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Young people face many of the same job challenges as older workers, plus some extra ones, like limited work experience. Still, they have one major advantage: time. Younger people have more years to save and invest. If you’re Gen Z and trying to improve your financial future in a shaky economy, starting now can make a big difference.
Economic outlook for Gen Z Canadians
Gen Z includes people born between 1997 and 2012, which closely matches the 15–24 age group used by Statistics Canada. Here’s a snapshot of their financial situation.
High cost of living
Rising prices affect everyone. Inflation, high rent costs, and expensive groceries are putting pressure on young Canadians, just like older ones.
Unemployment
More than 50,000 young people claimed EI in one year alone. This number doesn’t include gig workers, contractors, part-time workers, or others who don’t qualify for EI. That means the real number of unemployed young people is likely higher.
Employment
Even those who are working are struggling. Many hold two or more jobs to keep up with costs. A KOHO survey found that Gen Z’s average monthly income is just $1,083. Nearly half (49%) expect to take on more work in the next year, and 70% say they feel financially unstable or only somewhat stable.
Debt
Younger Canadians generally have less debt than older groups, but the average is still close to $8,500 per person. That’s an increase of 3.84% from the year before, according to Equifax.
Savings and investments
Gen Z doesn’t have much left over to save. The KOHO study found that end-of-month balances averaged just $9 to $16. Still, savings among this group grew by 23% year over year. That effort to save and invest, even with tight finances, is a positive sign for the future.
Gen Z’s long time horizon
When it comes to saving and investing, how long your money stays invested matters just as much as how much you put in. The longer your money sits in an account or investment, the more interest it can earn. This is called a time horizon.
The magic of compound interest
Compound interest means earning interest on both your original money and the interest it has already earned. For example, here’s what happens if you invest $100 at a 2% interest rate:
| Starting amount | Interest earned | Ending amount | |
|---|---|---|---|
| Month 1 | $100 | $2 | $102 |
| Month 2 | $102 | $2.04 | $104.04 |
| Month 3 | $104.04 | $2.08 | $106.12 |
| Month 4 | $106.12 | $2.12 | $108.24 |
| Month 5 | $108.24 | $2.16 | $110.40 |
Savings accounts and GICs are examples of investments that earn compound interest.
Stock market fluctuations
Stocks work differently because their value goes up and down. They’re riskier, but they can also offer higher returns. Having a long time horizon gives your investments more time to recover after market drops.
Tools for young Canadian investors and savers
Most people benefit from having different types of savings and investments for different goals. Here are some common options for young Canadians.
Unregistered accounts: HISAs and GICs
Unregistered accounts don’t have limits on deposits or withdrawals. They work like regular savings or chequing accounts.
A high-interest savings account (HISA) is good for emergency savings because you can access your money anytime. A guaranteed investment certificate (GIC) locks your money in for a set period, which can work well for medium-term goals.
These options are low risk because they guarantee your original money plus interest. The downside is lower returns compared to riskier investments.
Compare the best HISAs rates in Canada
Registered accounts: RRSPs, TFSAs, and FHSAs
Registered accounts offer tax benefits that help Canadians save and invest more effectively.
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Keph Senett
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