Millennial Money is a weekly submission-based series that provides financial advice to millennials in the GTA. This is a special edition, featuring someone who is Gen Z. Read the full series here.
For 19-year-old Jenny, a first-year university student, the future feels grim. “I don’t have a job right now. I had one from November to January, but the pandemic has made finding part-time employment impossible,” she said.
Currently, Jenny is renting a spot shared with three roommates for $ 1,085. For now she’s using her savings from high school, when she worked part-time as a barista, but knows that if she doesn’t pick up something soon she’ll be dipping into the red.
For now, her credit-card payments have been regular. “Thankfully my parents always taught me to pay off debt, so I’ll have, like, $ 100 here and there that I will pay off every month,” she said. What really worries her? Her student loans.
At the end of her education, she anticipates paying $ 3,000 or more each year. “I would like to find a way to efficiently pay off OSAP,” she said. Jenny also hopes to save enough to be able to rent in downtown Toronto on her own.
For now she’s been lightly checking for part-time jobs, but hopes that the province and city can get closer to getting control of the pandemic so she can more easily find employment.
In terms of her day-to-day spending, she’s seen her own parents work hard to provide for her and her siblings so it’s never been about splurging. “I study at home, so most of my meals are cooked at home with the groceries I buy for the week,” she said. Once a week, she might get takeout but that number increases if she has more school work and deadlines.
Going beyond renting isn’t something she’s considered yet. “Home ownership isn’t much of an idea I entertain, especially where I hope to live, which is downtown Toronto.”
We asked Jenny to share her weekly spending to get an idea of expenses.
The expert: Jason Heath, managing director at Objective Financial Partners Inc., on Jenny’s worries.
It’s a tough time to be a student. Youth unemployment was 17 per cent in 2020 and peaked at 29 per cent last spring when many students would have otherwise been looking for jobs. That’s the first time in almost 40 years that youth unemployment exceeded 20 per cent.
A lot of college and university students are probably feeling shortchanged. Social aspects like pub night and academic aspects like labs have been lost. The good thing in Jenny’s case, at least financially, is her discretionary spending is down. She doesn’t go out much and cooks most meals at home.
She notes she is drawing down her savings from working during high school to pay her rent now that she has moved out to be closer to school. I think this is an important lesson to high school students. If you can get a job, and you can save a little during high school, it increases your lifestyle options as a young adult. This continues throughout early adulthood. Smart financial decisions early help later in life. Likewise, bad choices make things harder.
The recent federal budget offered some relief for students. Canada Student Loan and Canada Apprentice Loan interest is being paused until March 31, 2023. There’s also more support for loan-repayment assistance that is provided to low-income graduates: the income threshold of $ 25,000 is being increased to $ 40,000 starting in 2022. This means a graduate living alone and earning under $ 40,000 will not have to make any payments on their federal student loans.
Jenny is still in school, so the interest and repayment relief don’t benefit her in the short term. However, the doubling of Canada Student Grants in the federal budget might help. Low-income students can get up to $ 6,000 of nonrepayable aid as a full-time student or $ 3,600 as a part-time student.
The budget also included funding for work-placement programs and other strategies meant to increase hiring of post-secondary students. In time, measures like this and an eventual return to normalcy will help Jenny get a safe, part-time job. She has no credit-card debt, and while she expects to accrue about $ 3,000 a year of new student loans to fund her education, this is hopefully an investment in her future ability to get a job and pay that debt down. As Jenny works her way through school, she should be looking into career paths and what courses or other training she should be doing now, to be able to get those jobs in the future.
Home ownership in Toronto may seem daunting now, but a lot could change in the next 10 years — not only with the real estate market, but also her career, or where she lives. I’d focus her attention on shorter-term financial goals like keeping her spending low, finding work as best she can, and planning her tuition funding and financial support for next year. Her long-term planning should be more focused on her career than on her finances.
The result: She spent less. Spending in week 1: $ 265.50 Spending in week 2: $ 205
How she thinks she did: “My weekly spending is quite average,” Jenny said. This week she tried extra hard to buy enough for the whole week, and avoided ordering takeout. “A fun challenge, but it’s hard during extreme studying time.”
Take-aways: “It’s great to know I’m not alone in my financial struggles right now!” Jenny said, referring to Heath’s point about youth unemployment sky rocketing.
In her life, from the older adults to her peers, Jenny has felt like people have only shown their successes, which made her feel alone in her financial struggles. “In a sad way, this is super comforting, especially when I’m in a world where people only share their accomplishments.”
Another possibility Jenny is looking to consider from Heath’s advice is the job training. “It’s interesting that it’s an option I can explore now, to look at what will make it easier for me to get a job in the future,” she said.
Finally, Heath’s advice has reaffirmed her instincts around home ownership. “The market could change a lot by the time I’m ready to actually buy a house, so my goals, at least right now, should be more short-term.”
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