Canadians want $250,000 a year to live comfortably — experts say curb your expectations

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WATCH: A $250,000 pre-tax salary makes Canadians feel "financially comfortable." – Nov 5, 2018

What would it take for you to be “financially comfortable?” For many, the answer might be lower than they think.

A new survey conducted by Leger for investment firm Edward Jones found Canadians think they need an annual salary of $250,000 before tax to be financially comfortable. And they’d like $300,000 a year to have their “ideal” income, the survey of 1,565 Canadians said.

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A $250,000 pre-tax income translates to $144,000-$168,000 post-tax across the country, depending on your provincial or territorial tax rate.

That’s a sharp contrast to the average post-tax income of $57,000 a year

reported by Statistics Canada in 2016.

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According to the survey, younger Canadians (aged 18-34) had lower expectations, saying they would need $166,622 a year to feel financially comfortable.

Those who are likely to be planning for retirement (55-64 years old) said they’d need $398,347 a year to feel financially stable, but that number dropped to when asked what their “ideal lifestyle” would cost.

Experts say this shows that Canadians have fairly high expectations when it comes to financial comfort, and that there’s a big disconnect from where they are versus where they want to be.

“It really starts from people feeling very tight, and that’s common across the country,” Julia Chung of Spring Financial Planning told Global News. “With rising house prices, and in particularly B.C. with rising gas prices which makes the cost of living go up, … it feels like a lot of pressure.”

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Rona Birenbaum, founder of Caring for Clients financial planning, says financial comfort comes from having stable, affordable housing, quality food at an affordable price, and reliable and convenient transportation.

“I think it proves that Canadians realize that their current income is well below what is necessary to have a worry-free financial life,” Birenbaum explained.

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Lana Gilbertson, a licensed insolvency trustee with MNPLTD, says the high expectation of financial comfort shows that Canadians are expecting to live a certain type of lifestyle.

Birenbaum agreed. “Keeping up with the Jones’ has never been more expensive,” she explained.

“It infers a lifestyle that Canadians see on all forms of media, including social media,” she said. “‘Everyone’ is travelling, owns high-end vehicles, wears high-end clothes, goes to expensive live concerts, etc.”

“What it says to me is, here is why Canadians are taking on so much debt, this is the lifestyle they want to live,” Gilbertson explained.

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Experts say more money isn’t always the answer. There are other ways to get financial comfort through a few basic principles, including having a budget and a safety net, and most importantly, living within one’s means.

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“I have clients who make $300,000 or more, and the really interesting thing is that you can make $50,000 or $300,000 and you can still be in a financial situation that is tight,” Jason Heath of Objective Financial Partners Inc. told Global News.

“How much you make, how much you save, and how much you spend, is really what makes you financially independent,” he said.

“I haven’t noticed that people with more money are happier than anyone else.”

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“True financial comfort doesn’t come from stuff, and [the $250,000 yearly salary] sounds like they want more stuff,” Gilbertson agreed.

Chung said to get financial comfort, you should start by looking inward, then coming up with a plan to get it.

“What [salary] do you need to live the life you want?” she said. “Then all these tools can be put into use.”