111 Waterloo Street, Suite 310
London, ON N6B 2M4

Your income is too low

November 14, 2017

If you are reading this blog then the opening statement probably applies to you – “your income is too low” and that has far more to do with you being in debt than any other factor. In London, Ontario, a slightly misleading report released by the city council, as councillors were seeking a pay increase, indicated that the median full-time wage in the city was about $48,000.00 per year.

If you are earning less than that that may seem like a lot of money, but is it? Let’s look a little closer. First, the word “median” snuck into the report but not the definition of “full-time wage earner” – the median is a number that is exactly in the middle, and full-time wage earner is one who works at least forty hours per week.

In other words, half of people with full time employment in the City of London earn less than $48,000 a year – some earn a lot less but still work forty hours each week to support their families. Some people earn more money than that working part-time but they are a very small number.

There’s more – the median full-time wage in London, Ontario, which is a very average small city, just happens to fall at about the seventieth percentile of all income earners in Canada. Which means, 70% of Canadians earn less money than the median wage earner in London.

Statistics get confusing for some folks so I’ll get to the point. The point is that the “after-tax” value of that income is $3,135 per month. Even with that level of income you simply cannot afford to live a normal Canadian lifestyle without augmenting your income with some form of debt. You will need debt to buy a house, a car, furniture and sadly more, a very significant percentage of Canadians will need debt to buy clothes and even food.

If you have debt, you feel “normal”, you can live what we have come to expect a Canadian lifestyle to look like. But the reality is that the Canadian lifestyle is incongruent with Canadian incomes. Here is a sample budget showing a list of average living costs – which far exceed the median full-time wage or 70th percentile value of Canadian incomes. In other words, about 80% of Canadians cannot afford this lifestyle without debt. And notice the only allowance for debt payments is for a car loan or lease.

Take a look and see what you would change.

EXPENSES Amount
Child Support Payments
Spousal Support Payments
Child Care
Medical Condition Expenses
Fines/Penalties imposed by the Court
Employment Imposed Expenses Parking            $80
Rent or Mortgage                                                 $1,400
Property Taxes/Condo Fees
Heating –Gas or Oil                                                $100
Telephone                                                                  $120
Cable and Internet                                                   $120
Hydro                                                                          $140
Water
Smoking
Alcohol
Dining in Restaurants                                             $150
Entertainment/Sports                                              $80
Gifts/Charitable Donations                                     $25
Prescriptions
Food/Grocery                                                           $450
Laundry/Dry Cleaning                                              $25
Grooming/Toiletries                                                  $25
Clothing                                                                        $50
Car Lease/Payments                                                $450
Repairs/Maintenance/Gas                                     $250
Public transportation
Vehicle Insurance                                                      $125
House/Contents Insurance                                       $45
Life Insurance                                                             $125
Payments for Secured Creditors
Other (specify):
Total monthly expenses (B)                       $4,165