1.6.4.4 Disposable Income
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Not all your personal income is available for you to spend. In Canada, personal income is subject to government deductions (taxes). What remains after deductions is
called disposable income or take home pay.
Amounts of disposable income help economists forecast retail sales, housing purchases, and other types of spending.
Saving a portion of one's disposable income every month is a wise idea. One recommendation is to save enough money to cover three months living expenses including rent or mortgage payments. This money will help bridge any gaps between times of employment, for example.
Unfortunately, Canadians aren't saving enough. In 2017, the Bank of Canada issued a warning about the rising levels of household debt. The average Canadian household debt in 2017 was 163% of the household disposable income - a record high.
DISPOSABLE INCOME = PERSONAL INCOME - TAX DEDUCTIONS
Amounts of disposable income help economists forecast retail sales, housing purchases, and other types of spending.
Saving a portion of one's disposable income every month is a wise idea. One recommendation is to save enough money to cover three months living expenses including rent or mortgage payments. This money will help bridge any gaps between times of employment, for example.
Unfortunately, Canadians aren't saving enough. In 2017, the Bank of Canada issued a warning about the rising levels of household debt. The average Canadian household debt in 2017 was 163% of the household disposable income - a record high.