How much money should I have saved by age 25?

With all these competing costs, coupled with Canada’s elevated rate of inflation, it might seem like you’re falling behind your peers financially—especially if you’re on TikTok or Instagram, where it seems like everyone is living their best life. But what’s a “normal” amount of savings for young adults in Canada? We find out.

Average savings for Canadians under 35

According to Statistics Canada’s pre-pandemic data on savings by age in Canada, households with a major income earner 35 years or younger saved an average of $4,782 in 2018. And its 2019 figures indicate that Canadians under 35 had average savings of $10,720 in the bank, along with $8,395 in a tax-free savings account (TFSA), and $9,905 in a registered retirement savings plan (RRSP). Two-thirds of Canadians (66%) were also saving for a major purchase within the next three years, such as purchasing a home or condo (11%), undertaking a home improvement (17%), taking a vacation (14%) or buying a vehicle (13%). 

Newer Statistics Canada data is not yet available, but numerous surveys have found that many younger Canadians are struggling financially. For example, a Leger survey released in September 2023 found that 51% of Gen Z and millennials are living paycheque to paycheque.

How to prioritize financial goals and obligations

Canadians in their 20s have a lot of bills to pay. Rents across the country are at all-time highs, food prices are rising, car insurance rates have soared in many provinces, and travel costs have also jumped since the pandemic. If you’re planning to buy a home, putting any extra cash and gifts into a first-home savings account (FHSA) may be a priority for you, too.

We don’t mean to overwhelm you, but we want to put things into perspective. What should you tackle first? Our list can help you prioritize things.

1. Pay off debt

Paying off loans—especially those with high interest rates, such as credit card balances—may be high on your priority list already. Credit card interest rates are typically around 20%. When a borrower falls behind on payments, the debt can quickly snowball, making it harder to catch up.

When you have a balance or miss payments, did you know that you could be paying interest upon interest? That’s called compound interest, which means interest you pay on the previously owed interest, not just on the previous balance. (Compound interest can also work in your favour when you have savings, like in a high-interest savings account.) 

Of course, many people in their 20s carry student loan debt, and that may be your next priority. As of 2021, the average Canadian student owes approximately $28,000 in student loans upon graduation, and it takes students about nine and a half years to pay off what they owe. So, if you owe for school, you’re not alone in this situation, despite the trips and lavish lifestyles you may see on TikTok and Snapchat.

The Canadian federal government eliminated the accumulation of interest on Canada Student Loans, as of April 1, 2023, but you must still pay any interest accrued before then. Some provinces and territories—Alberta, Saskatchewan, Ontario, Quebec, Nunavut and the Northwest Territories—charge interest on their portion of student loans. The interest rate varies, but it’s typically the prime rate plus a percentage. Ontario, for example, calculates interest at prime rate (currently 7.2%) plus 1%.

2. Build an emergency fund

Once your credit card debt is paid off and you’re on track with repaying your student loans, next on the agenda should be building an emergency fund, which should cover at least three months of living expenses. This will be helpful for situations like getting laid off, a car breakdown, a sudden health condition that doesn’t allow you to work, and so on.

You do have a few options for where to stash your cash, including registered accounts, but in an emergency, you’ll likely want fast and easy access to your money. A high-interest savings account (HISA) pays significantly more interest than a regular savings of chequing bank account, and you can withdraw the funds anytime.

3. Set goals—and set up savings plans to fund them

Once you have a solid debt repayment plan and an emergency fund, you can allocate some funds towards your future financial goals. Maybe you’re adopting a pet, or you’re starting a side hustle and need start-up costs. Maybe you’re aiming to take a big trip or buy a car in the next few years. An automated savings plan—which transfers a set amount to a specific savings account—can help you accomplish this faster. At CIBC, for example, you can set up AutoSave in your bank account to transfer a set amount—say, $100—to a specific savings account each time your paycheque is deposited. (This is what financial experts mean by “paying yourself first”!)

Your monthly contributions may be as small as $20 a week or as high as $100 or more, but the key is that they will add up over time. You want to maximize the interest you earn on it. Remember that compound interest info above? It applies in a positive way, too. You can earn interest on the interest you’ve saved. Check out our compound interest calculator—it may blow your mind to see how savings can grow over 30 years. (Your parents and future financial advisor will be impressed, too.)

Again, a HISA is a good option that pays more interest than a regular bank account. Currently, you can find HISAs with interest rates of 0.5% to 5.25%, which might include limited-time promotional offers* that pay additional interest for a few months to a year. While these rates can change, using a HISA can be a great wealth-building tool in the short term. And if the HISA is held in a TFSA, all the investment income you earn is tax-free.

Boost your savings with a special interest rate when you open your first CIBC eAdvantage Savings Account. Limits apply.

4. Choose your financial advice carefully

Parents and friends all have their own ideas about how best to save—especially if they’ve had success buying real estate or made a lot of money investing in the stock market. While some of their tips might be valid, true, their advice might not apply to your unique financial situation.

Your parents and older relatives grew up at a time when the economic climate was very, very different, and everyone has different financial needs and challenges.

Speaking of financial advisors… When determining how you’d like to save and invest your money, consider talking to a financial planner or advisor. They can take stock of your assets and debts, help you to determine your priorities and develop a financial plan.

Managing a big debt load while still making the most of your 20s isn’t easy. It might require careful budgeting, a lifestyle reset and tough purchasing decisions. Talking to a qualified professional about your options can be very helpful. Drawing up a debt repayment plan coupled with an automatic savings program in a high-interest savings account can lay a solid foundation for your financial future.

Read more about savings:

• How much does the average Canadian have in savings?
• The best way to save for retirement in your 20s
• How to start investing with ETFs in your 20s
• How much money should I have saved by age 40?