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Five simple things all Millennials should know about saving money



 

The other day, I had a HUGE wake-up call. I went into Meridian to meet with a financial advisor and I learned that I would need to save approximately $2.9 million for my retirement! That amounts to about $10,000 per month at my current age!!! Once I picked my jaw up off the ground, Gloria (the Meridian financial advisor I met with) told me not to worry! This was just an estimate and there were many other factors to consider in my retirement plan. Gloria then spent the next hour reviewing my finances with me and helping me come up with a plan to start saving for retirement.

At the end of the day, she opened my eyes up to one very simple fact: I need to make some changes in my lifestyle and the time to start planning for my retirement is actually now!

They say Millennials are doomed when it comes to retirement…

We’ve probably heard it a million times before: Millennials are doomed when it comes to saving for our future! We’re entitled, self-absorbed, narcissistic, social media obsessed, and spend all of our money on material things. Whether you buy into the stereotypes or not, there are still some undeniable FACTS about our generation:

  • The unemployment rate for Millennials is around 12.8%, which is 3 times higher than the rest of the population

  • The average income today for people between the ages of 18-34 is lower than it was in 1980

  • The average Millennial debt is about $45,000 by graduation

  • Our annual spending was about $2.45 trillion in 2015, and by 2018, it will be about $3.39 trillion

With all the debt, over-spending, and low earning, it’s easy to see why some people believe the words “saving” and “retirement” aren’t a part of our vocabularies!

Blogging contributes to a culture of consumption.

And as a blogger, I felt compelled to talk about this issue because, truth be told, I am part of the problem! We, as bloggers, contribute to this culture of consumption that Millennials are known for. We take advantage of your Instagram obsession and compulsive spending by posting beautiful pictures, parading around with Chanel and Gucci bags. We make you feel like you need to buy another handbag to be in style. Don’t ever let anyone tell you that influencer marketing doesn’t work, because it even works on me!

So when Meridian asked me to partner with them, it made total sense! If you weren’t aware, Meridian is Canada’s largest credit union and has been around for more than 70 years. Credit unions are non-profits, so they are owned by and accountable to their members. They are competitive with the major banks and can generally offer higher interest rates.

Five things I wish I knew about money…

Since it’s important to use my ‘influence’ in positive ways, here are 5 simple tips about money all Millennials should know, and I wish someone told me when I was in my 20s:

Budget, budget, budget!

This is the single most important rule when it comes to managing your finances. Quite simply, if you don’t have a budget, you don’t have a plan!

What you earn in a month (or have access to) is NOT what you can spend!

Having a credit card is not like having free money and you shouldn’t live paycheque to paycheque! It’s nice to treat yourself, but you should pay your whole credit card bill every month, otherwise you’re spending above your means. Credit card debt is the worst kind of debt to have.

When I was in law school, I had access to a $50,000 credit line. Tuition was only about $12,500 per year, but I still managed to rack up a $45,000 debt by the end of law school because I thought it was a good idea to splurge on designer clothes and accessories. I figured I’d have no trouble paying my debt off when I started working as a lawyer. But, it actually took me several years to finally get myself out of the red; and all of that could have been avoided if I didn’t act so irresponsibly with money.

You don’t have to wait till you’ve repaid all of your debt to start saving!

Depending on the type of debt you have, you may not want to repay all of it before starting to save and invest. When I began my career, I aggressively paid down my debt until purchasing a home became a goal. I then switched gears to save for the down-payment on my loft, which I bought with no help from anyone in 2013. Since getting engaged in 2015, I began saving for my wedding in July. Over all this time, I could and should have started setting aside money (even only a few hundred dollars per month) towards my retirement.

Make retirement a priority

The time to start saving is now! Retirement isn’t really that far away (especially if you want to retire by the age of 55, like me, haha!). So, use what’s available to you now to make your future a lot easier. Investing in an RRSP, for example, is a no-brainer (don’t forget the deadline to contribute is March 1st). Governments change their policies all the time, so I really wouldn’t want to rely on Canadian Pension Plan to cover the cost my retirement (not that it ever could anyway, with the rising cost of living and inflation)!

Ask for help!

Real talk: navigating your options and discussing money can be a daunting thing. Don’t do it alone! Ask a qualified person for help, like a financial or investment advisor. Make sure you speak to someone you feel comfortable with and that you trust.

*This post was done in partnership with Meridian Credit Union. However, all opinions and thoughts are my own.

Krystal is a corporate lawyer and blogger who writes in Dine and Fash

 

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