How to Become a Minimalist to Beat Millennial DebtNov 07, 2018
The millennial debt struggle is real.
Our recent BDO Canada Affordability Index report found that millennials have some unique generational obstacles when it comes to their finances. In fact, 34 per cent of millennials are overwhelmed by their debt load, making them the most likely generation to feel this way (with Gen Xers second and boomers last).
It’s no wonder 81 per cent of millennials think they’ll have to work longer than their parents before they can afford to retire. And those aren’t the only struggles.
53 per cent of millennials struggle to cover their housing costs, that’s more than any other group, and Albertans in particular are struggling, second only to Ontario residents.
Supporting a family isn’t an option for many millennials; one-in-five have put off having kids because it’s unaffordable.
Nearly 30 per cent of 18-34 year olds are carrying student loan debt.
Millennials consider themselves the least financially prepared generation for any sort of significant life event, like dealing with a financial emergency, purchasing a home, or having kids.
But being a millennial doesn’t have to be a never-ending financial struggle. Because of these challenges, millennials have to think smarter (but not necessarily harder) about their finances.
One relatively simple way to reduce your debt load and open up opportunities is to adopt a minimalist lifestyle. Here’s how.
The basics of minimalism
The rewards of a minimalist lifestyle are more far reaching than many people expect. By wanting less and accumulating less, your physical, emotional and financial realities can become less complicated. This is critically important — because some of your financial woes may be within your control.
Millennials were the age group most likely to admit that they spend more than they should on wants (43 per cent admit to overspending).
Minimalism is about recognizing and attending to needs, and being more thoughtful about wants.
Reduce what you have (and don’t need) and avoid unnecessary spending
To tune into your goals and stay motivated, start by reducing the physical clutter in your life. Getting rid of what you don’t really need can save you money in small ways throughout the month and year.
Think of the decreased utility costs by streamlining multiple entertainment systems. Or the gas, upkeep and insurance costs you’ll save by eliminating one or all of your vehicles. Pack your own lunch and you’ll spend a few less bucks a day compared to dining out.
Jordann talks about how to Stop Wanting Things in her blog at My Alternate Life.
Now, use your freed-up money wisely
Consider using your saved money to build an emergency fund (think four to six months’ worth of living expenses). Every time you’re able to pay cash for an unexpected cost in the future, the lower your debt load will be.
And don’t ignore those retirement savings. It’s Financial Literacy Month (FLM), and the Financial Consumer Agency of Canada offers retirement plan resources to help you make a plan as your debt dwindles.
Interestingly, having kids is considered a want rather than a need by one-in-five millennials, and they’re more likely to put off having kids because it seems unaffordable.
If you want to have kids, minimalism can help there, too. Starting and raising a family on the minimalist philosophy is possible (and can help you avoid a lot of debt). Your kids don’t need everything you every had (or wanted) as a child for them to be happy (or for you to be a good parent).
Consider minimalism as the gateway out of your millennial debt.
If you’re wondering where to get started with the minimalist lifestyle as a family, The Minimalist Mom’s blog can help.