Canadian households are opening their wallets wider than they have in years, but for the vast majority of families, that money isn’t coming from what they earn it’s coming from what they owe, what they’ve saved, or what their investments are worth, according to a sweeping new analysis of household finances.
The report, published July 9 by the Boston Consulting Group, found that household spending rose approximately 2 percent in the first quarter of 2026. But beneath that headline figure lies a more uncomfortable truth: only the country’s top earners can genuinely afford what they’re spending.
Looking back over the period from 2021 to 2025, BCG tracked how much spending rose across different income groups and how much of that increase was actually supported by income growth.
The top 20 percent of earners increased their spending by 24 percent over that five-year stretch. Their disposable income, meanwhile, grew fast enough to cover 106 percent of that increase meaning the richest Canadians weren’t just keeping up; they had room to spare.
The picture looks starkly different for everyone else.
The middle 60 percent of earners saw spending climb 19 percent, but their income growth only covered 57 cents of every new dollar they spent. The bottom 20 percent fared worst of all: spending jumped 27 percent, while income crept up just 3 percent. Nearly the entire increase in their spending came from somewhere other than their earnings.
“With income up by just 3 percent, the rest came from somewhere other than their paycheques,” the report stated plainly.
Where is the money coming from? In large part, from savings that are being drawn down at an alarming rate.
Between 2021 and 2025, the wealthiest fifth of Canadian households actually managed to save more, adding roughly $16,000 per household annually to their nest eggs. For everyone below them, the trajectory ran in the opposite direction.
Middle-income households, which had been modest but consistent savers heading into 2021, have since watched their annual savings fall by approximately $7,000 per household. Lower-income households have seen their savings erode even more sharply by around $15,000 per household each year.
That trend is showing no sign of reversing. BCG’s Global Consumer Radar Survey found that 41 percent of Canadians say they either don’t expect to save anything over the next six months or expect to save less than they do now.
Savings drawdowns are only part of the story. Credit has taken on an increasingly prominent role in propping up household spending particularly for middle-income Canadians.
The middle 60 percent of earners saw their total liabilities rise 22 percent over the five-year period, the fastest growth of any income group. Much of their wealth is tied up in their homes and other assets they can’t easily liquidate, leaving them exposed and increasingly reliant on borrowing to meet day-to-day financial demands.
For higher-income households, gains in equity markets have helped sustain spending even where income growth has fallen short. The top 80 percent of households saw their financial assets grow between 13 and 26 percent over the period gains that either bolstered their confidence to keep spending or gave them additional collateral to borrow against.
The lowest-income households, by contrast, have had to sell assets just to cover their expenses. Their total assets declined by 2 percent over the same period.
The nature of higher spending is also worth examining. Much of the increase hasn’t gone toward buying more things it’s gone toward the cost of financial services tied to borrowing and asset-related fees. Spending on everyday essentials has held flat, and purchases of durable goods cars, furniture, appliances are actually falling.
BCG acknowledges that the composition of the lowest-income group complicates a simple interpretation of the data. Retirees, students, and people experiencing temporary unemployment may have low current income but still be able to spend by tapping into savings, family support networks, or credit.
The findings carry implications that extend beyond individual household balance sheets.
As middle-income Canadians grow more stretched, BCG expects they will become more selective in their spending more deliberate, more price-conscious, and more likely to pull back when conditions shift. That shift could make overall consumer demand increasingly sensitive to interest rate movements and to how much additional debt Canadian households are willing and able to take on.
The report’s conclusions align closely with data published by Statistics Canada in April, which found that net saving worsened in 2025 for lower-income households as their spending rose. That report also documented a widening wealth gap, with the richest Canadians pulling further ahead on the strength of strong equity market returns.
For the majority of Canadian families, the spending boom of recent years has come at a cost one that is quietly accumulating in the form of depleted savings accounts and growing debt loads, even as their financial lives appear, on the surface, to be humming along.
