Those in Generation Y have been handed a tough card as they set off on their own. Sandwiched between high student debt and a lackluster job market, many 20-somethings find it difficult to attain financial independence. And because of that, saving, proper budgeting and future planning often feel unattainable.
A poll released last June by TD Canada Trust found that 34% of those in Generation Y (defined as those born between 1980 and 2000) admit that they find it an almost impossible struggle to save. The research also found that Gen Yers appear to be more affected by common obstacles to saving than those in previous generations.
“There is no question that the job market is tighter, university costs higher and salary growth lower for young people today,” Raymond Chun, a senior vice president at TD Canada Trust, said in a news release last year.
But regardless of how difficult it may be, saving for the future is a necessity. And with a little planning, discipline and the right advice, everyone, even young Canadians, can build a solid foundation for their financial future.
Make a budget
One of the most basic mistakes that people of all ages make is not writing a proper budget. Doing the math and laying it all out gives you a crucial understanding of how much is being spent, what it’s being spent on and whether you’re actually accumulating any wealth.
Keep credit card use in check
Carrying credit card debt costs you a lot of money. Use credit cards to your advantage by sourcing the best loyalty programs but don’t use them as another source of income. Whenever possible, always pay your balance in full every month.
Make it a habit
Putting a little bit of money away every month before you have a chance to spend it is one of the most effective ways to save. Set up pre-authorized transfers with every paycheque and you’ll barely notice that money is missing.
Buy life insurance
Investing in life insurance is an indispensable and fundamental part of every sound financial plan. That’s because no other financial product can do what life insurance can do for you (Read more about what life insurance can do for you in this previous blog post). And, a benefit to investing in it early is that it’s usually cheaper when you’re young and healthy than when you’re older or have had unexpected health problems.
Creating a proper saving strategy is the foundation for securing retirement. And even though retirement may seem a long way off when you’re just starting off; the sooner you start planning, the easier it is.