Cost of living is a key factor along with inability to boost household income
The increased cost of living has impacted most Canadians, but while the growth of consumer prices has eased according to recent stats, for those whose income has not kept pace with inflation things are challenging.
A newly released Intelligence Memo from the non-profit Financial Resilience Institute and Coast Capital shows that 84% of respondents say the cost of living has outpaced their income over the last year, and while earning more would be a simple solution, 55% said they face barriers that impact their ability to do so.
Among these barriers are job insecurity, which affects 39% of respondents and four in ten of them say they feel “extremely vulnerable.” Job insecurity may be coupled with income volatility with three in five respondents saying that their income varies significantly or quite significantly month to month. Those experiencing this show higher levels of financial vulnerability compared to those not experiencing this challenge.
Those who say they face barriers to being able to earn more score a 20-point lower mean financial resilience score (42.6 as of June 2024) compared to those not facing the issue (62.9) based on the Financial Resilience Index model which considers nine behavioural sentiment and resilience indicators and ranks ability to get though financial hardship, stressors, and shocks from unplanned life events.
Just over a third of respondents said they have taken on a side hustle or additional work in the last year in order to boost their household income.
“Our latest Intelligence Memo shows that economic exclusion increases financial resilience for Canadians. 77% of the population experience financial vulnerability, regardless of income, and despite a third of households taking on side gigs in the past twelve months,” said Eloise Duncan, CEO and founder of Financial Resilience Institute, who is calling for policymakers and employers to expand access to employment, especially for vulnerable groups facing barriers.
Maureen Young, VP of social purpose at Coast Capital, says that the financial services industry can play an important role.
“This data and the broader story it tells helps us, as a trusted financial partner, to better understand, and tailor our advice, education, and solutions to break down barriers and unlock financial opportunities for our members, employees, and communities.”
