These days, our generation of young professionals seems to have very little savings compared to what our parents had at our age. There are, obviously, a few reasons for this. We stay in post-secondary institutions longer, return to school, leave secure jobs to satisfy entrepreneurial cravings and work for next to nothing at the beginning of our careers… aside for “experience.” Not to mention, our cities are increasingly expensive. The high cost of living is evident in major cities in everything, from ridiculous cab fares (it now starts at $4.50 just to sit in a Toronto cab) to real estate (Vancouver topping the list as the most unaffordable worldwide). In fact, the 2012 global Mercer cost of living survey rates Toronto and Vancouver among the most expensive cities in North America for expatriates. Finally, we young professionals do like to spend money and reward ourselves for all of our pavement pounding with things like dinners out, vacations and shopping trips. We get it. However, saving money, as daunting as it seems, is easier than you think. Here are five actionable things that every YP can do.
If you are organized, you will not only spend less, you will save more as well – two main points in accumulating wealth. This means things like allowing yourself adequate time in the morning so that you don’t have to take a cab or having a selection of clean and freshly dry cleaned clothing so you are not tempted to drop a few hundred dollars on a new outfit for the evening. Being organized also means keeping tabs on your bank account. Pay attention to what goes in and out of your bank account each month, along with your credit card statements. In the same vain, pay attention to those ever-dreaded cell phone bills and look for ways to cut the bill. Make it a challenge each month to reduce your bill, if even just by a few dollars.
It’s About Strategy
Saving money requires strategic thinking. Take advantage of sales, they happen all the time. Our favourite jewellery designer, for example, just had an 85 per cent off sale on jewellery that would otherwise be considered a serious splurge for most YPs …so we took full advantage. Especially with rampant photo sharing on social media, we get that you don’t want to be that guy or girl always in the same clothing in pictures. Neither do we. If you’re tired of your wardrobe, do a temporary clothing swap with same-sized friends. Be selective and comparison shop; you certainly have the resources to do so. Place money-saving features on your bank account. For example, every time we use our debit card for purchases, $2 from our chequing account goes to our savings (an account we can not use for debit purchases). This may not seem like a lot now, but trust us, it adds up. This way you don’t feel as bad about making those multiple purchases on a brunch, shopping and partying-filled Saturday.
Prioritize, Pick and Choose
Again, you can accumulate wealth if you are blowing more money than you are spending. Be selective in how you choose to spend, in everything from the events you choose to attend to what you order at restaurants. Take ownership of your spending decision! As we discuss in our popular article on how to handle FOMO, there is absolutely no point in going out for the sake of it; you’ll likely end up chasing a party that never happens, wasting time and money in the process. Take the time to really think about what makes you happy and what you can live without. Everyone spends their money on different things – do it wisely. For us, for example, we decided that nice clothing was more important than singlehandedly supporting our city’s entire cab industry or buying multiple, ridiculously over-priced drinks during nights out.
Don’t Risk It
When it comes to money matters, don’t take too many risks. When Wayne Gretzky offered financial advice back in the fall, a resonating theme of the discussion was to be conservative with your finances. We are all too familiar with the young person (pro athlete or not) who is met with early financial success only to find themselves broke a short while later. Gretzky himself says he won’t make financial risks that involve more than 10 per cent of his net family income. He spoke of financial sensibility and cautions about risks like borrowing and leveraging (a common occurrence among entrepreneurs), advocating instead to put your money away in the bank. Rather than gambling in things like stocks, he has never been the type to “make ten out of one dollar” and keeps his “money in the bank and the houses he lives in.”
Sure, things like your future child’s university fund or your retirement may seem like a lifetime away. Much like your parents probably do, however, Gretzky stresses the importance of starting young when it comes to financial planning strategies – regardless of income. Use your resources and seek the aid of a financial planner. Of course, in order to save money, you need to keep making money. So keep grinding away and making waves in your career. Don’t get lazy or take your success for granted. Strike while the iron is hot and keep the mobility going with the end result of watching that savings account grow before your eyes.