Remember when experts blamed Millennial home buying woes on avocado toast? Well, in Canada, Millennials now need help buying regular toast. Ditto with Gen Z, according to a new RBC survey. The bank found that most parents are providing some form of financial help to their adult children between the ages of 18 and 40. However, the help isn’t for a down payment on a new home, but for groceries, rent, and utilities—assistance that remains disturbingly high even as these young adults approach middle age.
Canada’s Cost of Living Failure: Most Parents Need to Help Adult Children with Bills
Most parents (51%) need to help their adult children (ages 18 to 40) with bills, according to the survey. This is no longer just helping with a down payment to buy a home, but the collapse of stability for multiple generations. Nearly 1 in 3 (32%) of parents warn their children aren’t financially independent, while 35% of those providing support explicitly state the cost of living is too high for their adult children to stay afloat.
The younger these adults, the higher the odds of needing help. The survey found that more than 2 in 3 (68%) of parents are providing help for their 18-24-year-old adult children. Even among older cohorts (ages 35-40), the share of parents providing help was stubbornly high at 37%, almost 2 in 5.
Most Parental Help For Canada’s Young Adults Is For Groceries
The parental help isn’t for down payments, but many are forking over down payment amounts of cash. Over the past 12 months, parents provided an average of $6,151 in financial support for their adult children. Nearly 1 in 5 (18%) parents who provide support are giving between $10,000 and $19,999 annually. Inflation may be “low” according to StatCan, but the segments greatly outpacing CPI are the ones siphoning this cash—groceries, rent, and utilities.
Most of the parents providing support are paying for groceries (56%). The problem only slightly improved with age, with 43% of those with adult children aged 35-40 still helping with groceries. Help with groceries even outpaces unexpected emergencies (43%), which transforms this from a hiccup in finances to a systemic failure.
A quarter (24%) of parents providing financial help are helping with rents, a problem that worsens with age. Yes, you read that right. The share helping 18-to-24-year-olds matches the 24% average for all age brackets, but that climbs to 30% for those with children 30 to 34 years old.
Soaring energy bills and consumer debt are also contributing pressure. Utilities (21%) were the third-highest reason for help, followed by help paying off consumer debt (12%). The bank didn’t provide a breakdown, but TransUnion previously noted that consumer debt is increasingly being used to make ends meet, suggesting the accumulation may be an attempt to smooth the other three expenses that young adults are struggling to contain.
Canada’s Cost of Living Crisis Is A Structural Threat
Canada’s cost of living crisis is now a structural threat, dismissing the narrative that young adults are just making bad financial decisions. Only 15% of parents providing support cited poor money management as the reason for their help. The path to financial stability has structurally collapsed.
The wage-to-inflation mismatch has extended dependency into what should have been peak earning years, with 1 in 5 (19%) 35-to-40-year-olds still lacking financial independence. “This generation isn’t failing to launch. The runway has gotten longer and a lot more expensive,” says Melissa Leong, a personal finance expert cited in the bank’s report.
The fact that young adults need help in the current environment isn’t the only problem either. Parents also need to be vigilant, as their retirement incomes face the same hurdles in trying to beat the cost of living, regardless of what level CPI is reported.
“Put on your own financial oxygen mask first. As a parent, protect essential expenses, emergency savings, high-interest debt repayment and retirement before deciding what you can sustainably give,” warns Leong.
The bank’s report didn’t include a regional breakdown, but the most recent CPI report indicated this mismatch may skew by region—and not where many anticipate. CPI is currently hot nationally, but Eastern Canada is facing a much stronger inflationary environment. The problem is approaching crisis levels in provinces like Nova Scotia, where annual growth is now more than double the Bank of Canada’s target rate.
