Have you heard the common misconception that millennials are bad with money? Are you unsure whether or not to believe this, leading to questions about your own financial habits? Do you feel awkward and unsure about where to look, not wanting to get the wrong advice?
With the amount of information available to us via the internet, it can be overwhelming and confusing to sort through it all. Let’s be honest here: although engineers are good with numbers, sometimes we need a boost to put them together into a financial plan that makes sense.
This week, Elaine and I attended an event hosted by Lean In Canada called “Lean In to Your Financial Future: Why Women Need to Change our Relationship with Money”. The event featured a powerhouse panel that included:
Jennifer Hollett – Head of News at Twitter Canada
Jackie Porter – Financial Planner, Carte Wealth Management
Shannon Lee Simmons – Author of Worry Free Money
Jennifer Reynolds – President and CEO at Toronto Financial Services Alliance
Laura Reinholz – Director BMO for Women
Pretty stacked, right? WE LEARNED A LOT.
The event covered a number of topics from personal finance to long term strategies, and was specifically targeted at the issues women face in the realm of finances – think the wage gap, self-reported lower confidence levels regarding financial acumen, and the gender disparity in the financial industry (which isn’t far off what we see in engineering).
We realized that a number of topics not only applied to women, but could also be applied from a millennial point of view. Let’s be frank – money can be challenging as a millennial! For instance, it’s hard to think about saving for retirement when there’s a mountain of debt to pay off. And we only need to look at the housing markets in big cities to see that buying a house in your twenties isn’t what it used to be (must be all that avocado toast)
Luckily for us, and since we aren’t financial professionals ourselves, the women on this panel had a great collection of advice to give. In order to pass it along, we’ve taken what we learned and distilled it down to the basics we believe apply to millennials.
Whether your budget is at its beginning and needs a starting point or whether you’ve developed a relationship with your riches and want to make sure you’re on the right track, we hope you can also take away some pointers from this event. Afterall, couldn’t we all use a little more cash in the bank? Those brunches and lattes aren’t going to pay for themselves!
Note: This article will cover the very building blocks of financial success (since we can all appreciate the need for a solid foundation amirite?). Stay tuned for future articles where we will tackle some of the topics mentioned above: the gender wage gap, social norms that affect women’s finances such as mat leaves and time off, and others.
1. Financial Goals – we all have them!
Like other areas in our lives, #goals are a way to prioritize what’s important to us in order to establish a means to accomplish them. Finances are no different.
When setting financial goals, it’s important to recognize that your own situation can be vastly different compared to the people around you. The panel recommended that the best way to starting thinking of money goals and where you think you should be is by talking to your friends who are in situations similar to your own. Afterall, your goals are going to be different if you’re a young professional just starting out in your career vs being a professional in their 40s or 50s who may have more assets (*cough* actual real estate property *cough*), children, a pet, aging parents, retirement on the horizon, you get the picture.
Being a millennial isn’t so bad afterall, eh?
Once you’ve set some goals that reflect your personal values, it’s time to get to work! Based on personal experiences, we found that meeting our financial goals boiled down to two basic areas: saving our money and repaying our debt.
2. Saving (pay yourself first)
“Pay yourself first!” Said Jennifer Hollett, Head of News at Twitter Canada, as she opened the panel with this statement. When you think of saving that way, doesn’t it make sense? If we make room in our lives for the necessities like rent and the hydro bill, shouldn’t we also be making room for ourselves? Saving is a place we could all afford to be a little more selfish.
That being said, saving can be difficult. As Shannon Lee Simmons puts it in her book Worry Free Money, social media platforms are the worst and they hinder our saving efforts. Just like it’s the human highlight reel for your friends’ accomplishments, it’s also a sneaky place where Facebook and Instagram will advertise all the things you want in your life but may not have.
A saving rule of thumb is to save 20% of your income. Popularized by Harold Pollack’s personal finance index card, along with other simple rules for investing, it tells us to set aside 20% of our income before taxes. At the event, the panel discussed this rule of thumb and agreed there is validity to it. However, they noted that if you aren’t in a position where 20% is possible for your finances, aiming for 10% is also a good goal. Also, if you’re putting money aside for debt repayment, this too is a form of saving.
Building a Budget
So how do we prioritize paying ourselves first? A budget is a good place to start.
“A budget? *Snooze* those are boring. I came here for funny anecdotes and non-obvious advice.”
Yes, this may be your initial reaction too, but budgeting doesn’t have to be boring or restrictive! As we heard from the panel, budgeting is a way to ensure that your money is going where you want it to go. Do you have dreams of travelling the globe? Is your monthly gym/dance/yoga membership important to you? Are you self-employed or want to funnel a little more moolah into your side hustle? Budgeting is the answer to all of these questions.
Personally, I am a loyal user of Mint (no sponsors here, we wish we had them so we could pay ourselves more first). I like this platform because it automatically pulls updates from my various accounts and auto-categorizes my spending. While I found it took some teaching for the software to “learn” which categories I prefer, it has simplified my budget and allowed me to get the full picture even though my accounts are spread out across multiple financial institutions.
3. Debt (paying others so you can pay yourself in the long run)
Ah, debt. Engineering sure was an *investment* degree wasn’t it?
How to pay off debt was a popular question for the panel. One woman explained her status as a millennial with a pile of debt, currently living at home. She wanted to move out eventually, and she asked how she should manage her finances going forward and if asked if she had to live at home forever, given her loan status.
As ladies with OSAP loans who do not have the option to live at home due to the location of our work, this question definitely resonated with us.
Engineers and financial planners can agree that it mathematically makes sense to live at home forever. However, the panel also made the point that this may not socially or professionally make sense for everyone. They stressed that debt is easier to pay off the earlier it is tackled. If you have the option to stay at home (or otherwise reduce your expenses), it is in your favour to hammer off your debt soon in order to avoid paying large sums on the interest instead of on the principal.
If the debt you owe is student debt, congratulations! The panel deemed this as good debt, because you made a solid investment in yourself and that deserves serious pats on the back. However, if the debt you owe is not student debt, it becomes all the more important to prioritize paying it off.
Do you feel financially successful? Do you have great tips for others on how you got there? Let us know in the comments below!
Olivia is a project manager at a mechanical engineering consulting firm for the food industry in Toronto, ON. Her job is like a behind-the-scenes episode of How It’s Made, and includes free samples on good days if she’s lucky. Outside of engineering, she is an avid thrift shopper, has a strong affinity to corgis, and is passionate about advocating for women in STEM and diversity in the work place.