The Average Canadian Household Net Worth Is Huge!

maple-leafWhen you think of Canada, what do you think? I think wonderful skiing in Whistler, hockey, maple leaves, free healthcare, cold weather, Hong Kongnese buying up Vancouver, French Quebec, McGill University and Blackberry devices. Seldom do images of extravagance and wealth come up.

So it is with great surprise to find out our brothers and sisters up north are ROCKING it in the financial front with an average household net worth of $400,151 at the end of 2012. Vancouverites (West Coast represent) boast the highest net worth of all Canadians at roughly $662,600 last year. The report was conducted by consulting and research firm Environics Analytics and also goes on to mention the US average household net worth lagging at only $381,086.

That’s right folks. Despite the perception that America is the land of opportunity, we are falling behind with even The Associated Press saying that 4 out of 5 Americans are at risk of living in poverty or near-poverty at some point in our lives. That’s pretty sobering news given how hard we work.

I’ve argued why Socialism could be a means to a brighter future to much disdain by readers everywhere. However, with this latest data about Canadian household net worth coupled with the research I conducted abroad in Socialist Europe, it’s become evident that Capitalism is not the only means to wealth.

LET’S TRY TO COMPREHEND WHY CANADIANS ARE SO RICH

* Real estate is booming. The average home price of $378,000 in Canada is 62% higher than the average US home price of $233,000. The chart below either says that Canadian home prices are at risk of a correction, or US home prices are severely undervalued. There’s probably some truth to both. $378,000 equates to 94.5% of the current average household Canadian net worth, which means the average household net worth is at risk of sharp movements in either direction. Other studies show that 60-65% of assets are tied into real estate. Either way, anything over 50% is quite risky after a certain age.

US vs. Canada Home Prices Chart

 * Social safety net. When you’ve got free health care, strong unions, and deep support for the unemployed you are more likely to be less stressed and do a better job at work or on your business. We’ve talked about extending unemployment benefits to the 5 Year Shock & Awe Yeah program to encourage Americans to take more risks and go for glory. When the worst thing that can happen is five years of unemployment benefits while living at home, life can’t be that bad.

* Debt in a bull market. Canadian household debt runs roughly 160% of disposable income, one of the highest in the world. The debt is largely mortgage debt which has been going up in a relatively steady fashion for well over a decade.

* Smaller population. With a population of only 34 million in Canada, it’s much easier for the Central Government to govern and take care of its people. The Low Income Cutoff (LICO) is around 10% in Canada compared to around 16% of Americans living in poverty as of 2012 according to the US Census Bureau.

* Lower military spend. When you’ve got America as your neighbor, you don’t have to spend as much on F-35 fighter jets to protect your country. The US will scramble their jets and switch on ARC Net in no time. When you’re not the World’s Police, butting in every other country’s business, military spend isn’t as big a priority either. Canada spends roughly $20 billion a year on the military compared to $860 billion a year in the US. Americans say they are Canadians when they travel to some countries for a reason. It pays to be more peaceful.

* More open immigration policy. According to the Canadian government, 21% of the total population was foreign born in 2011, the highest proportion among any G8 country. Canada is a hot spot for immigration because they have major worker shortages in hospitality and skilled industries. With Vancouver as the closest North American international airport to Asia, Vancouver is able to garner wealthy Asian traffic that bring with them strong savings customs. In the US, we put up fences, pass discriminatory laws, enact trade embargoes and speak negatively about the Chinese. We also don’t seem to get along well with the French.

* Natural resources. When you’ve got oil, minerals, and gold, what more do you need? Canada is resource rich, providing a never ending source of wealth. There’s this enormous debate about the Keystone Pipeline project that would ship crude oil and bitumen all the way down to the refineries in Texas. Big bucks. Big dependency. Six figure jobs abound! It’s kind of like the Saudis ruling the world just because they’ve got so much oil. It’s nice to inherit great wealth.

* Slightly higher tax rates at lower income levels. The top Federal marginal tax rate in the US is now 39.6% on single income of over $400,000 and couple income of over $450,000 a year. Just last year in 2012 the highest Federal marginal tax rate was 36%. The top Canadian “Federal” tax rate is 29% of taxable income over just $135,054. The closest bracket we’ve got is a 28% tax rate on taxable income over $87,850 and up to $183,250. Canadians also pay Provincial tax rates of 10%-16.7% on incomes as little as $67,000+. In comparison, California taxes income between $46,766 and $1 million at 9.3%, and California is one of the highest tax states. By having a lower income threshold and slightly higher taxes, this means that more people contribute to ensure a healthier system. There is no constant droning on about how half of Americans don’t pay any Federal taxes. Oh, and Canadians don’t have estate tax either.

Canadian Household Debt Chart, Bloomberg

CONCLUSION

Despite long work hours, tremendous opportunity, and inventing so much of what we use every day (iPhone, Android Phone, iPad, Chromebook, Intel processor, Nike shoes, Google, Yahoo, YouTube, AirBnB, Pandora, etc) Americans are not the wealthiest ones in North America. Canadians are King and Queen thanks to their extraordinarily strong housing market and Social system of governance. With stronger governance comes better managed financial institutions. A wider taxation net also helps ensure that a country is more united.

Although it might be hard to name a handful of Canadian billionaires, portending to a lack of extremely wealthy success stories, having a household net worth of $400,000 in your mid 30s to early 40s is not too bad at all, especially if your health care is covered when you retire. If the average $400,000 household can keep working for the next 20 years, there’s a good chance that many of them will be millionaires.

Americans can look forward to more Canadianized America given the redistribution of wealth and the ever growing size of the government. Americans should think twice about working so hard and taking so much career and financial risk when it comes to starting a business. Although there are risks with owning real estate, it’s clear that over the long run real estate has helped more people get wealthy than not.

It’s unlikely that government-reducing Republicans will win the White House again if they don’t address the diversity of America. With the stock markets at record highs and the real estate market in full recovery mode, the future is looking bright!

Related Posts:

The Average Net Worth For The Above Average Person

The Average Net Worth For The Above Average Married Couple

How Much Should People Have Saved In Their 401(k) At Different Ages?

Any Canadians out there want to share their thoughts on the average Canadian household net worth and the housing market? Can you think of other reasons why Canadians are doing so well? I plan to take a business trip to Vancouver to understand more about their $662,600 in average household net worth. Anybody have any tips on where to go and specific thoughts about the area?

Regards,

Sam

 

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. No Waste says

    Don’t worry Canada, one day we may need some of your massive fresh water supply down here in the states. So you can thank us for the F-35 Fighter Jet then.

    That household debt trend does not look to savory though…

    I also wonder how they will fare when they experience a decline in their own Baby Boomer consumption, something we will face too. We have immigration to help prop things up somewhat, but I don’t think that’s the case in Canada?

    • Financial Samurai says

      Immigration is one of the factors I highlight that helps them with their labor shortages and wealth creation.

      I hope they really do share their precision water and minerals with us if needed.

  2. Larry says

    You don’t say if you’re converting the CAD to USD, but since it’s now only $1.00 USD to $1.03 CAD (or $.97 USD to $1.00 CAD), the numbers wouldn’t be far off even if you weren’t.

  3. Mr. Utopia says

    Don’t worry, about 6 months from now Canada’s good fortune will be coming to a colossal end. Why? Because Sidney Crosby and team Canada hockey is going to massively choke at the Winter Olympics! When that happens, the entire country will fall into a deep mental depression that will ultimately lead to an economic depression lasting at least 4 years (until the next Olympics).

    U-S-A!!!

    • The Financial Blogger says

      Don’t count on that, the last time I’ve check, Team USA choked during the last Olympics ;-) hahaha!

      Sam, to get back on the topic, you forgot a huge part that explain this high average net worth; it’s called oil ;-) Alberta has been growing like there is no tomorrow due to oil sand. A few years ago, anybody that has 2 arms and 2 legs could easily make 100K working on oil platform up there.

      The second improtant point is Real Estate as you mentioned. The problem is that most Canadian in Western Canada are millionaire by accident. They bought a house at 50k 25 years ago and it now worth 1.5M$. It seems ridiculous but my house that is situated 1h drive from Montreal worth 350K in Quebec. The same house 1h from Vancouver worth over a million.

      Real Estate in Canada will collapse and we will fall behind the US again.

      • Financial Samurai says

        True, true. Natural resources has been included, with the most obvious example in the Keystone Pipeline from Alberta to Texass.

        The thing is… don’t Canadians want to live in more temperate climates all year around with more activities and diversity? It’s part of the reason why Vancouver is so expensive no?

  4. Mr. Utopia says

    I didn’t get much sleep last night and my brain is somewhat in a fog, some hoping someone can help out here: If “Canadian household debt runs roughly 160% of disposable income” and it’s “largely mortgage debt” then how can their net worth be so high? In other words, if they are highly leveraged in their real estate, then their isn’t much equity in general. Equity is the only thing that contributes to net worth (assets – liabilities). So, how can average net worth be $400k with so little equity? Do Canadians have massive amount of other assets with little to no accompanying debt?

    • Financial Samurai says

      Here’s an example of debt-to-gross income:

      $1,000,000 mortgage
      $500,000 income

      Debt / Gross Income = 200%.

      If the home is worth $1.4 million, then one has at least $400,000 in net worth given the $400,000 in equity with a D/I ratio of 200%.

      • Mr. Utopia says

        Thanks, makes sense. If I’d paid a bit more attention to the graph you shared then I’d have noticed the drastic appreciation that has occurred. I agree, it certainly does make you wonder about a correction (the slight dip in 2008 wasn’t much).

  5. Joe says

    Do they on their way to a housing bubble? It seems like housing is ridiculously expensive in Vancouver.
    I really like Canada’s social safety net. I wouldn’t mind living there for a few years. It’s not easy to immigrate there though and it’s probably too cold for me up there.

    • Financial Samurai says

      Hard to say as the US economy is improving and that should help them out as well. Their housing did take a brief dive in 2009, so they are not impervious. Canadians can’t even deduct the interest on their mortgage!

      Vancouver sounds expensive, but it’s still much cheaper than SF!

      • Jason says

        Not only that, but there’s no such thing as a Canadian version of our fixed-rate X-year mortgage. No matter what mortgage you get, the interest rate always readjusts every 5 years.

  6. krantcents says

    Look what a stable economy can create! The U.S. economy took an extreme hit with the housing bubble which the Canadians seemed to dodge. People do not spend when they worried about their job, investments and housing values.

    • Financial Samurai says

      It’s like the turtle pulling away from the volatile gate in the race to accumulate wealth.

      Stability does indeed breed wealth, which is part of the reason why Switzerland is so rich.

    • mysticaltyger says

      But, actually that’s not true. The savings rate in America is in the 3% range….Americans seem to spend all of their income in good times and bad.

  7. Liquid says

    Great observations. I recently blogged about this topic as well. I think another reason Canadian’s net worth is higher is because of cultural differences. Although there are many overlapping similarities between Canada and the US, the social economic landscape is ultimately very different. According to our government, 21% of our total population was foreign born in 2011, the highest proportion among any G8 country. Canada is a hot spot for immigration because we have a major workers shortage in the hospitality and many of the skills related industry.

    Many of our friendly immigrants come from European countries like France, Germany, etc where the country’s national gross savings rate as a percentage of their GDP is higher than in the US. And the largest group of immigrants in the last 5 years to Canada has come from Asia. And people in Asian countries like Singapore, Japan, China, etc are known by macro economists for their extremely high personal savings rate. Savings rates for East Asian economies averaged about 30% their income. When people from a culture where saving money is that important to them move to another country like Canada, it’s very likely they will hold the same perspectives about money and try to pass those values onto their children. I think Canadians having a higher savings rate than the US is part of what accumulated so much wealth for us.

    Vancouver is a special case because it’s the closest Canadian international airport to Asia. A lot of money in this city comes from foreign sources. The explosion of wealth in Asia in the last decade is forcing the rich there to diversify their investments and look for politically and economically safe jurisdictions to store their assets. Many parts in Australia have seen similar foreign capital injections :D The Economist estimates that in 2010 Australian house prices were overvalued by 63%. Whether this is good for the local economy because it raises the average wealth within the city, or bad because younger, lower income people are priced out of the housing market, I don’t know. But one thing you will notice when you come to Vancouver is how multicultural it is.

    Interestingly however, the US has a higher income level per capita than Canada. So if somehow the US population were to adopt a higher savings rate mindset then I think Americans would once again become more wealthy than Canadians :)

    • Financial Samurai says

      Very well said. I do think about the Hong Kongese buying up much of Vancouver because I know several Hong Kong investors who’ve done just that in the past 10 years. North American real estate is CHEAP compared to major cities around the world.

      Great thoughts about immigration, savings culture, and occupational shortages.

      We Americans love to spend baby! With higher per capita income and lower housing, there shouldn’t be a problem to live a great life if we wanted to save.

      My only fear about moving to Canada is the weather…….

  8. The First Million is the Hardest says

    It seems like I’ve been hearing about a Canadian housing bubble for at least 5 or 6 years now, who knows if or when one will actually burst.

    Canadians also get hit with much higher sales and consumption taxes which is why when I go to the mall on a weekend 60% of the parking lot is comprised of Canadian licence plates!

  9. Holly@ClubThrifty says

    This doesn’t surprise me at all! We recently vacationed in the D.R. where we met a large group of Canadians that we hung out with all week. They were all either retired or about to retire rich before the age of 50. We talked about it at length and they said that they think that their societal safety nets are a big reason that they were able to succeed. Can you imagine being able to retire early without having to worry about the cost of healthcare? That has got to be very freeing, mentally and financially.

    • Financial Samurai says

      Totally and one of the main reasons I highlight in the article. To not have to worry about health care and going down the abyss of poverty is liberating. Allows then to take more chances.

      • Holly@ClubThrifty says

        One of the younger women in that group said that she was trying to have her first child and was extremely excited to take something like 9 months of maternity leave. I don’t remember exactly, but I believe she said she got paid at 80 percent pay for 9 months.
        I cannot imagine how things would be different if young families had security like that in the U.S. I got six weeks of maternity at 50 percent pay and my employer wasn’t obligated to pay me anything at all!

        • Financial Samurai says

          I’ve heard about the great same benefits as well. 9 months maternity leave rocks. I think in France and other Euro countries mothers can do 1 year maternity leave with majority pay and no ability to get laid off.

          If we implement this system, it could really jump start the population of America!

        • Holly@ClubThrifty says

          I don’t know if we really need to jumpstart the population or not…but it would be nice for young couples to be able to have their first child without having a huge financial hardship. I also believes that it puts single mothers at a disadvantage and keeps too many of them trapped in poverty.

  10. Nick @ ayoungpro.com says

    I had no idea that their top tax rate was lower than ours. When I think of “Socialism” I generally think “high taxes”. I’m all for ending our world policing, not from a moral or political standpoint, but a financial standpoint.

    • Financial Samurai says

      Well, let’s say you make $200,000 living in Nova Scotia, that’s 29% + 21% = 50% marginal tax on all income over $120-$150,000! If you make $500,000 in California, you’re only paying 39.6% + 13% on income over $400,000. Still terrible, but at least you get to make much more than $150,000 and not get taxed as much.

  11. Nathan says

    You cannot say that Capitalism is not the only means to wealth. Socialism is far deeper than just high taxes and social services. Socialism is the means of production and distribution are controlled by society (aka the gov’t). You would be hard pressed to find a wealthy nation that is actually socialist. Cuba anyone?

      • The Financial Blogger says

        We are not socialist ;-)

        The Gov’t sure controls more things than the US but we are still capitalist. In fact, the most comon way to get rich in Canada is to start your own business. This would not work if we were socialist.

        I think Canada is a great place to stay for the middle class as several things are free or cheap. On the other side, we still pay our cars at a higher price than in the US even if our dollar went up by 40%…. We love being fooled!

  12. Jason says

    Canadian here: Take these numbers with several large grains of salt. Make no mistake that the average Canadian household is in real trouble. I just recently discovered the blog “greaterfool.ca” and it pulls the curtain back, exposing the upcoming crisis there.

      • Jason says

        According to his blog, he’s an economist, has been in the government, has written several books and is a RE investor. I’m not sure of his current rent/own situation, but if he’s an investor, he must own property somewhere.

        Personally, I don’t have the background to contradict or confirm his exact findings. But from what I know about my friends and family, many of them are finding it hard to deal with the current prices given their salaries.

  13. Lauren @Cheapstudents.ca says

    There has been quite a bit of talk about the “housing bubble” bursting for a while now and I have to agree Canadian homes in large metropolitan cities are quite high. I live in Toronto and the cost of housing has gone from affordable to unaffordable for those in their early 20′s over the last 15 years or so. It’s great for the boomers who purchased back in the 1980′s and 90′s which is where a lot of that wealth comes from (they have probably paid off their mortgages by now as well). Especially in Vancouver and other parts of BC there are a lot of wealthy Asian immigrants buying up housing and then take out mortgages with low interest rates, which if I had the money to cover the cost of the house I would take the lower rate and invest instead. Also not having to worry about medical expenses for the most part definitely takes a lot of stress off retirement savings and lifestyle in general, or so I would image, I’m not quite there yet lol

  14. B says

    I think many of the savy Canadians are safe even if there is a housing bubble in Canada because many of them came to Arizona where I live and bought hundreds and in some cases thousands of single family homes for deep discounts in ’10-’11. Others bought commercial properties or land deals that they’ve already flipped at impressive multiples. So the Hong Kongese are buying up Canada and the Canadians are buying up Arizona.

    • Financial Samurai says

      Just need the Canadians and Hong Kongnese and the rest of the world to buy up San Francisco and makes the citizens of the best city in the world wealthier. Once you come out here, you’ll see why people don’t leave. Trust me!

      • B says

        I would need probably a ~$5m networth to live like I can in AZ with a ~$1m networth. To put things in perspective, I bought a home in a very nice gated neighborhood at the bottum of the market for $320k (put another $30k in to make it my ‘dream home’) and financed it at 2.5% (5 ARM but I can pay it off at the end of the 5 years if rates go up too much). My home is 15 minutes from everything fun and work. With all the left over money I save on housing I can afford to fly to Utah every other weekend to ski with my season pass. And in the summer there’s mountains and a beach within 2-4 hours and also plenty of lakes for waterskiing. And our tax rates are way lower, especially for enterpreneurs. That is why IMO Arizona is better than California!

        • Financial Samurai says

          Arizona is certainly great for those who don’t have as much money despite the long distance to water, indirect flights to the world, less food and arts diversity, no top 25 universities and so forth. But if you have the money, $5 million net worth based on your number, you move to California to live it up and figure out ways to shield your money from the IRS.

          There’s a reason why there’s a robust tourist industry along the California coast and not so much in Arizona. Nobody dreams of visiting Arizona, but it’s California Dreaming for many people all over.

  15. JayCeezy says

    Interesting data. Australian-by-way-of-England comedian Jim Jefferies has a great joke, “The U.S. is #27 in education. But #1 in confidence! You know what that means? You are breeding a bunch of stupid confident people! They make the worst employees!

    Hahahahaa!! Only the truth is funny! btw, FS, this caught my eye from your post…Americans say they are Canadians when they travel to some countries for a reason. On your recent journies, do you travel with a U.S. passport? Do you travel as an ‘American’? Or something other than American?

      • JayCeezy says

        Nice~! There is a book “The Great Reckoning” that describes possibilities for those inclined. It may cost a little money, but the one time you need an option you will pay any amount for a choice. Glad to see you have made plans to have choices! Maybe sometime you will explore that subject (or something similar) in a post. Continued success to you!

  16. Martin says

    I have no idea. The Canadian housing market hasn’t crashed. It’s easier to find a high paying government job.

    My condo has gone up in value like crazy over the past few years.

  17. adsoifj says

    You forgot an economy mostly run by oil, minerals and conservative banking. These are more stable industries than the ones in the USA. Canada suffers a bit of a dutch disease, being driven mostly by natural resource extraction.

  18. CashRebel says

    As a reasonably well informed American, I was flat out shocked by the wealth disparity with our neighbors to the north. Nicely researched post!

  19. Anne @ Unique Gifter says

    It’s been awhile since I saw the actual number, but something like 42% of Canadian tax payers don’t pay any income tax (fed or prov). Whatever that number Romney got in trouble for was, it’s really close to that. Top rates are high, yes, but if you’re in those brackets, you’re getting deductions for things like retirement savings. We don’t have the mortgage interest deduction, but there’s lots of others. Presumably we also require higer levels of retirement savings, iven our higher cost of living.
    At 27, our household net worth hasn’t hit the average, darn. Hopefully by the end of next year.
    The debt levels are troublesome, especially with the low interest rates we’ve got. It’s been mentioned, but the longest fixed term mortgage rates we can get are 5 yrs, though I think I may have once seen a 10 year.

    • Financial Samurai says

      Is the percent of non taxpayers that high as well? At least it’s 5% lower than us, but maybe it’s always going to be at these levels since it’s just demographics.

      At 27, you haven’t reached the average age of 35-40 yet so not to worry!

  20. Joe says

    This is not surprising to me, in the very least! I live outside of Buffalo, NY. Right on the US-Canadian border. Every weekend, Canadians come to our high end malls in DROVES. They’ve got money to spend!! I wish I could find the exact number, but Canadian spending accounts for a ridiculous amount of our sales tax revenues in this county.

  21. Ben says

    This information is actually a little misleading. Financial statisitcs are normally looked at on a median basis, so the middle value is taken not the average. Averages can be skewed heavily by very large numbers. So if 3 guys with $50k net worth were stacked in with Bill Gates and his $50 billion, the average number is enormous.

    All the points you make are valid but the net worth figure is fun with statistics.

    60% of the time it works every time, more or less.

    • Financial Samurai says

      Can you name a handful of Canadian billionaires? I can’t, but I can name 20 US billionaires in a heartbeat.

      The median household wealth is around $240,000 give or take. Not bad either way you slice it. Canadians are rich and I’m letting them pay the bill next!

  22. Michael @ The Student Loan Sherpa says

    How much do goods and services cost in Canada compared to the US? Even if we do adjust to equivalent dollars for our comparison, if a BAG of milk in Canada costs far more than what a gallon would here in the US are we really that much worse off?

  23. squasher55 says

    I am a dual citizen, now living in the USA. Something that has not been mentioned is the solidarity of Canadian pensions. Most Canadians are retiring around 55-56 with a rock solid pension, and can look forward to two more pensions in their 60′s: the CPP and the OAS.

    Also, education is much more uniform in Canada. You can move from province to province and get a similar solid education for your kids. University education does cost money, but nothing close to the sums here in the U. S. And finally, teachers in Canada make much more money than in the U. S. Right now in Toronto, a teacher with 10 years experience makes 98K. And when you retire around age 56, you get a nice pension of about 70 K per year.

    • Financial Samurai says

      Retiring at 50-55 with a 70k/year pension for life is a beautiful thing. Everybody should migrate to Canada, suck it up with the weather, teach for 30 years and live the dream if they are struggling for cash! We need more teachers.

      • mysticaltyger says

        A lot of public sector jobs have similar deals to the Toronto example (at least in California). Problem is, they’re not financially sustainable here, and I bet the same is true in Canada. I pay 14% of my gross salary toward my pension now…and my public sector employer now pays 59%. Yes, that’s right….my salary plus an additional 59% for the pension. That percentage over 100% for police and firefighters. When life expectancy is ~ 80, retiring at 56 is not sustainable.

  24. squasher55 says

    I plan to take a business trip to Vancouver to understand more about their $662,600 in average household net worth. Anybody have any tips on where to go and specific thoughts about the area?
    *****************
    Hey Sam….when in Vancouver, make sure you spend time near the two big Universities there: UBC and Simon Fraser U. Salaries at Canadian Universities have risen quickly in the last decade…so there is lots of money in those areas. Also, regarding net worth…many Canadians also own a cottage on a lake or on the ocean. This asset does not always show up in financial stats, but it does add to the net worth of the household, as many of these cottage properties are now worth 350 -400K, or more.

    • Financial Samurai says

      Will do mate. I plan on interviewing folks on their thoughts about the economy, where they go on vacation, the government, the future, how they see the US, and whether we are all so crazy for working so hard and trying to create new things when we are falling behind.

      • Ryan says

        Hey Sam – Just curious – who and how do you interview people? just you just strike up conversations with random people? Thanks

        • Financial Samurai says

          Yes. From the hotel concierge to the taxi driver to the concession stand vendor. I try and get a good swath of people in society to get various points of views.
          Students and veteran workers in finance and real estate are also on the list. It’s pretty easy to talk to people if you’re friendly.

  25. lucas says

    Looks like they are in trouble with that much debt, assets locked up in their houses, and housing in a serious bubble. I would likely be willing to pay slightly higher taxes at lower income levels to guarentee medical care though. The idea of most people contributing instead of not contributing is definitly appealing as well :-)

  26. mysticaltyger says

    *Social safety net.

    The problem with the social safety net in America is it’s used by so many not as a “net” but a hammock. The liberal politicians use it as a way to buy votes and to control people. They don’t really care if the money is well spent and they are not held accountable. Same deal with health care. Medicare/Medicaid costs have skyrocketed along with private health insurance….so the government is not doing a better job…just a better job at hiding the costs from citizens. That is the problem with America. It’s more corrupt. Not just business…but the government, too.

    * Debt in a bull market.

    Actually, this doesn’t sound like a good thing. If that debt bubble deflates, watch out. America’s per capita net worth was better before our debt bubble popped, too. Morningstar.com recently did an article on Canadian banks and they basically came to the conclusion that their balance sheets look almost as bad as the ones of bit American banks before the real estate bubble popped.

    * Smaller population. With a population of only 34 million in Canada, it’s much easier for the Central Government to govern and take care of its people.

    –On this, we agree. America is soooo big…it’s just a lot harder to manage all those social programs and actually do it well. Bigness also opens the door to more corruption (as already mentioned).

    * Lower military spend. When you’ve got America as your neighbor, you don’t have to spend as much on F-35 fighter jets to protect your country. ….It pays to be more peaceful.

    You’re contradicting yourself here. Canada can spend less on their military precisely BECAUSE NATO and other agreements allow them to free ride off our military spending. It’s easy to say “let’s just spend less on the military”…Yes, I get it…there is plenty of bloat in our military spending….but the reality is there are evil people and governments out there just looking for opportunities to strike. I guess that makes me sound like a paranoid nut job, but seriously the western countries have gotten so complacent…I don’t think it’s a healthy thing.

    * More open immigration policy.

    We probably agree here. America’s immigration policy is a disaster for citizens. We accept huge numbers of low skilled illegal immigrants who end up being a net drain on the tax base. And we probably don’t accept enough skilled immigrants. That’s the problem. It all goes back to our government’s corruption and ineptitude.

    *Natural resources.

    Natural resources are great but they don’t guarantee that they’ll be managed well. I think of petro states like Venezuela. Apparently, Canada is doing a better job.

    * Slightly higher tax rates at lower income levels.

    I wouldn’t necessarily object to higher taxes if we had less corruption and ineptitude, but that’s not the reality.

    Sometimes I just think the cold weather countries just do a better job of managing stuff in general. With the exception of Russia, it just seems like the cold weather countries have less corruption and get things done….government & citizens alike. The warmer the weather, the greater the corruption and ineptitude (with Australia as the exception here).

  27. Jane Savers @ Solving The Money Puzzle says

    The social safety net means that if you have a life emergency you don’t lose your home and end up with a mountain of health care debt.

    If you had to have serious surgery or treatments that left you temporarily unable to work you would receive a monthly cheque to pay for some of your living expenses and your health care would be free. You may be down for a year or two but you can climb back up because there is no mountain of health care debt or massive charges on your credit card because you had to charge food.

    The cost of housing looks high but that is because of the overpriced Vancouver and Toronto markets. You can get a basic house in my small city for $200,00 and if you were further away from Toronto it would be cheaper still.

    • Financial Samurai says

      I think the fact you guys have disaster insurance is huge!

      If we had that in the US, I think there would be less inequality and more fulfilled people not afraid to go after their dreams.

  28. Bobbie Glass says

    Wealth in Australia, as in other countries, is very unequally distributed, and indeed much more so than income. The wealthiest 10 per cent of households have a mean net worth of $1.56 million, with the median being $1.19 million. The wealthiest 5 per cent actually average $2.15 million, with a median of $1.65 million. To be precise, 7.0 per cent of households have net wealth over $1 million. One can be sure, though, that most of them would not regard themselves as millionaires.

  29. Lena says

    Canadian here, and here’s my thoughts on building wealth in Canada:

    Programs from cradle to grave:
    1. Mat leave of up to 1 year: the government pays a part of your salary (up to $400/week) and your employer tops it up for half of the year. Fathers can take paternity as well (though for a much shorter period of time).

    2. Baby bonus of $100/month

    3. Good public schools so private school is not a necessity. Daycare is expensive, though, up to $1000/month except in Quebec where it is heavily subsidized.

    4. RESP – subsidized child education savings for college (ie. you put in $2000/yr, the govt will give you $400 per year, to a max of $50 000/plan)

    5. university/college costs: low compared to US eg. undergrad $5000-6000/yr, med school $15 000/yr. Student loans are not large so can be paid back in a reasonable amount of time. MBA still expensive though – $50 000 – $90 000/year depending on school (employer may pick up the tab)

    6. high middle class salaries: in Ontario, we have the “Sunshine” list – public workers salary disclosure of those making >$100 000. It is populated with police, teachers, TTC (Toronto public transit) workers, nurses, paramedics, social workers etc. Minimum wage is $10.25.

    7. savings programs: retirement (RRSP) and TFSA (tax-free savings programs). RRSP is retirement saving we can deduct from income (so we pay less tax), TFSA allows our savings to grow tax-free (max contribution currently $5500/year but limits may rise). The Globe and Mail had a contest and the winner had a TFSA of $100 000 (this program is only 5 yrs old so he only contributed about $25 grand. The rest was tax-free growth).

    8. stable housing market – new mortgage rules means 20% down, max 25 yr mortgage (so rare for underwater homes). Banks require documentation for loans (no liars loans).

    9. stable pensions (for public workers at least) – my pension is 104% funded. 401K-style pensions (defined contribution) not as common as US. Pension 1 can be taken at 55 yrs + a bridge supplement, Pension 2 (CPP – Canada pension plan) can be taken at 60-65 yrs, then Old Age Security (OAS) can be taken at 67yrs.

    10. healthcare (throughout life) + drugs are covered (at age 65yrs but you can apply for drug coverage earlier if you are in financial hardship). Govt sets drug prices to keep prices down.

    11. many programs for those down on their luck – welfare, unemployment, disability, subsidized housing for mentally ill. We don’t have food stamps but a food allowance can be applied for if you are on welfare.

    12. immigration – Canada cherry picks its immigrants. But if you get here, you can sponsor your parents and they are also eligible for a pension after residing here for 10 years (even if they never contributed).

    13. job security through unions, strong labour laws etc.

    We don’t have the extremes of wealth or poverty. We are comfortable.

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