Owning a home top priority for young Canadians

Carving out a spot in the property market and reducing debt are the top financial priorities for young Canadians, suggests the results of a recent RBC poll.

The top three most important financial priorities for Canadians between the ages of 18 to 34 include:

• owning a home (49 per cent)

• reducing or eliminating debt through regular payments (48 per cent)

• general savings for a rainy day/emergency fund (39 per cent)

But establishing financial independence is a marathon not a sprint, notes Melissa Jarman, director, Student Banking, RBC.

"[These results] show that they're dealing with two competing financial priorities: savings and debt reduction. This can be a significant challenge for people that may just be starting out in a career or possibly starting a family," Jarman says.

As it is for other age groups, seeking advice from a financial advisor can potentially help alleviate these challenges. But how likely is it that someone in his or her early 20s is keen to do so?

"What I've learned is that 20-somethings are actually fairly receptive to the opportunity to meet with a banker," she says. "Certainly doing research online ahead of time is something that's quite common and that crosses a lot of age groups."

No doubt student loan debt looms large in the challenges young Canadians face.

"A reasonable percentage of students coming out of school will have student loans or other loans to help fund their education," she agrees. "We want to ensure they have the tools and plans in place to (handle) that.

"One of the best ways to do that is to itemize whatever loans you have and pay off the higher interest ones first. Put minimum payments on everything else. Or look for opportunities to consolidate."

The student debt challenge

Crystal Wong, senior regional manager, TD Waterhouse Financial Planning in Calgary, agrees a significant factor facing post-secondary and graduating students is debt.

"The largest challenge with graduating students certainly is the amount of debt they're carrying from student loans," she says. "We're finding they're not necessarily looking for property purchases right away in their 20s. They'll try to locate the career-type of position that they took their schooling from. At the same time, they haven't had the discipline for saving throughout their whole time in school.

"The largest challenge is how to budget now that they're starting a career and they're receiving a regular paycheque."

The key to establishing and sticking to a budget comes down to the discipline Wong mentions.

"Don't purchase lunch everyday or the extra cup of coffee everyday. Ensure you're not trying to keep up with the rest of your peers in the technology purchases," she says. "The younger generation, or Generation 'Always-On', is the generation that needs to have the most up-to-date technology in order to have the connectivity with their peers, family and friends."

The importance of a debt repayment strategy can't be overlooked.

"It's critical. It has to be included in your regular monthly budget," she says. "Somehow, someway you have to be reducing debt every year instead of accumulating debt."

Create a spending snapshot

In addition to being frugal, she says it's critical to know where you're spending your money.

"Know where your money goes, everyday and every week. When you get out on your own and you're either paying rent or your first mortgage, if you understand where your money is going every month you'll have a better chance of not over-exceeding what you're bringing in," she says. "We have a hard enough time learning that when we're older. Have the understanding not to put all of your purchases on credit cards.

"Credit cards are fabulous venue for us to monitor spending however if you're over-purchasing you'll never learn that discipline if you can't pay it off every month."

Of equal importance is building a so-called emergency fund for the curve balls life will throw at you.

"Make sure you use that emergency fund for an emergency," she advises. "Don't make the mistake of thinking you have extra money and take off for the weekend with friends. Whether you're in your early or late twenties or thirties, you will require that buffer for times when you don't have a job or for when there's another drop in the economy."

And as soon as you enter the job market or obtain a credit card, consult an accredited financial advisor.

"They can give you advice in terms of how to build a budget, how to balance payments; you're not alone," she adds. "Whether you feel you have money and you're deserving to speak to a financial advisor, everybody needs to have that type of conversation regardless of age."