As millennials, we’ve come to expect a few things for free or close to it (don’t go changing, Snapchat and Netflix) but affording the big-ticket items like buying a home or realizing a start-up dream can often feel overwhelmingly impossible. If building a fabulous future is more important to you than living in the present moment; take these financial tips for a test drive.
Don’t be a Professional Student
Working towards an undergraduate or graduate degree, or enhancing skills through continuing education may be excellent life choices. Getting an education can negatively impact your financial health when you become a professional student — remaining in school with no real plan and no line of sight on earnings, especially if racking up student loan debt is the only way to pay for it. If you are avoiding the realities of landing a paying position at a company, it may be time to take stock of your life plan being a perennial student.
Don’t be Turned off by “Good” Debt
One of the best ways to get ahead financially may include incurring some good debt. While this may sound counter to everything you have been taught, good debt can include investing in an affordable mortgage — or any asset that increases in value — increasing your net worth along with it. A student loan for a program that elevates your future earning potential is another example of good debt. Bad debt: splurging on a huge wedding when you can barely afford to reload your Starbucks app.
Don’t Fall into the Digital Dollars Abyss
Things that are obsolete: Blockbuster Video. Public Pay Phones. Coming soon is physical currency? Governments still print money (for now) but we can go weeks without handling cash thanks to Apple Pay and our debit/credit cards. The downside: We don’t physically see the money being depleted in our wallet as we spend our way through the day. A budgeting app or a simple login to your banking app can help you track how money is slipping through your fingers with each and every swipe or tap. Keep track. Resist your temptations from time to time, and watch how your digital dollars can grow.
Do Consider the True Cost of Plastic Purchases
Credit cards are one plastic accessory that is almost impossible to avoid (just try booking an Airbnb without one). Having access to good credit and learning how to manage it is critical to financial success; however, it can also be the start of a downward financial trend if you’re not savvy. Yes, you can now purchase South X South West tickets on your handy piece of plastic, but if paying the cost off takes months you may ultimately pay double the cost via the credit card interest. Consider a disciplined approach to using your square piece of plastic: If you can’t afford it now, buy whatever it is you desire and make sure you pay it off. This not only builds your credit rating, but establishes a healthy relationship with Plastic. If you are using plastic to bridge yourself financially, ask yourself if you will be able to still afford your desired purchase when you’re paying more than the current price once interest is added to your plastic purchase down the road.
Do Invest in Yourself
Investing in the sometimes confusing and ever-fluctuating investment world can be a daunting experience for the inexperienced. You may not be killing it on the salary front (yet!), so investing your hard-earned dollars might seem like seriously risky business. Make sure you are setting aside 10% of your earnings into a TFSA or separate Savings account. You can even automate the payments so they come off as soon as your paycheque hits your account – that way you don’t miss the money. There are other ways to invest without literally investing dollars— Use your early working days to invest in educating yourself on just the basics of how markets work, how to read a stock table, and how to understand the various exchanges. Why? The better educated you are, the more decision power you’ll have when the time comes to dip your toe in the investment world — like contributing to an RRSP.
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This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
