This blog is not for average people.
That was the snarky reply given to a visitor whining and moping about the economic ills of Canada. You know the list. Lettuce is $3.99. The servers at Tims wear turbans. A house in Kits is $2.3 million. Rents are ridiculous. Incomes are stagnant. Everybody’s in debt. Immigration, inflation, speculators and politicians have destroyed Canada. It’s a shithole country.
This blog spares you from most of that drivel. The Delete Finger always wins.
But don’t the stats published this morning add credence to the litany of complaints – at least on the surface? The amount of debt Canadians are shouldering is up again – to 173.9% of disposable income. So, on average, we owe $1.74 for every buck earned. When it comes to servicing that debt (the household debt service ratio), just under 15% of income is required.
Sounds bad. And it is. The household savings rate is going down, too. At 5.7%, it has declined every quarter since late 2023. Now with tariffs making imports more expensive, inflation may eat further into disposable income while it also crimps business expansion and wage gains. Meanwhile house prices have not collapsed (and likely won’t) at the same time over a million families are renewing mortgages taken out during the pandemic, at higher rates.
So, add it up. Shithole country?
Not so fast. There are no troops with automatic weapons and flash-bangs on our streets. No immigration cops lurking at Home Depot. No government attack on universities. No Diddy. No defunding of science, vaccines or the public broadcaster. Compared to the US, it’s a bucolic paradise here, with lower public debt ratios, universal health coverage and Jann Arden.
But what we do have is a yawning disparity between the whiners and the bulk of society. At least that’s what the stats tell us.
Since the pandemic became a thing (2020) only the top 40% of income earners in Canada have been saving money. Lower-earning households have been on the losing end of the stick. In fact the gap in income between the top 40% and the bottom 40% is an astonishing 47%. As you stretch out the data, it becomes starker. The top 20% of families (by income) hold almost 70% of the nation’s personal wealth, averaging about $3.5 million. The bottom 40% have a net worth of less than $68,000. (Real estate included.)
By the way, the percentage of Canadians earning $100,000 or more is 21%. The top ten per cent earn at least $126,000. The top five make $162,000. And to be a 1%er, you need income of about $285,000.
So why do the 40% of Canadians at the bottom own just 3% of total net worth? Are they less talented? Or lazier? Is this because of their cultural background, education or from listening to too much rap?
Nah, probably not. Likely it’s more about financial illiteracy. If folks don’t know what to do to make their situation better, they won’t. Money skills are not taught widely in school. Governments do a horrible job showing citizens how the various tax shelters and benefit programs work. Banks, brokerages and online investment platforms suck at providing accessible, credible info.
As a result, the bottom 40% have an average of $84,000 in debt, surpassing income. Overall, Canadians owe $3.1 trillion, three-quarters of which is mortgages. Just as troubling is the fact that 80% of assets in TFSAs are interest-generating GICs, high-interest savings accounts or regular no-income bank deposits. We know people hold more in high-fees mutual funds than low-cost ETFs. And there’s solid proof RRSP contributions have declined. It seems tats are more important to a broad chunk of the population than seeking financial security. This is the YOLO mentality of generations which are headed for a wall.
So, surprised at the stats, or the nihilism gushing from them?
Don’t be. As night follows day, money woes flow from ignorance. Lack of good information does not explain all financial misfortune (of course), but large numbers of those who blame others (newcomers, elected officials, Trump) should blame themselves.
No, this is not a blog on how to be average. Average doesn’t cut it. For that, there’s Reddit.
About the picture: “Longtime readers and podcast listeners here,” write Aleksandra and Greg in Calgary. “A few days ago, we said goodbye to our 13-year-old miniature weenie Doglog. She taught us the true meaning of resilience and brought boundless love to each and every day we shared with her. She was dearly loved and will be forever remembered and missed by her Meatbag and Hooman. Run free sweetie Doglog. We would be honored to have her featured on your blog.”
To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.