For decades, the traditional way of life has been pretty much as follow:
- Get good grades and get a degree
- Find a job and climb the corporate ladder in your company
- Get married
- Buy a house and a car
- Have kids
- Retire at 65 and explore the world
Does the above sound familiar? It certainly does for our grandparents and parents. But for the Generation X – who I am- and Millennials, things definitely don’t line-up that way. I don’t want to sound pessimistic but:
- Post-secondary education has become incredibly expensive and does not guarantee a good job
- Unemployment is also on the rise; The glory days of company pension plans and job stability are long gone, Same goes for the single career.
- Almost 50% of marriages end up in divorce
- Buying a house is no longer the ultimate proof of success and adulthood. In some cities, like Vancouver, it is just plain unaffordable
- More and more people chose not to have children or have them later in life
- Nowadays people want to retire at 55, if not sooner, and explore the world throughout their lives
OK, maybe I am a little pessimistic, but the above is the reality of most people nowadays. Yet, most people still have the same old financial style, i.e. pretty much financing everything and relying on a regular salary to pay it off.
There is just one problem with this line of thinking: the regular salary is becoming more and more elusive, and everything is becoming more and more expensive.
Our parents and grand-parents were able to achieve the original lifestyle because they actually made more money than the younger generations thanks to unprecedented economic growth. Living costs were also lower and, more importantly boomers were saving more.
Isn’t it time for the finances to match the new lifestyle?
- You probably will need to get creative to finance post-secondary education or you may have to postpone it
- You need an emergency fund, not to mention you will need to save for retirement too
- You need adequate insurance
- You may elect to rent over buying
- You will need to save if you decide to have children. Maternity benefits in North America won’t get you far
- Living today vs. living tomorrow will always be a balancing act
For some reasons, the word “savings” seem to have skipped younger generations. OK, I get it that it is more difficult to save nowadays, with way more demands on our hard-earned cash.
That being said, the best way to be able to save is not to get into too much debt in the first place, even more so to finance the “old lifestyle”.
We, as in generation X and Millennials, actually need to let go of that particular lifestyle. This is probably the hardest thing to do, as it has been ingrained in our minds by our parents….