Alberta cities rank highest for household financial health

Out of Canada’s 35 largest cities (with populations over 100,000), Calgary and Edmonton came out on top in a new report that assesses average income, debt and asset levels, as well as poverty levels.

The report, released by Prosper Canada and Canadian Council on Social Development, is part of a research initiative sponsored by the Investment Industry Regulatory Organization of Canada called Urban Spotlight: Neighbourhood Financial Health Index findings for Canada’s cities.

The findings are based on data from the Neighbourhood Financial Health Index (NFHI), which “provides a more comprehensive and accurate picture of household financial health than income statistics alone,” according to a release. A distribution of financial health and vulnerability in different communities can be found on the NFHI Community Financial Health Maps.

Overall, 20 of the Census Metropolitan Areas (CMAs) in the report posted above-average scores for household financial health when compared to Canada overall. Fifteen cities fell below the national average. 

Western cities had above-average levels of financial health, with Calgary and Edmonton topping the index by a wide margin, while cities in Quebec and the Maritimes tended to score below the average. 

Three cities in Quebec ranked the lowest on the NFHI scale (Saguenay, Sherbrooke and Trois Rivières) and the four Maritime cities (Moncton, Halifax, St. John’s and Saint John) were also in the bottom half of the index. 

Income alone does not determine financial health

The NFHI includes asset and debt indicators, along with income and neighbourhood poverty, to attempt to provide a more balanced assessment of financial health.

The index takes into consideration a city’s income rating, but also encompasses the ability of individuals and families to balance their spending and saving, use credit productively and build savings and assets for the future.  

On the West Coast, Victoria ranked 16th out of the 35 CMAs studied with respect to income, but fifth on the NFHI index thanks to high asset values and comparatively low levels of poverty.  

The Maritime city of St. John’s ranked ninth overall with respect to income, but 22nd on the NFHI index due to low asset levels and high levels of debt. 

Financial strengths and vulnerabilities accumulate in certain cities

While the financial health of Canadian cities varied significantly, there were also some striking similarities among certain groups of cities. 

Cities in Quebec, as well as Halifax and, in Ontario, Peterborough, Thunder Bay and Windsor, were characterized as “living challenged.” Income and assets were lower in these communities, but low debt levels made households “more resilient” to potential interest rate hikes. Similar cities with lower poverty levels were described as “living constrained.” These included Moncton and Saint John in New Brunswick, and Belleville, Brantford and St. Catherines-Niagara in Ontario. 

In contrast, some cities were categorized as “living large,” with high income and high wealth, but also high debt relative to the national average. Toronto and Vancouver were the most extreme examples, but Guelph, Ont., Calgary and Kelowna also fell into this category. 

Additionally cities with good average income but high debt and low savings were characterized as “living on the edge.” These cities — which included St. John’s, Barrie, Ont., Oshawa, Ont.,and Abbotsford-Mission, B.C. — were financially stable, but highly vulnerable to interest rate increases and economic downturns.