That’s the question of the day. Earning $196K per year is a nice chunk of change and definitely puts you in the so-called One Per Cent—the top one per cent of income earners in Canada according to the latest Statistics Canada numbers. To break down the $196,000 annual income further, it works out to roughly $10,400 a month, after taxes.
Earning $10,400 clean after taxes are pretty inviting numbers. Reality is different for most of us though. Majority of us are nowhere near in earning of the top one percent, even when combining our income with our spouse, if you have one.
So, why am I talking about earning $196,000?
Good question and my answer to that is simple – I’m using this article as a bit of a bitch session. Call me whatever you want, but we’re all entitled to our opinions.
Recently (as in last night) I read a pretty good feature article in Toronto Life called; Almost Rich. The long and short of the article is talking about how it’s expensive to live in the city. And I agree, it is expensive to live in the city, especially if you’re living in a large metropolitan city such as Toronto, Vancouver or Calgary. Living the precious downtown life doesn’t come cheap by any means.
Despite a well written article, the meaning behind it nearly made me barf. I’m unsure if that was the intention of the authors, but if it was the case, kudos to you for nearly succeeding. The article talks about how expensive it is to live in the city by taking five top one percent income earning families, and sharing their stories of how tough it is every month to live in Toronto on $196K.
I hope you understand now what nearly made me barf. I do apologize for being so graphic.
I’ve always admired successful people, and their work ethic to continuously strive for a better life. These same successful people also pull in a good amount of money each month and shouldn’t feel guilty for earning $196k . However, this article is a poor attempt at soothing the feelings of the middle class people.
According to statistics from 2007, Canada’s top one per cent of earners were at $169,000 a year, compared to our south of the border neighbors who were at a “not so surprising” $400,000. Whats interesting though is that between 1980 and 2005 the earnings of Canada’s bottom income group declined by 20.6 per cent, all while top incomes rose by 16.4 per cent.
So, where do I stand?
According to a system on Macleans Magazine called – Rank Your Income , which ranks your income compared to the rest of Canada, my income ranks in the top 14.05% in Canada.
Okay, now that I figured that out, let me get back to my bitching session.
I do agree that living downtown Toronto is not cheap by any means. And that’s probably the only thing that I agree with in the article. Looking a little deeper, this article clearly depicts five families incurring massive amounts of consumer debt due to poor spending habits and a sense of entitlement.
Consumerism is the universal religion in North America, and it’s not just the upper class that buys into it. For us it’s just harder to poke fun at someone splurging beyond their means at a regular grocery store than at the new Loblaw’s (old Maple Leafs Gardens) store, where food prices are through the roof.
Living in the city and splurging will be tough for anyone, including those in the one percent bracket. So, I put together a quick list of splurging and broke it down by each family:
Scenario # 1 – Young family, two kids.
Wine – $400-$500/month – Sounds like a lot of wine to me. That works out $16.60/bottle per day in a thirty day month. One bottle per dinner I suppose? Either way it’s way too much. Quote: “We try to get the better $11 bottles, but they go fast“.
Cleaning Lady – $160/month – I suppose momma doesn’t like to get her hands dirty.
RRSP – $0 - Are you surprised? Quote: “We live month to month. When we have money left over, we go out.”
Scenario # 2 – Senior Couple
This is the only family with some sensible spending. It’s easy to see, since they’re living off of investments.
Gas – $150/month – Gas on Mercedes – Quote: “We buy a new Mercedes every three years; it’s our big indulgence, “We always pay cash. This one was $80,000.”
Scenario # 3 – Single Dude
Groceries & Eating Out – $1,400/month – Quote: “I often order pasta at Grazie or, if I’m in a celebratory mood, North 44°. I buy better cheese and other exotic ingredients at Pusateri’s.”
Too big of a monthly food budget for one person? I think so.
Wine – $800/month – Quote: “I’ll spend anywhere from $15 on a Rhône to $100 on an Amarone, and I open a bottle almost every night.”
Damn that’s a lot of wine.
Quote of Day: “He tries to stay debt-free, but occasionally he splurges on travel or a big-ticket toy, like the $7,500 Royal Enfield motorcycle he bought last year. “People think I make a lot of money,”, “but I lose so much of it in tax.”
Scenario # 4 – Family of 3 that immigrated to Canada
$1,000/year on furniture – How much furniture in a year does one really need?
$3,000/year on clothing- Quote: “I don’t buy as many new outfits as I used to, since I have several nice suits I haven’t worn more than once”
Family# 5 – Family of Four
$1,000/month in clothing – Sounds a lot. How much clothes does one possibly need? Quote: “I drive across the border to Buffalo all the time on business” , “I shop a lot when I’m over there, mostly at stores like Guess”
$400/month on Toiletries – That’s $4,800 per year on toiletries alone.
Not all is doomed though:
$,4000/year – Kids RESPs
$20,000year – RRSPs & Stocks
$1,700/year – Donations
The city is an expensive place to live. Toronto and Vancouver ranking the highest in terms of how expensive it’s to live in the city in Canada. The problem isn’t so much how expensive it is to live in the city, but rather the people who don’t understand living within their means. I don’t begrudge anyone for a nice home, expensive car and fancy furniture, but if they think that living in the moment is more important than saving for the future, that is not the fault of an expensive city life.
Regardless of what your household income is you should always live within your means.What happened to paying off your mortgage aggressively or topping up your RRSPs? I guess according to this article and people part of it, living in the moment is more important than preparing for retirement.
Some of these numbers are truly mind boggling. $400 a month at Shoppers? $800 a month on wine? $3000 a month on clothes? The problem is not Toronto, Vancouver or any other expensive city in Canada, the problem is and being too ignorant to budgeting and knowing the difference between needs and wants.
Using excuses such as; “A lot of my money goes to taxes” is just self pity. It’s no surprise to me that we hit a recession in 2008 and continue to reel from a near collapse. I enjoy reading Toronto Life, but articles like this make me wonder who the magazine is catered towards, the one per cent or the remaining ninety nine?
I’m approaching my dirty thirties. I make less money than any one of these examples in the article, and I’m still happy with my income. I own a home, have a car and still enjoy nice clothes from Harry Rosen. I have a paid off credit card and continue to build up my savings. I lead a normal average lifestyle. These people are out of control.
I’ve always said this; Rich will never be rich enough.
PS: I highly advise you to read the full article. A worthy read for sure. Click here to read Almost Rich.