The prospect of increasing economic instability amid the
U.S.-Canada trade war
is affecting the way Canadians of all ages manage their finances, but recent data indicate younger generations are preparing the most aggressively.
About 70 per cent of
generation Z
Canadians said they have
bumped up their emergency savings
in the past three months or are actively considering it, according to an April survey from EQ Bank conducted with Angus Reid.
The survey of 1,525 online Canadians who are members of the Angus Reid Forum found that more than half of all Canadians have either increased their savings or are thinking about doing so, but adult
generation Z
(aged 18–28) is ahead of the pack, especially compared with
baby boomers
(41 per cent of those aged 61–79) and
generation X
(53 per cent of those aged 45–60).
Statistics Canada’s latest household wealth data show this trend has been building since 2024.
Millennials
(Statistics Canada includes adult generation Z in this cohort, so those aged 18 to 44) saw their year-over-year net savings swell nearly 60 per cent to $23,716 per household in 2024. In comparison, generation X increased their savings by just 12.76 per cent to $18,679 per household and in older generations their spending continued to exceed their income.
Maria Solovieva, an economist at Toronto Dominion (TD) Bank, said she anticipates a precautionary savings environment for the near future as Canadians brace for the possibility of job insecurity and a potential recession.
Still, she noted that the full impact of the trade war on consumer finances will not be reflected in Statistics Canada data until the next 2025 quarterly reports are released.
“Some of (people’s income) will be eaten by inflation, coming from tariffs, but I think we will continue to see the precautionary savings on the elevated level relative to the pre-pandemic trend for some time,” she said.
More than half of the EQ Bank survey respondents who have increased or are thinking about increasing their savings said boosting their savings would help their overall financial stability, but others said they were specifically motivated by trade war concerns and anxiety about the future.
In fact, 47 per cent said they worried about a higher cost of living or elevated inflation due to tariffs and nearly 40 per cent had concerns about the economy or a recession due to tariffs.
Younger Canadians increasing their savings were especially motivated by anxiety about the future (67 per cent) and fears around job stability or being laid off (37 per cent), more so than older respondents.
Cindy Marques, a Toronto-based certified financial planner and director at Open Access Ltd., said she has seen this among her own clients as well. Her clients are avoiding taking on new debts and are prioritizing their savings — in part, she acknowledged, due to her own advice regarding the current economic climate.
Marques said the “whiplash” of the 2020 market crash and job insecurity faced at the onset of the COVID-19 pandemic have made Canadians more proactive about protecting their finances.
Having just experienced economic uncertainty five years ago, they are better prepared to face the effects of the U.S.-Canada trade war and the possibility of another recession. As a result, they are adding to their savings cushions and curbing their spending, she said.
“(They’re) back to survival mode,” she said.
Marques said generation Z increasing their savings the most makes sense as they are less likely to grapple with other major expenses, such as a mortgage or the costs of raising a family, compared with older Canadians.
“The fact that they’re able (to save) is one thing, the fact that they are, in fact, saving more is also a positive sign showing some semblance of responsibility, that they’re taking this seriously,” she said. “Because another thing that goes hand-in-hand with not having a lot of financial obligations is the freedom to splurge and go nuts and travel and do what you want.”
Nearly half of generation Z said they were delaying non-essential travel plans to prioritize saving, according to the EQ Bank survey.
The survey also found nearly half of Canadians (45 per cent) were postponing major purchases or life events. For generation Z, the top decisions they were postponing included moving out of their parents’ home and buying a new vehicle.
Marques said millennials, especially those who are preparing to take on a mortgage or start a family, are trying to be smart about saving before they enter expensive milestones. Older generations, on the other hand, have likely already locked their savings into place to prepare for retirement and aren’t necessarily making any drastic changes to their saving habits.
Solovieva said higher wage growth boosted younger Canadians’ disposable incomes, which could support their increased savings, but cautioned that TD expects wage growth to decline into the third quarter of 2025.
“Canadians are probably going to reverse back to less discretionary spending and try to balance out the budget that way.”
Consumers have already begun to cut back on spending. A recent
TD report
revealed year-over-year spending growth slowed to 5.2 per cent in February, down from 7.2 per cent in December.
“We believe the primary driver of this slowdown is the ongoing trade war,” Solovieva wrote in the report, noting there has been a major plunge in consumer confidence. The Bank of Canada’s
consumer expectations survey
for the first quarter of 2025 also indicated households are becoming more cautious about spending, with concerns about job security, a recession and overall financial health.
“By (the second quarter), spending is likely to stagnate or even contract — a trend that could extend into the second half of 2025,” Solovieva said.
• Email: slouis@postmedia.com
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