Younger Canadians’ careers and financial prospects have been severely impacted by the pandemic in large part due to their over-representation in the service sector, according to a survey from the Canadian Bankers Association (CBA).
The survey found 53% of Generation Z respondents (aged 18 to 25) said the pandemic upended their financial security, with that number increasing to 73% for those in less stable financial situations.
Further, 41% said they’ve seen their debt level increase due to the pandemic. More generally, 51% of Gen Z respondents said they’ve experienced debt-related anxiety over the past 20 months.
The majority of Gen Zers (73%) reported having some type of debt, with an average reported debt load of $14,100. Further, nearly one-in-three are embarrassed about how much debt they have accumulated. The two most common forms of debt reported were credit card (49%) and student loans (39%). Only about half of respondents (49%) said they always pay off their credit cards in full each month.
Given these factors, combined with the ramifications of the pandemic, Gen Zers are strategizing when it comes to savings and budgeting.
About three-quarters of respondents said they have a savings account, and 77% said they put at least 1% of their income aside in their savings. In total, Gen Zers have an average of 9% of their income saved.
An emergency fund and financial independence were the two most common savings goals.
Tax-free savings accounts were the most-cited savings vehicle (47%), followed by high-interest savings accounts (27%) and registered retirement savings plans (20%).
Gen Zers are being proactive to control their spending and save money, the survey suggested. Overall, 71% of Gen Z respondents said they’re actively budgeting, with 58% saying they do so in a formal manner. These options include keeping a written record of expenses (21%), maintaining financial spreadsheets (20%), or using digital tools (17%).
Despite these methods of active budgeting, 92% of respondents said they experience barriers with sticking to a budget, such as not earning enough money (43%), unexpected expenses (42%) and impulsive shopping (38%).
Despite respondents’ concerns around debt and budgeting, 88% stated they’re feeling optimistic about their financial futures.
However, Gen Z respondents don’t necessarily view banks and other financial institutions as an instrumental part in helping shape their financial futures.
While 69% of Gen Zers stated they’ve sought advice regarding financial planning or debt management, the most noted sources were family and friends (52%), followed by financial institutions (30%). Only 47% said a financial plan is key to a secure financial future.
However, 80% of respondents stated they trust their bank and 85% said their bank is meeting their needs.
A total of 763 Canadians aged 18 to 25 were surveyed online in June 2021. The sample was designed to reflect Canada’s population of young adults but online surveys can’t be assigned a margin of error because they don’t randomly sample the population.