Curbing Careless Spending by Canada's Generation Y

PENTICTON, BRITISH COLUMBIA--(Marketwire - June 28, 2012) - Despite a sputtering economy and a staggering youth unemployment rate of nearly 15 per cent, research shows many younger Canadians are still intent on living a life of luxury.

According to American Express, between 2009 and 2011,Generation Y - those born in the 80s through to the mid-90s - increased spending on luxury fashion by 33 per cent, travel by 74 per and fine dining by 102 per cent.

"If young people have the disposable income that allows them to live the high life, good for them," says Ken Britton, a branch manager at Valley First. "However, in these tough economic times, it is increasingly important for us all to think twice about purchases. The dollar doesn't go as far as it once did and making emotional purchases can get people in trouble."

Britton believes that much of the increase in spending is driven by credit. And, with Canadian households' ratio of debt to disposable income currently at 152 per cent, he says younger people should be more mindful about where they are putting their dollars.

"Money management is a skill; managing borrowed money is an even greater skill," says Britton. "Unfortunately, young people don't always understand the real cost of credit and debt.

"At Valley First, we focus on finances and financial well-being. We provide advice that can help our members control spending and reduce monthly bills. A good rule of thumb is to work toward setting aside three months worth of bill payments for that 'just in case' situation."

Britton says young people are often more susceptible to excessive spending and debt because they don't have the same level of disposal income as older people nor do they have the same experience in managing their finances effectively.

"We've seen time and time again that financial literacy needs to improve, especially among younger people," says Britton. "Young people must understand the rising cost of food, clothing, entertainment and education - all the things they consume most heavily. The earlier they can recognize their spending or finances might be getting out of hand, the earlier they can seek advice and the better off they will be in the long run."

Valley First is a division of First West Credit Union, B.C.'s third-largest credit union, which has 37 branches and 29 insurance offices throughout the Lower Mainland, Fraser Valley, Kitimat and Okanagan, Similkameen and Thompson valleys. Led by Launi Skinner, First West has approximately $6.6 billion in assets under administration, more than 169,000 members and close to 1,400 employees.