For many young Canadians, financial independence no longer feels as straightforward as finding a stable job, saving consistently and buying a home a few years later. Rent, groceries, tuition and housing prices have all made the traditional timeline more difficult to follow.
I also hear the familiar claim that young adults are simply “bad with money.” As a 21-year-old, I understand both sides of that conversation. I am still learning how to manage my own financial future, and I will admit that I probably spend too much time checking Ticketmaster for concert or baseball ticket prices. But reducing the issue to young people being careless with money misses the bigger picture.
A difficult starting point does not have to create a pessimistic financial outlook. Young people may not be able to control the housing market or the cost of living, but we can control the habits we develop, the accounts we open and the way we invest for future goals. The path may look different from the one followed by previous generations, but different does not mean impossible.
I take comfort in the following:
The chart considers two investors pursuing the same goal.
Investor A begins at age 18 and contributes $243 per month for 20 years. Over that period, they contribute $58,320 of their own money. Assuming a 5% annual return, investment growth brings the total to approximately $100,000 by age 38
Investor B waits until age 28. With only 10 years to reach the same goal, they must contribute $643 per month. They contribute $77,160 of their own money to reach $100,000.
Investor A contributes $18,840 less but reaches the same result. The difference is not that Investor A had more money. Investor A had more time. The point is clear: although younger Canadians face real challenges with housing affordability and the rising cost of living, one advantage remains firmly in their favour: time.
Young investors do not need to begin with a perfect plan or a large contribution. Starting with a manageable amount creates more years for contributions and compound growth, while leaving room to increase the amount as income and priorities change.
Starting young also builds confidence. Someone who begins investing in their early twenties learns how markets move, how risk feels, and how their own behaviour changes when investments rise or fall. Those lessons are valuable. By the time larger financial decisions arrive, the investor is already armed with hard-earned wisdom.
Investing early should not mean sacrificing every enjoyable part of life. A realistic plan leaves room for short-term needs and experiences while still setting aside something for the future. The goal is not perfection: it is consistency. A contribution that can be maintained is usually more useful than an aggressive target that makes a person feel deprived and causes them to stop altogether.
The right account depends on the goal
Choosing an account is not simply a matter of selecting whichever one appears to offer the largest tax benefit. The right choice depends on what the money is for, when it will be needed and what the investor’s income looks like today compared with what it may look like in the future.
For young investors who expect to buy a first home, the First Home Savings Account can be especially valuable. Eligible first-time home buyers can make tax deductible contributions, invest for growth within the account and make a qualifying tax-free withdrawal toward the purchase of a first home.
The immediate value of the FHSA deduction may depend on income. During school, internships, part-time employment or the early stages of a career, a young person may have relatively low or inconsistent income. Fortunately, an FHSA contribution can still be made while preserving the deduction for a future year when income is higher. This allows the money to begin growing inside the account without necessarily using the deduction when it has relatively little value.
A Tax-Free Savings Account may be more attractive when flexibility is the priority. TFSA contributions are made with after-tax dollars, but investment growth and withdrawals are tax-free. The money can be used for a home, education, an emergency, travel or another objective if plans change.
An RRSP serves a different purpose. Contributions reduce taxable income, investments grow on a tax-deferred basis and withdrawals are taxed as income when you may be in a lower tax bracket. RRSP contributions can be particularly useful when someone has a higher, steadier income and expects to withdraw the money during retirement at a lower tax rate.
For a young investor with lower or fluctuating income, using RRSP room immediately may not always produce the greatest benefit. That room can be carried forward and used later, when the deduction may save more tax.
Using the right account is only one part of the equation. The investment held inside it should also match the timeline.
Money intended for a home purchase in two years should generally be invested differently from money intended for retirement in forty years—even if both amounts are held in tax-advantaged accounts. Money needed soon usually requires greater stability. Money that will remain invested for many years may be able to accept more market movement in pursuit of greater long-term growth.
Progress is broader than homeownership
I hear the line “you can’t eat your house” around the office from time to time, and it always makes me laugh. The point is that a home can be valuable without needing to consume every available dollar.
A strong financial plan should leave room for everyday life, unexpected expenses and goals that have nothing to do with real estate.
That is another reason to frame the conversation around investing rather than only around buying a home. A young person can begin building wealth before knowing where they want to live—or whether homeownership is right for them at all.
They can build an emergency reserve, invest regularly and develop a plan that remains flexible as their career, relationships and priorities change. Progress can mean greater security, more career choices, the ability to travel or simply having enough financial flexibility to deal with the unexpected.
Young investors also have access to more information and investing tools than ever before. That creates opportunity, but it can also create confusion. Social media often makes investing look either effortless or impossibly complicated, with very little in between.
This is where good guidance becomes invaluable. The account, investment strategy, contribution amounts and time horizon should work together rather than being selected separately. Good guidance can also filter out the noise and help someone identify the decisions that matter.
Takeaways for the aspiring investor
A good advisor can help turn a large, intimidating goal into a sequence of manageable decisions. The most valuable conversations do not promise quick fixes. They help people understand what they can control and give them confidence that steady progress is worthwhile.
For a young investor, the first steps can be relatively simple:
- identify what the money is for and when it may be needed;
- select an account and investment strategy that match that objective;
- establish a manageable automatic contribution; and
- review the plan as income and priorities change.
It is also important to remove the judgement that often surrounds money. People are more likely to make informed decisions when they feel comfortable asking basic questions before those questions become urgent.
The financial environment facing young Canadians is challenging, but the outlook does not need to be pessimistic. Starting early gives us time to build habits, learn from experience and allow small decisions to compound into meaningful opportunities…regardless of the end goal.
Housing prices may influence the route young Canadians take, but they do not eliminate the possibility of financial independence. When young people begin investing, they are not only building an account balance. They are building future choices.
To me, that is the most encouraging part of starting young—and one of the most important messages an advisor can provide.
-VAUGHN THOMSON – Summer Intern
References
Canada Revenue Agency. (2025, October 10). Opening a TFSA. Government of Canada. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/opening.html
Canada Revenue Agency. (2026, February 2). First Home Savings Account (FHSA). Government of Canada. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html
Canada Revenue Agency. (2026, May 7). Registered Retirement Savings Plan (RRSP). Government of Canada. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html
Canadian Securities Administrators. (2024, April). 2024 CSA investor index. https://www.securities-administrators.ca/wp-content/uploads/2025/08/CSA-2024-Investor-Index-Full-Report.pdf
Financial Consumer Agency of Canada. (2025, October 14). Planning and saving for retirement. Government of Canada. https://www.canada.ca/en/financial-consumer-agency/services/retirement-planning/start-saving-retirement.html
Ontario Securities Commission. (2018, July 12). Getting started: Human-centred solutions to engage Ontario millennials in investing. https://www.osc.ca/sites/default/files/2021-01/inv_research_20180712_getting-started.pdf
Ontario Securities Commission. (2025, October 24). How does compound interest help your money grow? GetSmarterAboutMoney.ca. https://www.getsmarteraboutmoney.ca/learning-path/saving-money/growing-your-savings-with-compound-interest/
