Among several Canadian habits affected by the COVID-19 pandemic, one thing that will likely continue is how people, especially millennials, are rethinking their personal financial positions.
Even beyond the ongoing tax season, young people appear to be looking at ways to save or invest money for better returns in the future, experts say.
A large percentage of people aged 24-35 are “very committed to saving more and investing,” Carissa Lucreziano, vice-president, financial planning and advice, CIBC, told Global News on Friday.
While such goals are laudable at any age, it is particularly so “for this demographic as actions now can have long-term benefits,” she added.
New findings further show that millennials have grown far more concerned about better managing their money over the last year than they were before the pandemic.
Online search trends, analyzed by Semrush, a data provider of online behaviour, found that Canadian millennials are visiting banking-related websites more than any other age group lately.
During the first wave of the pandemic — March 2020 to September 2020, and the second wave — October 2020 to January 2021, nearly “23.6 per cent of people aged between 24-35,” and “20.7 per cent of people from the 35-44 age group” were seen visiting banking websites, the Semrush findings showed.
The data “reflects a general snapshot of the market as a whole,” Eugene Levin, chief strategy officer at Semrush told Global News.
“Nationwide searches show us that now people are more conscious moneywise,” Levin added.
“They are using this time (the pandemic) to plan out their finances to either mitigate their financial insecurity or improve their financial security,” Levin said.
Moreover, searches for tax-free savings account or TFSA have increased by 45 per cent nationwide, the findings show.
Having a tax-free savings account ensures that the money within the account grows tax-free.
While it is similar to how funds grow free of taxes within a Registered Retirement Savings Plan or RRSP, contributions made to a TFSA do not provide an income tax deduction.
Withdrawals from the TFSA, however, are always tax-free.
Apart from increased interest in tax-free savings, there has also been a yearly increase from 2020 to 2021 in searches for “investment app by 173 per cent, along with an increase by 646 per cent in searches for the Wealthsimple app” followed by a 442 per cent increase in searches for the Questrade app,” Levin said.
Given the uncertainty in the job market, people “are more conscious of their options,” he suggested.
“This reflects a growing interest among Canadians to invest online for themselves as an additional financial source,” Levin noted, adding, “it also relates to the spike in TFSA searches, as people can also use them for investment purposes.”
A CIBC poll conducted from Feb. 16 to Feb. 17, 2021, based on an online survey of 3,026 randomly selected Maru Voice Canada panelists, reflected similar findings.
Millennials have been “our most digitally active age group,” a CIBC spokesperson told Global News in an emailed statement.
“Thirty-eight per cent” of people aged between 25-34 said their “spending has decreased during the pandemic,” the statement said.
Further, 36 per cent from the same age group said their savings had “increased during the pandemic,” while 35 per cent said “they will use extra money to save for a specific goal.”
A large section (nearly 34 per cent) also plans to put more money into investments like TFSA or RRSP, or “use excess money to build emergency savings,” the CIBC data showed.
However, there has also been a spike in loans, given the nominal interest rates, and the fact that people are still reeling from the economic losses of the pandemic, according to Semrush.
As a result, searches for “installment loans” has increased by 38 per cent, followed by searches for “payday loans” that has seen a sharp 25 per cent hike.
This clearly reflects the “financial insecurity among Canadians who have limited options,” and that “people need more time to support their economic recovery,” Levin said.
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