A new survey from the National Payroll Institute suggests concerns over the rising cost of living and impact of tariffs are pushing working Canadians to save more.
The 17th annual survey completed by Canada’s Financial Wellness Lab shows 51 per cent of respondents reported trying to save more this year, up from 42 per cent in 2024.
The share of working Canadians who saved $10,000 or more in the past year also rose to 29 per cent from 23 per cent last year.
At the same time, the proportion of financially stressed workers decreased to 36 per cent in 2025 from 41 per cent last year following four years of increases.
One surprising result from the survey finds Gen Z workers in their twenties save an average of 11 per cent from each paycheque, higher than any other generation. 30 per cent of Gen Z respondents reported saving $10,000 or more in the past year and have turned their efforts toward paying off debt.
Time is on Gen Z’s side
By both paying off debt and saving money, Gen Z and even Millennials (born between 1981 and 1996) have an advantage over older generations thanks to the power of compounding over time.
Albert Einstein called compound interest the eighth wonder of the world, “he who understands it, earns it. He who doesn’t, pays it,” he was quoted as saying.
Whoever doesn’t understand how debt compounds at a 20 per cent plus annual rate on the balance of a typical credit card is destined for a life of financial struggle.
This week Statistics Canada reported the amount households owed in the second quarter of this year grew to $1.75 for every dollar of income we take in.
In the 1990s, that debt-to-income ratio was 90 cents to the dollar before Gen X (born between 1965 and 1980) and Baby Boomers got comfortable with perpetual debt.
Debt is now part of life - especially for most homeowners - but whoever understands compound interest will understand every dollar that goes toward paying down debt has a risk-free, tax-free return of whatever rate applies to it.
Whoever understands compound interest, also understands the tables can be turned by investing in a way that produces steady and reliable returns over time.
How debt reduction and investing together increases net worth
You don’t need to be Einstein to understand that debt is considered a liability that should be eliminated and investments are considered assets that should grow.
Assets minus liabilities equals net worth. Net worth rises over time as liabilities fall and assets rise in price.
Household liabilities include any debt like mortgages, consumer lines of credit, and student loans.
Debt reduction is as simple as paying it down over time but it will go much quicker by consolidating high interest debt into one low interest loan. Mortgages usually have the lowest interest rates because they are secured by physical property, and that’s where a home equity line of credit can come in handy.
Tabulating your assets
Household assets can be open to interpretation. As an example, a motor vehicle is technically an asset but quick depreciation makes it a bad one. In most cases, though, it manages to retain enough value to cover the balance on a car loan as it declines. It’s probably most realistic to consider a vehicle - or household appliances neither an asset or a liability.
When growing your net worth it’s assets that hold or grow their value that count. That includes investments in registered retirement savings plans (RRSP), tax-free savings accounts (TFSA), company pensions, and any other savings vehicles.
Assets also include the appraised value of the family home and any other real estate owned by the family. Include the entire amount if you are measuring household net worth or your ownership portion if you are measuring individual net worth.
Business owners can also include their portion of equity in their businesses.
Works of art, or collections that hold or grow their value should also be included.
Using that formula, financial planners can track and target net worth over time to see where they stand. The dollar figure will probably vary depending on your age but the objective is to see it rise over time.
