Are Your Finances Better Than The Average Canadian’s Finance?

Are Your Finances Better Than The Average Canadian's Finance?

Are Your Finances Better Than The Average Canadian's Finance?
 

A couple of weeks ago, I had a guys’ day out with my buddies. We haven’t been able to hang out as much as we’d like in recent years. Most of us were busy with a young family. It was just the four of us. No wives and no kids. It was like the good old times we had during high school. We can talk about anything. There were no restrictions and any topic was fair game.
 

Being a huge personal finance nerd blogger that I am, I tend to try to steer the conversation towards money or personal finance, of course. I can talk about money for hours without getting bored. During the conversation, one of my friends told me that he’s been saving very diligently. That was music to my ears. He asked me and wanted to know if his finances are any better than the average Canadian’s finance.
 

I had come across some data about the average Canadian’s finance previously, but I didn’t really know what information he wanted to know specifically. That conversation stirred my curiosity a bit and in case you’re curious too, I’ve got all the juicy details for you in this post. Let’s see what the average Canadian’s finance looks like.

Average Canadian Student Loan Debt

Let’s start with one of the dreaded topics that most Canadians don’t really like to talk about – student loan debts. If you had been fortunate enough to graduate post-secondary school without any student loan debts, then you are definitely doing way better than the average Canadian. The average Canadian graduated with an average of $26,819 of student loan debt based on the Canadian University Survey Consortium.
 

For me, I actually did a bit worse than the average Canadian. I graduated with about $30,000 in student loan debt. Lucky for me, I was able to pay that off in less than three years after graduation. I am glad that I got rid of this debt a long time ago and my finance was not burdened by it.

Average Credit Card Debt

Based on the latest Statistics Canada’s Census results, there are about 36.7M Canadians, of which, 28.8M are adults (over the age of 19). According to TransUnion, there are 43.4M active credit cards, which means the average Canadian adult has about 1.5 credit cards (= 43.4M/28.8M). For each credit card, there is an average outstanding balance of $4,049. Hence, the average Canadian adult carries about $6,100 (= $4,049 * 1.5) in outstanding credit card balances.
 

I have five credit cards, but I have been able to pay off my credit card balances every month for the past decade. For this category, I definitely want to stay as far away from the average outstanding balance as I possibly can. There’s nothing good about being average in this category.
 

As a side note, the average Canadian owed about $22,081 in consumer debt, which included credit card debts. If we do the math, it means that the average Canadian owed about $16,000 (= $22,081 – $6,100) in other forms of debt such as personal loans and line of credits. Of this amount, I wonder what portion is used for investments?

Average Mortgage Debt

With data till the end of June of 2017 from TransUnion, the average Canadian mortgage had $198,781 left to pay off. Depending on which part of the country that you live in, this number may not be a very good gauge to measure against. If you live in areas such as the Greater Vancouver or Toronto Area, you’ll definitely be ahead of the game if your mortgage balance is around the average Canadian’s.
 

I live in the Greater Toronto Area (GTA) where the average home price is significantly above the national average. I feel lucky that I only have about $177,000 left on my mortgage. This is just slightly ahead of the average Canadian. I will take it anytime as the GTA is the second most expensive place to live in Canada.

Average House Price

When we talk about finance, there is one topic that’s almost inescapable in our conversations – real estate. According to the Canadian Real Estate Association’s House Price Index, the average Canadian home price is about $504,000 at the end of November 2017. If you own an average home and have an average mortgage, you’ll have about $300,000 in home equity. That’s not too shabby.
 

For me, I value my primary residence at about $900,000. With my $177,000 mortgage, I was able to borrow from the equity in primary residence to invest. This is why I have about $700,000 in good debts listed in my latest net worth review.

Average Salary

According to Statistics Canada (if you want to mine information related to the average Canadian, this is the site), the weekly earnings for the average Canadian is about $985.95/week. Multiply this number by 52, you get the average Canadian’s annual salary at $51,269.40. If you are making less than this amount, then it’s time to try to improve your salary. Here are a few options: ask for a raise, look for a better paying job elsewhere, improve your skills or move to an industry with a better salary potential.
 

For me, I am earning… oops, I almost slipped. I have no issue revealing what my salary is, but I am going to keep it as my little secret. If you are really curious, I am doing reasonably well relative to the average Canadian. My gross salary’s marginal tax rate is around the 43%. That’s all I am revealing :).

Average Household Expenditure

If we are looking at the average salary, I guess we just can’t miss the average expenses, can we? I was able to find some interesting household expense data from the Statistic Canada site again. I am loving this site. It’s making me look awesome and credible with all these data. The average Canadian household’s expenditure is about $84,489 in 2016. For simplicity sake, I am assuming the average household has two working adults and two kids. Comparing to the average Canadian income ($102,538.8 = $51,269.40 * 2), $84,489 seems like a very tight budget if you factor in the income tax.
 

For me, I am a bit embarrassed to admit (as a personal finance nerd blogger), my household spends more than the average Canadian household. I am not trying to make excuses, but if you live in the second most expensive part of the country and have two kids that are still in daycare, it’ll be difficult to stay below the average. Hopefully, I can do better in a couple of years when my kids are older. That’ll cut about $15K from my annual household expenditure.

Median Family Net Worth

When it comes to your finances, the two most important numbers (in my humble opinions) are your net worth and its rate of growth. Based on Statistics Canada’s numbers from 2016, the median family net worth was about $295,100. This meant that half of the Canadian families will have a lower net worth than this number and the other half will have more.
 

If you look at the median net worth number ($295,100) and average home equity ($300,000) number, it’s very close. This is consistent with the news headline that we’ve been hearing. Most families’ wealth is tied to the value of their home. So if your net worth is well above the median net worth and the average home equity, then you’re in great shape. Based on my latest net worth review, my $1.35M net worth definitely puts me in great shape comparing the average Canadian.

Average Retirement Age

For most of the people that I talk to, they are not very interested to talk about retirement. It’s either too far into the future or they just say 65 is the retirement age they’ll aim for. Well, guess what? According to our friends at Statistics Canada, the average retirement age for Canadians was about 63.6 years of age (2016 data). If you aim to retire at 65, then you’ll be below average.
 

Years ago, when I knew nothing about the Financial Independence Retire Early (FIRE) movement, I bought into some financial institution’s Freedom 55 slogan. That was the age that I want to retire at. After crunching my own retirement numbers, I am happy to update my target to Freedom 48, about 15 years below the average Canadian retirement age. At the current growth rate of my net worth, I am on track to reach my Freedom 48 target. I am definitely happy and proud to say that I am above average on this front.

My Two Cents

Normally, I don’t have a habit of comparing my own finance to others. However, from time to time, it’s good to sort of do a check up against the average Canadian to see if you are keeping up. From these numbers, you may be ahead in some categories and behind in others. The important takeaway from these stats is to measure your performance against your own expectation not someone else’s. Set your own goals and dreams and try to achieve them at your own pace.
 

So readers, are there any average Canadian’s finance stats that surprised you? Which category do you want to be above average and what are you doing to achieve that goal?

 

Leo T. Ly, Canadian Personal Finance Blogger/Enthusiast and a Realtor Living in the Markam, Ontario, CanadaAbout Leo
I am a Canadian personal finance blogger/enthusiast and a Realtor living in Markham, Ontario, Canada. I built a net worth of a million dollars over a ten year period. I did it by being a disciplined saver, taking advantage of income tax rules and borrowing money to invest rather than for consumption. I am often excited to take advantage of free money from employers and governments in addition to building more passive income sources. After accumulating my first million dollars, I am now embarking on a second journey towards achieving financial independence. On this journey, I will strive to increase my net worth to two million dollars and retire by the age of 48 - Freedom 48. Come along and follow my journey on Facebook, Twitter, Pinterest or Google Plus.



There are 40 opinions expressed on this post.

    1. @Brad, congrats. It’s great to hear. I would love to be able to join you in a few years, but it’s quite difficult to do that when I am quite comfortable with debt and don’t mind to borrow to invest.

  1. Living in the United States, my numbers are a bit different. I have two homes, which gives me about $220k in debt. Student loans are about $150k with MBA and a dissertation away from Ph.D. No other major debt, outside of this new car that I bought where I owe about $13k.
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  2. Our family expenses are still disturbing and until we finish paying up some debts, it’s going to be a bit rocky but hopefully we will see the light soon enough and get everything in the right track.

  3. Hey Leo! These are fantastic stats!

    After reading this, it seems like my fiancé and I are healthy compared to average I guess . But it’s odd that we (or maybe just I) don’t “feel” that financially healthy despite knowing these stats. And ever since I started this blog, we feel even more financially unhealthy bc most PF blogger like yourself are killin’ it! They are full of personal finance knowledge and achieving such high net worths! Overall, it’s great… my mentality is to be crap within my group and surround myself w/ ppl doing better, so that it pushes me to strive for more lol.

    Overall great post! Thanks for sharing these facts!!
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    1. @FinSavvy Panda, truthfully, I sometimes don’t feel very well off at all even though numerically, I should be happy with my financial numbers. So don’t feel bad and there’s no need to compare. I find that once I start comparing my numbers to others, things will become a bit unhealthy. Hence, I changed my mindset and start to set goals and try to achieve them instead. This is a much better way to achieve your financial goals.

  4. Wow great post leo. Yes we are better financially then the average Canadian. I got to say the average mortgage balance shooks me but again its canada wide. So many townhouses sell for a million, so im surprised on the equity. The numbers dont add up though for the gta. 700k house 200k mortgage 300k equity… of course other provinces knock that average down.

    Great post though!
    Thanks
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    1. @PassiveCanadianIncome, these numbers are Canada wide, so if you live anywhere near the GTA, your numbers should be a bit higher as these areas are more likely to be higher than the average. I am glad that you are doing better. Keep on going and try to reach the top 25% and further.

    1. @Steveark, if you think that 43% is high, the top tax bracket is over 50%. It really sucks when the government takes more money than you for every dollar that you earn at those tax brackets.

    1. @Cathleen, give yourself a big pad on the shoulder for graduating university debt free and being able to pay off your credit card bills on a monthly basis. Not a lot of people can say that.

  5. Huh after reading this, I’m not so sure if my finances are average, above average or neither. I should really look into that. Insightful post – thank you for sharing!

  6. I feel like I need to get over this post more than one times. So much information that is really important to understand. Will bookmark this!

  7. This has been a great post, I shared it with my family and they all enjoyed it. We don’t have any credit card debt and are doing our best to keep our budget where we feel comfortable. One of our girls will be going to collage soon and that is something we must account for too.

  8. Great post! Debt is terrible! We have been slowing working to pay down our debt. I know with time and persistence we will be able to get there soon.

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