Why Debt Help is So Important for MillennialsNov 07, 2018
Each generation faces their own money challenges. For millennials, two of their biggest hurdles are achieving financial independence and preparing for what’s ahead. Getting debt help can play a big part in tackling both of those challenges.
The 30s can be a very expensive stage of life — in fact, according to results from our recent survey, this was the age that was seen as the most expensive stage of life overall by Canadians. Everything from student debt repayment to a difficult job market to unaffordable housing prices are causing millennials to delay financially preparing for major life events. It’s no wonder millennials are living with parents longer.
What steps can the millennial generation take now on their path to financial independence? We’ve outlined three useful steps that anyone can follow regardless of how much or how little debt they may have.
Step 1: know where you are and where you want to go
Building a two-fold plan — to reduce debt and save for major life events — is important. Do you want to buy a home or have kids in the future? Knowing where you want to go with your finances is great, but you need to know where you stand to build a plan the works for you.
November is Financial Literacy Month across Canada. It’s an excellent time to take stock of your situation and perform a financial health check-up. Start by looking at your total household income each month and comparing it to what’s being spent on monthly expenses such as mortgage or rent, gas, hydro, cable, phone bills, etc.
You should also review your current debt payments. Look at the type of debt you carry (car loan, credit card debt, line-of-credit, etc.). What interest rates are you paying on each debt and what are the terms of payment?
Other things to review: Do you have any savings and are you regularly putting money aside for short and long-term goals? If you’re working from a budget, is it working or does it need to be updated?
Knowing all of this information lays the groundwork for a solid debt repayment plan, strong savings goals, and eventually, financial independence.
Step 2: take accountability for your spending habits
Spending money is easy. Owning up to spending habits that are resulting in overuse of credit and additional debt can be much harder. The best way to take ownership of your spending behaviour is to start tracking it. A pen and paper are the classic way, but there are also many great financial apps that can connect to your bank accounts and credit cards and track your spending automatically for you.
Once you’ve tracked your spending for a couple of months, you can look for spending patterns and opportunities to change spending habits. Breaking bad habits can be hard, but it can be done. Streamlining your spending may free up some money in your budget to put towards debt repayment and savings. You’re one step closer to financial independence.
Step 3: make getting debt help part of your plan
If you don’t understand something in a class at university you go to the professor for help. Wondering why your cold symptoms aren’t getting any better? You talk to your doctor. Raising a child for the first time and not sure what to do? You count on your parents or maybe a parenting website for help.
Why is asking for help with your finances any different?
Getting help with your debt can be as simple as going to your bank and inquiring about how a debt consolidation loan works. If you want to know what debt relief options are out there and what would work best for you, speak with a Licensed Insolvency Trustee (LIT). An LIT will go over all available options to reduce your debt and help you choose what works best for you.
Debt can really get in the way when you’re trying to move forward and prepare for what’s ahead. Overcoming your debt challenges can help put you firmly on the path to financial independence, and that’s important.