Are you better off financially than you were two years ago? Nearly half (46%) of younger Canadians aged 25-34 who responded to a recent poll for Manulife say they’re worse off. A scary thought since this cohort, one hopes, is mostly done school and settling into the full-time workforce. For comparison’s sake, 40% of those aged 35-44 say they are worse off financially.
Despite their financial circumstances, 62% of younger Canadians say they’re optimistic they will be in a better financial position two years from now. Optimism is good but it shouldn’t hide the hard truth.
We have our work cut out for us. I say “we” because I’m in the Generation Y camp, albeit the older of the bunch. Our generation knows all too well the challenges of today’s job market. Not only that, but according to the study’s findings, we won’t get as much help from our parents as previous generations did.
Some 43% of Canadians say they haven’t given any thought to how much cash or assets they’ll leave to their heirs. As many as 13% plan to leave nothing, while 29% say they will leave less than $100,000. Only 2% plan to leave an inheritance of $1 million or more.
Here’s what I glean from the above numbers: 98% of us will have to take care of ourselves because, let’s face it, living a fulfilling adult life for the next 60 to 70 years will cost a lot more than $1 million.
“The reality is that young Canadians will be the first generation that will not be better off than their parents. Many Canadians haven’t even thought about what cash or assets they will leave to their children,” said Manulife’s Paul Lorentz in a press release. “Young Canadians might need some of the financial discipline of their great grandparents, those who lived through the Depression, coupled with modern financial solutions.”
That’s good advice and boils down to this fundamental rule of personal finance: Spend less than you make and invest the difference. The first part takes hard work and discipline. The second part takes a little education and coaching. If you haven’t got the first part down pat, there’s little hope you’ll ever feel financially secure. Here’s a budgeting worksheet from The MoneySense Complete Financial Plan Kit to get you started on the right path. It will help pay down debt and build savings. If it’s the second part you’re struggling with, again, you’ve come to the right place. MoneySense.ca has regular stories on DIY investing as well as a directory of fee-only planners that can help map out your portfolio. You can also pick up The MoneySense Beginners Guide to Personal Finance.
Still need some inspiration? Check out these stories and you’ll be on your way before you know it…