Racial inequality can affect many aspects of financial well-being, including income, employment, housing, access to credit and the ability to build and pass on wealth. Wealth is about more than a paycheque. It includes the value of assets a person or household owns, such as a home, savings, investments and other property, minus what they owe. Over time, differences in income, homeownership, access to financial opportunities and family resources can contribute to significant differences in wealth. Understanding these differences is an important part of understanding financial inclusion in Canada.
The racial wealth gap refers to differences in accumulated wealth between racial groups. Wealth can provide financial security, create opportunities and help families withstand unexpected expenses or economic disruptions. Wealth can also be passed from one generation to the next. For example, parents who have the financial resources to help a child with tuition or a down payment may give that child opportunities to save, invest or purchase a home earlier in life.
The factors contributing to differences in wealth are complex. They can include:
It is also important not to treat racialized Canadians as one homogeneous group. Experiences can differ significantly between communities and between individuals.
Statistics Canada provides evidence of significant differences in economic outcomes among racialized groups. Housing is one example. In 2021, 64.7% of people in racialized groups lived in households that owned their homes, compared with 71.9% of the total Canadian population. The differences between individual groups were substantial: homeownership was 84.5% among Chinese Canadians and 45.2% among Black Canadians. These differences matter because homeownership can be an important component of household wealth. At the same time, homeownership is only one part of a family's overall financial picture, and it should not be used on its own to measure wealth.
Income and employment outcomes also vary among racialized groups. Statistics Canada's analysis of the 2021 Census found differences in labour-force participation and unemployment between racialized and White Canadians, as well as significant differences between individual racialized groups. For example, the unemployment rate for Black Canadians was 14.3% in 2021. More recent Statistics Canada data also show that racialized Canadians continue to experience higher rates of poverty. In 2024, the poverty rate among members of racialized groups was 15.5%, compared with 8.9% among non-racialized people. Rates also varied considerably among racialized groups.
These statistics demonstrate why conversations about financial well-being need to consider the broader economic circumstances people face.
Economic inequality does not happen in isolation.
Canada's history includes policies and practices that affected where people could live, work, study and build businesses and assets. The effects of historical discrimination can persist across generations, particularly when families have had fewer opportunities to acquire assets or pass resources on to their children.
Housing is a particularly important example.
Statistics Canada's research on housing trajectories found that differences in homeownership can persist throughout people's lives. Among Canadian-born racialized populations, Black and Latin American Canadians had lower homeownership rates than White Canadians in many age groups, while South Asian and Chinese Canadians had higher rates in many groups. Researchers also found that parental homeownership and living with parents can influence housing outcomes later in life.
This illustrates why financial outcomes cannot always be explained simply by individual choices. A person's starting point can influence the opportunities available to them.
Generational wealth is the financial foundation that can be passed from one generation to another.
It can include:
Consider two people with similar incomes. One may have parents who can help with a down payment, provide financial support during an emergency or contribute to education costs. The other may need to finance those expenses independently.
Over time, those different starting points can affect how quickly each person can save, invest and build assets.
This is one reason wealth inequality can be more difficult to address than income inequality alone.
Individual financial planning cannot eliminate systemic inequality. However, understanding your financial position and making informed decisions can help you build financial resilience within the circumstances available to you.
Some useful steps include:
Take stock of your income, expenses, debts, savings and assets.
Understanding where you are today gives you a foundation for deciding what you want to accomplish next.
Unexpected expenses can make it difficult to make progress toward longer-term goals. If possible, gradually build savings that can help cover unexpected costs without relying entirely on high-cost borrowing.
Your credit history can affect your ability to access borrowing and, depending on the situation, the terms available to you. Review your credit information regularly and make sure you understand how borrowing, repayment and credit utilization can affect your financial situation.
For many households, a home is an important long-term asset. If homeownership is one of your goals, learn about the costs involved beyond the down payment, including mortgage payments, property taxes, insurance, maintenance and other expenses. A financial professional can help you understand what may be realistic for your circumstances.
Investing can be one way to build wealth over the long term. You don't need to become an expert before getting started. Learning about risk, diversification, investment fees, time horizons and registered accounts can help you make more informed decisions. The right approach depends on your goals, financial circumstances and tolerance for risk.
Canada has a range of programs and resources that may help with saving, education, housing and retirement. Understanding which programs you may qualify for can help you make more informed financial decisions.
Financial conversations can help families make better-informed decisions and share knowledge across generations. Parents and caregivers can also help young people develop financial skills by talking about saving, spending, credit, borrowing and long-term goals.
Financial inclusion is not only an individual responsibility.
Financial institutions can help make financial services and information more accessible by:
The Financial Consumer Agency of Canada identifies racialized Canadians among the groups that can face greater financial vulnerability and continues to study the diverse financial needs of Canadians. For financial institutions, inclusion means more than providing access to products. It also means helping people understand those products and feel confident making financial decisions.
Financial literacy can give people useful tools, but it cannot by itself resolve structural barriers. Closing racial wealth gaps requires action across multiple areas, including employment, housing, education, access to capital and financial services. At the individual level, however, learning about money can still make a meaningful difference. Understanding your finances, knowing what resources are available and having conversations about financial goals can help build greater financial resilience. The starting point will not be the same for everyone. Recognizing that reality is an important part of creating a more inclusive financial system.
For readers who want to learn more about racial inequality, income, housing and financial opportunity in Canada, consider exploring research and resources from organizations such as:
When reviewing research on racial inequality, look at the date, methodology and population being studied. Economic experiences can vary significantly between racialized communities, generations, income levels and regions.
This article was originally published in February 2022 and has been updated to reflect more recent Canadian data and terminology. The information provided is for educational purposes and is not intended to provide personalized financial, investment, tax or legal advice.