How gen Z and millennials can set themselves up for financial success in 2026
You owe it to yourself to know the basics of personal finance, says David Chilton. There are huge positive ripple effects of managing your money well. (Credit: Courtesy of David Chilton)
Generation Z and millennial Canadians are facing financial issues ranging from out-of-reach home ownership to income uncertainty, making money management seem impossible for some.
This trend made the author of The Wealthy Barber, David Chilton, decide to fully update the personal finance guide for today’s young Canadians, more than 30 years since he first published it. Chilton said he was hearing the same questions from his children’s friends and his own friends’ children.
“I was seeing the confusion because of all of the information coming at them and the distress because of the challenges of the high cost of living. It’s tougher now to save money than it has ever been.”
Here, Chilton talks about how younger Canadians can get a handle on their finances and set themselves up for successful saving strategies in 2026 and beyond, despite the financial circumstances they may face.
Financial Post: What are some of the key challenges younger Canadians face today that previous generations did not?
David Chilton: When you look at what people are spending and their income, the basic arithmetic shows you just how tough it is to save. Most people’s personal inflation rate has run hotter than the reported consumer price index. You’ve also got a world of marketing that is so much more effective because of the algorithms that know how to exploit our weaknesses. And now you can just tap or click to make a purchase.
On top of that, young people are dealing with information overload from (social media). It’s difficult to discern what advice makes sense and what doesn’t, who is looking out for your best interest and who is not. At the end of the day, no matter if it’s tough or not, you’re still going to retire at some point and somehow you have to save money.
FP: What steps can younger Canadians take to tackle these challenges this coming year?
DC: One of the first steps any young person in their 20s and 30s should take is to chronicle all of their spending over a three-month period. This may sound old-fashioned, but the research proves it’s more impactful if you do that by hand than using an app.
The second step is to pay yourself first. This is more important now than ever. With costs today being so much higher, if you rely on budgeting alone, you won’t save. You have to take 10 per cent to 15 per cent off the top of your paycheque as quickly as you can and then go from there.
I also think in these tight times people should be more open to taking on a side gig. I’m not talking about driving for Uber, but taking a hobby or something you enjoy and finding a way to monetize it.
Next, sift through the noise. Check the background of who you are relying on for advice. Do they have the appropriate training and experience? It’s also important to remember that good financial planning … is very basic. People think it is very complex and the financial industry — including influencers — have a vested interest in making it seem complex. If we bring this down to buying index funds, focusing long term, staying away from credit card debt and using TFSAs (tax-free savings accounts) and RRSPs (registered retirement savings plans), it’s not that tricky.
FP: How can young people build financial resilience when career paths, housing markets and the cost of living are so unpredictable?
DC: Lower your burn rate. Keep costs under control and make sure you are not spending all of your income. There are advantages stress-wise and happiness-wise to living beneath your means.
Do not buy the biggest house you can possibly buy, even if the mortgage has been optimized for you. Can you truly afford it? By that I mean, can you make the mortgage payments and the other home-related payments, but also still save at the appropriate levels and still have a little fun? For some people, renting may be the more appropriate path. There is no magic answer to dealing with housing affordability.
FP: How should people approach investing given the existing volatility in markets, let alone what 2026 may bring?
DC: I’ve given the same answer to this question for the past 36 years: Pay no attention to the markets. You are never going to be able to harness all the information out there on a macro level and use it to productively move in and out of markets. So, recognize there will be times of gut-wrenching volatility and focus very long term. If you’re in your 20s, 30s, or 40s, you are looking at decades of saving money. You don’t have to worry about what the market is going to do in 2026. Interestingly, for many young people, it would be helpful if the market suffered in 2026 because then they could buy more shares at lower prices because of dollar cost averaging.
Dollar-cost averaging is the best strategy to invest on a monthly basis in your TFSA, RRSP and hopefully your first home savings account (FHSA) if you’re eligible for one.
FP: What are the most common financial mistakes you see young adults making today and how can they avoid them?
DC: Because of the strong performance of the markets over the last number of years, I meet many young people who are embracing the market too much with short-term money. For example, they are using an FHSA to save for a down payment, which is fantastic — it’s the best vehicle to save for a home. But they are thinking of buying a home in the next year to year-and-a-half and they have 100 per cent of their money in equities. You can’t do that. It could work out well, or the markets could drop when you need that money.
Determining your time frame for your financial goals is one of the most important things to do when you are trying to figure out your asset allocation and the best place to put your money. Make sure you have liquidity that matches your investing timeframe.
If you have a group RRSP available at work, be sure to check out all the details. If you are turning down a 50 per cent or 100 per cent match for every dollar you put in, you are making a huge mistake.
FP: Is there a mindset or approach to money that will serve young people well regardless of the next curveball life or the markets may deliver?
DC: You owe it to yourself to know the basics. There are huge positive ripple effects of managing your money well. Research shows people who handle their money better are happier, less stressed and more productive at work and tend to have better relationships. Keep it simple. The best performers are always people who emphasize time in the market over timing the market. Long term, you are paid well to put up with and wait out the downturns.
