A new survey from Toronto-Dominion Bank Group has shed light on the financial challenges faced by Canadian students today, revealing stark contrasts with previous generations. The survey, which interviewed over 1,000 randomly selected Canadian adults who have attended a university, college, or technical school, not only highlighted the increased affordability struggles faced by today’s students but also uncovered intriguing generational differences in financial attitudes.
What the survey found
The survey highlighted a significant shift in the financial mindset of students, driven in part by recent economic challenges. Gen-Z respondents, in particular, are showing a more proactive approach to financial planning, with 40% of them indicating that they think about their long-term financial future when entering post-secondary education. This is in stark contrast to Millennials (18%) and Gen-X (11%).
The survey also revealed that the majority of former students (59%) would choose to consult with their bank or financial institution for trusted advice. Notably, Gen-Z respondents were more inclined to trust social media for financial advice (21%), while only 7% of Millennials and 2% of Gen X respondents did so.
How students can start preparing
In light of these findings, it’s crucial for Canadian students to take proactive steps to secure their financial futures. To do this, there are a few ways to prepare.
First off, create a comprehensive budget that includes all sources of income (scholarships, work, family support, and student loans) and subtract your expenses, such as tuition, fees, books, food, and rent. Banks usually provide useful tracking tools to track spending and create budgets to help students budget effectively throughout their academic journey.
Secondly, it’s never too early to start building credit. While Gen-Z respondents were less aware (12%) of the benefits of building a strong credit score, it’s essential for students to understand the advantages of responsible credit management, even through small payments.
Then, start saving by opening a savings account with your banking institution. If you use one that’s meant for students, you can automatically grow your savings with each debit card purchase.
Finally, invest!
In addition to taking proactive financial planning measures, investing can be a powerful tool for long-term growth. One investment option to consider is iShares S&P/TSX 60 Index ETF (TSX:XIU). XIU seeks to replicate the performance of the S&P/TSX 60 Index, which comprises 60 of the largest and most liquid Canadian companies.
XIU has several attractive features for investors:
- Low management expense ratio (MER): As of the time of writing, XIU has an MER of 0.18%. This means that investors are not burdened with high management fees, allowing them to keep a larger portion of their returns.
- Dividend yield: XIU offers a competitive dividend yield of 3.13%, providing investors with regular income in addition to potential capital appreciation.
- Diversification: Investing in XIU provides exposure to a diversified portfolio of leading Canadian companies, reducing individual stock risk.
Investing in XIU can be a smart long-term strategy, especially considering past recommendations from financial analysts. Historically, Exchange-traded funds (ETF) like XIU have been favoured by experts for their cost efficiency, diversification benefits, and the potential for solid returns over time.
Bottom line
The TD Bank Group survey underscores the pressing need for Canadian students to prioritize financial planning and seek trusted advice from their financial institutions. Gen-Z students, in particular, are taking a more proactive approach to securing their financial futures.
In addition to these measures, investing in ETFs like XIU can offer long-term growth potential. With a low MER, competitive dividend yield, and a history of positive analyst recommendations, XIU represents an appealing investment option.
In these challenging economic times, taking action now to secure your financial future is not just wise but essential. By combining prudent financial planning with smart investment choices, students and young adults can navigate the financial landscape with confidence and build a brighter future.
