Young people trying to start careers and families are facing up to the stark reality that life is not turning out the way they thought it would.
Many millennials looked to their parents when creating their life goals: get a degree, find a job, start a family, buy a home, retire. For their baby boomer parents, that life was not only likely, but it was also attainable.
They experienced low tuition costs, high interest savings accounts, high employment, and good benefits. The picture isn’t nearly so rosy for millennials.
Record youth unemployment
If you were born between around the early 1980s and early 2000s, you are part of the most educated, and yet under-employed, generation.
According to a recent CBC story “More than 12 per cent of Canadians between the ages of 15 and 24 are unemployed and more than a quarter are underemployed, meaning they have degrees but end up in jobs that don't require them.”
When telling her story, one well-qualified graduate says: “I live in an apartment, I have three roommates, and I don't have benefits. If I were the exception, I would feel upset about that because I would feel that I had done something wrong, but I am not the exception. I am the norm."
With more graduates than ever before, competition for jobs is fierce. And it’s not helping that many boomers are staying in the workforce longer or taking on part-time positions.
Many young people take on unpaid work out of desperation, such as one of the 300,000 unpaid internships in Ontario alone. This only encourages the accumulation of more debt, with little guarantee of an actual job.
The debt trap
Graduates are entering this depressed job market saddled with record-breaking debt levels—an average of over $26,000. If you take the average period of 9.5 years to pay it off, you pay $8,521 in interest. Take the maximum allowed time of 14.5 years and that figure rises to $13,201.
Even those who find jobs struggle. The cost of living is rising—astronomically so in the case of housing in many Ontarian markets — but wages are not keeping pace with inflation. The lack of jobs, let alone well-paying jobs, makes it harder to pay down debt. This can lead to young people taking on even more debt, often in the form of “payday loans.”
Are big banks helping?
The answer to that question is “no.” Bank fees climb ever higher, and banks continue to put their focus on selling as many products as possible to as many customers as possible. All of this is reflected in the huge profits posted by the Canadian big banks. A real irony is that some of the shareholders of banks are other banks.
The tide, however, may be turning. A number of high profile investigations have found reduced trust in the big banks, and this is encouraging many Canadians to look for alternatives.
Earlier this year, a CBC Go Public investigation exposed how employees of Canada’s big banks “upsell, trick and even lie to customers to meet unrealistic sales targets and keep their jobs.” You can read the full story here.
Then there are the bank fees. Over the last couple of years, big banks have been busy hiking fees for everything from daily chequing accounts to credit cards. And many people who invest through banks are paying more in fees than they should.
And the government? It’s not helping much either. The 2017 Federal budget had little in it for millennials to cheer.
Should you continue to give banks your money?
If you feel neglected and unloved by politicians and bankers, you’re not alone. It has become clear that they prioritize the needs of baby boomers over millennials.
There are alternatives. Consider a credit union for your finances. They are owned by their members, and are not-for-profit and community-focused. The money you put in to a credit union is circulated to the benefit of small businesses, families, and your community as a whole. They offer the same services as a bank, but with lower fees and often higher saving rates.
There are more than 70 credit unions in Ontario alone, all catering to their local communities first and foremost. This makes them more likely to be sympathetic to your needs.
Banking with a credit union is a way for millennials to gain back some independence, empowerment, and ultimately choice. One millennial did exactly that, and wrote about it on LinkedIn. The question is, are you ready to start making different choices?