Canada’s ‘Bank of Mom and Dad’ Economy

Commentary

Even as Canada reportedly raked in a cool $500 billion in new investment commitments at the mid-September Canada Investment Summit in Toronto, beneath the glamorous headlines, many Canadians are living precarious lives propped up by financial transfers from their families.

A report released by the Royal Bank of Canada (RBC) on Sept. 15 argues that a “new kind of ‘Family Plan’ is taking shape” in the country that goes well “beyond shared cell phone plans or streaming services” to encompass “the everyday costs of adult life for their children.”

The bank commissioned polling firm Ipsos to survey 1,000 Canadian parents with children aged 18 to 40, a sample that was weighted to ensure it reflected the country’s demographics. It found that a full 51 percent of parents had transferred money to an adult child in the past year, with the average amount topping $6,000.

Financial support is by no means limited to children in their 20s. The survey indicates that 21 percent of parents with children in their early 30s, and 19 percent with children in their mid-to-late 30s, are still supporting their offspring financially.

The most common categories funded by parents are groceries, unexpected expenses, rent, utilities, and even credit card and debt payments.

Groceries and rent topping the list corresponds to two unavoidable expenses—food and shelter—that have been hit particularly hard by inflation in recent years. The price of a typical grocery basket rose 18 percent from 2021-2023, and while rent has seen steady declines over the last two years, the national monthly average is still hovering above $2,000.

With grocery and housing costs straining household budgets, it is perhaps unsurprising that “unexpected expenses” rank among the top three costs Canadian parents most commonly cover for their children. RBC data from this year shows that 42 percent of Canadians worry that even one major expense could derail their finances.

The “Bank of Mom and Dad” is actually being supplemented even further by the “Bank of Grandma and Grandpa.”

Grandparents are increasingly being called upon to provide financial support to their children and grandchildren, according to an RBC report released in July 2024. The report notes that for some grandparents, “what was once a desire to help, has become a necessity.” It found that 21 percent are supporting at least one adult child over age 25, while 30 percent have given money to grandchildren. Notably, among grandparents who provide financial help, 54 percent are sacrificing their own savings to do so.

Homebuying Support

If parents are increasingly shouldering the financial costs of daily life for their children, it is perhaps no surprise that, according to a CIBC report published in June 2024, “relying on a wealth transfer from their parents in order to purchase a home is becoming the norm in Canada.”

The authors found that the share of first-time homebuyers that received financial help from family had risen to 31 percent from 20 percent in 2015. The average first-time homebuyer gift was $204,000 in British Columbia and $128,000 in Ontario.

Parental help with buying a home extends beyond simply contributing to all or part of a down payment.

A Statistics Canada study released in May 2024 found that 17.3 percent of residential properties owned by people born in the 1990s are actually co-owned with their parents.

While some of these co-ownerships are cases of multi-generational living, many are instances of “co-signing,” where parents sign alongside their children, thus agreeing to take on responsibility for any unpaid debt. The rate of co-ownership is highest in the two most unaffordable provincial housing markets in the country: British Columbia and Ontario.

Helping to cover the ever-inflating costs of daily life, shouldering the burden of hefty downpayments, and taking on the risk of co-signing mortgages are all natural familial responses to the hardships of offspring in need. For those who can afford them, these measures preserve and build generational wealth.

But while family help is laudable on an individual level, the excessive dependence of young Canadians on generational wealth transfers—for everything from rent, to groceries, to their first home—is evidence of a deeply unhealthy economy.

Meanwhile, polls indicate that Canadians are sensing this sickness in our economy, and as a result, deep pessimism is taking root among much of the population.

An Ipsos poll released in April 2024 found that 72 percent of Canadians who do not own a home have given up on ever owning one. According to a multi-country Pew Research Center poll published in January 2025, 78 percent of Canadians think children today will be worse off financially than their parents, with only 16 percent saying they will be better off.

GDP growth and foreign investment figures are valid ways to measure economic performance, but so is the ability of young adults to pay rent and buy groceries without a transfer from their parents or grandparents.

The ultimate benchmark of national economic success will be achieved when family support again becomes an act of generosity, rather than a requirement for survival.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.