Are we in for The Roaring Twenties 2.0? Let’s not repeat the same mistakes.

03/08/2021   |   Dentistry, Financial Planning

The “Roaring Twenties” began after the 1918-19 global pandemic and ended when the stock market crashed in 1929, ushering in the Great Depression. Among several reasons for the crash, an overheated economy driven by out-of-control, debt-fuelled consumer spending was partly to blame.


In 2021, as we look to the post-COVID-19 future that is hopefully just ahead, the stage is set for another period of rampant consumer spending that could look a lot like the Roaring Twenties. But this time, if Canadians act prudently to balance the “FOMO” desire to spend on the “here and now” with the need to make concrete progress against important long-term financial goals, we can hope to experience a “Prosperous Twenties” without setting up a painful fall at the end.

We’ve recently seen interesting and contradictory economic news in Canada. StatsCan reported that the pandemic put Canada’s economy into a tailspin. Our national GDP declined by 5.4%, mostly due to major economic contractions in Q1 and Q2. But things improved in the latter half of the year and Q4 was quite strong, showing 2.3% growth. This echoes the experience of many of our clients; locked-down from March to May, very busy from June to December. At the same time, data show that many Canadians have been saving more and spending less, thereby increasing their net worth. With no vacations, daycare, summer camps, sports or concerts to spend their money on, many Canadians saw their savings grow like never before. For those who stayed invested, buoyant markets helped as well.

This is not to diminish the pain endured by many, especially practice/business owners who were forced to shut down for months. Many of our clients had a very tough 2020, and had to rely on government programs and/or draw on their savings to make it through. Their net worth may be lower than it was a year ago.


On the flip side, for some businesses 2020 was a good year; spending on home and backyard renovations, home office technology, cosmetic surgery and orthodontics were all higher. If you are in one of those areas, you may have had your best year ever.


While 2020 was a difficult year for people working on the front-lines, most healthcare workers, and public sector employees generally, continued to earn full pay. And for others, government programs like CERB provided valuable income support.

So in the aggregate, Canadians are now sitting on substantial savings with limited opportunities to spend for another few months at least. With high savings and low interest rates, consumer confidence is surging, supporting the notion that once the pandemic is finally in our rear-view, we could be in for a dramatic period of spending. It might mirror the experience of the 1920s when we saw a big increase in discretionary spending, especially on social interaction – eating out, going to nightclubs, and attending sporting events, theatrical shows and other kinds of group events. International travel was not feasible in 1920, but if it had been, I bet it would have been popular too! As a baseball fan, there’s nothing that would please me more than seeing full ball parks in 2022. So not to throw cold water on the idea of spending on travel, fun and general “joie de vivre”, I’d like to make some practical spending recommendations.

First, I hope that the federal and provincial governments, CMA, CDA and their provincial counterparts (etc), will remind Canadians who deferred “elective” medical or dental treatments during the pandemic to attend to their health as a first priority. If there is anywhere that pandemic savings should go first, it’s to making sure that you’ll be able to fully enjoy post-pandemic life!

Second, I hope that people look at their accumulated savings as an opportunity to make progress on financial goals that are longer-term and frankly more important than a weekend in Vegas or buying tickets to a concert. In the coming weeks, I’ll identify and describe some specific financial strategies and products that you may wish to consider at this historic time.

The Roaring Twenties 1.0 ended with a crash. Let’s learn from the mistakes of the past and make different financial decisions this time around.