Why No One Can Afford to Live in Canada in 2025

There is a cost of living crisis in Canada right now. About 50% of Canadians are living paycheque to paycheque, according to Equifax Canada.

Social media is filled with videos of people crying and struggling to make ends meet.

A shocking 40% of recent immigrants are considering moving to another country or leaving Canada entirely, mostly due to the high cost of living, according to a recent poll by Angus Reid Institute. 

Is the Canadian dream over? In this article, I’ll explain why so many Canadians are struggling financially and at the end I’ll provide some actionable tips about what you can do about it.

The Rising Cost of Everyday Items

Groceries and Household Goods

To understand why Canadians are so frustrated, let’s start at the grocery store. David Olive notes in his article on The Toronto Star that In March 2021, a basket of 18 household items cost $82.

Today, that same basket costs $113.32. That’s a staggering 38.2% increase in just three years! The latest Canada’s Food Price Report predicts an increase of up to $701 in the average family of four’s annual food bill this year, bringing it to a total of $16,297.20. This comes on top of a $1,065 jump last year. Food prices have been outpacing the average rate of inflation by a lot in the last few years.

Rent and Housing Costs

Rent is another big issue. In April 2021, the average rent for a two-bedroom apartment in Vancouver was $2,598 per month. Today, in july of 2024, it’s averaging $3,648 per month, a 40% increase. Shelter and food, two essentials, have become significantly more expensive in the past few years.

In 2015, the average cost to buy a house in Canada was $413,000. Fast forward to May 2024, and that average has skyrocketed to $699,117. This represents a staggering 69.3% increase over the past nine years.

So housing and food costs have soared extremely high in Canada in the last few years, and also other costs like transportation and entertainment. 

Inflation has been rampant, and it’s been tough for many Canadians to get by. Paying for bills in Canada feels like trying to fill a bucket with a hole in it – the harder you work, the faster it drains away.

Many Canadians Want to Move

28% of all Canadians overall are thinking about leaving their province because of high housing costs, with young adults and renters being the most likely to consider moving.

This trend is particularly pronounced in Ontario and British Columbia, where high housing costs have persisted for longer compared to other regions. Popular relocation spots include Alberta, where 18% of Canadians considering a move are looking due to more affordable housing and better job opportunities. 

A recent BMO report shows that net interprovincial migration out of Toronto, Montreal, and Vancouver was over 130,000 people between 2022 and 2023.

Income vs. Inflation

Unfortunately, income growth hasn’t kept pace with the cost of living increase. In the latest data provided by Stats Canada, in 2022, the median after-tax income of Canadian families and unattached individuals was $70,500. That’s actually a decrease from $73,000 in 2021. It’s likely the average wages haven’t increased much in 2023 and 2024 either, certainly not enough to keep pace with inflation.

It’s no wonder why Canadians are struggling. The rising costs of groceries, household goods, rent, and housing have greatly outpaced income growth. Inflation has been rampant, and it’s been tough for many Canadians to get by. 

The discontinuation of pandemic-related government benefits and the return of pre-pandemic Employment Insurance (EI) programs have further strained finances.

Unhappiness is widespread in Canada, especially among Canadian youth. The latest World Happiness Report by the Gallup World Poll ranks Canada as the 15th happiest country among 60 in the world. However, Canadians under age 30 fall to the 58th rank. 

This highlights a significant disparity in happiness levels among younger Canadians, and paints a bleak picture for our future.

What Can You Do About the High Cost of Living in Canada?

There are no easy fixes here, as many issues stem from uncontrollable economic factors. We can only manage what we can control and hope for better economic conditions and effective government solutions.

This is a personal finance channel, so I always like to provide actionable tips that you can try. I’m not saying that there are any easy solutions, but whether you’re struggling to get by or looking to optimize your finances, you can take some action. 

The two main approaches are to earn more money or to spend less money.

Earn More Money

First, let’s discuss how to earn more money. Regardless of your current income level, there are strategies to boost your earnings. I’ll cover tips for increasing income at low, middle, and higher income levels.

Low Income

1. Side Hustles: Consider taking on a part-time job or starting a side business. You can try things like freelance writing on platforms like Upwork, driving for Uber, delivering for DoorDash, or starting a small online store on Etsy.
2. Skill Development: Invest in learning new, in-demand skills. For example you can try taking free or low-cost online courses on Coursera or LinkedIn Learning, get certifications in fields like digital marketing, or participating in government-subsidized training programs
3. Job Search: Constantly search for better-paying job opportunities. Regularly checking job boards like Indeed or Glassdoor, network on LinkedIn, attend job fairs, or join professional groups in your industry.

Middle Income

1. Career Advancement: Focus on advancing your career within your current company. Ask for more responsibilities, seek promotions, and negotiate for higher pay.
2. Additional Qualifications: Obtain additional qualifications or certifications that can lead to higher-paying roles. This could include postgraduate degrees or specialized training.
3. Passive Income: Explore passive income opportunities such as investments, rental properties, or creating digital products that can generate ongoing revenue.

High Income

1. Investments: Make your money work for you by investing in stocks, real estate, or other high-return opportunities. Diversifying your investment portfolio can provide significant returns.
2. Business Ventures: Consider starting or investing in businesses that have the potential for high profitability.
3. Consulting: Leverage your expertise to offer consulting services in your field, which can command high fees.

Spend Less Money

Now, let’s focus on spending less money. Reducing expenses can significantly improve your financial situation, regardless of your income level.

Low Income

1. Government Programs: Use government assistance programs to reduce your financial burden. These programs offer services like food banks, emergency shelters, financial counseling, job training, and utility bill assistance. Examples include The Salvation Army, Habitat for Humanity, YMCA, and United Way.
2. Budgeting: Create and stick to a strict budget. Track your expenses to identify areas where you can cut back. 
3. Reduce the Big 3 Spending: Focus on reducing food, shelter, and transportation costs, as those are generally the biggest expenses per household.
4. Negotiate Bills: Negotiate bills for services like cable, internet, and phone to secure lower rates or better deals.

Middle Income

1. Debt Management: Focus on paying off high-interest debt to reduce your monthly expenses and save money in the long run.
2. Smart Shopping: Use coupons, discounts, and cashback offers to save on everyday purchases.
3. Lifestyle Choices: Evaluate your lifestyle choices and identify areas where you can cut back, such as dining out less or choosing more affordable entertainment options.

High Income

1. Tax Planning: Work with a financial advisor or accountant to implement tax-saving strategies that can reduce your overall tax burden.
2. Luxury Spending: Be mindful of luxury spending and consider whether it aligns with your long-term financial goals.
3. Automate Savings: Set up automatic transfers to savings and investment accounts to ensure consistent contributions and reduce the temptation to spend.

Out of the Box Solutions to the High Cost of Living

If you’re struggling to make ends meet, here are a couple of innovative ideas you could try:

Tiny Houses: Live in compact, efficient homes (100-400 sq ft) to save on housing costs and embrace a minimalist lifestyle. Tiny houses can be stationary or mobile and are environmentally friendly. For example, there’s Mint Tiny House Company in Vancouver and Minimaliste Houses in Quebec.

Digital Nomad: With remote work, you can live and work from anywhere. Reduce living expenses by moving to affordable locations abroad, like a beachfront apartment in Thailand or a cozy cabin in Portugal. All you need is a reliable internet connection and some planning. I’ve tried this in the past and travelled and lived in many different countries, all while spending way less money than I would have in Canada.

I still love Canada and encourage people to move here. I believe that Canadian core values and the economy is not worth giving up on quite yet. Hopefully, the government can figure out some effective strategies to help control the cost of living. It looks like inflation has been cooling off slightly, so we may see some relief around the corner.

Here at Blueprint Financial, we try to do our part by providing free financial educational content, and also custom financial plans for higher income earners in canada. Our expert advisors provide tailored financial planning to help you manage your expenses and grow your wealth.

Check out the planning services we offer, and book a free consultation when ready!