Every generation that comes along brings their own unique approach, ideals, and values.

Take Zoomers, aka ‘Generation Z’ and their relationship with money, for example.

Currently representing roughly 27% of the Canadian workforce (and growing), Gen Z is known for valuing financial flexibility in the here and now over planning for the longer term.

It’s all part of a youth culture that believes in putting an emphasis on self-care.

For Gen Z, that means spending priorities tend to be focused more on health, wellness, and experiences—with these priorities being easily swayed by their peers. After all, this is the first generation in human history to grow up fully immersed in the digital age. Where influencers, Youtubers, and podcasters set the trends of the day, both socially and financially.

However, that doesn’t mean Zoomers are careless with their cash. Quite the opposite.

In fact, according to research, Gen Z is far less likely to take on consumer debt compared to other age groups. However, they also tend to be a lot more stressed when it comes to money matters. Particularly in relation to rising costs, since Zoomers have only recently entered the workforce and are typically earning lower wages (or on the lower end of the pay grid if you’re early into your education career). Many within this demographic are also still paying off student loans, making major life goals, such as buying a home, seemingly impossible.

But no goal is out of reach. All it takes is being mindful where your money is concerned.

Think of it as an extension to your self-care routine—and it all starts by clearly outlining your goals.

Tips for outlining goals:

• They should be specific (i.e. pay off student loan, save for down payment on a home, supplement income during the summer months or to generate cash flow if you’re starting off with LTO/supply work, etc.)
• Set a realistic timeline in which you want to achieve each goal (i.e. if your goal is to save $50,000 for a down payment on a home within the next 5 years, you will then be able to gauge how much money you’ll need to put away each month in order to achieve that goal)

Once you’ve outlined your goals, create a budget and do your best to stick to it. 

As a Gen Z education member, you have time and a defined benefit pension on your side—two massive advantages when it comes to developing your budget:

• Pay grid: Having a sense of your earning potential over the course of your career enables you to project when you’ll be able to allocate more money within your budget towards each of your goals
• Pension: Having this in place means you can budget for other financial goals at the start of your education career (then as you work your way up the pay grid, you can decide if and how much you want to save in addition to your OTPP/OMERS income in retirement)

Did you know?

1 in 5 educators under the age of 30 are occasional teachers—yet you don’t have to be working in a full-time, permanent position before you can contribute to your pension. If you’re certified by the Ontario College of Teachers and work for a participating employer, you’re vested. Once you work more than 10 days in a school year for a participating employer, you’ve earned a qualifying year of credit. (Source: Ontario Teachers’ Pension Plan)

Tips for developing your budget:

• Get a handle of your cash flow: Track what’s coming in and what’s going out (because a budget won’t work unless you have the full 360-degree view of your financial situation)
• Trim unnecessary expenses: And then contribute any extra cash flow to your financial goals
• Build (up) an emergency fund: Allocating a portion of your budget towards saving for the unexpected ensures you’ll have the funds to deal with an emergency, should one arise (without having to take out a loan or take money away from other goals)
• Plan for any leaves: If you’re planning to take any leaves down the road (4 over 5 / X over Y, maternity, etc.), you may want to build a savings plan into your budget to buy back pension credits to cover that leave.

Taking a leave? You should understand pension buybacks.

Finally, give your money the ultimate form of mindfulness by investing.

Whether you’re a Zoomer or a Boomer, every generation has had to deal with some sort of cost of living of crisis. However, while cash savings loses its value over time, investing on the other hand offers the power to stay ahead of inflation and rising costs thanks to compound interest.

And you don’t need to be at the top of the pay grid in order to afford making contributions.

Consider the Tax-Free Savings Account for instance.

The $7,000 annual contribution limit can be divided into just under $135 a week—or roughly $19 a day.

Considering almost half of Gen Z Canadians don’t have a TFSA (of which 30% say it’s because they don’t know how it works), there is plenty of untapped, tax-free savings potential.

Tip: Consider setting up pre-authorized TFSA contributions that automatically get deducted from your bank account. With the ability to select the contribution amount you’re comfortable with and the frequency, you won’t even miss that $19 a day.

Why contribute to a TFSA early in your career versus a RRSP?

Since you’re already paying into your pension, putting money into a Registered Retirement Savings Plan probably isn’t a priority at this stage—especially if you only have the money to contribute to one.

However, instead of viewing a RRSP simply as a retirement savings vehicle, think of it as a powerful tax-planning tool that you can leverage as you start earning more.

This will become especially beneficial down the road as you approach the top end of the pay grid since:

• When you contribute to a RRSP, that money is tax exempt (as long as it’s kept within the plan)
• Individuals are taxed on their net income (income after deductions, which includes a deduction for any RRSP contributions), which can result in significant tax savings

Keep in mind the benefit you earn through your pension plan is linked to RRSP contribution room.

The greater the value of your pension benefit, the less room you will have to contribute to a RRSP. Hence why it’s important to get educator-specific advice when making certain investment decisions.

That’s where Educators Financial Group comes in.

For half a century, we’ve been providing financial guidance exclusively to education members.

During that time, we’ve come to develop a unique understanding of your world. Whether it’s how to budget according to where you are on the pay grid to fully maximizing your pension income in retirement, we can help you navigate any type of financial challenge and achieve your financial dreams.

Gen Z, Boomers, and everyone in between—put our educator-specific advice to work for you

Sources:

https://www.investmentexecutive.com/news/industry-news/three-quarters-of-gen-z-ready-to-invest-tax-refund/

https://acuitycpa.ca/posts/the-future-of-business-in-canada-10-bold-predictions-for-2025

https://financialpost.com/wealth/smart-money/gen-z-and-millennial-canadians-already-stressed-about-money-and-a-trade-war-adds-to-the-pressure