Youth panelist shares three simple steps young adults can take to get ahead financially
Imagine you are 60-years-old, and that you have over $3-million invested, and it was growing? I mean, how would your life be? Cheerful? Calm? Stress-free and worry-free, regarding your financial future? But here is the truth, many Canadians are not on track, and may never be able, to retire comfortably.
According to the CCS 2022 Consumer Debt Report, less than 50 per cent of Canadians have up to one month’s worth of emergency savings left. Two thirds of the population are carrying non-mortgage debt, and few have sought outside assistance from non-profit credit counsellors. The report also indicates that 73 per cent of Manitobans are carrying non-mortgage debt, with people ages 35 to 54 accounting for the majority. So where are we going wrong?
The problem lies in a lack of financial education. For example, data indicates many Manitobans aged 25 to 35 do not understand the differences between a TFSA and an RRSP. Leave the idea of saving for retirement! Roughly 30 per cent of Manitobans aged 25 to 35 don’t know how much they’ll need to save for retirement. These numbers are indicative of a looming danger. Times ahead are tough, and what we urgently need right now is to teach youth about the right practises.
Three Key practices that help me – maybe they will help you too!
- So what you can do is first increase the appetite. Parents and teachers can play a huge role here. My dad really helped me in this. He handed me a book while I was on holidays a few years back and said, “Read this.” I did, and it had a very straightforward principle: Save 10 per cent of your income, invest it wisely, and never spend it. I questioned whether investing 10 per cent of income really works and watched it play over time. Straightforward it seems, and difficult to do it every month, but believe me it works wonders.
- Another thing that helped me realize my goal was setting up a vision board. You might feel it is a small task to do, but it helps in imagining your life trajectory. Once you realize it in your brain, it makes it easier to guide your actions and build your motivation. It gives you purpose and guides your energy.
- Last but not least, invest your income wisely. It is not a matter of knowledge but of discipline. Discipline is hardest to tame but yields long-term gains. So, if you are disciplined in uncertain ways over a period of time, it is time for change and to adopt some self-restraint and control over your ongoing path. For financial literacy, I rely on the following breakup of my income:
50% – Needs
30% – Wants
20% – Savings and Investments
Start investing in your savings/RRSP/TFSA account from an early age and see the magic of compounding interest in effect. If you focus on your wants first, your goals are hitched to the wrong wagon, which can prove disastrous to your financial stability in the long run. Endless desires can never be fullfiled and as Mahatma Gandhi said, “Earth provides enough to satisfy every man’s needs, but not every man’s greed.” At last I would like to emphasize, “Your financial literacy is your responsibility, others may help you, but it is you who has to get disciplined and seek it”.
Young Adult Podcast Panelist
The Great Disconnect