Household financial health

Prosper Canada and the Canadian Council on Social Development recently released a new report comparing household financial health across Canada’s 35 largest cities.

A multi-phase research initiative sponsored by the Investment Industry Regulatory Organization of Canada (IIROC), Urban Spotlight: Neighbourhood Financial Health Index findings for Canada’s cities ranks Canada’s largest urban areas (with populations over 100,000) on overall household financial health. The report explores how cities perform with respect to key underlying drivers of household financial health.

Findings are based on the Neighbourhood Financial Health Index (NFHI), a composite measure of household financial health at the neighbourhood level. Combining income, debt, asset and neighbourhood poverty indicators, the NFHI provides a more comprehensive and accurate picture of household financial health than income statistics alone. NFHI data are drawn from Environics Analytics’ WealthScapes product.

Urban Spotlight

findings show that:

  • Calgary and Edmonton placed at the top of the Index by a wide margin.
  • Five cities could be characterized as “living large” with high income and high wealth but also high debt. Toronto and Vancouver are the most extreme examples although this group also includes CalgaryKelowna and Guelph.
  • Nine cities could be characterized as “living challenged,” with below average income, wealth, and debt and higher poverty. Select Quebec cities as well as HalifaxPeterboroughThunder Bay and Windsor display this profile.
  • Five cities could be described as “living constrained,” displaying a similar pattern but with lower than average poverty levels. On the list are MonctonSaint JohnBellevilleBrantford and St. Catherine’s-Niagara.
  • Cities with good average income but high debt and low savings might be ok financially for the present but can be characterized as “living on the edge” because they are highly vulnerable to future interest rate increases and economic downturns. These cities include St. John’sBarrieOshawa, Regina and AbbotsfordMission.
  • Ten cities have total-debt-to-income ratios greater than 150 per cent: SaskatoonCalgaryGuelphVictoriaKelownaBarrieOshawaTorontoAbbotsfordMission and Vancouver.

Urban Spotlight shows that our financial health is heavily influenced by where we live,” said Elizabeth Mulholland, CEO of Prosper Canada. “Assets and debt, not just incomes, matter when it comes to our overall financial health.”

“This report provides important insight into Canadians’ financial health – which is of great value to regulators, policymakers and those working with Canadians to help them make investment decisions,” said Lucy Becker, IIROC Vice-President of Public Affairs and Member Education Services.

To learn more about the NFHI, visit www.nfhi.ca. To see the distribution of financial health and vulnerability in your community, visit the NFHI Community Financial Health Maps.

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