Life on a Budget: How Canadians are Coping with Financial Stress in 2025

What’s stressing Canadians out the most in 2025? Work? Relationships? Health? For 42% of people, the answer is money.

While work, relationships, and health affect our well-being, the 2025 Financial Stress Index reveals that money is the top cause of stress for Canadians. In 2021, only 28% Canadians identified finances as their top stressor; by 2025, this gradually increased to 42%, surpassing concerns about health, relationships, and work.

According to RemitBee’s 2025 poll, housing costs remain the top financial stressor for Canadians, with 44% of respondents naming rent or mortgage as their biggest worry. Debt and savings tie for second at 22% each, while groceries, though essential, account for only 11% of reported financial stress. This highlights how fixed housing expenses are a primary concern for Canadians.

Financial stress affects family life, mental health, and long-term security. With housing costs soaring, groceries consuming a larger portion of paychecks, and debt accumulating, Canadians are finding it increasingly difficult to feel in control of their finances.

Housing Costs: Rent and Mortgages

Here’s a look at the average rent for a one-bedroom property in Canada:

Table 2. Average Rent for 1-Bedroom in Major Canadian Cities (2020–2025)

Sources: Apartments.com, Statistics Canada, Ontario Housing Market, Toronto Rentals

The rent table above shows that housing is the sharpest edge of Canadian’s financial stress in 2025. A one-bedroom in Canada’s largest cities now averages over $2,500 a month, with Toronto, Vancouver, and even mid-sized markets like Halifax seeing record highs. In Montréal and Sherbrooke, the percentage increases have nearly doubled in just five years. Rents started to decrease in 2025, however, they are still way up compared to the average rental prices in 2020.

The CMHC 2025 Mid-Year Rental Market Update shows some relief on the surface: advertised rents in Toronto, Vancouver, Calgary, and Halifax fell 2%–8% year-over-year in early 2025 as new supply entered the market. But affordability hasn’t improved much. Rents for occupied units continue to rise, driven by “turnover rents” when apartments change hands. CMHC also reports that 88% of new rental starts in 2024 were backed by federal programs, and in high-supply markets, landlords are offering incentives like free rent or moving credits to attract tenants.

For homeowners, mortgage renewals are the other source of strain. Many who locked in five-year fixed rates around 2% in 2020 now face renewals at 4%. TD Economics estimates that about 40% of renewals through 2026 fall into this “payment shock” group. Even as rates ease for some variable and shorter-term borrowers, the share of income going toward mortgages is projected to stay elevated at ~7.8% through 2026, keeping budgets under pressure.

Behind these numbers are hard choices. Young families are relocating farther from city centers, trading long commutes for lower rent. Seniors on fixed incomes are downsizing or even moving in with relatives, while some newcomers are sharing cramped housing to make ends meet.

Also read: Here’s How to Secure Your First Mortgage in Canada as an Immigrant

Groceries and Inflation

Ready to go shopping in your grocery store? How much is your budget? The latest Canada Food Price Report (2023) shows that an average family of four in Canada will spend around $16,288.41 per year (or $1,357.37 per month) on food. This rough estimate is not far from what Canadians are saying on Reddit, stating that they spend around $250 for one, $800 for two, and up to $1,200 for a family of four. These individuals claim to live in Ontario, Montreal, Yellowknife, and British Columbia.

You may retain your budget for the last five years; however, you might realize that the number of items you can buy with that set amount declines each year. Here’s a look at the price increase of everyday grocery items in Canada:

Table 3. Grocery Price Increases in Canada (2020–2025)

Source: Statistics Canada

For Canadian households, the grocery bill has become one of the clearest signs of inflation’s bite. Food costs have increased by 20% to 40% since 2020, with staples such as beef, fresh vegetables, and coffee experiencing some of the sharpest price rises.

The result? Families are making tough trade-offs, such as buying less meat, skipping fresh produce, or switching to lower-quality options. Some are relying on food banks and community fridges, shopping at discount grocers and warehouse clubs, using couponing apps and grocery rebate programs, and turning to gig work to offset food bills. On the same Reddit thread, one commenter noted: “We have normalized choices like cutting out fresh fruits and vegetables, lining up at foodbanks, and choosing between food or other basic living needs.”

Debt Repayment

The debt-to-income ratio (DTI) is a financial measure in Canada that helps individuals and lenders understand how much of a person’s monthly income is allocated to paying off debts. In early 2025, Statistics Canada reported a national average of about 174%, meaning Canadians owed nearly $1.74 for every dollar of disposable income. While slightly below the record high of 179% seen in 2017, the figure remains elevated and underscores the persistent financial strain many households face.

Many Canadian households owe significantly more than they earn, leaving them with little room to manage unexpected expenses. With a significant portion of their income tied up in debt payments, families often struggle to save for retirement or set aside funds for emergencies. This heavy debt burden also makes the broader economy fragile, as any rise in unemployment or slowdown in wage increase could leave many households unable to meet their obligations. To prioritize debt repayment, Canadians strive to reduce their expenses.

Saving for the Future

Table 4. Retirement Savings Outlook in Canada (2025)

Source: Fidelity Canada 2025 Retirement Report

According to FP Canada’s Financial Stress Index, nearly 60% of Canadians worry they won’t have enough saved for retirement, and many say they are unable to prioritize savings because everyday expenses claim so much of their income. In such a climate, retirement planning often feels like a luxury reserved for those with financial breathing room.

With such pressure, many delay contributing to TFSAs, RRSPs, or employer pension plans. Some turn to micro-savings tools (roundups, small recurring transfers) or invest in small amounts via robo-advisors. Others earmark side hustle or gig income for future savings goals.

Also read: Understanding Your Maximum Contribution Limits: TFSA, FHSA, RRSP

Supporting Family Abroad

Many newcomers and long-time immigrants in Canada are supporting their families abroad to help cover essentials like food, education, and medical bills for loved ones overseas. Still, they can create significant pressure on household budgets. The money they send home often competes with rent, groceries, and debt repayments. The destinations are concentrated mainly in countries like India, the Philippines, and China, reflecting Canada’s immigrant communities.

Financial support to family abroad is a source of pride and a financial strain for many Canadian households. According to the Bank of Canada and recent reports, immigrants sent more than $12 billion abroad in 2023, a figure that has grown by almost 50% since 2013. By comparison, Canada received only about $1.2 billion in incoming remittances, making the country a net exporter of money. In fact, relative to GDP, Canada now sends 33% more remittances than the U.S., placing it among the world’s top 15 remittance-sending nations.

Many immigrant households in Canada are managing two economies simultaneously: their lives here and the survival of family members abroad. To cope, immigrants are turning to lower-fee online transfer services, taking on extra shifts, or reducing their own household spending to preserve these payments.

Coping Through Extra Income: Gig Economy and Side Hustles

For many Canadians, especially younger workers and immigrants, the gig economy is a financial necessity. A recent H&R Block Canada survey found that 7.4 million people (nearly one in four Canadians) participate in the gig economy, and 90% of them do so as a side hustle while keeping a primary job. This marks an 85% increase in the number of Canadians doing gig work compared to three years prior, primarily driven by rising everyday expenses.

For skilled immigrants, the offer pays more than extra money. It provides them with Canadian work experience and builds professional networks while bypassing hiring barriers associated with credential recognition.

Some of the most common and in-demand side jobs in 2025 include:

• Food delivery and ride-hailing (DoorDash, Uber Eats, Uber, Lyft)
• Freelance digital work (graphic design, writing, coding, social media management via platforms like Upwork or Fiverr)
• Tutoring and teaching (academic support, ESL tutoring, or skill-based lessons online)
• E-commerce and reselling (selling products on Facebook Marketplace, Kijiji, Etsy, or Shopify)
• Content creation (YouTube, TikTok, or podcasting with monetization opportunities)
• Pet care and home services (dog walking, house sitting, handyman work via Rover or TaskRabbit)
• Affiliate marketing and referral programs for different companies such as RemitBee and Silver Gold Bull

Surprisingly, gig work delivers less income than workers expect. A 2024 Centre for Future Work report estimated that 927,000 Canadians, about 3.3% of the workforce rely on digital platforms, but much of their time goes unpaid. Ride-share and delivery drivers often spend nearly half their time unpaid, as platforms only pay per order, dragging adequate wages well below the minimum. Ride-hail gig workers in Toronto earn around $6.37 an hour after expenses, which is comparatively below the minimum wage of $16.55 in Ontario. As economist Jim Stanford argues, “A powerful way to promote productivity … is to raise the price of labour — starting by paying platform workers at least minimum wage for the time they sit idly waiting for another order.”

Taxes are also a hurdle for gig workers. Nearly 30% considered not reporting income until learning that platforms now share earnings with the CRA. Depending on their income, workers may receive a T4A or file via Form T2125, track their records for six years, and if they earn over $30,000, register for GST/HST and contribute to CPP/QPP. With gig work accounting for 24% of income, failing to comply with these rules can result in costly penalties.

Beyond the Numbers: Mental Health and Family Impact

Money worries are taking a visible toll on Canadians’ mental health and family relationships. The Ipsos 2023 poll showed that about 40% of Canadians say money worries keep them up at night, while nearly half (48%) report that financial concerns take a toll on their mental health. Moreover, 43% admit that financial stress spills over into their personal relationships, creating additional strain at home.

Many factors contributing to financial stress are often beyond an individual’s control. However, here are simple ways to improve their financial well-being:

• Track your spending, create a budget, and follow it
• Set realistic financial goals
• Build your emergency fund, even if slowly
• Use free or affordable financial education resources
• Discuss your finances openly with your family, trusted friends, or professionals

Conclusion

Easing the weight of financial stress in Canada cannot be left to individuals alone. While households work hard to budget, cut costs, and find new sources of income, recovery requires collective effort. Employers can play a role by offering fair wages, predictable hours, and benefits that support long-term stability. Governments can strengthen safety nets, invest in affordable housing, and ensure financial systems are fair and transparent. At the same time, individuals can continue to develop healthy financial habits, including saving and managing debt, as well as seeking support when needed.

When people, employers, and policymakers move in the same direction, the burden of money worries becomes lighter. Financial stress may never completely disappear, but with shared responsibility, it can be managed in ways that protect both household well-being and the strength of the broader economy.