Millennials: Why Being Debt Free MattersOct 14, 2018
When it comes to finances, a lot of millennials are facing an uphill battle. Debt from secondary education, low paying jobs in an ultra-competitive market, and costly living options are putting a real strain on their finances.
Affording even the basics can be challenging, according to the new BDO Canada Affordability Index poll.
Shockingly, 37 per cent of 18-to-34 year olds say that they struggle to afford essentials utilities like heat and water. For just under half of the millennials respondents, living without debt isn’t a possibility with their current household income. The disproportionately lower wages that many in this age group receive may have a lot to do with their debt and affordability challenges.
Ask anyone over 34, and they’ll say that millennials have their whole lives ahead of them, with nearly endless possibilities. But the truth is, with debt adding to the burden of an already unaffordable situation, adults in their 20s and 30s are having to defer a lot of typical milestones.
Our poll found that 37 per cent of millennials viewed having children as a “want” rather than a “need”.
One in five millennials have put off having kids over the past two years because they couldn’t afford it.
With unaffordable housing and transportation, food and utility expenses, and ongoing debt, affording kids isn’t viable for many. That becomes even more significant when looking at women specifically, who are more likely to take time off of work when starting a family, and have more difficulty re-engaging in the workforce at their previous (already lower) wage.
And that’s not the half of it. Millennials struggle to bring in liveable wages, sometimes taking on debt to make ends meet. Savings goals are put on the back burner. And as for retirement plans? It’s almost unanimous: 81 per cent of millennials told us they will need to work longer than their parents’ generation before they can retire.
About half of millennials (47 per cent) told us they have no retirement savings at all.
Two-thirds of millennials don’t view saving for retirement as a top priority.
Millennials aren’t the only age group struggling to save for retirement. Nearly 70 per cent of all Canadians said it’s their biggest affordability challenge, and many people are putting off retirement just to afford living today.
What can millennials do to make life more affordable in the future? Reduce debt.
Being able to achieve future goals starts with being debt free. Carrying debt — especially a lot of debt — can make it nearly impossible to save anything. And carrying debt into retirement years can make retirement altogether unaffordable.
Are student loans are the issue? Finding repayment assistance or a forgiveness program might be the best option.
A financial plan that includes eliminating debt and saving will create financial balance, and help make a retirement plan a reality.
For consumer debt, especially if it’s high interest or variable debt (think credit cards and lines of credit), meeting with a professional can help. A Licensed Insolvency Trustee (LIT) can help lay out the options and answer any questions about debt solutions, both informal and formal (like a consumer proposal).
For millennials with big hopes for their future — whether it be starting a family, getting married, traveling, owning property or retiring comfortably — eliminating debt is a must.
Finding a debt strategy and asking for help is a good beginning.
If you’re living paycheque to paycheque and struggling to save money, these tips from blogger The Every Girl might help.