Supporting millennials in financial wellness during COVID and beyond
They lived through the Great Recession of 2008/09, and many emerged from post-secondary education with big student debts and limited employment opportunities. Now, amid an ongoing pandemic, they’re facing various employment, social and mental health challenges of the Great Lockdown.
Keeping track of cash flow through budgeting may add to those challenges – but it doesn’t have to. Learning how to properly budget, with some guidance from a financial expert, can help them achieve their financial goals during and beyond the COVID-19 crisis.
Millions of millennials
First of all, who are millennials?
While many Canadians think millennials are in their 20s, this generation in fact comprises a wide range of ages and stages. By standard definition, they’re born between 1981 and 1996, and are now between 24 and 39. Figures from Statistics Canada show there are approximately 10.4 million millennials in 2020, and they outnumbered Baby Boomers for the first time in 2019. Dig a little deeper and you find there are just over 2.6 million Canadians between the ages of 34 and 39, thus being the “senior” millennials.
As a whole, they’re juggling careers, children, aging parents and considerable uncertainties about today and what lies ahead. While they have a variety of needs and experiences, they share common concerns about money. A recent survey by the FP Institute illustrates those concerns:
- money (38%) is the top stress in Canadians’ lives, outranking personal health (25%), work (21%) and relationships (16%)
- half of Canadians (49%) have lost sleep over financial worries
- Younger Canadians (under 35) are significantly more likely to have lost sleep due to money stress than those over 35 (55% to 46%)
- those who say the COVID-19 pandemic has financially impacted them, are twice as likely to say they have lost sleep
There are several reasons behind this, with job instability being among them. Broadly speaking, concerns about money – how to earn it, spend it, save it – underpin the worries that millions of millennials contend with when it comes to budgeting.
The value of a personalized approach
As these numbers suggest, budgeting can be stressful when balancing unexpected expenses, debt repayments and irregular earnings, while also trying to save for your children’s education and your retirement. So, where to start, and what comes next?
Whether you’re spending on groceries or saving for a home renovation, it all starts with learning to manage your cash flow. Do you fully understand what’s coming in, what’s going out, and why you’re spending in the first place? These are fundamental questions, the answers to which might reveal some immediate opportunities to find savings that can be used to start that renovation or ramp up your savings.
This is where personalized help with budgeting pays off. Consider it this way.
Having grown up in the internet era, millennials are accustomed to buying things online and using a variety of payment apps to do so. This digital-first instinct might work well when paying for coffees, housewares and clothing, but is not necessarily for good budgeting advice. For instance, many of the employers we work with subscribe to ProsperiGuide, T.E. Wealth’s proprietary digital tool, for their employees. It not only gives employees a personalized budgeting checklist to follow and return to, but also provides educational content designed to teach them how and why budgeting is so important. This is balanced with guidance from our certified consultants by way of seminars and one-on-one financial counselling.
When it comes to investment advice, online robo-advisors can provide quick and easy suggestions, but fall short when it comes to providing comprehensive, personalized advice in the broader context of an individual’s particular circumstances.
Amid so much uncertainty, the millennials my colleagues and I work with seek the peace of mind that comes in speaking directly with an expert financial planner who truly understands them, their long-term goals and their family situations. In other words, they can buy their Venti lattes at lightning speed with their phones, but they want human connections built on trust, expertise and experience when it comes to managing their cash flow (budgeting) and the broader aspects of financial planning.
More than the millennials
Many millennials have moved back home during the pandemic, which means budgeting is crucial for their siblings and parents too. Countless households have expanded over the last several months, with multiple generations moving under the same roof. Money can get as tight as space, putting a premium on good budgeting discipline for everyone.
We understand these family situations because many of our clients have millennial children. In customizing and executing the financial plans of the parents, we always factor in the current and expected needs of everyone in the family today, and for years to come. Budgeting for their children is often front and centre in discussions about those plans. This is particularly important when it comes to talking about legacies and wealth transfers down the line. It’s not uncommon for conversations about the fundamentals of budgeting to stimulate some interesting and candid discussions among family members about financial planning for significant life events. This is one way that an online robo-advisor falls short.
We see similar dynamics at play when offering financial education services to our corporate clients, many of which employ millennials who take advantage of our education offering. Over the last several months, we’ve had more than 55,000 visits to our online ProsperiGuide program, which includes a budgeting tool and other helpful calculators. Our discussions about the importance of budgeting often lead to conversations about longer-term financial goals and how to achieve them, which reassures both employees and employers alike.
Financial goals are getting closer
The challenges of COVID are likely here to stay for a while. Making a new or renewed commitment to budgeting can help steer millennials towards a brighter future, and they don’t have to be alone in that journey. Working with a financial planner can identify quick wins today and longer-term wins tomorrow through a customized plan.
Ask us how our private and corporate client services can help you or your employees make more informed decisions to further financial goals.
Mariana Paltanen, CFP Financial Planning Consultant