Lost in Financial Translation: Tips to Save Money for MillennialsJuly 4, 2016
If you’re a parent of a millennial, you’ve likely told your child repeatedly “not to live beyond their means”. And if you’re a millennial, you’ve likely heard the phrase “save for a rainy day” countless times. It’s crucial to reiterate the importance of saving to a young adult, however, do they really understand what these universal phrases mean?
A recent TD survey found that the top three pieces of advice millennials have received from parents and caregivers include not living beyond their means (55 per cent), saving a percentage of every paycheque (52 per cent) and saving for a rainy day (47 per cent).
And while many millennials turn to their parents and guardians for financial advice, only two-thirds (66 per cent) consider this advice worthwhile, and a lot of this advice typically gets lost in translation.
Give your child straightforward financial advice
When offering general financial advice, it’s best to avoid the clichés and explain in a realistic and measurable way.
You may tell someone to “save for a rainy day”, but what exactly is a rainy day and how much should they save? To put it into context, you should save a percentage of your paycheque in the event that you run into some unplanned expenses or loss of income, like a sudden job loss.
Shirley Malloy, Associate Vice President of Everyday Banking at TD Canada Trust, recommends setting aside three to six months’ worth of income. Having this cushion will help you take care of living expenses until you get back on your feet.
Even telling someone to save a percentage of every paycheque can also be misconstrued. How much should you save? What should you save it for? Malloy suggests putting aside 10 per cent of every paycheque as funding for vacations, educational pursuits and hobbies.
And “not living beyond your means” should be understood as advice to not mistake credit for cash. Past generations may have taken this phrase as “avoid debt at all costs”. But contrary to what many may believe, not all debt is bad. The key, however, is to make it a top priority to pay it back by creating a budget and tracking your spending. A student loan or a mortgage should be looked at more as an investment in your future, not a burden.
- Related Read: Creative Ways To Save Money and Pay Down Debt
More helpful saving tips (not in cliché form)
Here are some additional useful money-saving tips for millennials, parents… and anyone for that matter:
- Understand your financial circumstance. Creating a detailed budget will guide you on how much of your income should be spent on bills, debt payment and other necessary expenses; versus how much can be saved and how much is disposable. Knowing how your money is spent will keep you from making bad money choices. There are many online tools and apps available specifically for budgeting and money management to help keep you on track.
- Scan weekly flyers to find sales, price match and use coupons (most flyers are available online or through flyer apps).
- Eat out less. Skip the morning coffee run or the frequent lunch dates and bring your own coffee and lunch to work/school.
- Avoid general ATM fees by going to your banks own ATM.
- Rethink your cell phone plan. Scan your bill for any add-ons and services you don’t use and cancel them.
- Save on your car by shopping around for cheaper car insurance rates. You could save up to $670 by using ComparaSave.com’s online quoter to compare rates.
- Related Read: Top 10 Tips For Cheaper Car Insurance
- Keep up with auto maintenance to avoid unexpected mechanic expenses. Regularly change the oil and keep your tires inflated properly to get more mileage and avoid blowouts.
- If you can afford to ditch the car, you can save a pretty penny on parking and gas by taking transit… or walking!
Saving doesn’t have to be confusing or cliché. By using our tips, you can save anywhere from a few dollars to a few hundred.