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July 15, 2015

Alarming numbers are published monthly indicating a constant rise in financial burdens! But beyond the numbers lies our behaviour as individuals.

An article published in The Globe and Mail in 2015 takes an interesting look at the realities that each generation faces with regards to debt. One thing is certain: credit and the problems created by its use spares no one, neither the older generation nor the younger one.

Generation "Y"

The "Y" Generation (21-38 years old) was raised with debit cards. It is therefore easy for them to transition into credit cards for all of their purchases, even the $5 ones! Everything remains virtual and is nothing but numbers written in black or red ink. 

Generation "X"

Whereas Gen-Xers (39-49 years old) work hard to repay the mortgage or vehicles that have been financed... and re-financed, but they also live in the most promising times with regards to income. Confident that said income will only increase over time, they have a tendency to be tempted by larger purchases made on credit (ex: pool, trips, spa, etc.).

The "Sandwich" Generation / Baby Boomers

The next generation, called "Sandwich"/Baby Boomers (50-64 years old) invest quite a bit for their offspring's post-secondary education. Simultaneously, used to a certain way of life, they have a tendency to want to enjoy life, to travel more, without necessarily planning for the next step: retirement.

The "Retirees"

Finally, the "Retiree" Generation (65 and older). They are somewhat victims of consumer credit habits acquired while employment income was sufficient to absorb credit costs. As income is no longer readily available, a part-time job is often necessary to make ends meet.

Conclusion

There is one common denominator to all generations: habits. We must realize the waste that is represented by non-essential purchases made on credit and paid over several years. Of course, we have no choice but to accept living with credit given that most big purchases cannot be made without it. It is therefore important to know our financial limits and keep an acceptable debt ratio at all times, and more particularly nearing retirement.

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