Millennials — a term used to describe people born between 1980 and 2000 along with Generation Y or the Echo Boom — are expected to have the same impact as the Baby Boom generation on politics, the workplace, culture and business — and, in fact, are destined to reshape our country and possibly the entire world.
Canadian millennials of all ages have an estimated income of $237 billion – that is 21% of all the income earned in Canada – and will make up 75% of the Canadian labour force in the next 15 years.
In the mid-range of the Millennial stream, 14 per cent of Canadians are between ages 20 to 30. Forty-seven percent of them earn over $50,000 per year, often with minimal financial commitments.
If that describes you, it’s important to your financial future that you develop good savings habits as early in life as possible. To get you started, here are three financial must do’s for Millennials under 30 years of age.
1. List your goals and the dollar amounts required to reach them
In other words, do some personal goal-setting to determine your short- and long-term financial objectives. Assemble the relevant financial information to understand your current financial situation and establish a realistic strategy for reaching all your life goals including – and at your age this is a stretch, but a necessary one – achieving a comfortable retirement.
2. Learn the difference between good and bad debt
Good debt is a worthwhile investment in your financial future. It can include taking out a student loan to extend your education and increase your earning potential, a mortgage on your home, a real estate loan for an investment property, or investing in your own business.
Bad debt drains your financial resources, is not affordable, and has no realistic repayment plan. Examples include an expensive holiday or vehicle you can’t afford, high interest credit cards that you are unable to pay off at the end of each billing period, and borrowing money to pay your bills. (Borrowing to consolidate your credit commitments can be an effective strategy for debt reduction but only under certain circumstances.)
3. Keep an eye on your credit score
Be sure the information in your credit report is accurate by checking it at least once a year and reporting any inaccuracies. (The two major Canadian credit rating/reporting agencies are Equifax Canada and TransUnion Canada. The keys to maintaining a good credit score are establishing a good credit history, paying bills on time and limiting your credit – every time you apply for credit it is noted on your credit history, even if you never use it.