Why A Good Job Doesn’t Solve Poverty

Estimated reading time: 17 minutes

More needs to be done to solve poverty other than earning more money.

Some people increase their shopping habits as income increases for many reasons.

It’s easy to fall into this trap because letting our guard down when income increases is easy.

Indeed, there are people with no debt that can spend more money, but there are also people who are broke and should not.

If you find paying bills stressful and must choose between rent, eating, or electricity, you need financial help.

What Happens When Poverty Is Not Solved?

When someone struggles to pay bills, companies often give up on them but pass them on.

The company may sell the debt to collectors if the debt is the leading cause of poverty and you’re not paying your bills.

These debt collectors stop at nothing to pay off the debt, so you don’t want to advertise your life on social media.

Imagine you finally get hired for a career that you’ve dreamed of with a $30,000 salary increase.

You’ve gone from earning $35,000 yearly to $65,000 before taxes, and you’re so excited.

If I could snapshot this moment, I would because this story is true for Mrs. CBB.

Today, I want to discuss why people feel earning a higher salary will solve poverty.

Let me explain how Mrs. CBB was in debt with a school loan and car payment.

Below, I talk in more detail about why earning more money initially didn’t solve poverty for her.

Why A Good Job Doesn't Solve Poverty
Why A Good Job Doesn’t Solve Poverty

Can You Solve Poverty With A Higher Income?

Let’s continue with the scenario, but my immediate answer is yes and no.

Unfortunately, you have school loans for which you’ve only paid interest.

What this means is you’re paying the interest every month but not paying down the principal.

You live alone and rent an apartment, but this massive leap in income is not living up to what you thought it would.

The only way a higher income would benefit someone living in poverty is that they use a budget.

She laid all financial information in a budget, including all debts, and then calculated the debt-to-income ratio.

Below are 5 Debt Reduction Strategies that are imperative if someone wants to solve poverty.

Put Your Money To Work

Whether you are single, married, have kids, or have no kids, you must put the money to work for you if you get a raise or salary increase.

  1. Financial Assessment
  2. Decrease Debt to Income Ratio
  3. Budgeting
  4. Increase Income
  5. Financial Fast

Source Twitter

Angee @AngeeGabs · Mar 23 I thought my life would change drastically when I got my $20 000 salary bump. But the only way I’ve scaled up my life is by buying organic produce and contributing money to my TFSA and RRSP bc I know time is of the essence w compound interest and I have to start from scratch.

Common money mistakes keep Canadians from paying off debt due to failure to plan and stick to it.

Below are just a few money mistakes that keep people in debt, living in poverty, or unable to pay rent, mortgage, debt, loans, credit cards, etc.

Stop Adding Money To Your Debt Portfolio to solve poverty in your life.
Stop Adding Money To Your Debt Portfolio

Welfare Did Not Solve Poverty

The low-income cut-off (LICO) table represents the poverty line in Canada’s urban areas, with a population of half a million or more.

In other words, if your income is below LICO, you are poor. LICO changes every year due to inflation. 

Source: Settler.ca

Poverty Line Figures

of Family Unit
– 12 Months
– 6 Months
one person$26,426$13,213
two persons$32,898$16,449
three persons$40,444$20,222
four persons$49,106$24,553
five persons$55,694$27,847
six persons$62,814$31,407
seven persons$69,934$34,967
If more than seven persons, for each
additional person, add
The following table shows LICO for 2021* as the LICO changes based on the household number. Source

While Mrs. CBB was collecting welfare, paying rent and her monthly bills was enough.

The debt she was paying at the time was her OSAP loan, which she could pay off quickly.

As a single person with no kids or significant other at the time, she says that although she was able to pay off the debt that she had, if there was

She didn’t budget; however, she stopped buying items she did not need.

Had she had more debt to pay, it would not have been possible with the money she was given.

Finding a job was tops on her list, and she was out every day looking and passing out resumes.

Solve Poverty With More Jobs

She could not find a job after graduating from College; she moved a friend in to help pay her rent.

When she moved back home, she still had no job, and then, magically, she had three, all of which paid a minimum wage.

She had applied for welfare then, now called social assistance or Ontario Works.

Eligibility for welfare in the early 90s was straightforward for her since she had just graduated.

The only thing she needed to do was prove that she was actively seeking employment.

Once she started job number one, she needed two more jobs to pay her rent and bills, plus build her savings account.

In the end, she had one job in her field of education once a week, part-time work at a record store in the mall, and full-time employment at a fast-food restaurant.

Canada’s official poverty rate was 6.4% in 2020, down 3.9 percentage points from the previous year when it stood at 10.3%.


She needed off welfare and multiple employers to begin emergency savings and build her savings account.

Not everyone can have three or more jobs to earn extra income to get ahead.

Paying Debt To Solve Poverty

What debt did Mrs. CBB pay for when she moved home?

She paid $450 a month to her parents to live in an apartment they owned without cable or telephone.

Back then, there was no need for a cell phone, the internet, or social media.

Finding a job that paid more than minimum wage meant she needed a degree or to get lucky by knowing someone who would hire her without one.

That never happened, so all three of her employers paid a minimum wage of $8 in the 90s.

Why did she move away from home to find a job that paid more than minimum wage?

Finally, in 2000 she found a job that paid $15.50 an hour to start, and when she left in 2009, she earned $21.50.

She returned to school part-time to earn a diploma to finally walk away from a job with no prospect of moving up.

Finding what she loved to do was easy, especially when a new career prospect in the employment industry surfaced on Kijiji.

Before she finished her education, a company hired her to contract government services.

After ten years of employment, she handed in her two-week resignation notice as she began her new role in life.

She had an entire office and underground parking, which earned her $65,000 to start, with perks such as a free mobile phone and internet at home.

There was also a retirement savings plan that the company matched, plus three weeks of holidays and 90% benefits, which included maternity leave top-up.

Was this too good to be true? Yes and no, but she worked very hard to balance her responsibilities.

Getting A Good Job Doesn’t Fix Everything

Source: Canada's Official Poverty Dashboard Indicator
Source: Canada’s Official Poverty Dashboard Indicator

Highs and Lows To Solve Poverty

First, I want to tell you that it’s not easy to pay off debt, and each scenario is different yet similar.

Everyone’s knowledge about financial management in Canada also differs based on experience.

The median after-tax income for families and unattached individuals increased or remained relatively unchanged for every province in 2020.

Ontario had the largest annual increase, going from $65,100 in 2019 to $70,100 in 2020.

Conversely, the smallest increase was in New Brunswick, which went from $54,800 in 2019 to $56,900 in 2020.


Going from a high due to a new career move and house purchase, we all needed to pay off debt, start a family and live happily ever after.

It sounds like a fairy tale life.

Well, here’s where it gets messy.

By earning a salary, she could finally pay off her $9000 student loan, finish paying a 0% interest loan for her vehicle of $35,000, and invest and get life insurance.

After three months, she received a $5000 raise, followed by the pink slip right after we bought our first house together in 2009.

Did the higher income allow her to solve the poverty following her shadow wherever she went?

It allowed her to pay off her OSAP and vehicle loan, leaving her debt-free months after we married.

Solving poverty personally will take planning, execution, persistence, and continuous learning about finance.

Discussion Questions To Solve Poverty

  • Have you ever been in a situation where you struggled to live because of your income level?
  • How did you solve poverty in your life?

Share your experiences below to help others who are looking for real-life situations.

Below you’ll find our May 2022 Budget Update, which includes some significant expenses for our home.

Finally, the 2022 Budget Challengers share their budget for May 2022

CBB Family Budget Report

monthly Income
Canadian Budget Binder May monthly update.
Canadian Budget Binder May monthly update.

May 2022 Budget Summary

May was an expensive month for our budget as I’ve been buying renovation materials for the main bathroom.

So far, I’ve spent around $10,000, and I’ll be doing the work myself, so I don’t find that too bad.

I spared no expense for the main bathroom, so it becomes spa-like.

We’ve decided to stay home, so the bathroom and kitchen will be our primary focus.

The basement is still unfinished, but I’ll start once I build the new deck in Spring 2023.

I plan to take photos as I start the master bathroom and share the prices and reno from start to finish.

Our grocery expenses were higher in May as we doubled up on items from Costco, so we don’t have to go back for a month.

Also, Mrs. CBB bought tickets to a concert with her friend in the Fall of 2022.

That’s all for now.

How was your monthly budget? Please share it in the comments, ask questions, or respond to answers.

Budget Expenses Percentages

May 2022 Household Budget Percentages
May 2022 Household Budget Percentages

Our savings ratio was 29.31% in May.

We saved more in March than April because of purchasing bathroom renovation materials.

As you can see, our housing ratio shot up to 29.31% compared to March, which was 5.38%.

I’m anticipating this summer to see our housing ratio continue to rise based on my main bathroom renovation.

Monthly Home Budget Breakdown

Monthly Net Income and expenses for May 2022
Canadian Budget Binder May monthly update.

Below is a breakdown of our expenses which helps us understand where our money goes.

  • Chequing– This is the bank account from which we pay our household bills. We use Simplii Financial, TD Canada Trust, and Tangerine Bank. Join Simplii Financial today! Read more about the best Canadian online virtual banks.
  • Emergency Savings Account– This money is in a laughable high-interest savings account.
  • Regular Savings Account– This savings account holds our projected expenses.
  • Monthly Budgeted Total: $6564.18
  • Monthly Net Income Total: $9309.15
  • (Check out the  Ultimate Grocery Guide to see where our grocery money goes)
  • Projected Expenses: These are expenses we know we will pay for throughout the year = $905.00
  • Total Expenses Paid Out: $8281.91
  • Total Expenses Paid Out: Calculated is $9309.15 (total net monthly income) – $905.00 (projected expenses) – $122.24 (Savings to emergency fund) = $8281.91
  • Actual Cash Savings going into Emergency Savings: Calculated is $9309.15 (total monthly net income) – $8281.91(actual expenses paid out for the month) – $905.00 projected expenses) = $122.24

Estimated Budget and Actual Budget

Below, you will see two tables: Our monthly and actual budgets.

Our monthly budget represents two adults and a 7-year-old boy.

Budget Colour Key: It is a projected expense if highlighted in blue.   

Since May 2014, we’ve been mortgage-free, redirecting our money into investments and renovations.

Spending less than we earn and budgeting has been the easiest way to pay off our debt and save money.

Monthly Budget Amounts May 2022

Monthly  estimated excel budget May 2022
Monthly estimated exExceludget May 2022

Actual Monthly Budget May 2022

May 2022 Actual Monthly Budget Numbers for May 2022.

Another month is under our belt for 2022, but I’ll return in July to share our June Budget Update.

Please read below to see how our 2022 Budget Challengers are doing with their monthly budget report.

Thanks for reading,


Monthly Budget Challenge 2022

2022 budget challenge CBB
Rules For The 2022 Budget Challenge on Canadian Budget Binder
Rules For The 2022 Budget Challenge on Canadian Budget Binder

Welcome to the 2022 Budget Reports from our 2022 budget challenge.

Over the past two years, this challenge started with many positive CBB readers who wanted to join.

For 2022 we began with six people ready to change their lives by challenging how they manage a budget.

Each budget summary will always fall under the same Budget Challenger number below.

If you plan to leave comments about one of the budgets below, always use the budget challenger number so they know it’s for them.

Budget Challenger #1

May was good a good month for me financially. I received an SGI 100-dollar rebate which was a nice pleasant surprise.

During the month, I could sell some items I no longer use and earn $200.

My son paid me the 80 dollars that he owed me in May.

He moved back a bit but planned to move out for good in June.

I want to save up for birthdays again and still need to do my taxes.

I spent 50 dollars on my car for fluids and wipers in May.

His electricity, power, and water bills decreased by 40; however, Netflix increased by 5 dollars. 

I’m thinking about changing my Netflix subscription moving forward.

I am also looking for a cheaper internet provider to help cut costs.

On a good note, my grocery budget will decrease since I’m by myself again.

I did work 8 hours of overtime in May, which I should see on my next work cheque.

I plan a yard sale next month, and I’m slowly getting ready for it.

That’s all for my May budget.

May Pen and Paper Budget Challenge 2022
May 2022 Budget Update Budget Challenger #1

Budget Challenger #4

Hello, CBB!

May as well; we made it through with the price changes and some planning.

Many around the financial blogosphere have noted that food and gas prices are going through the roof.

I’m trying to eat better after surgery, but BOY significantly impacted May’s spending.

There were a lot of office gifts – lots of people retiring or going through rough times.

I hope that’s not a trend for the rest of the year; however, it’s hard to tell what will happen.

You’ll see an entry for “Trip Home (August)” – I hadn’t intended to purchase my ticket until June, but the opportunity came up, and I leaped upon it.

My parents’ 50th anniversary was last August, but I could not travel to Ontario because of Covid.

Later this year, 2022, we’ll celebrate 50+1 and try to make it extra special.

In June, I’ll continue walking as much as possible, finding things around the condo to sell, and balancing healthy eating and spending.

Until July!

Budget Challenger 4- May 2020 Budget Update
Budget Challenger 4- May 2020 Budget Update

Budget Challenger #5

Hello everyone, Happy June!

It was financially rough in May, but most was my own doing.

I had a power bill and a land tax payment due, so I knew it would be larger payments than I love seeing come out of my account, but not too bad.

My downfall was my fast food obsession, I’m always embarrassed when it is $100 a month, but it was way more than that this month.

Some of it also included purchasing for my boyfriend, but I overindulged this month.

I had planned to get CAA, but it was much more expensive than expected, so I decided to hold out.

I’m aware of CAA and a Canadian Tire version, but I want to see if there is anything else out there that would be a better fit.

Gas was rough, $226, but some of that I will get back for travel as part of my job, which helps.

It’s hard watching the creeping up of the prices at the pump, though realistically, we are seeing inflation everywhere.

Money Surprises!

I did have one major surprise this month (though I haven’t cashed the cheque yet).

Happily, I discovered that my health plan covers the counseling I have been paying for since I began.

So in the future, it is covered, and they looked back one year; I got about $1000, which helped.

I think I have to get a ton of firewood this year so that it will go towards this.

My firewood guy quit doing it last year, so now I have to find someone new and hope they don’t charge a tonne more. Overall I’m pretty proud of things.

We are now on one income but doing okay, and my boyfriend has planted a garden and works diligently on it.

He also makes suppers almost every night (if only he’d make enough leftovers, I wouldn’t have to buy lunches out)!

The definite disappointment was how much I spent on fast food.

Planned expenses for June are a mini-vacation around my birthday, probably gas, fast food, and some clothing purchases.

However, we have a free place to stay, and they have a few things they are giving us they no longer want, including a fantastic full-on drum kit.

Hopefully, everyone is enjoying the lead-up to summer!

Budget Challenger #6


My May budget was a bit tight this month. 

I had surgery on May 25 on my ankle, so trying to get things done. 

We were preparing meals, going to our Haliburton trailer to open it and have it ready for the summer, stocking up on groceries/toiletries, etc.

My husband and I have separated since January, but he moved back at the end of May.  

So I will have a second income now; however, I will be on reduced pay for a few months until I can weigh bear again. 

I expect an even tighter month in June as I’m unsure when I will get my first sick leave payment.

May 2022 Budget Challenge Canadian Budget Binder
May 2022 Budget Challenge Canadian Budget Binder

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