Pattie Lovett-Reid: Money lessons for millennials amid the pandemic
There are no shortcuts to becoming financially secure and there are a lot ways you can blow it.
A recent report from Equifax Canada revealed millennials (18-34) have really felt the financial impact of COVID-19.
Forty-one per cent of millennial respondents to the survey said they were limiting their spending because they already had too much debt, compared with 32 per cent of respondents 35 and older. And one-quarter of respondents in the younger cohort said the government benefits they’re receiving won't be enough to cover their bills, compared to just 18 per cent in the older age group.
My fear is that it’s tough enough for someone starting out on their financial journey without having to contend with a pandemic.
In light of this concern, I decided to share a few of the lessons I've picked up along the way in life.
1. Pick the right partner. Seriously. You want to be with someone who understands and embraces your money mindset. Develop financial goals together and get excited about them. Having said that, if you’re both spenders, that will likely lead to a disaster financially. So it’s important to put pre-authorized purchase plans into place to create a forced savings habit. The money comes right out of your account into a savings or investment vehicle. As more of us remain in tight quarters working from home with our partners, similarities and differences can often become front and centre. Aligning emotionally and financially can go a long way.
2. Spending money to impress others is a temporary diversion at best. The pandemic has been the perfect storm to create a scarcity mindset. Stop spending on needless things. Take that money and apply it against your debt. Applying for another credit card to help cover your bills will never be the solution. In fact, it is likely going to make things worse.
3. Find a job that will pay the bills. The government assistance programs put into place during the pandemic are temporary and won’t be enough to sustain you over a longer period of time. Now is not the time to be selective. Be prepared to do what others aren't. The job you take on may not have the best hours, your boss may have less experience than you, or you may have to work weekends. That's okay – it doesn't have to be forever.
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4. Borrowing money from family or friends is humbling and often can lead to resentment. For some, it may be a last resort. So if this is the route you go, set out terms and conditions to pay it back, especially if you said you would. My mother has often said to me: "A promise made is a debt unpaid" … until of course you make good on the promise.
5. Sometimes you have to make tough financial decisions. Moving from an expensive rental unit or selling your home may be one of them. It’s never easy, it never feels good, but it could be the path you need to get on the right financial trajectory. Early on, we bought a home that left us with little wiggle room. It was my dream home. I didn't want to sell but we did anyway. It was absolutely the right call then even if I did have a few regrets at the time.
Financial mistakes you make today could haunt you financially for the rest of your life. Be bold, be brave, but know that even in tough times you can set yourself up for financial success.