Young Adults Are More Engaged In Their Finances Than Parents Think

Despite what their parents think, young adults today are very engaged in their finances, particularly as they face high inflation and cost of living. According to a recent RBC poll, 59 per cent of young adults aged 18-24 say they are very or extremely engaged in their finances, while less than half (47 per cent) of parents think they are, revealing just one of the perception gaps between young adults and parents towards various aspects of finances.

The poll, which surveyed both young adults and parents, also found that the young adults who reported being engaged in their finances were more likely to be confident in their ability to save (83 per cent) and invest (60 per cent), and experienced increased feelings of financial responsibility (82 per cent).

“The survey shows that young adults today are working hard to secure their financial future,” said Jason Storsley, Senior Vice-President of Everyday Banking and Client Growth at RBC. “They have both an optimistic and pragmatic view of the future, acknowledging the obstacles but looking to harness opportunities with more resilience than they are perhaps given credit for.”

Revealing the perception gap between parents and their children
There are other notable gaps in perception among parents, including young adults’ attitudes around finances. As young adults look towards the future by taking action to achieve longer term financial goals, parents may not be as aware they’re doing so. For example, while one-third (32 per cent) of young adults are saving for a house and one-fifth (19 per cent) are already saving for retirement, only 23 per cent and 12 per cent of parents think this is the case, respectively. Being aware of young adults’ long-term goals – and the steps they are taking to achieve them – is important to help guide their journey and set them up for success.

And while the majority (83 per cent) of young adults say that financial stability is key for overall happiness, nearly as many as (83 per cent) say they need more information and support on money management, and two-thirds (68 per cent) report feeling overwhelmed and needing help. Yet parents underestimate these feelings among young adults comparatively, which highlights a valuable opportunity for parents to become involved earlier in their children’s financial journey to help ease some of the stressors they face in trying to sort out their financial future.

Youth plan to battle cost of living and inflation by taking on side hustles
The survey findings also revealed that young adults identify different challenges than those faced by their parents’ generation. Over 70 per cent of young adults believe their biggest challenge is cost of living, followed by inflation (54 per cent) and saving for a home (28 per cent). Parents, on the other hand, found their main challenges as a young adult to be finding a job that pays well (44 per cent), finding a job they like (35 per cent) and saving for a mortgage (33 per cent).

Even though these challenges are outside their control, young adults are finding ways to work with their realities. Seven-in-10 young adults (68 per cent) expect to take on a side hustle to supplement their income and over half (51 per cent) expect they will work for themselves or be an entrepreneur at some point. Parents had much lower expectations, with 44 per cent and 35 per cent, respectively, who believed their child would take these entrepreneurial routes.

Seeking advice from many for their finances
When it comes to seeking financial advice, it turns out that young adults rely equally on their parents (45 per cent) and their bank or a financial advisor (44 per cent), despite a majority (71 per cent) of parents who think their children turn to them on these matters.

Other sources of relevant financial information include social media (25 per cent), such as TikTok and Instagram, friends (27 per cent), online articles (26 per cent) and other family members (26 per cent).

Some tips that parents should take into account when considering helping with their children’s finances:

• Open up about money – As young adults report their parents being their primary source of information, now’s the time to start having these conversations, and including an RBC advisor in these conversations can help by providing professional tips and resources for moving forward. A valuable resource that parents can use to help start the conversation is a social video content series called Money in Real Life, which provides an intimate look into popular artists’, athletes’ and gamers’ experiences and relationship with money, career development and more.
• Think critically about finances – With young adults going to a variety of sources for advice, having the know-how to sift through misinformation and poor advice is imperative to learning how to spend, save and invest wisely. That’s why RBC has collaborated with McGill and The Globe and Mail to offer a free Personal Finance Essentials course to help Canadians of all ages enhance their knowledge and skills when it comes to financial literacy.
• Learn to invest – Young adults are increasingly investing for both short- and long-term goals, but as investing comes with risks, it’s important to learn how to do so responsibly. RBC Direct Investing offers a Practice Investing Account, so anyone can invest risk-free and see how their earnings could grow.
• Prepare for the future – Many young adults report they see a side hustle or entrepreneurship on the horizon, making it advantageous to start considering the future now. Through RBC Future Launch young adults can leverage resources to grow their network, skills, experience and enhance their mental health. This includes partnerships focused on personal finances, entrepreneurship, and success stories for inspiration.