How is Millennial Debt Causing Affordability Problems?Oct 15, 2018
Full-time job, side hustle and still can’t avoid going into debt every month? If you’re a Canadian millennial, this is often the frustrating financial reality. In fact, one-in-three who fall into this age group admit feeling overwhelmed and unsure about what to do when it comes to their finances.
In an effort to learn more about the current financial challenges faced by all Canadians, BDO Canada recently implemented a survey focusing on affordability, spending and debt. The results of this survey provide valuable insights into what motivates the daily spending habits of Canadians, as well as the things that Canadians feel are difficult to afford.
The BDO Canada Affordability Index also sheds light on how much debt Canadians are actually carrying and how this debt load affects the ability to meet expenses, save for the future and achieve important financial and personal goals.
When it comes to millennials and money, the Index shows that those in this age group (along with women and Gen Xers) are definitely feeling the financial squeeze. Many respondents who fell in the 18-34 age range actually indicated that they regularly struggle to afford basic necessities, including the costs of food, utilities, transportation and housing.
Why millennials are feeling the financial squeeze
Why are so many Canadians in their 20s and 30s struggling financially to make ends meet? A few different factors are likely to blame. Increasing amounts of student debt, for one, have made it difficult to find financial stability after graduating from college or university. A lack of full-time, permanent employment is another factor, as well as the fact that wages have not kept pace with the increased costs of living. Finally, housing costs and rising interest rates have also made it difficult to get by and, for many millennials, necessary to rely on debt in order to do so.
Financial readiness and the modern millennial
Although the debt load carried by so young adults makes it hard to get by now, it’s also important to look ahead to the future. As discovered in the Affordability Index, debt is also taking its toll on the financial readiness of the modern millennial. Sixty-seven per cent of millennials indicate that they are either poorly or terribly prepared for having children and 67 per cent also indicate that they are also either poorly or terribly prepared for retirement.
How to find balance
Although the factors previously mentioned can get in the way of finding financial balance, it is possible for members of the millennial generation to take steps to find debt relief. Having a plan in place, including a personal budget, is paramount. A personal budget will help you keep track and on top of your spending and expenses and help you allocate your money.
In addition to a plan, it’s also a good idea to be aware of the tools that are available to help. When it comes to budgeting, for example, there are apps available, such as Mint and Wally that can make sticking to your budget a little easier. Tools available also include professional debt help, such as a credit counsellor or Licensed Insolvency Trustee. If your debt is overwhelming, these professionals can help you better understand your options and create an effective plan to find debt relief.