Practical Financial Solutions: Millennials – the new transformers
Millennials are now the largest cohort in the Canadian workforce. Small wonder they are driving workplace transformation, destined to reshape our country and possibly the entire world – and yet, many of them still live at home.
In the last Canadian census:
- 42.3% of Canadians aged 20 to 29 years lived with their parents – a significant increase from 30 years ago.
- 63.3% of young men and 55.2% of young women aged 20 to 24 lived with their parent(s).
- Almost one quarter of young adults are “boomerang kids” having returned to their parental home after leaving at some point in the past*.
Millennials choose to remain at home for reasons that range from the financial constraints they now face, and staying in school longer to effectively compete in the job market (while shouldering steadily increasing post-secondary education costs), to escalating housing costs.
Parenting styles like “helicopter parents” (who hover over their children and micromanage their lives) may also be a factor in the millennials’ decision to linger longer at home.
One downside for parents of many millennials is having double-duty responsibility for their older children and their own parents. These are “sandwich generation” parents, whose emotional and financial support of both their parents and their children can take a tremendous toll on retirement savings.
While it’s true that for many young adults, living with parents is a fiscally-responsible decision even when they are working full time, and can be an ideal way to save for a house or start a business –leaving the nest is an important rite of passage for both parents and children. And whether the move is months or years away, it’s a good idea to set a date and make a plan.
Here’s how to prepare for nest-leaving:
- Pay off debt – especially high interest debt, before it’s competing with your rent or mortgage payments.
- Establish a good credit history – get a credit card for small purchases and always pay the full balance by the due date.
- Save for major purchases – pay cash for furniture, appliances and other large purchases.
- Build an emergency fund – for minor setbacks like home or car repairs.
Both millennials and their parents should talk to a professional advisor about strategies to help avoid hefty debt and bring your entire financial life into focus so you can balance all your priorities while maintaining a sound, long-term financial plan.
This column is sponsored by Roger Higgins, a BA, CFP Division Director for Investors Group in the Kootenays. For all your financial planning needs, contact Roger at 250-352-7777 of email at firstname.lastname@example.org