Families on the financial edge
Due to the scarcity of wealth data, very few studies have examined
the wealth of low-income families in Canada. This study asks whether
low-income families can use financial assets ( all assets except
a house or business) to absorb the shock of economic stresses, such
as job loss, sickness or divorce? It also asks if families that
are classified as being in "straightened circumstances"
by income data have substantial wealth? It has long been agreed
that wealth is a better measure of "straightened circumstances"
than income flows. This study examines this issue using data from
the Assets and Debts Survey of 1984 and the Survey of Financial
Security of 1999.
As measured by median financial wealth, the median low-income family
had only $300 to face a financial emergency in 1999. Some 75% of
low-income families had less than $6,000 in financial assets. As
a benchmark, we turn to the median financial wealth of all Canadian
families, which was $14,900 in 1999. Sixteen percent of low-income
families had financial assets above this median, and 10% had more
than $32,000 in these financial assets. Many of these wealthier
families had a major income recipient aged 45 and older, who would
have had a fairly significant period of time to build up their savings.
A few low-income families (classified by income flows) had significant
financial assets, but their numbers are not large.
The median net worth of all Canadian families increased 14% between
1984 and 1999, and median financial wealth increased 40%. However,
the study found that at the end of the 1990s, the vast majority
of low-income families had no more financial assets than did their
counterparts in the mid-1980s. Specifically, it showed that neither
the median net worth nor the median financial wealth of low-income
families increased between 1984 and 1999. The wealth gap between
low-income families and other families widened during this period.
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