Financial Friday #127: MythBusters
Myth #1: Most Canadians are not struggling with money.
Busy restaurants, plenty of new cars on the road, airports jammed with travelers.... it seems a lot of Canadians are living high on the hog. Unfortunately, appearances are deceiving and many Canadians are extremely worried about their finances. The worry cuts across all age groups from young adults who are wondering how they are ever going to pay back their student debt, to families struggling with rapidly rising food and housing/mortgage costs. Some surveys have found that up to 70% of adult Canadians have few if any plans for how they are going to live out their supposedly “golden" retirement years.
Half of all Canadians live paycheque-to-paycheque and 44% said they would have trouble meeting financial obligations if their pay were delayed. Financial stress is a huge issue for most Canadians and affects family life, job performance, mental wellness, even our physical health!
Despite how things appear to the eye and Scotia Bank telling us "you're richer than you think", this myth is completely busted!
Myth #2: You need money to make money.
Careful investing is the secret to building wealth and you do need an income to get started, so this myth is not entirely untrue. However, what most people don’t realize is that the amount of money you need to make money can be surprisingly small. Financial guru Dave Ramsey’s research group found in their survey that 70% of millionaires never earned a 6-figure income.
If you happened to catch our live webinar with Millionaire Teacher author Andrew Hallam a few months back, you would have learned that a modest teacher's salary combined with some basic investing principles could fund an early and very comfortable retirement.
This myth is busted!
Myth #3: Money is too complicated.
Managing your money isn’t complicated, it just that having too little (or too much) leads to a lot of issues that make it seem complicated. We offer plenty of free webinars where you can easily pickup all kinds of financial knowledge with just one-hour of your time. While one short webinar may just get you started, the fact is that mastering a wide variety of money skills doesn’t take as much time or effort as many of the other things we spend time trying to learn. A lot of us spend more time learning how to use some app on our phone or make the perfect pasta sauce than we do learning how to manage our money.
The knowledge required to effectively manage your money is not difficult to learn — this myth is busted!
Myth #4: Investing is too risky.
It might be easy to say this one is true given the abysmal performance of financial markets over the last year (see market update below). Investing can be risky, but you can learn how to monitor and adjust your risk to suit your targeted returns, life stage, and other factors affecting your risk tolerance.
Your investing timeline also plays a huge role. Investing for the short-term is always going to be a lot more hit and miss than holding a well diversified portfolio of equities and other financial assets over a number of years. Financial markets have a long history of proven resiliency and they will recover. Given current inflation and interest rates and the chance they will persist for some time makes investing and even greater priority these days
This myth is busted!
Myth #5: Earning money is more important than saving money.
Careful field research by an endless stream of bankrupt athletes, actors and reality TV has-beens has proven that when it comes to cash, "the more you earn, the more you burn!" The belief that more income is a surefire solution to your financial difficulties is busted!
Carefully tracking your spending, making wise spending decisions, and adjusting your spending appropriately to "enjoy life more" as your income rises is the golden rule, regardless of how much money you are making.
Resources:
| Are grocery stores ripping us off? Food prices seem to rise every week and many of us our casting a suspicious eye at the supermarkets, but are they really taking advantage of inflation to pad their profits? How does inflation affect my retirement plans? Do I need to save more? How does it affect my company pension, CPP and OAS? Do I need to delay? All great questions and some good answers in this one. How to get ahead financially while renting A deep dive into the rent vs own debate with some great examples why current homeowners, urban families and retirees may want to reconsider the benefits of renting. Canadians turning to credit cards and more debt for financial stress relief Consumer (non-mortgage) debt is on the rise. Check out why and how it compares from province to province and between different age groups. Student loan forgiveness in Canada a hot topic Is there any chance Canada may follow America's lead in student loan forgiveness and if so, why would we do so and how much would it cost? Also check our upcoming webinar on student loans. |