Just starting out? Consider these tips to get your finances in order

Young Canadians faced with rising home prices and precarious employment have to make tough choices when it comes to deciding their financial priorities.

Financial priorities are personal but some tips can apply to everyone

Whether to rent or own is a difficult decision for many young people. (Paul Sakuma/Associated Press)

It's a new year, and perhaps the year you decide to get your finances in order. But for many young Canadians that may not be such an easy task. Some cities are plagued with rising house prices and ultra-competitive rental markets.

Just about everywhere, full-time, secure employment is increasingly hard to come by, not to mention health benefits and a pension.

Feeling overwhelmed? You're not alone.

Shannon Lee Simmons, a personal finance expert and founder of the New School of Finance, sat down with us this week to answer questions from viewers on the CBC News Facebook page

Simmons shared some of her top tips for young Canadians to save, spend and define financial priorities — starting with not sinking deeper into credit card debt every month.

'3 a.m. anxiety'

It's too easy to fall into the trap of making your minimum payments every month.

"It doesn't mean you're on track. It just means you're breaking even," Simmons said.

While peer and societal pressure to live well, drive a nice car and eat Instagram-worthy meals can make paying down that debt difficult, the alternative could be much worse.

"Spiralling into debt actually causes more anxiety, but it's hidden anxiety. It's like 3 a.m. anxiety," Simmons said.

So, watch the credit card balance, and take it seriously.

Keep drinking your lattes

Cutting back spending to cut down debt can be a tough slog. But within the allotment of spending money you do have, Simmons says make sure you spend it on what's important to you. 

If you want to buy lattes and tech toys — something so-called millennials are often scolded for — go ahead.

"If you've got $1,000 a month to blow to zero every month, why do we care if it goes to groceries or going out to dinner or buying lunch out? As long as it's within what you can afford, who cares?" Simmons said.

But when it comes to the big purchases, like a house, this generation may need to dial down their goals, or at least delay the timeline for reaching them as more young Canadians make do with part-time or low-paid employment.

Adjusting expectations is a 'buzzkill'

Simmons talked about the shock and disappointment that can come with setting goals that correspond to certain milestones — like turning 30 — that don't pan out. 

"Our expectations need to adjust if our incomes aren't going to do what we need them to do. And that's a buzzkill. Nobody wants to hear that," Simmons said.

But remember that the dream of home ownership isn't for everyone. But some millennials have bucked the trend of buying a home entirely, opting to rent and save instead.

Consider 'renting for life'

Simmons believes renting for life is a smart choice if you can't afford to buy, especially if you live in a very expensive city. But that choice comes with conditions.

"Make sure that you're renting affordably," Simmons said. "And you need to take advantage of the fact that you're not paying for repair, maintenance, a furnace or 'Oh my god, there's termites!'"

That means saving more than you would be if you were paying off a mortgage — often referred to as forced saving.

"Make sure that you're saving 20 per cent of your after-tax income for the long term. That's my tip for anyone who's deciding to rent for life," Simmons said.

It's important to acknowledge that while every generation will share some common struggles, ultimately everyone's experience in this economy is different, so your financial challenges will be too. Share solutions or strategies that have worked for you in the comments below.

Watch the full interview:

Q & A: Millennial money challenges

7 years ago
Duration 27:52
CBC's Jacqueline Hansen and financial planner Shannon Lee Simmons answer viewer questions


Jacqueline Hansen

Senior Business Reporter

Jacqueline Hansen is a senior business reporter for CBC News. Based in Toronto, she's been covering business and other news beats since 2010.