Personal Finance

Young and financially savvy

For most of my professional career, I have primarily worked with the pre-retiree. These people are often over the age of 45 or older and either getting ready for retirement or already retired.

Working with younger people is not something I do often but I must admit, I really enjoy meeting young people who sincerely want to learn about money. I recently met a bunch of young adults who really seemed to have their heads on straight when it comes to financing.

The 18-year-old saver

Zak is 18 and works in the Diamond Mines making about $80,000 per year. He is not married and has no dependents. He just has lots of free cash flow. When I was 18, I was working as a waiter at a restaurant and was not making anywhere near $80,000 per year. I think it’s really cool to see.

Most 18-year-olds making any amount of money are more interested in partying, having fun and buying toys but for Zak, he sees making good money is an opportunity. Here are some of the things Zak told me:

  • This year, he maxed his RRSP with a $2000 contribution.
  • He is saving about $3000 per month easily
  • He has saved about $30,000 in his savings account
  • He is also putting money into his pension at work

When we met, Zak wanted to get some ideas on what he can do to do better. I told him he was already doing a lot of things not only right but better than any 18-year old I have talked to. I did give a few of my personal opinions:

  1. Maximize the Tax-Free Savings Account – instead of saving money in a taxable savings/investment account, the TFSA should be a priority.
  2. Continue to maximize the RRSP. He could either do this monthly or he has the capability of maximizing his contribution as a lump sum right upfront. This is a great dilemma to have.
  3. Learn more about investing. Zak is a naturally good saver so his next natural step is to learn more about investing.
  4. Continue to build his emergency fund. Right now he has about 4 months saved up for emergencies. There’s nothing wrong with holding 6 to 12 months especially if his TFSA and RRSP are already maxed out.

The young family

Marty is 25, married and about to have their first child. He makes $95,000 per year and is contributing 2% to a pension plan that the employer matches. He is putting another $150 per month into RRSPs through his bank. They have a house with a mortgage but no other debts.

Obviously, they have less free cash flow than Zak because they are a 1 income family and plan to be that way for a while as they plan to have a couple of children over the next few years.

When I met with Marty, he was not sure where to start or what questions to ask. I used my annual financial check-up document to find some direction for our conversation and it was interesting most of our discussion focused on protecting risks.


We talked about life insurance, wills, the enduring power of attorney, critical illness and having a good emergency fund. This is not completely surprising as then start to build a family.

He’s 22 and debt adverse

Brett bought a house a year ago and is about to be married this year. He is contributing to his company pension plan but other than that, he is focusing on paying down debt. He has a car loan and a mortgage and it was interesting to hear a 22-year-old so bothered by debt.

His main question was if he was wrong to choose debt reduction over-investing in RRSPs. I told him what I tell everyone about the RRSP vs Mortgage debate – both strategies are good. We talked about the benefit of the 38% tax deduction he would get with an RRSP contribution and using the tax savings to pay down the mortgage but Brett could not get over his need to aggressively tackle the debt. If he can maintain his strategy, he will have his mortgage paid off before his 40th birthday. Nothing wrong with that!

My five cents

Today I feel inspired by these young adults. Every day, I read about high debt levels, lack of savings, and stories of people struggling financially. All I hear over and over again is how young people are stereotyped as spenders. In our retirement workshops, Baby boomers are constantly telling me they wish they would have started sooner when they were in their 20’s.

It was great to meet people who not only have the desire and passion to get ahead financially but they are also developing good healthy financial habits at a very young age!


  1. aB

    Hm.. interesting combination .. inspiring and depressing at the same time.
    But good on them, they are doing well.

  2. Bet Crooks

    These are inspiring stories and a pleasant change from the doom and despair in the mainstream media. I think there are more young people like them than we realize. They just aren’t reported on because they aren’t as shocking “news” as their opposites.

  3. Eric

    There’s not enough newsworthy content in the fact that people of my generation manage to put in $5k (now $5.5k) a year into their TFSA. No scapegoat target, no stereotypes to play up…

  4. HS @ SmartMoneyJunction

    It’s quite inspiring to see these youngsters doing so well and that too so early in their lives. I hope other 20 somethings follow suit and start planning about finance now itself rather than delaying it until later in life.

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