A September 2011 study by the BC Securities Commission has exposed an impending head-on collision that I’ve been warning about for years. The financial expectations of Canada’s youth are on track to smash into their ever-diminishing financial reality.
The securities commission study surveyed over three thousand 17- to 20-year-olds across Canada.
They found that their expectations for the future were vastly different from current reality or what is most probably in the future.
Survey respondents expected to earn, on average, more than $90,000 in 10 years time. Unfortunately, 25- to 30-year-olds with post-secondary degrees are now only averaging $31,640.
These figures become even more ominous in the context of a recent Statistics Canada study showing that wages of those 20 to 34, across all levels of education, declined significantly in the 1980s and the trend has continued to present day, though at a lesser pace.
Now factor in unemployment for youth, which hovers in the 14 per cent range compared to the national rate of just over seven per cent, and the picture gets pretty bleak.
Adding menace to these statistics, over half of the 17- to 20-year-olds are already carrying an average of $8,000 in debt from credit cards, lines of credit, student loans and family borrowing.
By the time they graduate, according to a 2010 Vanier Institute of the Family Study, that amount will have swollen to $18,000 not including family debt or lines of credit.
And what about those debts? Almost half say they are setting aside money and will “definitely” or “very likely” have them paid off in five years, while 25 per cent are doing nothing.
How likely is that these debts will be paid off in five years? Not likely based on a September 2009 survey by the Canadian Payroll Association, where two-thirds of Canadians 18 to 34 reported they would be in trouble if their paycheque was delayed by only one week.
We simply can’t afford to let a generation fail.
We must make every effort to reduce youth unemployment and help them avoid or pay down debt, particularly student loans.
Since it is financial literacy month this isn’t only a good goal, but also an essential one.