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
Posted by: san | Jun 13, 2021 8:56:31 AM
Gen Y their problem they do not live by their means like the baby boomers who saved to have things later in life...This new generation has to go out and buy whatever they see, because they can borrow at the low interest rates...Look at the wages compared to what the baby boomers made...Who needs to buy a coffee and lunch everyday go make yourself a coffee at or lunch and take it to work...
There is your problem NIck perhaps start cutting back on those little things one does not need..
I call it complete laziness when you cannot make yourself a coffee....
credit card debt is your own fault get rid of them save till you can afford it...
as BMO posted a few weeks ago the younger generation are going to become the big spenders nice for them so they can make more service fees and interst off their debt..
Posted by: clear and focused | Jun 13, 2021 9:01:37 AM
Yes, yes. Austerity is the answer... not prosperity.
Quote: "Try to figure out which areas they are spending on that they enjoy the least, and cut from there"...
Never mind the fact that wages today aren't enough to scrape by... just shut up and make do with less.
Wouldn't it be nice if this advice was given to the parasitic MP's instead.
If we don't string up politicians, bankers, and "journalists" now, than we deserve everything we get.
Posted by: Birds | Jun 13, 2021 9:16:09 AM
I honestly feel that the impetus to save is faulty. Did anyone anticipate that the cost of houses would go from 70,000 in the 60s to over 200,000 50 years later? You do realize that wages have not increased in like. Of course the amount of savings people have/can put aside has fallen. The cost of everything has followed this same formula, the cost increase is astronomical but the wage increase is minimal.
It is one thing to save money when you know what you are saving for will cost just so much... but given that it is roughly 50 years that people work and save....can you honestly tell me that the money I would be able to save today could be enough to cover the cost of what I am saving for tomorrow? No, no one can. Be reasonable.
When we know that income versus expenditure is so out of whack why do we expect people to behave the way others before them did when wages were a bit lower but the cost of living was extremely lower.
My grandmother's generation bought their land and built their house for around 7000.00. My mother generation did it for around 70,000. My generation gets to pay over 200,000.00. My grandmother's generation made(minimum wage) 4 dollars an hour, my mother's made 6 and now mine is making 10. From 4 dollars an hour to 10 dollars an hour, from 7000.00 to more than 200,000.00. Really?
On that note, ask me why there aren't any savings in the bank. I think the question is, how do we stop the cost of living from eating away at every dollar we manage to make in this world of profit margins that must grow? How can I save when I make less then 1 times more than my mothers wage but pay 28 times more for my house. This is just one example.
Posted by: Birds | Jun 13, 2021 9:41:31 AM
Credit card debt....why do we use them? Because we can't afford maintaining a decent lifestyle on the wages we make. It is only the lower wage group that struggles with credit cards for the most part, and in reality without those credit cards most of those people would have their hydro cut off, their fridges empty and their kids going to school without. Or they would have to work all year long, and hard, without ever getting to take a holiday. What is the sense of living so hard in the face of so many who don't live so hard.
The answer is to stop the astronomical unfounded increase in the cost of living so people can enough money left over on a 10 dollar an hour wage to live. Not many people actually buy boats and other frivolous things with their cards. They pay the bills with their cards. The fact that wages won't cover the cost of living is the problem, if there isn't enough money how can you find fault with the person who can't pay. Likely as not it wasn't the person who can't pay who decided the low wage they earn or the cost of what they must buy.
No, you can't just expect people to live up to your expectations, especially when the odds are stacked so against that person. Who decided that it should cost me 28 times more for my house to raise my kids than my grandmother. Not me. Who decided that wages should increase only 2.5 times in the same amount of time. Not me....but I am stuck with this and also stuck with a bunch of people in the world who think that I should be able to perform as well financially as my grandmother's generation. Or as exceptionally well as my mother's generation, the baby boomer generation, when wages were increasing slowly but so was the cost of living.
Posted by: Lindsay | Jun 13, 2021 10:17:19 AM
Youth today are so bent on showing everyone what they can do all on their own that they closed the door on their support team, their family! When you work together as a team the whole family benefits, including the youth as they go out on their own.
When their attitudes start to reflect the reality of their situation and stop blaming the generation that came before them for their problems then things will improve, but not until. Greed, fame, social status appear to be more important to our youth today than financial security.
I am as poor as they come and I was still able to help my son, estranged husband, and father financially just by teaching them how to budget properly and live according to their budgets. They found no fun in living according to their incomes and demanded more from me, which destroyed the family because what I would not give willingly, they took forcibly. My son struggles, my estranged and dad are lost, and I am doing okay now except for my injuries and my slow recovery from them due to complications.
People need to chose between want and need. Need comes first then wants. I have found that when I take care of my needs, my wants take care of themselves. Priorities people, priorities!
Posted by: using common sense | Jun 13, 2021 10:41:35 AM
People need to use more common sense when it comes to their finances. If you only make minimum wage then you can't afford a 200,000$ house try renting. My wife and I make decent wages and we save money for the future but we see most of our friends that we know make less than us spend a lot more (bigger house, more vacations, more expensive cars, etc...) and often complain that it's hard to make ends meet.
The major problem today is that people don't budget. The banks offer people mortgages they can barely afford but they take them figuring the bank says I can afford this I must be able to afford this. My wife and I where pre-approved for a 450,000$ mortgage our budget called for a 230,000$ mortgage maximum we didn't buy the 500,000$ house that the bank told us we could afford we bought the 250,000$ house that we knew we could afford. Our friends drive 30K-40K cars we have a 18K car and our second car is a 2002 that has been paid for 7 years now. Everyone has the smartphones with all the bells and whistles costing 100$-150$ per month we have cellphones with basic plans that cost us 30$ a month.
People of our generation are more preoccupied with looking successful and financially well off than actually being successful and financially well off. Our parents didn't have the nice house they have today when they were our age, they had a starter house. They didn't have all the top of the line appliances in the kitchen right away, they bought the reliable appliances and used them for the next 20 years. They saved all year to go on vacation once a year, they didn't go on vacation and charge it and then try to pay it off later. Their self worth was tied to them being responsible adults not in the size of their house or the make of their car. Maybe if this generation could think about being responsible more often and not only think about having fun then we would get a long way to solving these debt and savings problems.