Living comfortably may mean different things to different people, but the average Canadian feels he or she needs a pre-tax salary of $250,000 to be financially comfortable, according to a new survey from Edward Jones.
Considering that the country’s median, after-tax income is $56,000 (per Statistics Canada data from 2015), that’s a huge gap.
As for the amount of money Canadians think they’d require to have the lifestyle they really want, the number jumps $50,000 to a whopping $300,000.
“It’s encouraging to see Canadians have a general idea of where they want to be, but have they actually sat down and thought about the lifestyle they want in detail?” commented Patrick French, principal of solutions tools and consulting with Edward Jones.
A general rule for living comfortably is allotting 50 percent of one’s income to necessities (mortgage, utilities, food, etc.), 20 percent for savings, and 30 percent to disposable income. Edward Jones surveyed 1,565 Canadians, over the age of 18, online in May 2017.
Interestingly, millennials (those aged 18-34) stated they needed just $166,622 to feel financially comfortable and close to $300,000 to have the lifestyle they actually want.
Those aged 35-54 said they need about $227,290 to be financially comfortable. The higher amount, when compared to millennials, may be due to the older generation’s family obligations.
Meanwhile, those aged 55-64 said they required a pre-tax income of $398,347 to live comfortably. With regards to how much they would need for the lifestyle they want, the number dropped by over $70,000 to $325,066. This indicates that the people in this age bracket may have “unwanted financial responsibilities.”
“The research indicates that financial expectations and needs are continuously evolving through different stages of life,” added French. “Having a clear view of your goals and understanding how one financially influences the other is the first step towards achieving your lifestyle objectives.”
One of the reasons Canadians may feel they need so much money is because of high housing prices. As of summer 2017, the average Canadian had $198,781 left on their mortgages, according to TransUnion. People are borrowing more and more money to finance their homes.
Canadians are also dealing with credit card debt (with an average balance of $2,840) and car loans (averaging $19,087). Nearly 24 million Canadians have at least one credit card, and there were over 3 million auto loans in circulation as of 2017.