3 Money Habits That Can Really Help with Debt ReliefNov 07, 2018
There is an abundance of stories in the news about the financial challenges and debt problems millennials face compared to older generations. What’s often overlooked though is how adopting just a few simple, new money habits can provide some relief — and even help you reduce your personal debt.
We know from results of our Affordability Index that every generation tends to see their current stage of life as more expensive than other generations do. The “it’s harder for me than you think it is” mentality is sometimes perception, but often it’s based on fact.
A majority of millennials think they have it worse than boomers and seniors on every metric we tracked, including cost of living, housing affordability and average debt load.
The fact is, a lot of millennials are struggling. Millennials are the generation most likely to say they’re struggling to afford basic necessities — and the most likely age group to be overwhelmed by their debt.
Knowing that so many Canadians in their 20s and 30s are faced with challenges like student debt, unaffordable housing prices, a limited job market and slow wage growth, what new or improved money habits can they adopt to help with the debt relief process?
- Find a budget strategy that works for you
The monthly budget is the most important item in your financial tool belt, but it’s not one size fits all. Find a budget that works for you and you’re more likely to stick to it. That can mean using a worksheet (online or offline) or a budget app and then customizing it with the categories that make sense for your life. A millennial with kids will have a vastly different budget than a single millennial living on their own.
- Practice mindful spending
More often than not it’s a bunch of small purchases that makes your money disappear faster; with a large purchase you know where that money has gone. A dozen or so $20 purchases made within a few days can add up to a few hundred dollars spent – just like that! That’s money that could be helpful in your efforts to find debt relief. It could be money that you put towards extra debt payments. Or you could add to your emergency savings, so you don’t rely on debt when your hot water heater dies or your car breaks down.
If you’re building a budget with an app, find one that will track your spending. If you’re a spreadsheet budgeter, track it manually for a month. This information will help you visualize where you may be mindlessly spending money and help you build a plan to change those habits.
To learn more about how mindful spending can help you ditch debt, check out our blog post.
- Plan ahead and build major spending into your budget.
In this FOMO-age, the trend for millennials is to prioritize experiences over material things, but trips and other experiences can still be costly. Instead of relying on credit to cover the costs, plan ahead. Factoring your “wants” into your monthly budget is an important financial habit to adopt. Plus paying upfront will make those memories even better when you’re not paying off that trip six months after you’ve taken it!
November is Financial Literacy Month in Canada. It’s a great opportunity to grow your financial knowledge and increase your money and debt management skills.
- Check out the resources, tools and advice on managing your money from the Financial Consumer Agency of Canada.
- Learn more about options for getting relief from your debt here.
- Spend some time reading a few posts on topics like wedding guest debt and budgeting on a freelance income on our blog.
What you learn will not only help you improve your finances, it may make those “it’s harder than you think” moments easier to deal with when they happen.
Do you know a friend or family member who could benefit from these financial readiness tips? Share this post with them directly or join the conversation on Twitter. #LeaveDebtBehind, #Millennials, or #FLM2018!