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May 15, 2021

Canada's youth have spending power

Dollar signYoung money.

According to a new report from BMO Economics, Canada's youth will have more spending power than their parents over their lifetime.

Years ago, it seemed the younger you were, the worse off you were.

But now it seems the kids will be all right.

Sal Guatieri, vice-president, BMO Capital Markets says, the 20 to 24 age group has seen real median income gains since 1996.

And, although youth today are starting out with a lower income, they have the potential to achieve a greater increase in spending power over their lifetime with the right education, by gaining valuable work experience and by eventually moving into higher paying careers.

The report also states that an upturn in compensation growth, which was driven in part by the resource and housing booms, has generated gains in spending power since the mid-1990s.

"This upward trend in income should continue, albeit at a slower pace in the near term, as the economy returns to full employment next year," adds Guatieri.

And increased spending power means higher demand for many businesses, particularly in the retail and service sectors. 

The report notes, that one-in-four Canadian business owners are expecting to increase their workforce in 2013, with large companies more likely than small companies planning to hire more employees. 

Perhaps they are getting prepared for the influx of new business with the young money.

By Donna Donaldson, MSN Money

Do you think today's youth will be better off financially in the future? Why or why not?



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

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