Lesley-Anne Scorgie is a Canadian best-selling author, speaker, and entrepreneur. She’s published 3 books — Rich By Thirty, Rich By Forty, and her latest one that released this past May, Well-Heeled. You can also get a weekly dose of her financial advice from Metro newspaper.
1. Most Millennials can’t afford to support themselves until their 30’s. What’s the biggest thing holding them back from independence?
I believe that three things are holding millennials back:
First is student debt associated with the rising costs of education.
Second is lower salaries coupled with rising costs of living. This relates to so many graduates not securing the jobs and associated salaries that were once available pre financial crises.
Third is lack of financial literacy. We don’t train young people in school, and often times not at home, about how to manage their finances. Thus, so many millennials lack the skills to effectively pay off debt while balancing their long term savings needs and eventual retirement. For so many millennials, the word “retirement” isn’t important to them and that again relates back to limited financial literacy. For young women, smart retirement planning early on is even more important because so many earn less than their male counterparts for doing the same jobs (sadly this is still true in 2014), yet they spend comparable amounts and usually at the expense of their retirement savings. This is what pushes so many women into the position where they are underprepared for, and often times impoverished, in retirement.
2. The biggest complaint from new grads is crippling student loan debt. What’s the secret to paying it off before grey hairs come in?
Three secrets. First, set a goal to pay it off in a specific timeframe. So, if you owe $30,000 and set a goal of being debt free in 3 years, the principle repayment is $10,000 per year. Then, you must review your budget – a critical element in order to achieve one’s financial goals – and find ways to accommodate those payments. Usually this requires cutting out unnecessary expenses and being resourceful like having a roommate or getting a second job.
The second secret is to pay a little extra whenever possible. Yes – even $10 extra a week can make a massive difference in the length of time to pay off the loan and it saves money on interest.
The third secret is to face reality and know that the investment you’ve made in your education is the most lucrative you’ll ever make. So, feel good about the fact that your income earning potential in the long run is far greater than the cost of your student debt.
3. 20-somethings tell me the stock market is scary — what investing tip would you give them to overcome their fears?
Do your research. I took a stock tip from my hairdresser once when I was 18 and lost pretty much all of my money on the investment. The fiasco was entirely my fault because I didn’t research the company. These days information on any investment is available with one quick Google search. Don’t make an investment in something you know little about. Research pays.
4. There’s lots of articles about what millennials are doing wrong with their money, but is there anything they are doing right with their money that we’re not giving them enough credit for?
Yes – millennials have a pretty good grasp on frugality and are all over deals, sales and group buying. Thankfully it’s become en vogue to save money on purchases. The millennials have also figured out the importance of enjoying the fruits of their labour. Rewarding yourself, within reason, is what makes having money worth it. The trick is to strike a balance between making healthy financial choices and finding ways to enjoy your life.