Let's save your college and university age kids from getting an F in personal finance.
What follows is a brief financial survival guide for young adults under 30. It's actually the agenda for presentations I'm making this week and next at universities in Mississauga, Ont., Vancouver and Calgary along with my colleague Roma Luciw, the Globe's personal finance editor. But these points stand alone as an argument to young adults about how and why they should be smarter about their finances.
You do have unique financial challenges:
They include fast-rising tuition fees and a tough job market that loves to slot young people into contract jobs and temporary work without benefits or pensions. Also, an expensive housing market and demographic trends that will put increasing pressure on you to pay for the health care costs and government benefits of the aging baby boom generation.
Not many people give a damn about those challenges:
The business community keeps thinking up new ways to devalue young workers. For instance, there's the just-in-time job, where you wait on a daily basis to see if you'll be called into work. Politicians keep talking about the middle class and families, not you. Parents of millennials understand the problem.
Student debt is manageable if you study the right things:
Did anyone ever tell you to follow your passion in your studies? Wrong. Find the path where your passion meets a career that lets you pay off any student debts you incur and move on with life. I'm okay with sounding mercenary on this. You need to be financially independent in life. Study what gets you there.
If the job market is shutting you out, create your own work. We worship tech entrepreneurs, but you can be successful finding a niche anywhere in the economy. That said, there's a lot of opportunity in creating banking and investing services for young adults like you. The big banks show no sign of understanding this market.
Banks see you as younger versions of your parents:
They're mainly interested in grooming you to be a passive, lifelong consumer of the products they sell – chequing accounts, mutual funds, mortgages, lines of credit and more. Your goal should be to pay nothing for banking and very little for investing. If your bank can't deliver, find one that can.
Credit cards are a trap:
Young people have a gift for failing to grasp the basic concept behind credit cards, which is that whatever expense you put on a card must be paid back promptly to avoid stunningly high interest rates around 20 per cent. Have a card in your wallet to buy stuff online, but don't use it anywhere unless you have the money to pay what you owe sitting in your chequing account right now. Use online banking to pay your card expenses the same day you incur them.
Lean on your parents, but don't bury them:
Move back home if you can't afford to live on your own after graduation and repay any student debt, but don't be a parasite. Recognize the extra costs to your parents and contribute as you can. Do not accept parental help with your debts or other costs unless your mom and dad have the money. If they wreck their finances helping you, you may be helping to support them 20 or 30 years in the future.
Houses are luxury goods:
Treat yourself if you can afford to, but don't feel bad if you can't. House prices have been rising a lot faster than incomes in recent years, and in some cities they're getting too costly for young buyers outside of professions generating big six-figure incomes. Renting is perfectly fine, as long as you aggressively save and invest for the future.
Don't live your life by your parents' timetable:
You'll probably live longer, which means you can take more time to find and build a career, buy a house and start a family. Expect to work longer, and don't pay any mind to the antique expression "early retirement." By the time you retire, 65 will be early.
The Globe and Mail's on-campus personal finance sessions are supported by the non-profit Canadian Foundation for Economic Education, which aims to improve financial literacy. If you're interested in arranging a session for your school, let's talk. I'm at email@example.com.
Financial Literacy on Campus
The Globe and Mail's Rob Carrick and Roma Luciw are running financial literacy sessions for university and college students this fall. Follow the discussion on twitter at #genYmoney. Here's the schedule:
Thursday, Oct. 1
Li Koon Chun Finance Learning Centre, University of Toronto Mississauga
Monday, Oct. 5
University of British Columbia
Simon Fraser University
Tuesday, Oct. 6
British Columbia Institute of Technology
Wednesday, Oct. 7
University of Calgary