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Here’s How Party Leaders Can Really Help the “Middle Class”

During the 2015 Canadian federal election, party leaders spent a lot of time speaking to the country’s “middle class”. It’s a phrase uttered so often – in campaign speeches, ads, and debates – that it’s almost become a cliché.

Who are the middle class?

By definition, they’re the group whose income is between 75 and 125 percent of the median for a country. In reality, they’re working families – usually homeowners with children, a car, and a mortgage. The busy lives led by the middle class means they’re also the spending class, the drivers of an economy cited as the top ballet box issue during this election.

Politicians recognize this; many base their economic policy on what’s good for the middle class. Unfortunately, much of the solutions we heard in October were based on increased spending like raised wages, tax cuts, and accessibility to loans, all pushing families to break out their wallets. While helping the economy, this may be missing the real issue facing Canadians.

What’s the real issue?

Lately, all this spending has Canada’s middle class suffering a growing debt crisis. Household debt has continued to rise as 2015 has gone on, recently making its biggest jump since 2011 from $1.63 in debt for every dollar earned to nearly $1.65.

Spending has turned to borrowing as credit cards and interest-laden loans (like mortgages) are taken out to make purchases. Home-owners have stretched their budget with mortgage payments, as one in six Canadians are now saying they couldn’t withstand a $500 increase in monthly payments.

There are even parallels between Canada’s debt picture and the one experienced by the United States leading up to the 2008 housing crisis. While Canada’s stronger loan underwriting provides a safety net, this is still a concerning trend. Are middle class families becoming too comfortable taking on debt?

How can politicians really help the middle class?

While ensuring that consumers continue to spend is an important part of oiling economic gears, party leaders also need to ensure that Canadians know how to avoid bad forms of debt and where to get help when it piles up.

The government has already addressed this, in fact, with the Financial Consumer Agency of Canada’s (FCAC) National Strategy for Financial Literacy. The initiative seeks to improve financial knowledge, skills and confidence through a number of tools and resources for all age groups – including working families. It’s a valuable piece of work from the government, but it’s been breezed over on the campaign trail.

For families, FCAC provides lots to read on financial preparation for life milestones: owning a home, making mortgage payments, having children, and enjoying a long, safe retirement. There’s also information on how to deal with debt, including resources on where to find a trustee in your area.

Politicians need to promote these important tools, especially to engage those across Canada, including Sault Ste. Marie, with debt problems. In future elections, the middle class will again be the focus. It would be ideal to see some messages about financial literacy worked in.

Are you part of a working family dealing with household debt? Looking for more from your politicians? Join the conversation on social media by using the hashtags #CountMeInCA and #BDOdebthelp.



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