Cost of Living in the US vs. Canada
Where do you live in the world? If you live in the US, you may be wondering how your life compares to your neighbors north of the border. If you live in Canada, you may be wondering how your life compares to your neighbors to the south. If you do not live in either place, you may still be wondering how the two countries compare when it comes to cost of living. I know that I have thought about it frequently.
How the Cost of Living Differs between The USA & Canada
It is hard to directly compare the two countries. Cost of living is one thing, but does that compare to the quality of life? How can you even accurately measure your quality of life? Organizations may be able to, but who am I to put a figure on that measure? No, the cost of living is easier to measure. Exact figures may not be comparable, but you can get a sense of what is out there and make a loose comparison. So, which country has a lower cost of living?
We hear a lot about shopping trips to the US and the cost of goods when compared to Canada, but I was surprised to learn that the cost of living in the US was roughly seven-and-a-half percent higher than in Canada. Salaries may be higher on average in the US, but when you factor in everything, especially rent, the cost of living is a lot higher in America than Canada.
Salary in the US vs. Canada
The obvious place for me to start is with salary. You cannot pay for your cost of living before you have some money in your pocket. So, why don’t we start with the average salary in each country and go from there?
It is hard to find the most up-to-date data, but from the recent information that I could find, I learned that the average salary for someone living in the States is a little over $3,000 a month (just so I am clear with my data, I am presenting all figures in US dollars). The average salary for someone living in Canada is a little under $2,400 per month. That is a pretty big gap in salaries (especially since Canada is implementing a $15 CAD minimum wage nationwide).
With this difference in salaries, how can Canada have a better cost of living? Well, the main difference when it comes to expenses is in rent.
Housing Costs in America and Canada
When it comes to owning property in the US vs. owning in Canada, you can buy an apartment in America for a lot less, per square meter, than you can in Canada. You get more for your money in the US. There is, however, a large difference in the mortgage rates. The US has an average 20-year interest rate percentage of 4.3 versus 3.36 in Canada. The cost of renting in America is also far higher than the cost of renting in Canada. I wanted to find out more about that, so I have researched and broken down the information.
The average house price in Canada is significantly higher than in the US. You can expect to pay around $350,000 for a Canadian property versus $234,000 for an American one. That is a massive difference. When you compare the average wage and cost to own a home, it would suggest that America would have a lower cost of living, but not everyone can afford to own a home, so rent becomes an issue.
For a one-bedroom apartment in a city center, you will be shelling out $900 in Canada, compared to $1,200 in the US. If you cannot afford to live in a city center (or do not want to), then you may opt to save some money by living outside of the city. Still, when you compare Canadian rent prices to American, you are still saving over $200 per month.
What about a larger property? When I looked at three-bedroom apartments in the city center, I found that Americans were paying $500 more on average ($1,500 for Canadians and $2,000 for Americans). When you take those apartments outside of the city, the gap closes, but you are still paying $350 more as an American ($1,200 in Canada and $1,550 in America).
With higher rental prices and a higher mortgage interest rate, the higher salary is eaten away at quickly, but are there other factors which contribute to a higher cost of living for Americans?
Utilities and Other Expenses: US vs. Canada
Once you have your new home or rental, the costs do not stop there. You need to pay for your utilities. When I looked at the basic utilities (those which you needed, such as electricity, heating, etc.), I found that the cost of basic utilities is higher in the US than Canada. Another reason the cost of living goes up. If you take the average cost over both countries, then the cost of utilities in the US is over 35% higher.
One saving grace is the cost of a cellphone plan. Users in the US benefit from wider coverage due to population size, and therefore pay less for their cellphone service. Canada is big and often sparsely populated, so cellphone plans are higher. Of course, when you are adding internet to your new home, you are paying more again as a US resident.
When you are settled in your new home and have made peace with all of the costs which go with it, you are going to have to buy some groceries. This is a cost which you are going to have to pay for daily. If you are solely eating at home to save money, what are the differences in cost of living?
I was surprised again. When I talked to my friends about shopping, it seems that many Canadians are heading south of the border to take advantage of lower prices, but are those luxury goods a part of the cost of living? We do not really need shoes and handbags, but we do need food. When it comes to your weekly grocery shop, you can expect to pay up to 20% more as an American (if you want fruit and vegetables, then I would recommend a trip north of the border).
Going Out: Transportation and Eating Out Prices, Canada vs. USA
You are not going to spend all of your time in your apartment (unless you are an American and want your money’s worth after paying so much for it). How does transportation compare?
Cars are more expensive in the US. Now that more tariffs are being imposed on imports and exports, I am not sure how this will be affected (there are some who say prices will go up initially), but from what I have found, you can expect to pay at least $2,000 more on a new car purchase in the States compared to Canada. This may seem like a lot, but you also need to factor in gas (unless you have one of those fancy new Teslas). Gas in the States is one of the few things which is cheaper, comparatively, than in Canada. Canada may have a wealth of oil, but US gas prices are almost 30% lower than those north of the border.
When it comes to getting around without a car, you can expect to pay slightly less for public transit. So, where are you going when you go out?
If you are going for a fancy meal, then you can expect to pay around the same in Canada as you would in the States. If you are going out for an inexpensive meal, perhaps at a family restaurant, then you will need to shell out more in an American restaurant than you would in a Canadian one; where America is going to save you money is if you want McDonald’s and a domestic beer. Both are cheaper than their Canadian counterparts (even imported beer is cheaper in the States than it is in Canada). I never recommend sticking with beer only, but if you are in the States and want a specialty coffee, then I recommend sticking with the beer.
If you want to work out, then feel free in both countries. If you want to go to the cinema, then you will feel your wallet become a lot lighter in the States (the price of a cinema ticket is extremely high in both counties, in my opinion). Feeling like a trip to the movies while your child is in daycare? Forget about it in the States. The price for childcare in the States is 20% higher than its neighbor’s.
Main Expense Points to Consider Between America & Canada?
We often see a lot of numbers thrown about; the main one is the salary of both countries. Armed only with that information, life in the States can seem appealing. US salaries are consistently higher than those in Canada, but you only have a lot of disposable income if you can spend it on a lot of things. Salaries are high in the States, but so are rental prices. It is a lot more expensive to live in a home in America than it is in Canada (when you take into account all of your expenses).
It would seem that life in Canada is more cost effective, but does that mean life in Canada is better? Life is about a lot more than physical possessions. Life is about what you make it. If your life is filled with happiness, then you are living a rich life. It may be cheaper to live in Canada than America, but your ideal life is wherever you make it.