Many of my clients have adult children graduating from university and starting a new career. For many it’s the first time they have had to manage finances and plan for the longer term. Now is the time to establish good habits and attitudes that will last a lifetime. Here is my list of the top 10 things I advise young adults to do if they want to build a healthy and successful relationship with money:
- Write down your values and goals. You may draw some blanks at first, but these should be your guiding principles. Then work hard to make them happen.
- Earn all you can, save all you can and give what you can.
- Avoid credit cards until you have a full time job to pay off balances in full each month.
- Pay off student loans, credit cards and any other debt on which the interest is not tax deductible.
- Contribute to an RRSP early and often. You can’t beat the value of tax deferred compounding.
- If you’ve maxed out RRSPs, contribute to a TFSA and invest what you can. If you save and invest your money, you can’t spend it.
- If you need a car, buy a used one. It’s a depreciating asset that won’t help you build wealth.
- In everything you buy, buy quality, not brand.
- Don’t buy a house or condo until you can really afford it.
- Be ambitious and courageous; there is no such thing as failure; it’s just experience.
I recently had the experience of counselling a long-time client who, despite a very secure financial position, was overcome with anxiety about money. What became clear to both of us after a lengthy and at times emotional discussion was that her anxiety was not about money at all. Rather it was about her obligations to her children, as the sole beneficiary of her late husband’s estate.
