Toronto: Cost of Living & Cost of Thriving

BearMoney Team

BearMoney Team

BearMoney is the balanced finance blog for new and old Canadians alike. We are a team of people living international that research, write, and share

Toronto Skyline

Cost of Living As A Concept

Everywhere you turn today you can’t help but read about record high inflation. Everything from donuts to socks is more expensive and in many cases harder to come by. Even people who are expert savers that waste very little are feeling the pinch. This is the end result of the reckless monetary policy of Western governments since 2008.

While central banks are trying their best to ‘slowly and safely’ crash the economy using interest rate rises there are many places that hopped on the inflation train a lot earlier. In Toronto, Canada’s biggest city, there has been a housing crisis for over a decade. The cost of living there is so astronomical it’s incredibly difficult to rationalize living there in 2022.

The average one bedroom condo costs $1.1 Million. No only that but up until recent rate rises people were blind bidding with zero conditions. That meant people were happily spending over 1 million dollars to buy a house that might collapse in on itself. Clearly these people need to adopt a healthy money mindset.

Despite all this, Toronto still has a lot to offer and many people love living there. It is the economic and cultural heart of Canada after all. If you want to be one of these people though, what do you need to live there, and better yet thrive there? Let’s see.

Calculator and spreadsheet

What is Living Wage (LW)

You’ve probably heard this term quite often in the last few years, especially in countries where wage growth has not kept pace with inflation. It’s fast becoming a conservative bogeyman and a centrist rallying cry. 

At its most basic a living wage is the amount of money that a family of 2 adults and 2 children needs to cover reasonable costs. This includes daycare, transportation, food, rent, clothing, medical expenses and other. It also includes tax rebates and net taxes.

It is really a true ‘minimum wage’ that allows people to live with dignity in the modern economy. You can find more information about the methodology here

In the GTA the highest living wage is 20.75 an hour or roughly 5.25 or 33.7% higher than the federal minimum wage.

For the sample family this is a whopping $75,530 gross per annum. This doesn’t seem particularly onerous until you realize that to have a living wage in the GTA you need to be in the top 25% of income earning households AND receive government subsidies for things like childcare.

This is a pretty significant amount especially when you consider the average living wage for Calgary and Edmonton is 18.35 an hour or $66,794. Although funnily enough the living wage for the ski town of Canmore, Alberta is an insane $136,136 a year (only the ski-obsessed need apply).

So what about if you want to be financially stable and build a middle class amount of wealth over the course of your working life? It’s clear the living wage doesn’t do this, for that you need the ‘thriving wage’

Job Market

What is Thriving Wage (TW)

Much like the living wage the ‘thriving wage’ is a measure of economic well being that operates above the minimum pay that an adult worker can receive. It is designed to allow people some reasonable extra spending like a vacation once or year or a car younger than 15 years old while also allowing them to save up their 6MCS nestegg and invest for their future (check out our retirement calculator for more info). 

It is not about any sort of luxury like most talking heads would have you believe but rather it is about existing a bit more above the baseline set by the living wage. This is a difficult and subjective number to quantify but for our living wage family to thrive they need to earn at least an extra $20,000 per year gross (and more if they want to own their own home someday).

So that’s $95,530 gross household income a year in Toronto. That’s the top 15% in household income for Canada. That’s just to live a relatively comfortable life. If you ever needed evidence just how out of control cost of living has gotten due to mismanagement of the economy, try finding 2 jobs paying $27 as a new immigrant or underkilled person. You’re likely to fall about $8-10 short.

If that’s the benchmark then what is the real cost of living in Toronto for the average couple? Let’s have a look at the key expense categories of the ‘Thriving Wage’ and see.

Cost of Housing & Utilities

Housing in the GTA is a massive cost. The housing market in Canada is a giant money laundering operation and wealth transfer scam that’s been running for about a decade. This means it is intentionally being kept terrible by people with money invested in the status quo.

Politics aside this has led several popular areas to be ridiculously undersupplied in affordable housing. Assuming that our Thriving Family aren’t going to share a house with others, the average cost of their home in a decent area is going to be about $2,800 per month in rent and about $250-300 in utilities for a total cost of $3,200 or 35-40% of their gross income.

This is not going to rent them a fancy apartment in a downtown area. It is more likely that a relatively spacious condo in a working class/middle class suburb (for example Harwood or Guildwood) is their best bet. Even still this is a huge % of your gross salary to spend on housing costs that will definitely eat into the potential for saving and wealth creation.

This is not to mention the fact that as this is a 4 person household the family will likely have to get a good 3-bedroom solution as the children get older.

Running Total: $3,200 40% of Gross income

Cost of Food

Food costs have been going through the roof recently in both the USA and Canada. Grocery staples have increased in price due to inflation and also extra % margins added by unscrupulous grocery stores.

The average statistics for Canadian grocery spending are currently hopelessly outdated and even then the numbers seems a bit questionable. Generally speaking though it seems that the a thriving family of 4 will spend about $1,000 a month on groceries.

This is somewhere between moderate and liberal spending estimates in both the USA and Canada. It is likely that this number will be as high as $1,200 by years end with current inflation trends.

Of course you can always be frugal with your groceries and eating nothing but eating rice and beans for half of your meals is no way to live let alone thrive. Whatever your level of thriftiness this is likely a fair enough representation but you could go as low as $600 or as high as $1,300 depending on your food planning.

Running Total: $4,200, 53% of gross income

Household Goods/Clothing

Although consumer goods are generally getting cheaper year over year in real terms, supply chain shortages and the emergence of new technology ensure that there are always more things to spend money on.

Outside of food and groceries, a household still needs clothing, electronics, appliances, and numerous other things to keep their home livable. Generally speaking though this doesn’t come out to as much as either shelter or food costs. Durable goods tend to last a bit longer and the ‘monthly’ price of buying a TV that lasts 5 years for $600 is only $10 a month. 

This is especially true for households that don’t need to have the latest brand names and adopt a functional but not ‘cheap’ approach to shopping. When adding up all the costs on the other goods brought into a household you’re probably looking at an average of about $400 a month per household.

This is of course assuming that your children don’t play multiple sports or have many expensive extracurricular activities and that there isn’t an ipad for every family member. Thankfully in Canada, heavily subsidized child care costs also prevent us from immediately failing in our goal to have a thriving wage life. In the USA it would be very difficult to bear these costs and pay for full time childcare.

Rolling Total: $4,600 or 58% of Gross Income


You might already be looking at that rolling percentage and realizing that it’s getting awfully close to what our net income threshold is likely to be (usually around about 75% of gross at levels like this). Given the costs of owning vehicles nowadays this is obviously going to cause some issues.

Assuming you’re going to buy a car used and not finance or lease it, a single middle of the road car is going to cost you about $800 a month assuming a 4 year ownership cycle and some start up money to pay cash,

This might seem a moderate amount of car to own, the 2012 champagne Toyota Corolla, but it’s actually a step above living wage calculations which assume only transit use. Luckily though transit in Toronto is in very decent shape and both the TW and LW families should be well served.

 That still means that 2 car household are far and away above what is the ‘thriving wage’ in Canadian and American terms. To many people this live is still not thriving.

Food for thought when we realize that what most middle class people consider basic is now something that is reserved for the top 25% of the workforce.

Running Total: $5,400, 62% of Gross Income 

Fun Money, Savings, and Other

Now you’re probably thinking “BearMoney, why is saving in the same category as fun money? saving isn’t fun”. You’re right, it’s not, well not for most people (just check out FIREtwitter for those who aren’t ‘most people’).

The reason these two exist together is something else you’ve probably noticed. In general terms we are getting very close to what is likely our net income. The ‘Thriving Wage’ couple are likely to have somewhere between $6,000 to $6,500 a month after tax and rebates are taken into account. 

So right now we have a median of $550 left over per month to fund discretionary spending, saving and investments, not to mention education costs such as college funds or unexpected/excess healthcare costs.

When we look at this amount of money it is clear that even our TW family cannot build a comfortable amount of wealth for retirement, cover their medical bills, and fund/partially fund their children’s education.

Taking average excess healthcare costs in Canada (we’re not touching US healthcare with a ten-foot pole) and assuming that the family has some sort of fun treat one a month and presents for birthdays/special events it’s likely that most of this money is used up. 

In the $6,500 scenario that family should be left with about $500 to invest in retirement and education. Looking at TFSAs (retirement) and RESPs (education) and assuming conservative rates with a 72/25 split this would give our TW family the following outlooks over a normal investing period:

  • Retirement savings: $356,000
  • Education savings: $20,000 per child

That is not terrible and certainly not as bad as the 33% of Canadians or 49% of Americans with no real retirement savings. However, it is a clear signal that something isn’t quite right. The baseline measure of economic comfort is to have 6MCS, the baseline measure of economic success is to have 6MCs and investments with discretionary income.

What it takes to make it in the GTA

The Verdict

Let’s get back to the categories of wage families again and what they functionally means for families living in the GTA:

  • At minimum wage: You are $40,000 below comfort (TW)
  • At living wage: You are $6,000 below comfort (TW)
  • At thriving wage: You are $15,000 below ‘success’

The very interesting thing is that a more reasonable property market that wasn’t built to serve the interests of corporate landlords would elevate each tier practically overnight for our Toronto family. If they paid similar rents to people in Edmonton Alberta, they would have $1,000 spare per month. That would give a lot of breathing space for our MW and LW people.

You can see that there isn’t $1,000 to cut from the other categories together, certainly not for people on a living wage (and minimum wage families are definitely going to struggle). That brings us to the final number then -the number the LW family needs in the GTA to live a middle class life with savings and a comfortable retirement portfolio and semi-funded kids college. For the metropolis of Toronto and its surrounding areas this is a significant $105,000 gross per annum.

So if you’re thinking of relocating to the GTA from within Canada or hoping to emigrate there in the near future, you have a general target of Salary to aim for. For a single person to thrive you likely need at least $55,000 a year and be fine with having roommates.

It seems like middle class dreams are a bit more complicated than we were led to believe. At least in the land of Raptors and Drake, anyway.

Do you think this is an easily attainable salary? Have you had similar experiences with the cost of living in the GTA? Let us know below in the comments.


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