More than one third of Canadians are planning to reduce their summer spending this year as inflationary pressures continue to squeeze household budgets, according to a new survey by Toronto-Dominion (TD) Bank.
Inflation and Spending Trends
The survey, released this week, found that approximately 35% of Canadians intend to spend less this summer compared to last year. This trend is driven by rising costs, particularly in transportation and everyday essentials.
Inflation in Canada rose to 2.8% in April, according to Statistics Canada, largely due to higher energy prices. Gas prices surged 28.6% after a 5.9% increase in March, a direct consequence of the ongoing war in Iran. These increases have significantly impacted Canadians' travel plans and discretionary spending.
“People are watching their dollars a little bit more carefully,” said Leslie Logan, a senior financial planner at TD Bank. “We are a bit more pinched across all the generations.”
Generational Differences
The survey highlights notable generational differences in spending plans. Among those cutting back, 40% cited higher transportation costs as a major concern, while 62% plan to redirect spending toward necessities like groceries, fuel, and housing.
Across generations, 36% of Gen Z, 38% of millennials, 42% of Gen X, and 26% of baby boomers plan to spend less this summer. However, nearly a quarter of Gen Z respondents intend to increase their summer spending—the highest proportion among all age groups and above the overall average of 18%.
Logan noted that Gen Z's spending behavior reflects their life stage. “They’ve got their first jobs, they’re graduating, and they’re really getting into experiencing life,” she said. “They are less likely to have kids, marriages, mortgages. They’re less likely to be thinking about their retirement.”
Gen Z's Spending Priorities
With fewer financial responsibilities, Gen Z is more inclined to spend on experiences. About 28% of Gen Z respondents plan to travel more this summer, compared to 18% of all respondents. Additionally, 22% are interested in attending concerts, festivals, or sporting events, versus 16% overall.
Logan cautioned that social pressures and social media have intensified a “Keeping up with the Joneses” mindset among younger Canadians. However, she emphasized that this does not mean Gen Z is ignoring their financial future.
“Even as they lean into experience-driven spending, many are still redirecting savings toward meaningful goals,” Logan said.
Saving and Investing
Among the 36% of Gen Zers who plan to reduce spending, 58% are putting the spare funds toward long-term plans, and 42% are saving for goals like buying a house or car. About 30% are building emergency savings, paying down debt, or investing.
“Rather than opting out of spending entirely, Gen Z is adapting by finding ways to enjoy experiences while still making progress toward their goals,” Logan said. “The key is balance and intentionality.”
Overall, the TD survey underscores the varied responses to inflation across generations, with many Canadians tightening their belts while younger consumers continue to prioritize experiences.
