2 Ways Millennial Debt Threatens Your FutureOct 14, 2018
If you’re a millennial, you might know a lot about debt and the financial and personal strain it can cause.
The affordability of typical life events and goals can be out of their reach so a significant portion of this generation. Not surprising when you look at the results of our recent released Affordability Index: 36 per cent of Canadians say that they have trouble affording essentials like heat and water, and almost half say their household income isn’t enough for them to live without debt.
A heavy debt load during a time when basic affordability is already a concern for Canadians from all age groups can mean having to make tough choices in your 20s and 30s about how your future will unfold.
Putting off having a family
There was a time, not long ago, when having children was a given – simply a “next step” for individuals who wanted to take that step.
Today, in-debt millennials who already struggle to afford housing and transportation, and achieve minimal savings goals (if any), don’t always consider having children as an affordable option.
Our Affordability Index found that one-in-five millennials delayed having children over the past two years because of lack of affordability.
Living costs are often on the minds of millennials, who may be shouldering the burden of student loans and other debt. Even seemingly small increases can stretch finances to the breaking point, where even housing isn’t affordable. That’s a concern for this age group, and one reason they may be putting off having kids.
Putting off retirement
And even though this age group is in the early stages of their working life, our Affordability Index revealed that millennials already envision themselves having to work much longer than their parents and grandparents.
We found that 18 to 35-year-olds are more likely than any other demographic to say they’ll have work longer before they can retire.
Just under 80 per cent of Canadians polled cited saving for retirement as their number one financial need, and almost 70 per cent said it’s the most challenging thing to afford.
And with many millennials in or about to enter their 30s – considered by all of our poll respondents as the most expensive time period – retirement planning isn’t on the radar for the majority of this cash-strapped generation.
When we asked millenials to rank their top three savings priorities, half said “paying down debt” made the top three, 66 per cent said “saving for retirement” did not.
How to open more doors for the future
Getting out from under their debt load is the first step towards opening up more opportunities.
If student loan debt is making it difficult to make ends meet, check out the student loan debt relief options available to you.
If consumer debt has taken over your financial life, talk to a professional who can help you get back on track. A Licensed Insolvency Trustee (LIT) can help you understand your options and create a plan that will not only help you reduce your debt, it will also help you avoid taking on debt in the future.
Saving money when you’re in debt and living paycheque to paycheque isn’t easy. But there are some methods that can help, like paying yourself first, finding other income streams, cutting costs strategically. Using some of them can help you whittle away at your debt, and save for your goals, whether that includes having a family, travelling or buying property (but it absolutely should include a retirement plan).
Millennial debt, and the stress it causes, is real (just ask any millennial). But even when other things impact the affordability of your future plans, debt shouldn’t have the power to close the door completely. Find the strategies that work best for you to reduce your debt and allow you to keep your options open.