As tax refund season unfolds in Canada, a significant shift in spending habits has emerged among younger Canadians. Recent research from TD Bank reveals that a remarkable 47 per cent of Canadians expecting refunds are prioritising savings over spending, with this trend particularly pronounced among Generation Z, where the figure has surged to 63 per cent this year from 30 per cent in 2025.
A New Financial Mindset Among Young Canadians
Younger generations are increasingly focused on building their financial futures. The TD Bank survey indicates that 33 per cent of Gen Z respondents plan to invest their refunds this year, a stark increase from just 15 per cent last year. This is also notably higher than the national average of 25 per cent for all age groups.
Manish Jain, vice president of personal savings and investing at TD Bank, commented on this shift: “More Canadians are planning to save this year, more Canadians are planning to invest this year as well, and discretionary spending is trailing far behind.” The message is clear: younger Canadians are leading the charge towards a more prudent approach to personal finance.
Impact of Economic Pressures
The rising cost of living and escalating debt levels are pivotal factors shaping these financial decisions. The survey revealed that 36 per cent of respondents intend to use their tax refunds to pay down debts, a notable increase from 23 per cent in the previous year. Additionally, one in four Canadians (25 per cent) will allocate their refunds towards everyday expenses, a rise from 15 per cent last year.
Interestingly, Jain noted that nearly half (44 per cent) of those not investing this year express a desire to do so but lack the necessary funds to initiate investments. Furthermore, nearly two-thirds of Gen Z participants admitted they feel ill-equipped to navigate investment options.
Investing for the Future
For those choosing to invest their tax refunds, the focus is on establishing consistent habits rather than one-off actions. “Our Gen Z respondents are planning to save more consistently. It’s not just about the one-time refund, but consistent investing,” Jain elaborated. This shift reflects a broader trend where younger Canadians are exploring diverse investment avenues, such as exchange-traded funds (ETFs) and individual stocks, in contrast to older generations that have traditionally favoured options like guaranteed investment certificates (GICs) and mutual funds.
This trend is mirrored in the United States, where a 2025 report by JPMorgan Chase highlighted that young adults are increasingly turning to stock investments as homeownership becomes increasingly unattainable. The report notes a marked rise in retail investment activity among lower-income and younger demographics since the pandemic began.
Homeownership Challenges
The struggle for homeownership is also impacting investment behaviours. A February report from the University of Ottawa’s Missing Middle Initiative indicated that while incomes in Canada have risen by 76 per cent since 2004, the price of new homes at the lower end of the market has soared by 265 per cent. This discrepancy has left many young Canadians feeling sidelined in the housing market, prompting them to seek alternative investment opportunities.
Recent data from an EQ Bank survey shows that more than a third (36 per cent) of Canadians are relying on their tax refunds more this year than in 2022. This reliance is particularly acute among younger Canadians aged 18-34, with 42 per cent indicating they depend on their refunds to meet their financial obligations.
Why it Matters
The evolving financial landscape for younger Canadians underscores a significant cultural shift towards saving and investing, driven by economic pressures and changing attitudes towards money management. As this generation navigates unprecedented challenges, their proactive approach to personal finance may well set the tone for future economic resilience, highlighting the importance of financial literacy and the need for accessible investment opportunities in an increasingly complex financial world.
