Higher cost of living and payroll deductions could see more residents budgeting in Waterloo Region

Tough financial times could be ahead in 2023 CTV’s Hannah Schmidt explains why there will be changes to your pay cheque and why budgeting may be harder this year.

A change to your pay cheque can be expected in 2023 as contributions to the Canadian Pension and Employment Insurance are increasing.

Between higher payroll deductions for workers and the rising cost of living, budgeting will certainly be something top of mind for many residents of Waterloo Region this year.

“I’m stumped basically,” said Greg Nowak, a resident within the region who had to learn to live on a budget after being in-between jobs for many years. “It’s silly, I thought I would hear back from some of these [employers] and so far haven’t and that’s forced me into some budget constraints.”

This has been the case for many wrestling with higher costs throughout the last year.

“There are absolutely things that are going upright now,” said Chris Poole, certified financial planner with CWP Financial Services Inc. “We’ve seen in 2022, markets, housing markets, stock markets be influx.”

The New Year also promises to bring some changes for people’s home budgets.

The Canada Revenue Agency announced in November that Canada Pension Plan contribution rates will increase to a maximum of $3,754.45 in 2023.

Employment Insurance rates are also changing and will see workers pay a maximum annual premium of $1,002.45 this year, up from $952.74 last year.

The Canadian Federation of Independent Businesses said the increases will mean every Canadian worker will see up to $305 less in annual take-home pay.

“So this is actually saving for our own future selves, which comes with a future net benefit based on years contributed and working in Canada,” said Poole.

Another saving tool Poole suggests to combat rising costs, is the tax-free savings account which will see a contribution limit increase to $6,500.

“We find that the $6,500 increase is certainly welcomed. I wouldn’t be surprised if next year the increase is actually $7,000 just based on how CPI numbers work.”

Nowak said he will continue to look for work while doing his best to keep up with the rising costs.

“Look for some other ways that you haven’t thought of to generate a bit of extra income along with cutting some of the spending,” he said. “Meet in the middle and that might get you farther than you thought.”