New study shows that younger generations have shown better willingness to save, but challenges remain in moving ahead
The National Payroll Institute’s 2025 Annual Survey of Working Canadians offers a few glimmers of hope in an often bleak and uncertain economic landscape. The survey, conducted by Canada’s Financial Wellness Lab at Western University, identified that the number of Canadian workers who consider themselves financially stressed has actually declined by five per cent over the past year, down to 36 per cent after four years of consecutive growth. One of the drivers for that improvement that the survey identified was an increase in savings rates, especially among younger Canadians.
Chuck Grace, Professor Emeritus at the Ivey School of Business and Program Director for the Financial Wellness Lab, unpacked the results and outlined why these younger Canadians are saving now. He explained, too, some of the risks out there to these Canadians’ capacity for wealth building and how both financial advisors and financial literacy advocates can better connect with this generation to help improve outcomes overall.
“The younger demographic seems to be a bit more agile and adapting quickly to what they see as sort of the new world order, and they are saving more,” Grace says. “I think it's the headlines. I think it's social media. I think they're waking up every morning and realizing that this is different, that the world has entered a new phase. It's not business as usual, and they'd better take care of business.”
Older generations, Grace notes, were not found to have taken to saving as rapidly as Gen Z in the survey. He attributes that to a few factors, including the constraints placed on Millennial and Gen X finances by homes and children. Younger and more unburdened Canadians can respond to all the negative stimulus in the news today by saving more to protect themselves.
Grace says he’s encouraged by saving as a reaction to negative stimulus. He notes the prudence and wisdom demonstrated by the decision to save and not take the fatalistic approach of spending all they have. He sees risk, though, if those Gen Z savers decide just putting money away is enough. If those savings aren’t invested in a way that protects against inflation, for example, they may not be as secure or financially protected as they might have once thought.
This is also a generation that came of age during the GameStop short squeeze of 2021 and the rise of cryptocurrency as both a high returning asset class and a source of countless scams. This generation is social media native and countless social media ‘finfluencers’ are competing for their eyeballs and their newly saved dollars. Grace approaches the young people he teaches with a few core messages: build up an emergency fund, automate your savings, kill your debt, and stop listening to TikTok.
This generation is so inundated with information from friends, family, and strangers via social media that they have trouble remaining well informed. It’s challenging to know, amid all that information, if the advice they’re receiving is well sourced. Grace tells them to get in front of someone they know they can trust, who knows what they’re talking about, and use that relationship to “gut check” their decision making.
Financial literacy has often been touted as a panacea for the woes facing Gen Z investors. The trouble is that it’s hard to know exactly what kind of financial literacy is required to cope with this extremely rapid world, Grace notes.
“We've been spending a lot of time, a lot of money on financial literacy, and the headwinds just get stronger and stronger,” Grace says. “Social media, the news will always move faster than we can build curriculum that we can build programs.”
If the task of educating young investors is so challenging, the question arises as to whether it’s worthwhile for advisors to undertake it. The assets that many advisors are incentivized to chase are largely held by older, established investors who don’t come with the same educational work.
Grace notes that every business model and advisory practice is different, and that each advisor will have their natural market. That said, he sees a challenge for the industry if it neglects the younger investor cohort because those investors will go towards low-cost trading platforms and robo-advisors. Once there, it will be much harder to convince those investors to leave.
For advisors who want to reach Gen Z, Grace argues that a focus on human fundamentals is key. He says that focusing on their unique goals can create connection and real utility in the relationship for a Gen Z investor.
“Understand where they are in their lives and what's motivating them right now. I would not spend an awful lot of time right now talking to Gen Z clients about RRSPs and retirement funds. They have some other hurdles that come well before that. They're worried about saving for a house. They're worried about having enough money if they lose their job. They need some short-term savings and emergency accounts to make that happen,” Grace says. “be very, very sensitive to the fact that because they're 20, it doesn't mean their goals are 45 years out. Some other goals are 12 months out, and we have to acknowledge that.”
