Finances and Debt Management

Transcription

1 Finances and Debt Management

2 Quick Summary by Age for Finances and Debt Management Not very concerned with money at this point. Most are still living at home, supported by their parents. They generally feel pretty good about their finances - With the high cost of education they are saving for school - Strugging the most of all the Millennial groups. 70% are making less than $30k a year. - As they search for their career path they going back to school is a serious consideration which will require savings - With a clearer career path, they begin to make better salaries. 25% are earing $50k+ - With a little more financial freedom and the ability to begin thinking about the future and the thing they could save for, their overall financial outlook is the most positive - Their hard work in school and in their first few years of their careers are paying off. 35% earn $50K+ a year - Their strong salaries afford them a generally positive attitude about their current financial situation. Saving however is a struggle because of their heavy debt loads and costs of living (continued on next page)

3 Quick Summary by Age for Finances and Debt Management (continued from previous page) Their current jobs provide them with enough money to support themselves and save a bit for the future - Their savings goals are school, travel and someday buying a house/home - Their savings goals are buying a house and travel and retirement begins to be a consideration - With student loans still looming they are anxious to start 'living'. As a result their debts are signficant, with nearly 40% claiming to have debt of more than $10k. - At this stage in their life, they are starting to get married, start families and they are moving out of their student lifestyles. They are trying to put a little away for retirement, but they are also thinking about travel and home ownership if it hasn't already happened. - The most debt laden of all Millennials because they have entered their home buying years. Student debts are no longer a concern but building a life costs money (continued on next page)

4 Quick Summary by Age for Finances and Debt Management (continued from previous page) % still have not debt, but within the next year or two, they expect to begin incurring debts such as student loans and credit card debt - 44% have no debt despite having finished school and high unemployment. - They have the lowest level of debt and expected debt of all Millennial groups, yet they are the most concerned about the debt they do have. - With so many who are debt free, they also do not anticipate signficant debt in the near future. In 5 years they anticipate buying a house but prior to that their debt expectations are very modest - Before they have paid off their student loans, they are starting to spend money they don't have, wracking up credit card debts and car loans - For those who don't have any debt they expect to buy homes, cars and build credit card debt as they build the lifestyles they want - In addition to their mortgages they are also buidling their credit card debts and their lines of credit to pay for their new lives and homes - They expect they will be in debt for a long time and have resigned themselves to this fact. - For those lucky 33% who currently hav not debt, they will catch up in the next few years with their goal of home ownership and all the costs associated

5 Despite, constant reporting of the struggling Millennials the reality is that by the age of 25, one third of Millennials are earning at least 25% more than the overall average income of Canadians <$20,000 $20,000 < $30,000 $30,000 < $50,000 $50,000 < $70,000 $70,000< $100,000 $100, Annual Indivdual Income Average Income by Age Group All Ages $40,500 Under 20 $8, $18, $39,800 Tl Millennials SOURCE: Income Statistics Division, Statistics Canada 5

6 Negative = 27% Those who are most positive about their current financial situation are the year olds who likely continue to be supported by parents. As Millennials get older they feel the pressure of needing to save but basic expenses are being covered Current financial situation: Barely making ends meet Living paycheque to paycheque Neutral = 30% Job that pays well, many expenses & Able to pay my bills, have a little fun but saving money is a struggle Positive = 43% Job that pays well, not a lot of expenses, money not an issue Job pays enough to satisfy I make enough money to paybills, have fun, save I live well, no money worries Tl Millennials

7 Saving however is relative. Not being able to save, should be more defined Millennials are claiming to be saving for the future. Currently saving for the future Tl Millennials

8 School 34.8 With fulfillment and desire high on their list of aspirations (see P.9) it is no surprise travel is an important saving goal, particularly once they have graduated from high school. By 30 saving for retirement has become an important priority 64.5 Primary Reasons for saving: year olds year olds year olds year olds Real Estate Real Estate Retirement A car Travel Travel Travel Travel School Retirement A rainy day Real Estate A car A rainy day Real Estate A rainy day A rainy day A car A car Retirem ent Retirem ent Other School Not sure Other Tl Mllnls Other Not sure Tl Mllnls School Not sure Tl Mllnls Other Not sure Tl Mllnls

9 Without some of the safety measures generations before have enjoyed, thinking about retirement is necessary 9

10 Their ability to save and the amount they can save, will be hampered by their significant debt load. Nearly half of year old have debt of more than $10k No Debt Debt >$10, Tl Millennials Debt <$10,

11 start to pile on such as mortgages and car loans. The most consistent debt is Type of debt: year olds year olds year olds year olds Student loans Student loans Credit card Credit card Credit card Credit card Student loans Mortgage General living General living Car loan Line of credit Other Car loan Mortgage Car loan Line of credit Line of credit Line of credit Student loans Car loan Other General living General living Mortgag e Tl Mllnls Mortgage Tl Mllnls Other Tl Mllnls Other Tl Mllnls

12 Starting adult life with debt is starting behind the line not at the line 12

13 Student loans are the greatest dollar contributors to debt for Millennials under 25 but as they become more established and the student loans are paid off other life expenses like homes and cars begin to add to the debt load Distribution of Debt Tl Millennials Boomers Other General living Line of credit Car loan Student loans Credit card Mortgage 13

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15 Debt has been a necessary evil in achieving life goals so far, but it is causing many stress and anxiety. However, for 23% of Millennials their debt load is not causing any sleepness nights Attitude towards current debt load: I don't like having debt but it was necessary to get where I am today I don't like having debt. It causes me stress just thinking about it Tl Millennials I am comfortable with this debt and feel it was worthwhile for the fun, pleasure and/or investment in my future I almost never think about the debt and don't let it change what I do % 15

16 The level of debt has very little impact on their attitudes toward the debt. In fact the greater the debt the more justification that it was worthwhile Attitude towards current debt load with debt >$10,000 Attitude towards current debt load with debt <$10,000 I don't like having debt but it was necessary to get where I am today I don't like having debt but it was necessary to get where I am today I don't like having debt. It causes me stress just thinking about it I don't like having debt. It causes me stress just thinking about it I am comfortable with this debt and feel it was worthwhile for the fun, pleasure and/or investment in my future I almost never think about the debt and don't let it change what I do Tl Millennials I am comfortable with this debt and feel it was worthwhile for the fun, pleasure and/or investment in my future I almost never think about the debt and don't let it change what I do Tl Millennials

17 About 50% of the Millennials under 25 whose debt is dominated by student loans expect to have it paid off within 5 years even if their debt is more than $10,000. For those older Millennials whose debts include much big ticket items, it will take them much longer than 5 years, perhaps a lifetime if their debt includes a home Expected duration of debt: Debt of Less Than $10,000 Debt of More than $10,000 <1 year 26% 31% 30% 24% 20% <1 year 4% 4% 7% 3% 3% 1-2 years 33% 33% 35% 32% 33% Tl Millennials years 12% 20% 20% 10% 8% 3-4 years 23% 18% 20% 25% 25% years 18% 20% 18% 16% 32% 5+ years 18% 18% 15% 20% 22% 5+ years 44% 55% 66% 69% 73% 17

18 Home ownership for 20% of currently debt free Millennials is at least 5 or % of individuals who currently have no debt expect to incur a student loan within the next 1-2 years Expected future debt TOTAL MILLENNIALS without debt currently: Next 1-2 years Next 3-5 years 5 or more years Student loans General living Car loan Mortgage Credit card Line of credit Other 18

19 Education is extremely important to Millennials. With the rising cost of education in Canada student loans and expenses associated with school are necessary evils to achieve the education that is necessary to compete % of individuals who currently have no debt expect to incur a student loan within the next 1-2 years Expected future debt year olds without debt currently: Next 1-2 years Next 3-5 years 5 or more years Student loans Credit card General living Car loan Line of credit Other Mortgage 19

20 work force, they aspire to the first purchase of independence by purchasing a car, with the view that in 5 years home ownership might be attainable Expected future debt year olds without debt currently: 12.4% of individuals who currently have no debt expect to incur a car loan within the next 1-2 years Next 1-2 years Next 3-5 years 5 or more years Car loan Student loans Credit card General living Mortgage Line of credit Other 20

21 As they become established in their careers, becoming a homeowner becomes more of a possibility and an achievable and imminent goal % of individuals who currently have no debt expect to incur a mortgage within the next 1-2 years Expected future debt year olds without debt currently: Next 1-2 years Next 3-5 years 5 or more years Mortgage Car loan Credit card Student loans General living Line of credit Other 21

22 starting families. At this point owning a car and a home become higher priorities % of individuals who currently have no debt expect to incur a mortgage within the next 1-2 years 19.2 Expected future debt year olds without debt currently: 16.3 Next 1-2 years Next 3-5 years 5 or more years Mortgage Car loan Credit card General living Line of credit Student loans Other 22