Generation Y Canadians, born between 1980 and 1995, are constantly portrayed in the media as a generation burdened with financial issues, involving needing to pay back student debt and difficulties finding employment prospects after graduation. The effects of the Great Recession and a poor entry-level Canadian job market is making it difficult for this group of young adults to move forward in life's milestones like buying their first home and starting a family. Just recently, the governor of the Bank of Canada made a comment that unemployed youth should consider working for free to gain experience -- clearly not the solution for gaining financial stability. How can Gen Y-ers who struggle with employment prospects and paying back student debt afford the costs that come along with marriage and raising a family?
Recent studies also support the notion that Gen-Y is in financial trouble, thereby delaying post-graduation lifestyles. A 2013 research study by BMO Financial Group found that on average, students in Canada will graduate college with $26,297 in debt and will take 6.4 years to pay it off. That is an incredible amount of debt for a young adult who wants to become independent, buy a car or their first home! These harsh economic circumstances may also be related to Gen Y-ers getting married later and waiting to have children. According to Statistics Canada, almost three-quarters of those aged 25 to 29 had never been married, when compared with only 26 per cent in 1981.
Looking ahead, it's a matter of an attitude adjustment to decrease spending during periods of debt repayment and lack of financial stability, with the hope that savings and searching for a better employment situation will allow Gen Y-ers to get ahead and experience all of life's milestones.
Here are a few tips from my personal experiences to ward off the spend-fests and embrace the habit of saving to overcome student debt:
1. Use cash over credit
Try to use cash as much as possible and avoid using credit cards when you can. On the weekend, take out a predetermined amount of cash that you have budgeted for that particular weekend and use only that amount, without any exceptions! This will not only keep your spending in check, but it will also find you new ways to stretch your dollars. If cash isn't your thing, you can also do this with a debit card too!
2. Pay off your debts
It's important to pay off your credit card bills on time to prevent nasty interest charges from increasing due to late or missed payments. If you can't pay your full balance due, then at least try pay the minimum payment due plus a little, to pay off your balance in a shorter amount of time. You can also apply this rule to other types of debt, including student loans and car loans.
3. Make a Budget
Having a budget will give you a better picture of your finances. Write down exactly how much money you have coming in, as well as how much is going out on expenses such as rent, food and utilities. Make sure you can pay off all your essential costs before making unnecessary purchases. Planned splurges will allow for a compromise between just covering your expenses and celebrating your financial independence.
4. Maintain your goals
To stay motivated, always picture the life that you want once you overcome student debt. If you want to travel, if you want to rent a nice apartment, get married, or maybe even own a house one day, then keep these goals in mind when you are budgeting. Envisioning your future autonomous lifestyle can help you focus when you are tempted by unnecessary shopping splurges.
Of course, don't get overwhelmed by debt repayment fatigue, but become aware of the consequences of overspending and try to better understand your own financial situation. Taking care of your own finances is the first step to moving forward and maximizing your own life.
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