The 3 Financial Challenges Facing Millennials Right Now

From soaring student loan debts to the relentless increases in living costs, Canadian millennials are dealing with a variety of financial challenges in 2024.

With traditional milestones like homeownership and retirement planning seeming increasingly out of reach, it's essential to address these challenges head-on. We're delving into the key financial challenges facing millennials right now and providing practical solutions to help you overcome them. 

Whether you're struggling with student loan debt, grappling with inflated living costs, or urgently need to build savings and emergency funds, let’s explore your options.

#1. Student Loan Debt 

One of the most critical financial problems for millennials is the burden of student loan debt. According to the Financial Post, the average Canadian millennial has $47,283 worth of unsecured debt, of which most is student debt.

If you have a student loan, this debt may make it more difficult to save for other goals, and feel like a mental weight.

How Can You Overcome Student Loan Debt?

• Adjust Your Repayment Plan: You may be able to request adjustments or support for your student debt directly with your lender. You can explore repayment options with Canada’s National Student Loans Service Centre. Federal loans are often flexible and allow you to customize your payment schedule, so don’t be afraid to check out your options.
• Employer Student Loan Assistance Programs: Advocate for or seek out employers offering student loan assistance programs as part of their benefits package, providing relief through contributions towards loan payments.

#2. Inflating Living Costs

Despite wages increasing, millennials are struggling to keep up with inflating living costs. The increase in wages has not been sufficient to match the rising costs of housing, healthcare, and other essential expenses. As a result, millennials often find it challenging to make ends meet and achieve traditional milestones, such as starting a family or buying a home.

How Can You Combat Inflated Living Costs?

• Budgeting and Expense Tracking: Implement strict budgeting techniques and utilise expense-tracking apps to find areas where expenses can be trimmed, enabling better management of limited resources. Budgeting won’t solve the problem of inflation, but it can help you understand and manage your own spending. Every little bit counts, so budgeting is a great tool to stay ahead of the curve, identify problems, and take advantage of opportunities.
• Evaluate Your Debts: Interest paid on debts like credit cards and loans can add up and cause a huge impact on your monthly budget. If you find yourself stuck with high-interest debt, you may be struggling even more to keep up with inflation. Evaluate your debt and consider your options to reduce its impact. Debt consolidation could be a solution to help free up more cash flow each month.

#3. Saving Difficulties

Millennials must face the need to save more for homeownership, retirement, and various other life milestones. Many companies have shifted the responsibility of retirement savings to their employees, making it crucial for millennials to start saving early and take charge of their financial future. Additionally, rising housing prices and the need for larger down payments make it challenging for millennials to enter the housing market without a healthy savings account.

The need for savings paired with the struggle of inflation makes it challenging for millennials to make a dent in their financial goals.

How Can You Save More and Build an Emergency Fund?

• Build Positive Habits: Financial habits and literacy are not taught in school, leaving Canadians to figure it out on their own. Taking the time and effort to work on your financial habits can have a huge impact on your ability to save. You may be surprised by how much of the process is related to your behaviours and mindsets, not just your income.
• Automated Savings Plans: Set up automated transfers to savings accounts to ensure a portion of income is consistently earmarked for savings, fostering a habit of regular saving.
• Emergency Fund Prioritization: Prioritize building an emergency fund equivalent to at least three to six months' worth of living expenses to cushion against unforeseen financial setbacks.

Learn how Parachute can help you take control of your financial wellbeing now!