Canadians weighed in, and the amount might surprise you
“Unless you are living like a king, $10,000 a month is enough for even a couple to live very, very comfortably, assuming you don’t have debt,” says Hugh Woolley, a Vancouver CPA (Illustration by Leeandra Cianci)
How much money do you need to make to feel financially comfortable? According to the Canadians polled by financial services firm Edward Jones, the magic number is—wait for it—$250,000 per person, per year. After tax, that figure drops significantly (to $155,000 in B.C., for example), but it’s still nearly triple the $56,000 in after-tax income that the average Canadian makes.
The quarter-million-dollar figure is delusional, says Hugh Woolley, a Vancouver CPA with Lewis & Company. Very few Canadians earn that much—nor do they need to. Most individuals can get by fine on nearly $5,000 a month, he says. “Unless you are living like a king, $10,000 a month is enough for even a couple to live very, very comfortably, assuming you don’t have debt,” he says. The good news, he adds, is that “for two people each netting $56,000, the disconnect”—between what you make and what you think you need—“is not as big as it first seems.”
Still, what explains that disconnect? Panic, perhaps. “There are a lot of people in their 40s helping their kids go through school and who have no retirement savings whatsoever,” says Woolley. In fact, in a 2018 survey conducted by CPA Canada, 42 per cent of respondents said they plan to work past age 65; half of that group said they can’t afford to retire.
Instead of daydreaming about a six-figure paycheque to fix that, Woolley says, it’s best to get ahead and start saving early. Roughly three-quarters of the respondents in the CPA Canada survey already contribute to their savings every month. Beyond that, track your expenses, put money into RESPs and RRSPs, cut down on unnecessary expenses like eating out, and switch from two family cars to one if possible. Once people see where their money is going, they’ll realize it’s possible to feel financially comfortable without a huge payday, even if that means keeping the Toyota and ditching the Benz.
