Young adults 'feeling the squeeze'

[nns]

Maybe you should just skip young adulthood — it could be the worst time of your financial life.

B.C.’s 20-to-35-year-olds are in crisis, reeling from a uniquely vicious financial assault, new studies show.

They’re staggering under debts, fighting to get a toehold in the Lower Mainland housing market and watching their household incomes shrink.

The Human Early Learning Partnership at the University of B.C. calls young adults “Generation Squeeze,” reflecting the pressures that mount as their living standard slumps.

“There is a silent generational crisis occurring in homes across Canada,” the partnership says in a recent study. “We are talking about a massive social and economic change — one akin to a silent but no less damaging earthquake in our environment.”

Experts in personal finance pin the blame for young adults’ plight on an unholy trinity: poor role modelling by parents, lavish spending, and the economic pressures of out-of-reach house prices, dwindling real income and daunting student loans.

Many of young people’s poor financial habits and attitudes can be traced back to their free-spending parents, observers say.

“Eighteen to 34-year-olds are getting strangled by their unrealistic expectations,” Kwantlen Polytechnic University educator Robert Ironside says. “This generation has grown up watching parents use credit extremely liberally. The result is a culture of debt in which people feel entitled to spend.”

Others say it’s the fault of young people’s live-for-today philosophy.

The Wealthy Barber Returns author David Chilton, who has two children in university, says it’s understandable that many young people finish college with debts. But young adults often do themselves no favours with their spending, he says.

“When you sit down and look at their math, a lot of them got themselves into some of this difficulty,” Chilton says. “A lot of their lifestyle decisions are absolutely crazy.”

The learning partnership says young adults’ housing costs and incomes are going in opposite directions. House prices in B.C. have risen 149 per cent since 1976 while young couples’ household income fell six per cent in this period.

“No other province in Canada reports a decrease in the average young couple’s household income,” the partnership’s study says. “Nor does any other province report as large an increase in the cost of housing as does B.C.

“These trends reveal that the standard of living for the generation raising kids has deteriorated more in B.C. than any other part of the country.”

As well as grappling with tougher financial challenges than any other age group, young adults have the worst financial literacy of all adults in B.C.,
a poll conducted by Ipsos Reid for
The Province shows.

Half of 18-to-34-year-olds call their knowledge of personal financial management fair, poor or very poor.

Their ability to apply what they do know is also dismal. Sixty-seven per cent rate their personal financial performance as fair, poor or very poor.

Far too many young adults know too little to handle daily money matters — let alone the longer-term planning they should be doing, Ironside says.

“We’re putting our entire future at risk because of this lack of financial literacy,” he says.

Richmond resident Josie Hung, 22, works diligently to manage the financial side of her life. From her $13-an-hour job as a pastry chef, Hung makes mortgage payments, handles household expenses, sets aside money for property taxes and saves for travel.

She and her mom pooled $200,000 to buy a condo two years ago and have a $30,000 mortgage.

Hung describes herself as the financially responsible member of this mother-daughter duo.

She lives frugally, taking public transit and avoiding expensive clothes.

She never leaves an unpaid balance on her credit card.

“I’m a careful spender,” she says. “I’m always aware of how much money I have and where it’s going.”

She criticizes parents who finance their adult children’s spending, warning these misguided subsidies prevent young people from learning financial management skills, keeping them in a state of perpetual childhood. “It’s mind-boggling,” she says of parent-dependent youth. “They have very expensive lifestyles but don’t have the money to afford them. “They will get hit very hard.”

Hung, who long knew that cooking was her passion, fast-tracked into a 10-month pastry program at Vancouver Community College during her final year of high school. That let her come out of Grade 12 with a college diploma in hand. The Vancouver school board paid most of the program’s costs.

Hung, who as able to draw on savings from a high-school job, graduated without debt.

She was fortunate. The average B.C. post-secondary student graduates with $27,000 in debt, according to the Canadian Federation of Students.

Twenty-five per cent of post-secondary students will have trouble repaying their loans, Credit Counselling Society CEO Scott Hannah says.

“People are not looking at how to minimize their student loans. They’re thinking ‘How much can I get?’ — when they should be doing the exact opposite,” Hannah says.

If careful spenders like Hung are potential role models for young adults, a young and high-income Calgary realtor whom Ironside met a few years ago is the dark side of the spending force.

“He told me ‘My generation is never going to start saving money. We’re happy the way we are now.’”

“He said: ‘We’re going to make a lot of money, we’re going to spend a lot of money. We’re going to use money to the fullest extent we can,’” Ironside recalls.

Ironside’s reaction?

“That’s OK when things are going well but the second conditions change and you’re not making that kind of money, problems surface.”

© Copyright (c) The Province

Young adults 'feeling the squeeze'

[MindBomber]

Richmond resident Josie Hung, 22, works diligently to manage the financial side of her life. From her $13-an-hour job as a pastry chef, Hung makes mortgage payments, handles household expenses, sets aside money for property taxes and saves for travel.

She and her mom pooled $200,000 to buy a condo two years ago and have a $30,000 mortgage.
...
she criticizes parents who finance their adult children’s spending

The girls mom gave her a minimum of a $150,000 to put towards a condo, and she's criticizing parents who financially support their children.

[nsmb]

what a horrible example for this article

brb 13$ hr job
brb 200k from mom
brb 30k mortgage for a richmond condo

[AAnthony]

-----

[twitchyzero]

let's see this $13 dolla balla put a down payment for her condo by herself
she had the school board pay for her schooling as well

[Excelsis]

[Teh Doucher]

im one of those idiots. so bloody hard to save

[JKam]

Originally Posted by MindBomber

The girls mom gave her a minimum of a $150,000 to put towards a condo, and she's criticizing parents who financially support their children.

They probably live together (single mom + daughter). I doubt her mom just gave her money to buy her own place.

[DsZ24]

I would have thought pastry chef's make more than that.

[nns]

I think some of you guys are hung up on the wrong details of the article.

[Lomac]

It's an article written by The Province. Don't expect it to be a good example of how a new story should be...

[DsZ24]

Originally Posted by JKam

They probably live together (single mom + daughter). I doubt her mom just gave her money to buy her own place.

I was thinking that too when I first read it. That's enough to turn alot of people off from buying their own place lol. You can have this condo but your mom has to live with you for the next 20 years, yah no thanks.

[MindBomber]

Originally Posted by nns

I think some of you guys are hung up on the wrong details of the article.

Okay, I'll focus on the intent of the article.

Having learned poor financial management skills from the previous generation, many young people now have equally poor financial management skills. All my friends smartened up before hitting their mid twenties, paid off their cards and began tucking away money every month for a down payment. They also all chose careers that will provide a reasonable income over the long term, not thirteen dollars an hour. The ones who do have student loans, look at them as investments into a career that will pay well, and have real degrees, no ten month course bull shit.

The article was dumb, thanks for posting.

[bloodmack]

I like how they attempt to point the blame on the "young adults" when they state before that it was the older generations fault because of their "liberal" spending.

And mindbomber what do you mean by 10 month course bull shit? Trades go up to 4 years in apprentiships that's a very legitimate way of learning, in fact its an older way of learning then college it self.. so if anything college is 4 year load of BS.

[nns]

Sorry if the article upsets you. That wasn't what I was going for. Your friends sound pretty level-headed. Too bad they seem to be a part of the minority.

I think it's a bit underhanded to put down someones profession like that. I don't know the lady, but she seems to enjoy her career choice, despite the low income it offers. Some people, like myself, are sort of the opposite. When looking at professions, I put money first, and happiness second. It's definitely not unique to myself - it's just kind of sad, that's all.

[MindBomber]

Originally Posted by bloodmack

And mindbomber what do you mean by 10 month course bull shit? Trades go up to 4 years in apprentiships that's a very legitimate way of learning, in fact its an older way of learning then college it self.. so if anything college is 4 year load of BS.

The article praises her like a saint for having completed a ten month course without debt, then criticizes the average of $27k in debt, when that number is based primarily on people with bachelors degrees or higher. It's just another layer of illogic based in using that girl as an example. That's what I intended to criticize.

A four year apprenticeship is a totally legitimate way of learning, and not much different from a university degree, the environment where you learn is just different. I'm a tradesmen, in addition to being a university student.

[taylor192]

A couple things from this article stood out to me:

Many of young people’s poor financial habits and attitudes can be traced back to their free-spending parents, observers say.

“Eighteen to 34-year-olds are getting strangled by their unrealistic expectations,” Kwantlen Polytechnic University educator Robert Ironside says. “This generation has grown up watching parents use credit extremely liberally. The result is a culture of debt in which people feel entitled to spend.”

I have pointed out that children of the 70s/80s are heavily influenced by how much our parents spent during the financial bubble of the 80s - yet they did NOT do this on credit. Canada Savings Bonds paid 19% (while they pay 1% now) at one point, money was making money hand over fist thus why people spent it so freely.

Now our parents are retiring and we're seeing how ill-prepared they are, yet are we adjusting to that? No, we're spending like the economy is roaring along and digging an even bigger hole for ourselves.

The Wealthy Barber Returns author David Chilton, who has two children in university, says it’s understandable that many young people finish college with debts.

I don't think it is understandable at all. We push more people into higher education with higher price tags and less return on value.

[taylor192]

Originally Posted by MindBomber

The article was dumb, thanks for posting.

This article is only dumb for your small circle of friends then. It is dumb for me too, yet I think it has tons of merit for the majority. I also agree the example is friggin dumb, how does a $13/hr pastry chef save $2000K with her mom... oh ya she doesn't, its mostly mom's money.

There's a reason for stats like how mnay Canadians live paycheque-to-paycheque with no savings, why debt ratios are at all time highs, ...

[ilvtofu]

lol if you were really "feeling the squeeze" maybe you shouldn't be going into a pastry program... Someone needs to slap some sense into josie hung

[MindBomber]

Originally Posted by taylor192

This article is only dumb for your small circle of friends then. It is dumb for me too, yet I think it has tons of merit for the majority. I also agree the example is friggin dumb, how does a $13/hr pastry chef save $2000K with her mom... oh ya she doesn't, its mostly mom's money.

There's a reason for stats like how mnay Canadians live paycheque-to-paycheque with no savings, why debt ratios are at all time highs, ...

I'm aware that debt ratios are at an all time high, and that many Canadians live one pay cheque to the next with no savings; the prior generation passing on abysmal financial management skills to the current is a legitimate issue that the public and government should embrace. The issue isn't dumb, the article is though. It doesn't leave me feeling compelled to curtail my spending and save more, because it uses a ridiculous example and poll figures that could hardly be called scientific. I want this article to quote stats can figures, interview a recent graduate overwhelmed by debt now regretting those frequent trips to starbucks, use an example of an individual who had to declare bankruptcy, or someone who lost their job and is in crisis because they have no savings.

[Meowjin]

you miss the fact that she's a girl too. probably some dude paying for everything.

[dinosaur]

Everything I am thinking has pretty much been said, but fuck dude, this article pisses me off!

Really!? she is feeling the squeeze? should we all applaud her for keeping her spending in-line when she really has no fucking bills? Where would she be without the money her mom gave her for the fucking condo? Fuck, at $13/hr that bitch would barely be able to rent a basement suite in Richmond...and yay! good for her!! she got a post-secondary education for free but have fun making $13/hr for the long-haul!

She makes 13/hr. Lives with her mom in a condo she didn't really pay for. Most likely drives a car her mom paid for or is "sharing" it, split the groceries (which lets face it, you know her mom buys and cooks), and gets to "share" all the utilities. Gee, sucks she can't go out and buy that new Channel bag she really wanted!

Do you think the reporter was interviewing her and then was like "oh, fuck"..."whatever, print it anyway."

[trip]

haven't felt the squeeze in a long time

[twitchyzero]

Originally Posted by trip

haven't felt the squeeze in a long time

[Nightwalker]

Living paycheque to paycheque and having a balance of zero is far BETTER off than a lot of people my age. Carrying debt places you below zero.

I'm finally going to be debt free for the first time since my first loan 7 years ago (except for my mortgage, aiming to sell soon though). Getting rich enough to have zero money is something I'm extremely excited about. A lot of opportunities open back up for me like changing jobs or career, moving, going back to school. The pressures of 5 digit unsecured debts and car loans really held me in a middle class rut.

My parents are spenders and it's something that's been extremely difficult for me to break, it's taken a lot of self development and scary realizations.

I hope there's more articles and media like this, it might help someone else that was in my position change their life around.