Tag Archives: millennials and money

Fixing the Financial Business

Financial Literacy – Let’s continue last month’s discussion: “Feeling Ripped Off?”

From bank tellers pushing unwanted products to financial advisors charging huge hidden fees for their “expertise” in managing your money, the financial business in Canada is broken.

Continue reading Fixing the Financial Business

Believe it or not: balance isn’t everything, even with finances

Young Money - Vanessa Kunderman
Young Money – Vanessa Kunderman

Being a young person comes with a lot of pressure. And even though some of our slightly older and slightly wiser peers explain that this tension falls away as we age, it can still be a challenge to navigate through emotionally rocky waters while we try to find our independence.
A smattering of surveys have come out recently, declaring that millennials are the most stressed-out generation, with money and school being big offenders.
For example, millennials currently have an average of $15,194 saved in their RRSPs, according to a survey conducted in January by the Bank of Montreal. If you don’t have that saved, your inner alarms are probably going off at the realization you are statistically below average.
Why do we let these things have such a crippling power over us?
If you’re just starting an RRSP this tax season, applaud yourself for taking control and taking this first step. Remember, every financial situation is unique and you don’t need to think of yourself as a statistic. Some of life’s biggest financial changes happen in your 20s and 30s. Even this time last year, you were probably in a vastly different situation.
I read a quote recently from Ivanka Trump that helped me put things into perspective as a millennial. She said “people obsess too much about balance. A scale is only in balance for a brief second. Inevitably the pendulum swings. It’s impossible to maintain. Rather than obsess over perfect balance, I like to focus on my priorities.”
Now, I’m a Libra, the zodiac sign of the scales – my life is practically governed by balance, especially in the financial sector. But when I asked myself if I just wanted to be average, the answer was easy. Of course not.
Millennials want to be the best version of ourselves that we can possibly be. And that can’t be measured by the size of our bank accounts or the balances sitting in our investments.
If your priority this year is to accumulate some serious wealth, then make that your focus and stick to it. Set your ground rules and give it your all. Don’t feel bad if you’re not as socially active as you have been in the past, nor if you can’t keep track of every new restaurant to hit the city.
If you’d rather focus on starting a family or getting your health in check, don’t feel bad about not saving as much as surveys say you should be, or if you haven’t hit that $15,000 mark in your investments.
Life is a pendulum.
Vanessa Kunderman writes every month on money issues facing millennials. Email her at: hello@vanessakunderman.com.

The cost of creating a human

Young Money - Vanessa Kunderman
Young Money – Vanessa Kunderman

At some point in the life of a millennial woman, she may find herself making another human.
Let’s get one thing on the change table before we get all ooey-gooey about babies – kids are friggin’ expensive.
According to babycenter.com, you will spend approximately $10,158 in your child’s first year of life. The average crib costs $230 and an infant car seat – something you’re not allowed to leave the hospital without – averages at $100. The site says the average amount of money you’ll spend before baby even comes out is $2,058. That’s a trip to Mexico.
On the plus side, TD Canada Trust says a child will cost you only an extra $8,000. In reality, after you buy those pricey maternity photos you just have to have, the fancy rocking chair, and the childproofing supplies, you’ll probably be ringing up closer to $12,000.
Whatever you think a baby will cost, I think it’s safe to say you’ll be wrong. Millennials in particular seem to underestimate just how much a little human will cost them.
According to parenting.com, you can count on spending at least $50 per week on diapers, baby formula and baby food alone. Say goodbye to your fancy cannelloni and get used to making some rather creative casseroles.
As if your expenses going up weren’t stressful enough, your income goes down too. If mom or dad takes a maternity or parental leave, you will feel it in your wallet. You’ll lose approximately half of what one parent makes.
Saving for baby
Parenting.com also suggests saving approximately six months’ worth of your living expenses to ease the blow of these changes. I actually guffawed when I read that.
Are you kidding me? A millennial has a hard enough time learning not to buy an expensive new car, let alone disciplining himself to stash away half his paycheque each month.
And, if you’re like me, the first frantic thing on your mind is eliminating the credit card debt of both of baby’s parents and tickling your nesting bone by totally redoing the upstairs of your house.
And while you’re perusing the Top 100 Baby Hipster Names of 2015 while setting up your new baby crib, check out moneysense.ca. In Canada, moneysense.ca declares that raising a child until university will cost a whopping $243,660. That’s $12,825 per child per year. Pray to the sperm gods that you don’t have twins.
One of the hardest transitions for the millennial will be digesting the fact that his or her baby doesn’t need to have the best of the best.
We already think this for ourselves and it’s only natural that the mindset trickles down to our offspring as well. This is a great time to check in with your parents to learn their secrets when you just can’t afford a Jolly Jumper or Diaper Genie.
If it’s any consolation, baby nail clippers are only three bucks.
Vanessa Kunderman writes every month on money issues facing millennials. Email her at hello@vanessakunderman.com.

When your impulses don’t match your income

Young Money - Vanessa Kunderman
Young Money – Vanessa Kunderman

Photo by Luiz Sousa

Millennials can be lauded for a lot of things. We are great at manipulating technology and we’ve pioneered a lot of new ideas in the business and creative worlds. But one of the biggest misconceptions we have is that we think we are entitled to certain luxuries.
An annual vacation outside the province is a must-have, and our mornings won’t start on the right foot until we snag our daily mochaccino. Once we land our first “real job” after two to four years of college, we tell ourselves anything to justify having a brand-new vehicle or really expensive apartment.
After all, we rode the bus for sooo long.
“I’d rather spend money on experiences than on things,” many a millennial will say – but this is such bologna.
So many of them drive new cars, have brand new phones, and spend money on things over experiences. We spend so much so frivolously, we actually struggle to recognize just how much we have.
Yes, our twenties are a time for self-discovery and exploration. But we can also be really stupid with our financial choices, ultimately setting ourselves up for a more difficult time later. It can take years to get ourselves out of a mistake we didn’t think twice about making in the first place.
According to The Principles of Psychology by William James, our habits are practically solidified once we turn 30. It becomes exceptionally hard to relearn or teach ourselves something new.
We need to stop lying to ourselves and take a long hard look in the mirror if we want to enact change. Once we realize we want a lot of things but don’t need them, we can make better choices.
Many millennials grew up having a lot – at least more than our parents had. For the sake of our financial habits, this is unfortunate. We’ve lost the drive to work at a reasonable pace for the things we want, then buying them when it makes financial sense. We want things now. Heck, we want things yesterday.
But it feels so good to save for something and buy it when we can afford it. There’s no stress in the back of our minds that our credit cards are getting out of control, and the pride we get when we really own something is hard to shake.
We need to curb the lustful distractions we feel when we really want something.
We need to take a cue from James and get a grasp on our desires soon. And quickly – before it’s too late.
Vanessa Kunderman writes every month on money issues facing millennials. Email her at: hello@vanessakunderman.com

Trimming the fat

Young Money - Vanessa Kunderman
Young Money – Vanessa Kunderman

Millennials love to overspend. We love traipsing down to Baked Expectations for no reason other than hanging out with other millennials – pumpkin spiced lattes in hand, new iPhones tucked into our back pockets.
A common thread weaved through many millennials’ curiosities on the financial world is: “How can I spend less?”
Well, other than overhauling your habits, try putting yourself up to the challenge of a financial diet.
The bathroom scale isn’t the only place you can see numbers drop and your confidence soar.
Step 1: Review
Examine three months of your previous online banking to spot trends on where you’re spending your money – all those Rockstars from 7-Eleven really add up. Calculate what you’re spending on rent, food, utilities, car payments, savings, loan payments and other fixed bills, and then determine all the other items being subtracted from your account.
Dining out, buying coffees, $1.99 purchases on your favourite game apps, Netflix – these are the types of things you should be looking for while reflecting on your three-month history. If you regularly spend on your credit cards, include the histories from those as well.
Calculate the average of how much disposable income you’re spending over the three months. For example: In July, Lucy spent $800 between buying clothes, dining out, going to movies, etc. In August, she spent $900 on her luxury items, and in September, she spent $600.
$800 + $900 + $600 = $2,300/3 = $766.67 average spending per month.
Step 2: Trim
Now that you know how much spending money you are doling out on average, cut that number in half. This is your financial diet number. $766.67/2 = $383.34
I always suggest splitting this number in half again or into four increments, depending on the frequency of your pay schedule. If Lucy gets paid biweekly, she knows that every two weeks, she has just under $192 to spend on fun things.
Remember, Lucy’s $192 every two weeks is not for spending on groceries or her cellphone bill. This is strictly for the disposable money she is spending on things such as new shoes, brunches, alcohol, etc.
Step 3: Keep track
For the month of your financial diet, be conscious of where you’re spending your money. Every time you’re asked if you want a receipt – take it! Keep a running tally of your receipts so you can be sure you aren’t going over your set financial diet number (FDN). I always find it easier to use cash so I know I won’t go over my FDN, but do what works for you.
Once you make it through your diet month, look at your bank balance. I bet you aren’t feeling too bad about yourself now, are you?
And that wasn’t that hard, was it?
After overindulging, you sometimes have to rein it in to get back on track. And hey, the holidays are coming – and you just might need your fat pants.
Vanessa Kunderman writes every month on money issues facing millennials. Email her at: hello@vanessakunderman.com.