Barely getting by
Living paycheque to paycheque has become the new normal for many
The percentage of Atlantic Canadians living paycheque to paycheque may have gone down since last year.
But a recent survey by the Canadian Payroll Association still shows nearly half of Atlantic Canadians polled (49 per cent) are living in this predicament, which is five-per-cent higher than all employed Canadians polled.
Joe White, financial advisor with White & Associates Financial Services Inc. in Charlottetown, says he isn’t surprised by the percentage of Atlantic Canadians living paycheque to paycheque.
White said a contributing factor he’s seeing is people living beyond their means. One area is the rise of new subdivisions and people moving into newer and more expensive houses rather than starting out in more affordable and older inner-city houses.
“Bigger houses, granite countertops, two-car garages, and ultimately before they’re ready to purchase them,” he said.
Another contributing factor related to people living beyond their means is that people don’t budget their money.
“They don’t understand how much money they’re taking in every month versus how much they’re spending,” he said.
White offers a strategy to help budget your money – mid-week and end-of-week “check-ins” to see how much you’re spending and whether you’re hitting the targets you set.
“Even if you’re doing it monthly, I find it can get away from you,” he said.
This strategy can help people save more by having them pay closer attention to the areas of unnecessary spending that can be cut out, he explained.
Besides unnecessary spending, there are also times people have to make hard choices with their spending habits.
“Sometimes we have to do these things in order to get ahead. And, it’s easier to do from the start than to catch up at the end,” he said.
The Canadian Payroll Association survey was conducted between June 22 and Aug. 1 and involved 5,074 employees from across Canada. Besides living paycheque to paycheque, other responses included 28 per cent of Atlantic Canadians thinking their local economy will improve (compared to 39 per cent, nationally), 41 per cent spending all or more of their net earnings (35 per cent, nationally) and 45 per cent feeling overwhelmed by debt (40 per cent, nationally). As well, the main reason for increased debt cited by 24-per-cent of Atlantic Canadians was children (14 per cent, nationally) and 31 per cent said the most difficult debt to pay down was credit cards (25 per cent, nationally) followed by lines of credit (29 per cent in Atlantic Canada, 22 per cent, nationally).
In terms of retirement, 66-percent of Atlantic Canadians said they have only saved one-quarter of what they feel they will need to retire (compared to 72 per cent, nationally).
In last year’s survey of 4,766 employees, 55 per cent of Atlantic Canadians responded they were living paycheque to paycheque and 55 per cent also said they spend all or more of their net earnings.
A factor may be that workers on P.E.I. are earning less weekly (on average) compared to the national average. According to a recent Statistics Canada report, average weekly earnings (seasonally adjusted) on P.E.I. in June were $834.19 compared to $844.50 in February. Also showing a decline was New Brunswick with $903.48 in June from $908.17 in February. Nova Scotia had an increase over that time period to $872.02 from $866.04, as did Newfoundland and Labrador, to $1,060.20 from $1,036.74. The Canadian average was $999.74 in June, an increased from $997.21.
As well, the price level of certain goods (such as food, shelter and clothing) on P.E.I. also increased July 2017 to July 2018. Overall, the increase in the consumer price index was 3.4 per cent. In Nova Scotia, New Brunswick and Newfoundland and Labrador, the CPI increase was 2.7 per cent and in Canada as a whole, the increase was three per cent.
Also helping with budgeting and financial advice is Family Service P.E.I. – a non-profit charitable organization that offers credit counselling and debt repayment services in Charlottetown and Summerside.
In 2017-18, the organization had 524 people attend its consumer education events and had 362 clients meet with a credit counsellor face to face.
“People certainly come to us when they don’t know where else to turn,” said Kathy Jones, the organization’s executive director.
The organization advises clients as well about setting up a household budget, and will negotiate on behalf of clients to end harassing creditor phone calls and reduce or eliminate interest repayment on debt, said Jones.
She said there is a variety of factors leading to people living paycheque to paycheque and seeking financial counselling, such as older parents helping out their adult children, dealing with an illness, lost jobs and having trouble budgeting money.
“It really crosses all situations and all ages. There’s not one in particular I could point to,” she said.
In terms of whether the situation is improving on the Island, Jones notes another service the organization provides is financial literacy sessions for groups in the community, including schools and youth organizations.
“I think the more we can go out in the community and provide that, we hope that, over time, the situation in terms of credit management will improve.”