Now that millennials make up the majority of the workforce, many are wondering what effect their financial decisions will have on the economy.
Young Guys Finance, a business run by Simon Fraser University (SFU) alumni that has been nominated for three Small Business BC Awards, looks to raise financial literacy among millennials, defined by the Pew Research Centre as people between the ages of 18 and 35.
Justin Lee, who started the company in Surrey with SFU School of Interactive Arts and Technology graduate Shun Lee and SFU Beedie School graduate Irvin Ho, said the idea was to create demographically tailored educational tools.
Young Guys Finance, which offers workshops and free tools such as videos about investment products through an initial sign-up program, is aimed at helping millennials fill in some of their educational gaps, Ho said.
“We wanted to find out why there’s such a knowledge gap between personal finances and the concepts of finances,” said Lee, who also works at MNP LLP as an accountant in Surrey. “I’ve just been noticing my peers a lot lately, and that some people in my age group really don’t know how to invest their money, or they’re scared to invest their money.”
Lee said many millennials want to take control of their finances, but they don’t necessarily want to devote a lot of their time to it. While baby boomers jumped into mortgages early in life and were forced to take an active role in their financial literacy, Lee said his demographic has a different mindset when it comes to money management, one that embraces apps such as Mint, which can consolidate bills and manage money for the user via smartphone.
“A lot of us want to be able to put it on autopilot and live our life. We have such access to technology, we just want to set something and forget it. We want to in a way … give the minimum effort but get the maximum results.”
But Lee added that many millennials are more focused on debt repayment than on investment opportunities.
A recent Institute for College Access and Success study found that the average non-mortgage debt load for millennials is around $28,400, the highest it has been for that demographic. The study also found that a quarter of those surveyed believed somehow their student debt would be forgiven before they paid it all off.
Ren Thomas, a visiting assistant professor with the University of Oregon’s department of planning, public policy and management, said the financial decisions of millennials are now starting to shape the cities they live in.
“What we’re seeing is the convergence of a number of factors,” said Thomas, who received her PhD in planning from the University of British Columbia. “Major demographic changes such as smaller household sizes, young people putting off marriage and having children, smaller households opting to live in more central, mixed-use locations with access to different transportation options. That’s why it’s more complex than, ‘They aren’t making as much money, their employment rate is lower, and their debt is sky-high, and that’s why they don’t drive as much.’”
Thomas added that given the size of the millennial generation and its needs and wants, many public institutions and private businesses are being forced to adjust their planning.
“All of a sudden municipalities, transit agencies, car companies and realtors are worried about young people’s choices and preferences,” Thomas said.
Ho said that is why it’s so important for his generation to become more financially literate.
“There is no [financial planning] curriculum in the … academic system, which we focus the first quarter of our lives on,” he said. “And then we are left to ‘learn it ourselves’ when we are thrown into the workforce. There is very little incentive and motivation for millennials to learn about managing their money when they are more focused on their studies and other activities. We notice that personal finance becomes a priority when we finally start earning income.”