Gen-X Canadians Deserve More Credit.

Imagine living in a city where you owe a large amount of debt, the economy is uncertain, and the reality of raising a family has huge financial ramifications with no solutions. That’s the life many people between 35 to 40 years of age are faced with in Ontario. A recent study completed by a company in Vancouver refers to them as “Generation Squeezed” revealing that Ontario is ranked second only to BC as the most difficult province to live in.

The reality is that many Generation X Canadians are just too cash strapped to have children. According to a 2015 analysis by MoneySense, the average annual cost of raising your pride and joy sits at $13,366. Bear in mind this annual cost is averaged out over a child’s first 18 years of life. However, many parents will express they spend more than the above amount when they put their kid in daycare. With the staggering cost of childcare nowadays, it’s not unusual for parents to spend upwards of $10,000 — $20,000 a year for these services alone. A study released in December 2016 by the Canadian Center for Policy Alternatives (CCPA) revealed that infant fees are the most expensive and have the highest wait lists compared to other age categories. Toronto has the highest median infant fees at a whopping $1,649 a month totalling to $19,788 a year. That’s more than double what Ontario university tuition fees are! Turn to Toronto suburbs like Markham and Vaughan and you’ll find the second highest monthly fees at $1,454 and $1,363.

The most concerning discovery from the CCPA study is how much child care fees are rapidly increasing in major Canadian cities. Between 2014 and 2016, toddler fees rose by 8% while inflation over the same time was only 2.5%. Factor in a tough job market, the exorbitant costs of housing, transportation and food… living comfortably and raising a family doesn’t seem feasible.

The Generational Gap Between Generation X and Baby Boomers

Gen-X is arguably the most misunderstood group in the workforce today. They’ve been fired, overlooked and ignored all thanks to the Boomer generation that preceded them and now a Millennial cohort that is looking to take their place. Gen-X have stood the test of time through more recessions and economic hardships than their parents or their grandparents yet they’re struggling to stay afloat. Stats Canada reports the number of Canadians working over the age of 55 has increased by 12% since 1997 as Boomers age into their 50s, 60s and 70s. In 2006, mandatory retirement was abolished in Ontario making it even more difficult for Gen-Xers to get that all-important salary increase and advance their careers. The London Free Press spoke with a financial planner who explained that Canada Pension Plan benefits jump by 42% if you delay taking them until age 70 and increase more if you keep contributing. It’s no surprise more Boomers are choosing to retire later, there are monetary benefits to working past 65!

Gen-Xers have slowly but surely lost faith in their ability to meet their financial goals. With income for full-time positions steadily decreasing by more than $4,600/yr, sadly most young adults have put off having children or face the fact they will earn less than Canada’s national average. A 2016 article by Huffington Post Canada revealed that only 66% are confident they can achieve their financial goals whereas 82% of the “brilliant” boomer generation think they will. As the generational divide in Ontario continues to widen, those who got the short end of the stick are holding out for Canada’s first Gen-X Prime Minister, Justin Trudeau. The hope is he’ll address the issue of societal fairness pertaining to the job market — but will anything really change? The jury is still out.

Ontario’s Reality of a House Rich, Cash Poor Generation

A common conversation among young adults revolves around the sacrifices made in order to make their ideal lifestyle achievable. The Toronto Sun shared survey results from online retailer Wayfair, who found 26.4% of Gen X couples move in together in less than six months. It leaves one to wonder if couples are moving in for love or to avoid moving back into their parent’s basement. If the answer is the latter, who can blame them?

With lower interest rates, sizeable mortgages have been made to look more attractive, allowing families to break into the real-estate market leading them to believe they are wealthier than they think based on the concept that owning a home will increase their financial portfolio. The troubling truth is that their finances are at real risk. They’ve been duped into believing they can afford the home they are living in, when in fact once rates start rising, it won’t end well. According to the Bank of Canada, the average Canadian owes 3.5 times their gross income with no safety net. Many Canadians have nowhere near enough set aside for emergencies and rely on borrowing to make ends meet. It’s seemingly unavoidable to not have trouble paying the bills but this should be a short-term cost of being house rich. The long-term risks of being a house rich, cash poor family with no savings paints a dark picture with regards to retirement and putting kids through college or university. The fact is, those who made it through the trials and tribulations of moving out of their parent’s house and in with their beloved may be homeowners but what do they really have to show for it?

Financing Strategies That Are Sustainable

All is not lost. There are many opportunities for young adults to thrive in society. Instead of paying old debt with new debt, why not save a percentage of your income each month to put towards paying it off. Entertain the idea of living outside the city and on the outskirts. This offers easy commuting to work and you’ll often get more bang-for-your-buck. An even easier and more sustainable strategy is to become a credit union member. If you have accounts with the “Big 5” banks, you’ve probably experienced the high fees and surcharges, impersonal service, bad financial literacy and a lot of “overselling” of products. As if that’s not bad enough, the Big 5 often push young adults aside to earn the business of older and more profitable customers.

Credit unions value their members, you aren’t just another sales target, you’re owners. Time and money has been invested to really understand the financial needs of Gen-X. Credit unions are very aware of the many challenges people face trying to raise families in Ontario. They know the struggle and stresses of going to school and paying it off, working to make ends meet, trying to save for a house, paying household bills, managing debt and taking care of your family during gloomy economic times. They’ll work to do their best to support and help people achieve their short and long term financial goals. Employees pride themselves on transparency and offering sound financial advice to set realistic financial goals and help you achieve them. Mortgages and other products are tailored to meet individual needs in hopes of fostering stability and financial confidence. Credit unions in Ontario are the partner to help young adults improve their financial health, provide for their families and be able to confidently say they can retire comfortably and with peace of mind which is something very few banking institutions have been able to claim.

Some Choices Matter

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Belonging to a credit union keeps your dollars local.

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