Will young Canadians be able to leave the financial legacy they want?
Nearly half of young Canadians lose sleep over financial worries, according to Ipsos
While most kids were trading Pokémon cards on the playground and rehashing the previous night’s episode of The O.C., Garbo Kwan was worrying about money. It’s an anxiety she inherited from her parents, who immigrated to Canada from Hong Kong in 1994 in search of a better life for their family.
“Growing up in a low-income immigrant household, I was always taught to work hard, watching both my parents work from day to night to make ends meet,” Kwan says. “Money just seemed like such an impossible thing to hold onto before it slipped away from our fingers.”
Working multiple jobs from the age of 17, she learned to hang on to every cent to put towards her own future savings or to help out her parents, who were finally able to purchase their first home in Toronto when Kwan was in grade 11.
Saving money was a defining theme of home life for Kwan, who learned to rarely buy anything for herself; if she did, it had to be deeply discounted. “To this date, I still usually never shop at full price, because I’ve only done that my whole life,” she says.
Despite being so savings-savvy, she still worries about having enough money to help pay off her parents’ mortgage, achieve her dream of retiring at 65, and to leave her future family. Not to mention wanting to fund the typical desires of a 29-year-old, like traveling with her husband and treating herself from time-to-time. Constantly trying to figure out whether she should treat herself now or save for later, she says, is tiring.
Kwan’s not alone. With Gen Z and Millennial Canadians making the decision to have kids later in life (or not at all), the cost of living in Canada at an all-time high, and the traditional dreams of home ownership falling to the wayside, that hardly leaves space to think about short-term saving, let alone building a nest egg to leave behind.
It adds up to a whole lot of stress and overthinking. A 2023 Ipsos poll found that 48 and 53 per cent of Canadian Gen Z and Millennials, respectively, struggle to sleep because of financial worries, with more than half of both generations saying their mental health suffers due to thoughts about money. And, as a recent study from the Canadian Credit Union Association (CCUA) found, nearly 47 per cent of these younger Canadians are delaying major life decisions as a result.
But the solution is not to push these worries to the edge of your mind; it’s to make plans for the future that take into account the reality of the present.
“I’m a huge advocate for building wealth and creating a significant enough cushion for you to have a secure retirement,” says personal finance expert Alyssa Davies, “and also to give yourself space and freedom to choose how you spend your time.”
Now the founder and writer behind Mixed Up Money, Davies says she had wads of consumer debt and student loans when she first launched her business in 2015. Since then, she’s tripled her income, grown her family, bought a home and written two books, all with the goal of taking the stigma, guilt and myths out of financial planning. Myths like the idea that you already have to be wealthy to start investing.
“ You don’t need a lot to start investing,” Davies says. “Truthfully, the actual habit of learning to invest and stay consistent with these contributions is more important than the dollar amount you’re putting away.
While it’s never too late to begin investing (Davies didn’t start until she was 25), the money coach suggests starting at 18, even if that means contributing as little as $20 to $50 a month to kick things off. With age and income growth, building a financial legacy can include working towards maxing out a Tax-Free Savings Account (TFSA) first, and then a Registered Retirement Savings Plans (RRSP), leaving them both to grow and compound over time.
Of course, most 18 year olds aren’t necessarily thinking about building a family and accumulating wealth for them — but Davies says investing money is important whether you have or want kids or not. While a TFSA is great to grow savings for when you have children, it can also be used to save for short term goals, like a big trip or a car. Your savings goals might change over time, but the savings themselves will continue to accumulate while deciding what you want to do with your money.
“A financial legacy can be so much more than the traditional route of owning a home or having children,” Davies says. Consider non-physical assets, like education or travel, investing in community projects or charitable organizations that align with your values, or starting your own business. “Owning a business can provide that financial return piece and also allow you to work on projects that make you happy and fuel your passions,” she adds.
Still, Davies cautions the savings-minded not to forget to enjoy life now.
“Building a financial legacy can be great, but using money during your lifetime is important too,” she says. “You need to find a balance and tailor a plan to enjoy those earnings while feeling secure.”
When Kwan was 19, she started slowly but surely building her future family’s wealth through regular low-risk investments. At the time, this meant fixed-rate Guaranteed Investment Certificates (GICs), TFSA contributions, and paying into an RRSP. While she started out by contributing $50 every paycheque, the now 29-year-old hasn’t been able to do so for years, stopping in 2017 because she wasn’t bringing enough home to do so on her regular pay cheques.
Kwan would love to take on part-time work to top up her income, but her full-time job as a social media marketer just takes up too much time. Still, while Kwan worries over not contributing to these savings accounts right now, at least the existing investments are accruing compound interest in the meantime, helping to quell some of those feelings of fear and exhaustion.
Meticulously saving and planning for the future will always be important to Kwan, but she also wants to leave another legacy behind: One where her kids don’t grow up thinking all there is to life is working.
“I hope they can experience a childhood where money doesn’t even come into conversation,” she says, “where I can support my family without them having to feel guilty [like I did].”