Amid closed bars, restaurants, and concert halls, younger Canadians are spending less and saving more during the pandemic. Many say they plan to maintain these habits even after lockdown restrictions are lifted, suggesting that the pandemic has created a unique opportunity for some to build up savings and get on firmer financial ground.
The change seems most stark among Gen Z adults, those between 18 to 24, and millennials, aged 25 to 40, according to a Credit Karma report released Tuesday.
The survey, conducted by Qualtrics on behalf of Credit Karma, surveyed 1,017 Canadian adults across the country in June and found that 49 per cent of Gen Z respondents said that the COVID-19 pandemic has led them to want to save more for their families and less on themselves.
That cohort also said they predict they’ll feel less pressure to spend in the future to keep up with friends once the coronavirus pandemic tapers down. Millennials expressed similar attitudes, with 37 per cent of respondents saying they’ll feel less social pressure to spend money after the pandemic. (Only about a quarter of older Canadians surveyed say the current situation has caused them to save more money.)
Soaring house prices, high student debt levels and an increasingly precarious job market are some of the reasons the COVID-19 pandemic has hit younger Canadians harder than other generations. But for those lucky enough to have jobs, the lockdown has provided an opportunity to pay down debt and build savings, moves that might put them on firmer financial footing.
Beth Timmers, a 33-year-old project manager at the International Institute for Sustainable Development, told The Globe and Mail that since isolation restrictions began, she’s been walking in the park, exploring Winnipeg by bike and, lately, visiting with friends in backyards. She estimates that not going to restaurants and concerts has saved her a few hundred dollars each month.
“The way that the pandemic has unfolded has lent itself to a lower-cost lifestyle, which I think a lot of millennials were kind of doing anyway, but now it’s even more embraced and popular,” she said.
A recent Statistics Canada report said that when the country went into lockdown this spring, Canadians began to spend less and spend differently as they stayed home, investing more in shelter and food components than clothing, transportation or recreational activities.
Milana Schipper, a 25-year-old speech language pathologist who lives in Montreal, said that during the pandemic she’s used the extra time on her hands to open up a tax-free savings account and registered retirement savings plan. She plans to set up an auto-deposit soon to simplify the process. “It’s very overwhelming so I’m trying to break it down.”
An avid traveller, Ms. Schipper said that just with the trips that have been cancelled over the past few months – to Toronto, New York, Ottawa, the Middle East, Australia and Winnipeg – she has saved between $3,000 and $4,000 in airfare.
Not surprisingly, 63 per cent of those surveyed by Credit Karma said that they were spending less on travelling during the pandemic, likely owing to travel and lockdown restrictions worldwide.
Although Ms. Schipper is happy with her new savings, she expects she will return to concerts and restaurants once it is safe to do so. “I think I’m making good foundations for important financial savings and planning but I don’t see this period as shifting the way that I limit myself with certain experiences.”
Shannon Lee Simmons, a fee-only financial planner and founder of the New School of Finance in Toronto, says that ultimately, she sees people falling into two main camps once lockdown restrictions loosen up further and things return to normal.
Those who spent money unhappily on things that they didn’t want to do in the first place may use the pandemic and coming years as an opportunity to reset and stop spending that money, Ms. Simmons said. Others, who liked spending money on socializing, will likely go back to their usual habits.
To those using the pandemic as a time to save money, Ms. Simmons says keep going. “The one thing that’s so motivating about saving money is seeing money start to accumulate,” she said.
Ms. Simmons believes saving money at a young age makes a big impact down the road. “If someone hasn’t saved before and now started development that type of habit, that will stay with them for years to come.”
Paul Guerette, owner of Trident CPA, a boutique professional accounting firm based in Kelowna, B.C., says he has been seeing his clients are examining monthly habits in new ways.
“We’re asking questions we would have not normally asked and it certainly creates opportunities in terms of asking, ‘Do I buy this? I’ve gone three to five months without paying for this and my life can function just fine,' ” Mr. Guerette said.
Darryl Brown, a certified financial planner and founder of You&Yours Financial, said he’s encouraging his clients to create an emergency fund, especially with the possibility of a second coronavirus wave around the corner.
“If you’re not setting aside some money in case something happens, then get one started,” he said.
People who are not in a position to create an emergency fund right shouldn’t feel ashamed, Mr. Brown said.
“Balance your financial responsibility with your mental health,” he continued. “It’s a really, really difficult time period.”
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