Toronto, February 28, 2019 – Income volatility is linked to lower levels of financial knowledge and capability, often leading people to conclude that they have no personal control of their fiscal situation, according to ground-breaking new research from Chartered Professional Accountants of Canada (CPA Canada). While the link is intuitive, prior to this study, there was little research into the prevalence of income volatility in Canada and its correlation to financial behaviours.\n \nAccording to The Perils of Living Paycheque to Paycheque: The Relationship Between Income Volatility and Financial Insecurity, more than a third of Canadians report volatility in their monthly incomes, whether it’s the source of the money, the amount they’ll be receiving or both. It also shows that those precarious and uncertain income flows put people at greater risk of financial calamity and make it harder to effectively use common mitigating strategies like budgeting and saving.\n \nIncome volatility is not new – some of the oldest occupations, such as fishing or farming, traditionally have unpredictable earnings and widely differing income flows throughout the year. However, workplace shifts towards short-term, task-oriented employment – the “gig” economy – make it increasingly hard for many people to know where their next paycheque is coming from and how much that payday will bring.\n \nAccording to this study, people with volatile incomes have trouble keeping track of money and planning ahead, making it more difficult to make ends meet than for people who, while they may have lower incomes, know what they are getting and when.\n \nWhile more research will be needed, the CPA Canada report suggests public policy planners, financial institutions and those engaged in financial literacy education will need to develop new creative approaches to help assist those facing unstable incomes flows. “The sole focus cannot be on overall earnings,” says Francis Fong, chief economist at CPA Canada. “We need programs and strategies that either help people achieve a more consistent income flow or better enable them to cope with the problems and uncertainties that are associated with income volatility.”\n \nFor more information about CPA Canada’s Financial Literacy efforts, please visit cpacanada.ca/financial-literacy. Please click to download a copy of The Perils of Living Paycheque to Paycheque: The Relationship Between Income Volatility and Financial Insecurity.