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Secrets to planning for the future for Gen X, Y

CHRIS IBBOTSON askmoneylady@gmail.com Written by Christine Ibbotson, author of three finance books and the Canadian best-selling book How to Retire Debt Free & Wealthy. www.askthemoneylady.ca or send a question to info@askthemoneylady.ca.

You wrote a column a while ago about encouraging our adult kids to make it on their own financially. It seems to me that this new generation really can’t afford to do that, and I think they should stay at home as long as they can.

— Susan

Thank you, Susan, for this comment — there is indeed a lot of parents who agree with you. However, at some point, your adult children have to eventually find their own way without the continued financial support from their parents.

I will agree that it may be a little harder for the new X and Y generations who still want to do what others have done — buy a home, pay off school debt and eventually save for retirement. Generation X are those born between 1965 to 1980 (aged 41 to 56), and Generation Y (or millennials) are those born between 1981 to 1995 (aged 26 to 40).

Today, basic needs for this new group of spenders are much higher and has now outpaced the average for inflation. The cost of purchasing a home in Canada has risen from approximately three times the disposable income in the 1990s to seven times the household income. House prices have skyrocketed more than anyone could have imagined due to COVID. The increase in the cost of living compared to past generations has dramatically challenged the ability of Generation X and Y to achieve their goals. They definitely need to be more creative when dealing with this new reality.

Baby Boomers tended to be extremely loyal and more of a team player when it came to their work environments. They were less adaptable to change, and most would agree are even now not as tech-savvy as the newer generations.

Generation Xers are said to be very self-confident and quite demanding when wanting to have their opinions heard while Generation Y are even more independent, confident and tend to be more obsessed with social media. They both have felt the impact of a two-working parent family, the rise in divorce rates and they have had much less stability with employment opportunities. These two groups, especially Generation X, is now finding themselves in more debt than ever before. As a whole, they have less access to company pensions even though they want to retire at an earlier age; have ongoing education expenses for themselves and their children; have increased costs for the basics like food and housing; and now may have the burden of the anticipated care for their parents. This, of course, changes the way they view the world and how they plan to make their way forward.

Expanded digital technology provides knowledge, transparency and clarity for these new generations who are more confident, optimistic and smarter than any generation before them. They will need to get into the habit of budgeting more, saving more and most of all planning for their future. That being said, they are not afraid to get uncomfortable and to try new things.

Saving for the future with regular monthly contributions is of the utmost importance for these two generations: utilizing TFSAs, RRSPs, company pension/savings plans, personal savings accounts, and participating life insurance. Planning, learning and talking to others who have been successful is the key to balancing current financial needs and meeting longterm goals.

It is said that when times are harder, more challenging and problematic, we become better, more resilient and actually discard our self-doubt to aspire to greatness. I am excited to see what these two generations do in the future.

Remember, winners will always find a way to triumph over adversity no matter what the odds. These two generations are more educated, more confident, more optimistic and they can achieve more.

The fact is, if you believe that you were born to just grow up and pay bills, well, that’s all you’ll do. But if you believe that you can do more and become better than you are right now, then get started, be focused and stick to your plan. You’ll get there — I promise.

Good luck and best wishes, ATML — Christine Ibbotson

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2021-05-06T07:00:00.0000000Z

2021-05-06T07:00:00.0000000Z

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