Mackenzie Connolly doesn't buy into consumer culture. The 25-year-old Haligonian's money is his, thank you very much. He'd rather watch it double or triple over time than spend it on $60 bar nights or frivolous clothes.
People a few years older than Mr. Connolly are buying homes as far away as Truro, an hour's drive from downtown. That's a lifestyle Mr. Connolly can't get behind. When he buys a house, he wants it on his terms. That means saving up.
"I like to have fun like everyone else," the structural engineer says, "but all the media blitzes, to buy a new coat or a new PlayStation – I try not to let that affect me at all. It targets our generation so much."
In a time when technology bombards consumers with opportunities to buy – and when even that technology is rife with planned obsolescence – the notion of saving can seem downright baffling to young Canadians earning their first steady incomes.
But the income gap between younger and older Canadians is rising. The country's housing market is not particularly friendly to first-time buyers, especially in big cities. And the notion of a comfortable retirement seems more and more like a myth passed down from the boomers.
All the more reason to start tucking cash away now.
"We're finding that opportunities to consume are greater now than ever," says Jamie Golombek, managing director of Canadian Imperial Bank of Commerce's wealth advisory services. "The pressure is on, in terms of the variety of things you can buy, and the ease with which you can buy them."
In the 25-34 age group, recent CIBC polling has found that 77 per cent of Canadians are confident they'll meet their financial goals, and that 69 per cent feel confident about their current finances. But the bank has also found that 82 per cent of that cohort are dealing with debt.
"They're certainly optimistic, but they're less likely to be taking action," Mr. Golombek says. "I think it's very important that young people tackle things like student debt, because that can be a high drag on your cash flow."
Many young workers tend to bask in their newfound income and fall into the habit of spending it all. But for all their financial optimism, Mr. Golombek is quick to remind them that financial goals aren't accomplished in isolation.
"You have to have a financial plan to do so," he says. This means classic financial planning: making a budget, watching cash flow and income, and setting targets for debt repayment and home buying.
Mr. Connolly is fully aware of this. He's already moved to the western Halifax suburb of Clayton Park in order to rent affordably without living like a student. "To get the kind of apartment I wanted downtown would have cost me a fair amount of money," he says.
The move came with plenty of chiding from his friends, but a cheaper apartment and controlled spending lets him keep up his regular RRSP and TFSA contributions to see his money grow and keep a retirement age of 65 in his sights.
Whittling away today's unnecessary expenses is crucial for tomorrow, Mr. Golombek says. "Of all the expenses you have, how many are truly discretionary versus non-discretionary?" he asks. "Other than some housing or food, nearly everything else can be classified as discretionary."
Not that this is easy. There are strong arguments that the work force of today will be the first generation of Canadians to be worse off than their parents. Last year the Conference Board of Canada released a report that found the income gap between the youngest and oldest members of the work force has vastly expanded in the past three years.
Depending on how young Canadians expect their career to unfold, that can have big implications for retirement planning, says James Knowles, who co-authored the report.
"If their lifetime potential income is the same, Canadians may choose to save less now, anticipating they'll earn more later on," Mr. Knowles said in an interview. "But if they don't think their lifetime earnings are going to match those of the older generation, then they might start saving now, because they don't have that much larger income to look forward to in their life."
Finance coach David Campbell Lester, author of the book I Heart Money, says the idea alone that this generation will do worse than their parents can be a self-fulfilling prophecy. "They see credit-card debt, and debt overall, as something that people live with. Paying it off isn't a big priority for them."
By saving from the get-go and making it non-negotiable – with automatic withdrawals – saving and debt-repayment can become a good habit.
"It's cheaper when you start younger; you don't have to save as much longer in life," he says. "And you can split your savings so you're not only saving for retirement. Have some of it go into a motivational reward for yourself. See the big heads on Easter Island."
That's how Mr. Connolly works. "If I put money in the bank now, it's going to grow and double in 10 years. If I don't get an early jump on it, I'm going to be behind."