Younger people struggle to save now more than ever
For many, those born between the mid-1970s and mid-1990s may seem too young to be fretting about their financial futures. But things are much different for Generation Y compared to the good life that baby boomers have enjoyed.
So much so that more than a third of Gen Y (34%) admit they find it almost impossible to save, according to new research from TD Canada Trust. It's not that they don't have a sense of future financial challenges, it's just that they're not quite sure what to do about.
Young people today face fiscal challenges that older generations didn't have to worry about, like working to pay off massive student debts in tandem with managing spending on lower salaries.
The study, which matched Boomers and Gen Y on their ability to save in their 20s, found that today's youth are hindered in ways that simply didn't affect previous generations.
- Paying for education costs (44% of Gen Y versus 18% of Boomers)
- Salaries too low to cover living expenses (39% of Gen Y versus 30% of Boomers)
- Debts from credit cards, loans and lines of credit (38% of Gen Y versus 26% of Boomers)
- The temptation to shop beyond their means (36% of Gen Y versus 16% of Boomers)
The solution, say advisors, is to nudge younger clients toward more responsible financial behavior by meticulously combing through their cash flow.
“If you have someone who loves drinking coffee every day, you don’t want to cut that out,” says 27-year-old advisor Nick Pirnack. “Try to figure out which areas they are spending on that they enjoy the least, and cut from there -- so that they can save for their daily lifestyle and the future.”
That's what one somewhat successful Gen Y women has done. Click here for her story.
What about you? Are you able to save or are you simply interested in living in the moment rather than worrying about the future?
By Gordon Powers, MSN Money