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Saving and investing strategies for millennials and Gen Z

May 16, 2024

Written by Lisa Jackson

Cheerful young woman in convertible car enjoying road trip during sunset

Key takeaways

  • Establishing clear financial goals to guide spending and saving habits is essential for wealth-building.
  • Budgeting strategies — such as the 50/30/20 rule, paying yourself first and creating an emergency fund — and organizing your savings into separate "buckets" are savvy strategies for achieving financial stability.
  • Picking savings vehicles that match your goals and how much risk you can tolerate can help grow your wealth. Then, think about which "container" accounts work best for investing (like a TFSA or RRSP).
  • Don't put all your eggs in one basket! Spread out your investments to help manage risk and boost your chances of growing your money over time.

Saving and investing strategies for millennials and Gen Z

In today’s uncertain times, younger people have extra challenges growing their wealth. From skyrocketing housing costs to the pinch of inflation and higher interest rates to paying for post-secondary education, building wealth can feel like an uphill battle. If you’re wondering how to start saving and investing, given all these hurdles, you’re certainly not alone.

But here’s the good news: as a young person, you have time on your side. With the right tools, you have decades to build up a healthy nest egg and reach your financial goals. 

“Time may be the biggest factor in growing your wealth. I can’t stress enough how important it is to start putting money away as early as you can,” says Jason Daly, VP of Savings and Everyday Banking Solutions at Tangerine. “Did you ever hear someone say that ‘the best time to invest was yesterday?’ It may be a cliché but it’s also often true.”

From choosing the right savings products to tapping into the power of compounding, here are some smart saving and investing strategies that can help you take charge of your financial future. 

Step 1: Pinpoint your priorities — and make a plan to achieve them

Setting financial goals can help you get where you want to go in life. If your dreams are vague or unrealistic, you’re less likely to reach your destination on time (or at all!), sort of like “winging it” on a road trip. Goals, however, are like having a GPS: they help steer you in the right direction.

Start by doing a little soul-searching about your priorities. What do you value above all else? What do you want to achieve in one, five, and 10 years? What life do you envision for yourself? Then, jot down your short-, medium-, and long-term goals:

  • Short-term goals are typically achievable within one or two years, such as saving for a vacation. They also include goals for which you will want to be able to access your money in the near future, such as building an emergency fund.
  • Medium-term goals like buying a car, starting a business, or paying off debt usually span one to five years.
  • Long-term goals extend beyond five years and often involve big milestones such as saving for retirement, a down payment on a home, or a child’s post-secondary education.

This exercise will help you create a plan for your money, prioritize your spending and saving, and work towards achieving your dreams — whether buying a condo, travelling the world, or starting a business.

Step 2: Make a budget

Once you know where you want to go, the next step is to create a budget, which can help you track how you spend and save your money based on what’s most important to you. That means figuring out how much money to allocate towards fixed costs (housing, groceries, utilities, etc.), variable, non-essential spending (entertainment, clothing, dining out, vacations, etc.), and savings/debt repayment. Consider the following tips to help you learn how to budget like a boss and potentially supercharge your savings.

Stick to a system

There are many ways to budget, but popular approaches include: 

  • the 50/30/20 budget rule (or 60/30/10, or whatever ratio is achievable, depending on your housing costs and other circumstances), which involves dividing your post-tax income into "needs," "wants," and "savings/investing/debt repayment"
  • the envelope method, where you divide your expenses into categories, label an envelope for each one, and then fill them with cash to cover the expense
  • zero-based budgeting, where you allocate all your money from each paycheque so that you end up with $0 left over. 

Decide what works for you, and then stick to one system.

READ MORE: A beginner's guide to budgeting

Pay yourself first

Don’t think of budgeting as a chore or punishment — it’s about sticking to your goals and rewarding “future you.” Consider the idea of "paying yourself first," which means that as soon as a paycheque comes in, a set amount of it is automatically transferred to your savings. You never get the chance to reconsider — all you see in your chequing account is what's left. (Tangerine Clients can set a "pay yourself first" Money Rule that makes it an easy habit to stick to.)

Create a dedicated line in your budget for savings and watch the savings add up. For instance, you may wish to transfer $250 bi-weekly from your chequing account into a vacation fund. Over one year that adds up to $6,500!

By automatically setting aside a portion of each paycheque for savings, you’re taking control of your finances and prioritizing your dreams. Use this savings calculator to help calculate when you can reach your savings goal.

Cut costs

Cutting down is like financial decluttering: you’re getting rid of things you don’t need (or want!) to spend money on. That gym membership that you never use? Cancel it. Got subscriptions to five streaming services? Pick one and kiss the others goodbye. It’s about deciding which spending truly sparks joy.

Embracing a minimalist lifestyle — whereby you focus on simplicity and only buy what’s truly important — can also help you save a lot of money. By reducing frivolous spending, you can save more and be more intentional with your money, bringing you closer to achieving your dreams.

Expect the unexpected

Whether it’s a basement flood or a sick pet, an emergency fund is a buffer against life’s many surprises. Many experts recommend saving three to six months of your fixed expenses, but put aside whatever you can afford. Even saving a little bit can help in a jam! It’s a safety net that can help you avoid going into debt, changing your plans or giving up on your goals.

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Choose a term option to meet your needs

Step 3: Set up savings “buckets”

If you haven’t organized your bank accounts, things can get messy. Imagine having a big chunk of money just sitting in your chequing account — how do you know what’s for saving and what’s for spending? It’s a recipe for overspending and veering off course. 

A savvy approach is to create savings “buckets” — open multiple bank accounts designated for specific financial goals. For example, you might have one account labelled “Europe trip” or “kitchen renovation.” With Tangerine, you can hold multiple savings buckets and assign each one a name and custom goal, which lets you track your savings progress. Then, set up automatic transfers to keep your savings accounts topped up. Overall, bucketing can make saving more manageable and keep you laser-focused on the prize. 

READ MORE: The 52-week challenge: supercharge your savings

Step 4: Choose the right savings or investing “vehicle”

Some people make the mistake of using one type of product for all their financial needs but then lose out on opportunities to grow their money. From Guaranteed Investment Certificates (GICs) — called Guaranteed Investments at Tangerine — to mutual funds, there’s a wide variety of savings and investing products to help you reach your goals faster.

Here are the main vehicles to choose from
High-interest savings accountA type of savings account that typically offers significantly higher interest rates on deposits compared to a chequing account. You can easily access the money when needed.
Guaranteed Investments (GICs)A GIC provides a guaranteed interest rate over a set term. It’s considered one of the safest investment products out there.
BondsBonds are debt securities issued by governments, municipalities, or corporations to raise revenue. They are generally less risky than stocks.
Individual stocksInvestments in single companies. With virtually unlimited choices, picking which stocks to invest in requires time, research, and attention.
Mutual fundsProfessionally managed investments offering various options and include stocks from different companies, bonds, cash, and similar assets in one package. These investments aim to capture potential market growth. Management fees may vary. All investments carry the risk of loss, so review the prospectus before investing.
Exchange-traded funds (ETFs)Similar to mutual funds, ETFs can include many company stocks and track various indexes, such as broad stock markets, specific industries, or bonds. But just like a stock, they are traded on an exchange. You usually need to monitor your investments over time. Management fees may vary. All investments come with the risk of losing money, so make sure to read the prospectus before investing.
Money Market FundsMoney market funds are a type of mutual fund that contains a diversified portfolio of short-term fixed-income investments. They offer a conservative investing opportunity; however, like all investments, they still carry some risk.

Source: A beginner's guide to investing 

 Selecting the “right” product largely boils down to your financial objectives, time horizon and risk tolerance. 

Can you handle the fluctuations of the stock market? Or do you prefer a secure place to store your money, even if it means lower returns? Do you plan on spending the money in one or 10 years? Here are some pointers to help steer your vehicle choice:

  • For emergency funds and short-term savings: A high-interest savings account or money market fund provides a safe and accessible spot for short-term savings. A high-interest savings account is also typically covered by the Canada Deposit Insurance Corporation (CDIC) up to a certain amount for its eligible members. However, security comes with a trade-off: high-interest savings accounts usually bring lower interest rates than the stock market. 
  • For medium-term goals: Saving up for a new car? A down payment for a home? A GIC offers a low-risk option with a fixed interest rate, which can be an option for money you don’t need immediately and want to keep safe. 
  • For long-term goals: If you’re saving for something more than five years away, like retirement or a child's education, investing in stocks and bonds (either directly or in something like a mutual fund) can help you get there. Over time, a diversified, risk-appropriate investment portfolio might produce returns that beat inflation, whereas high-interest savings accounts usually just keep up with it. But the stock market can also be unpredictable, so your returns may go up and down over time. However, if you’re not planning to use the money in the near future, your portfolio will likely have time to recover from any market drops. 

Think of it this way: choosing the right product to save or invest in is like picking a vehicle for a road trip. Just as different rides offer various features and performance levels, every savings or investment product comes with different returns, accessibility options, and risks. A flashy Ferrari is likely a wrong choice for a cross-country family road trip, whereas a minivan might be a perfect fit.

Step 5: Pick a “container”

Now that you’ve figured out your vehicle, where do you park it? The next step is to pick an account type — the “container” in which to hold your savings and investments, like a Tax-Free Savings Account (TFSA), a Registered Retirement Savings Plan (RRSP or RSP), a First Home Savings Account, a Registered Education Savings Plan (RESP) or a non-registered account. All of these accounts can be powerful tools for helping you reach your financial goals, especially since some come with tax advantages, helping you invest and grow your money tax-free.

Account typeWhy it’s awesomeWhat it can hold

Tax-Free Savings Account (TFSA)

Invest and grow your money tax-free, as long as you stay within your contribution limits. You can withdraw the money at any time without paying taxes, but you don’t get a tax deduction for your contributions.

Any qualified products, such as cash, HISAs, GICs, ETFs and mutual funds.

Registered Retirement Savings Plan (RRSP or RSP)

Designed for retirement savings, invest and grow your money in a tax-deferred account. Contributions can be deducted from your income taxes, but you will be taxed on withdrawals.

Any qualified products, such as cash, HISAs, GICs, ETFs and mutual funds.

First Home Savings Account (FHSA)Designed to help you save for your first home, invest and grow your money in a tax-deferred account. You can get a tax deduction for your contributions.

Any qualified products, such as cash, HISAs, GICs, ETFs and mutual funds.

Registered Education Savings Plan (RESP)Designed to save for a child’s post-secondary education, invest and grow your money tax-free. Contributions cannot be deducted from your income taxes.

Any qualified products, such as cash, HISAs, GICs, ETFs and mutual funds.

Non-registered accountInvest and grow your money, but you must pay taxes on anything you earn.

Any qualified products, such as cash, HISAs, GICs, ETFs and mutual funds.


When picking a container, think about what you want to achieve with your money and how long you can leave it invested. Consider how much you can contribute when you might need to take out the money and any tax benefits. For instance, a TFSA could be ideal for holding your emergency fund because you can withdraw it anytime without penalty. Whereas if you’re saving for retirement, contributing to an RRSP reduces your taxable income, and your money grows tax-free until you take it out.

READ MORE: RSP vs TFSA: Understand the difference

Step 6: Know your risk tolerance

In a nutshell, risk tolerance is how comfortable you feel with not knowing how much your money will earn and how you handle potential losses if your investments decrease in value. Your risk tolerance depends on what you want to achieve with your money, how long you can leave it untouched and how comfortable you are with taking risks. Here are a few questions to ask yourself: 

  • What are your goals? Saving for longer-term objectives (like retirement) may mean you can take on more risk, while other goals (like creating a hefty cash cushion in your emergency fund) may require more stability.
  • When might you need to access the money? If you may need to tap into your cash in the next year or so, it might be best to minimize your exposure to risk and potential losses by using a safer savings vehicle such as a HISA.
  • How much time do you have? Is your time horizon one, five, or 10+ years? If you don’t have a lot of time to ride out the volatility of financial markets, a more secure investment with lower returns (like a GIC) may be a good option. But if you’ve got 10 years or more to spare, you have the time horizon to buy and hold for the long haul and potentially recover from any stock market dips.
  • Can you stomach potential losses? Do market dips trigger panic attacks? Or do you “stay calm and invest on”? Be honest about your reaction. If you find yourself worrying too much about your investments, the potential for higher returns might not be worth the stress. For peace of mind, you may want to consider a GIC, a high-interest savings account, or a lower-risk investment portfolio.

Generally, taking on more risk can lead to higher rewards. If you want to grow your money as much as possible and can tolerate some ups and downs, you might consider investing in the stock market. But if you need easy access to your savings or prefer low-risk options, a high-interest savings account or GIC might be a better place to park your savings. 

Step 7: Diversify, diversify, diversify

Once you know your risk tolerance, you can build a diversified investment portfolio that matches it. Ideally, you want to spread your money across different types of investments — a mix of cash, stocks, bonds and GICs — to manage risk. This is known as diversification. For example:

  • For a low-risk portfolio: You might stash most of your money (around 70-80%) in lower-risk investments like bonds, a high-interest savings account or GIC, and the rest (20-30%) into riskier assets such as stocks.
  • For a medium-risk portfolio: You might have a more even split, with about 50% in equities and 50% in bonds or other conservative investments.
  •  For a high-risk portfolio, this typically means investing most of your money (around 70-80%) in riskier assets like stocks and the rest (20-30%) in safer investments.

Note that it's possible to achieve your desired level of risk and diversification with just a few, or even a single, mutual fund or ETF. Often, when applying online for a mutual fund (including at Tangerine Investments), you will be assessed for your risk tolerance and time horizon and then offered options for your investments that are considered the most appropriate, based on your assessment.

If you’re okay with more risk, you might invest the bulk of your savings in higher-return investments, like stocks. If safe storage is your jam, you might allocate a bigger chunk of change into bonds or a GIC, or even cash in a high-interest savings account. Not putting all your eggs in one basket may help minimize the blow of any one decision's possible poor performance.

Step 8: Invest early — and often

Here’s a shocking mathematical revelation: starting to invest a little at 25 years of age can leave you with more money at age 65 than if you started with a larger amount at age 40. The key to this is a phenomenon called compounding. As your money grows, and you reinvest any interest or dividends you earn back into your portfolio, any further growth becomes exponentially larger over time. Here's an illustration of this phenomenon using a compound interest calculator

Age at first investment

Bi-weekly contribution

Number of years to invest

Estimated interest rate

Total amount contributed

Total interest


Future value by age 65
















For illustrative purposes. Source.

Be aware, however, that if you're invested in stocks, they are prone to upturns and downturns, so the year-over-year growth would not be as consistent or predictable as these calculations can make it seem.

But the conclusion is clear: Investing in your 20s can lead to a bigger payoff down the line. When you start investing early, your money has more time to grow, thanks to the magic of compound growth — like a tiny snowball rolling down a hill, it has the potential to grow bigger and bigger until it becomes a giant snowball when it reaches the bottom. By investing early and often, you can set yourself up for success.

Your financial future is in your hands — and Tangerine is here to help

The road to building wealth may seem daunting, but armed with the right tools and strategies, it can be an empowering journey. Remember, even small steps today can lead to big rewards tomorrow.

Now that you have learned the fundamentals of saving and investing in your 20s, it's time to take action.

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