The Canadian middle class is shrinking. According to a 2023 report by the Observatoire des inégalités, 42% of Canadians identify as middle class, while less than 1% consider themselves upper class — approximately 6% identify as lower or poverty class (1).

Middle class income thresholds vary across provinces and territories: As of 2025, middle-class households in Canada earned between $57,375 and $114,750 a year (2).

Here’s a hypothetical situation: Mark, aged 40, lives alone in Winnipeg and is technically middle class with his $60,000 annual salary — but he doesn’t feel very financially secure at all. Mark has no debt, but he only has $10,000 in emergency savings, and he lives in a one-bedroom apartment. He worries that an unforeseen crisis, such as losing his job or experiencing a health emergency, could plunge him into serious financial difficulty.

If you’re similar anxieties, here’s what you can do to become more financially stable, prepare for a potential future emergency and start building wealth.

Canadian data shows that income growth increasingly favours higher-income households. At the beginning of 2024, Statistics Canada reveals the middle 60% of households saw a decline in their share of disposable income by 1.0 percentage point year over year, whereas the top 20% saw the largest increase in both wage and investment income (3).

By the third quarter of 2024, the middle 60% saw another drop in income share by 0.8 percentage points, despite an increase in all households’ disposable income. This means that middle-class incomes are outpaced by those in the top 1%, despite making up a larger portion of the Canadian population.

While the middle-class lifestyle once meant having a nice house, two cars, a couple of kids and some money in the bank, that’s not necessarily the case anymore.

How far middle-class individuals can stretch their income depends on location and which end of the income scale they fall on. As a result, your class and status are irrelevant when it comes to your finances.

What does matter is whether you feel secure with the amount of money you have in the bank, and if your income stretches far enough to cover your needs. If it doesn’t, then you need to make a change — regardless of class distinction.

Read more: Are you drowning in debt? Here are 3 simple strategies to help crush your balance to $0 in no time

So, if you find yourself in the middle class but always feel like you’re one emergency away from financial collapse, it’s time to make some changes to the way you manage your money.

First and foremost: live on a budget that prioritizes savings. The only way to become more financially secure is to cut back on unnecessary spending and devote some of your income to building an emergency fund that can cover three to six months’ of living expenses. This will ensure you enough money to cover more than just minor emergencies like car repairs, but major ones like a job loss.

To build that budget:

Start by tracking your spending for 30 days to see where you spend your money now, and where you can trim.

Aim to save around 20% of your income, with money first going to emergency savings and then retirement savings.

Treat savings as a “must-pay” bill and cut your other spending accordingly to pay yourself first. This could mean slashing your entertainment budget, but you can also look for ways to cut down on your utilities, insurance and other necessary expenses.

Look for ways to increase your income to make your savings goals easier, such as taking on a side hustle.

Stop carrying debt. The interest you’ll pay to carry over balances every month can seriously cut into your savings budget.

Get serious about diverting as much extra money as you can into savings, including windfalls like tax refunds or cash gifts.

It’s best to automate transfers into your savings accounts until your emergency fund has three to six months of expenses. Once you have solid emergency savings, and are building a retirement fund, you’ll be more likely to feel that you’re living a stable middle-class life.

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Observatoire des inégalités (1); Spring Financial (2); Statistics Canada (3)

This article originally appeared on Money.ca under the title: Why so many middle-class Canadians feel one crisis away from collapse — and what you can do to get ahead

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.