Do you understand your paycheque?
What’s the first thing you do when you wake up in the morning?
Perhaps you grab your phone to check the time, then you end up browsing your social media apps, and maybe you even check the weather so you can dress accordingly for the day ahead. On payday, you probably do something fairly similar, with the addition of checking your banking app to see if your pay made its way into your account.
Payments Canada’s recent research about paycheques shows that half of working Canadians check the amount that hits their bank account on payday — but not the actual pay statement details around their income and deductions. Your paycheque is probably the most important deposit being made into your account. It’s usually your primary source of income and knowing what each part of your paycheque means is an important part of financial literacy.
I recently recorded an episode of The PayPod with Dr. Supriya Syal, Deputy Commissioner of Research, Policy and Education from the Financial Consumer Agency of Canada (FCAC). We talked about financial literacy in an increasingly digital world. I was excited to hear about the great work being spearheaded by FCAC to improve financial resilience across Canada, including their annual financial literacy campaign.
This year’s theme, “Make Change that Counts: Managing Your Money in a Changing World”, really highlights the importance of knowing where your money is coming from and where it’s going. With rising inflation and increased interest rates, there’s no time like the present to better understand the money coming in and out of your bank account — starting with your paycheque.
Knowing how to read your paycheque is an important part of managing your finances, and it’s absolutely essential for your financial well-being. If you take a look at your paycheque, there’s usually a net number to reflect your salary, the money in, and then various deductions, where your money is going. This could include payroll taxes, pension deductions and RRSP contributions. Understanding payroll details can be complex - I won’t deny it. In fact, one-third of Canadians find it daunting and a quarter feel uncomfortable asking their employers questions about it.
A common theme from my conversation with Dr. Syal was the importance of talking with your family, friends and employers about money. It’s important that Canadians feel empowered to talk about money and ask questions about their paycheque — regardless of how they receive it. Chances are if you have a question about your finances or your paycheque, someone else has it too.
This Financial Literacy Month, I encourage you to review your paycheque and the money going in and out of your bank account more often. Taking an active role in your finances and regularly reviewing your accounts the same way you check the weather or social media will set you up for success in the future. We all have a role to play in improving the financial resilience of Canadians because financially resilient Canadians lead to a financially resilient economy.
Chief Financial Officer