Credit Cards

Majority of women in Canada are living paycheque to paycheque

By: Lisa Coxon on September 30, 2019

Nearly 60% of women in Canada are living paycheque to paycheque, according to the annual BDO Canada Affordability Index, which looks at how affordable life is in Canada.

According to the index, which is the result of a poll of 2,047 Canadians conducted by Angus Reid, women are more likely than men to have growing debt due to lack of income, and are more likely to struggle to save for a major purchase, afford grocery bills and take a vacation.

While BDO didn’t elaborate on why, exactly, women fare worse than men when it comes to affordability challenges, there are several plausible contributing factors: the wage disparity among the sexes; the pink tax; the fact that women put child and elder care before their financial security; and that they’re not as confident as men when it comes to investing.

According to the index, a quarter of Canadians find debt to be overwhelming, 27% don’t have enough money to meet their needs, while 42% have enough money to spend on things they want. 

“Affordability and debt challenges continue to weigh on Canadians, and what our Affordability Index reveals is that, over time, the cumulative effects have a significant impact on financial goals,” said Doug Jones, president of BDO Canada's Financial Recovery Services practice, in a release. 

“However, for people with unmanageable debt, a Licensed Insolvency Trustee can help them understand their options and become more financially prepared for the future.”

Canadians have increasingly been turning to licensed insolvency trustees to file either bankruptcy or consumer proposals.

According to licensed insolvency trustee firm Hoyes Michalos & Associates Inc. in Toronto, insolvencies on student loan debt in particular are creeping up, comprising almost 18% of all Ontario insolvencies filed last year. 

Millennials made up 37% of personal insolvencies filed in the province in 2018, according to data from Hoyes Michalos, even though they had less debt than any other age group.

Gen Xers are the most indebted generation, with 75% carrying some form of debt, according to the index. 

“An increasing number of Canadians in their 40s and 50s are financially stretched and unprepared for retirement and unexpected costs," said Jones. “This can lead to a greater reliance on debt to support living expenses.”

The BDO index revealed that 57% of Canadians have credit card debt (up from 53% last year), and for 31%, this debt is growing because of “income constraints.” In fact, 31% of Canadians have put off paying off their credit card balances in full because they can’t afford to. And four-in-ten Canadians have a non-mortgage debt load of more than $20,000, according to the index. 

“This suggests that many Canadians will be forced to carry debt into their later years,” the release states. 

And that’s pushing the dream of retirement further and further away.

According to the index, 39% of Canadians admit to having no retirement savings (up from 31% last year). This percentage includes one-third of boomers and seniors.

And among the 38% of Gen Xers who have no retirement savings, 47% say they can't afford to save for retirement, and 19% say they need to pay debts off first.