Some interesting tidbits are:

• 51% of respondents wish they would have focused more on “life goals” than on “the numbers”
• 38% wished they had spent more time thinking about how they want to live rather than hitting a specific retirement number
• 18% would have given up on certain luxuries in order to reach their retirement goals
• 31% of respondents worked with a financial advisor, and 55% wished they would have worked with one

In terms of advice for younger generations, survey respondents recommended that if you are 10-15 years away from retirement you should:

• build a plan around what is most important to you
• have a plan to manage retirement income throughout retirement
• pay down debt

There is also a short write up of the survey on the Money Bucks website.

Don’t forget, there are only 2 weeks left until the $50 Amazon gift card contest is over, and all it takes is 3.5 minutes to enter!!!

No related posts.

The answer is you can’t!  Now I know some of you might say to suck it up, and deprive yourself for the short term in order to reap long term payoffs.  The problem is that humans can’t do this forever, and even a short-term deprivation can be challenging – you need to enjoy life and be happy in order to find the energy to make it through the rough patches.  The saying  all work and no play makes Jack a dull boy definitely comes to mind here.

So what are you to do if you find yourself in this situation?  Well, I was recently in this exact situation and had to make a tough decision.  I was feeling pretty burned out and unhappy, and it was negatively affecting my relationships at work and at home.  I quickly realized that I needed to take a break.  The problem was that I was having problems rationalizing spending money on a vacation when I should be spending money on my debt.  Luckily I spoke to a friend who made a simple point – in the grand scheme of things, how much time will a few hundred dollars set you back?  The answer of course is very little!

Over the course of your life, will $200 make a difference?  Will $500 make a difference?  Chances are that it won’t, but sometimes in the heat of the moment it will feel like it will.  I thought if I didn’t go on vacation and put that $500 towards my debt, I would be better off than if I went on vacation.  Luckily I listened to my friend and realized that $500 will not significantly affect my life – at worst, it would delay my debt repayment by two weeks.

So I booked a trip to San Francisco and came back feeling re-energized!  It was the best investment I could have made with that $500.  My message to you is, regardless of what your situation is, never forget that an occasional small investment in yourself will provide long lasting returns that your budget can’t anticipate or plan for.

And just to brighten your day, this clip from the Simpsons should help you remember this very point.

Click here to view the embedded video.

No related posts.

It’s unfortunate, but my story isn’t original.  I’m 29, educated, and up until 4 years ago, I never saw the need to understand how to manage my finances; for some reason, I always assumed my finances would magically manage itself.  That’s how I ended up owing the bank a huge student loan, having no savings, and living in my mom’s basement, wishing I had done things differently when I was younger.

Many young people aren’t interested in financial management, and who can blame them – the name alone must scare people away – it sounds intimidating, but it’s an important topic that needs to be taught at an early age.  And herein lies the problem, it needs to be taught, but often it gets left at the sidelines until it’s much too late.  Many parents don’t include this topic at the dinner table, and most K-12 education systems don’t mandate learning how to manage your finances – which is somewhat ironic, because people use financial management every day, whether they know it or not (remember, bad financial management is still financial management, it’s just ineffective).  I should point out that there are some great programs out there to help teach young people about finances.

Without a burning platform, people aren’t motivated to learn.  If your parents are always helping you out financially, you’ll never know why compound interest is important.  If your spouse is always paying the bills, you’ll never know why you need to pay off high-interest debt first.  If you’re always living pay check to pay check, you’ll never know why a budget is important.  If you don’t understand how budgeting works, you’ll never know why you need to start saving for retirement as soon as possible.

It’s never too late to learn and change your habits, but imagine if you could start following sound financial management advice when you were 15, as opposed to 30.  That’s 15 years of doing things right, and no matter how much money you make, the earlier you start budgeting and saving, the better off you’ll be.  As a side note, if you don’t know what compound interest is, now would be an excellent time to look it up.

So what does a person need to do?  We’ll there is a ton of great information out there, but you have to look for it, and more importantly, you have to want to learn about it.  I’m sure you’re asking yourself, “Where do I start?” At a minimum, you need to understand the basics of financial management, including (in no specific order):

1. Understanding what the equation Income – Expenses = Savings means.
2. Knowing where you spend your money (what is an expense?)
3. The difference between things you want and things you need, and knowing how to prioritize these
4. The future cost of living – how much will that 4 bedroom house really cost you?
5. Setting financial goals and making budgets to meet them
6. How compound interest works both for and against you
7. When is credit good, and when is it bad?
8. The basics of investing
9. Why you need to start saving for retirement today
10. How to maintain your education (and don’t forget to share what you learn with others)

Remember, personal financial management might sound scary and complex, but it’s really not that hard, and definitely not as scary as meeting your in-laws for the first time.  Financial management is not something that you’ll learn overnight, it takes time, but the payoff is worth it. Take ownership of your finances and start your education today.

No related posts.

What financial advice would you give in the current economy?  Would you tell people to save their money?  Would you tell people that today is a buyers market?  Maybe you’d tell people that they should do nothing and see what happens, otherwise known as the deer caught in headlights syndrome.  Would you give the same advice to a teenager or young adult?

I was recently asked this question, and you know what my response was?  My advice for the current economy is the same advice I’d give in a good economy – understanding the basic principles of financial management and implementing them is good no matter what is going on in the economy.  It doesn’t matter if the economy is doing well, it doesn’t matter if the economy is doing poor, it doesn’t matter if the economy is flat, what matters is that you understand how to track your spendings, how to set financial goals, how to meet them, and how to think about the future.

Are you stuck where to start?  Well, let me break it down for you.

1. If you don’t know how much money you make each week, month, or year, figure it out – you need to know how much money you make to make a budget
2. Know where your money goes – track your expenses, and see where you are spending your money.  Once you start tracking things, you’ll be amazed to see where your money is going – did you know a Starbucks a day costs you over $500 each year?
3. Understand this basic formula: Income – Expenses = Savings.  Whatever money you don’t spend throughout your daily life will be your savings, and these savings are what let you plan for the future.
4. Create financial goals – figure out what you want to buy in the short term (maybe it`s an xbox, a new TV, or some new clothes) and long term (do you want a new car, a condo, a house, a vacation around the world), because our next step is to figure out how to meet these goals.
5. Create a budget and stick with it – now that you know where your money is going, and you`ve figured out what your financial goals are, create a budget to meet these goals and stick to it.
6. Start thinking about the future – do you know at what age you want to retire? Do you know what the future holds? If you`re like me, chances are you don`t, but that doesn`t mean it`s too early to start thinking about the future.  If you start saving even $100 each month for your retirement, and you make use of compound interest, you`ll be amazed how much you can save by the time you want to retire, and who knows, maybe you`ll even be able to retire early.
7. Share your knowledge with others – financial management isn`t a topic that is often found at the dinner table, but that doesn`t mean it doesn`t belong there.  Start a conversation about managing your money with your parents, with your sisters, with your brothers, with your cousins or even with your friends.  Share what you know, and who knows, maybe your family and friends will share some new information with you!

No related posts.

In chapter 5, I talk about the future cost of life – it’s important to understand how much things will cost, and you need to start planning for big purchases as early as possible.

I just saw this post where Stephanie had a project for school that required her to “walk through the steps of buying and financing a house” – a great exercise to help you start thinking about the future cost of life.  Through this exercise, Stephanie started to look at how much her student loans will cost her, and has come to the conclusion that it’s going to be expensive, something which she didn’t realize until she looked into how she was going to finance her life post-graduation.

I wanted to put myself on the standard repayment plan right off the bat, and tackle this debt head-on. I wanted to consolidate my loans into one low rate while rates are dropping. But it looks like just to be able to make the minimums, I’ll have to stay on the graduated repayment plan (where the bills start small and get bigger every year) – with payments of $319 (at first).

Trust me, I’m really disappointed by this. I don’t know why I didn’t run the numbers until now, other than the fact that it’s easier to run them now that I’m done taking out new loans. It’s startling to be this close to repayment and suddenly realize that I will have trouble paying the bills.

My employment is uncertain. I’m going to do the best I can with job applications and internship applications over the next few weeks… but I’ve come to realize that I’ll have to do a lot more than that. I can’t afford anything outside of Ramen to eat and car maintenance, since I’ll be needing that to get to a job. I’ll have to start Compacting again.

I’d thought I was out of the woods, but I’m really, really not. Somewhere deep inside my brain, my current Self is kicking my 17-year-old Self in the pants for getting us into this mess!

Student loans and debt are a necessary part of life, and this post isn’t meant to scare you off of getting an education – it’s a good thing, and well worth the investment.  Rather, this post is meant to show you how important it is to think about the future cost of life, and create budgets to meet your future financial goals – if you plan to own a house after graduation, you have to start saving for it now, if you plan to pay-off your student loans as soon as possible, you need to make a game plan to achieve it, if you want to go travel the world, you better start saving today.

Regardless of what you want to do in the future, you need to start thinking about what you want, set those goals, and create budgets that will allow you to meet your goals, but don’t forget that while you are making those budgets, you still need to enjoy life (just ask Elie).

No related posts.

Let’s say you like to drink coffee from one of the high-end coffee shops, you can expect to pay $1.71 with tax for a regular coffee.  Now if you have that coffee once every few weeks, it doesn’t add up to a fortune, but if you’re having the cup of coffee once a day, every day, 365 days a year, it can add up, but the question is, how much can it add up to?

Well, if you buy 1 cup of coffee every day, you’ll have spent the following:

• after 1 week you’ll have spent  $11.97
• after 1 month you’ll have spent $47.88
• after 1 year you’ll have spent $574.56
• after 2 years you’ll have spent $1,149.12
• after 5 years you’ll have spent $2,872.80
• after 10 years you’ll have spent $5,745.60

Now I like my daily cup of coffee as much as the next person, and I’m not here to preach a frugal lifestyle (you do have to enjoy life after all), but it’s important to realize where your money goes, and make sure you include your daily cup of coffee in your budget – $1.71 a day may not seem like a lot, but I’m sure $574.65 might make a difference to your budget.  Something as simple as a cup of coffee can turn into a large sum of money over time – who knew that you could choose between a cup of coffee everyday or a month’s worth of rent?

No related posts.

I just found an article on the financialpost.com website from last year, which states this trend is changing.

Consumer credit represented 40% of personal disposable income at the end of the second quarter, according to CIBC World Markets. Mortgage credit, meanwhile, was 90.6% of personal disposal income. When those numbers add up to more than 100%, it means we have more debt than income.

The article is quick to mention that even with the downturn in the economy, this is not an end-game for Canadians. Rather, the advice is to re-evaluate your financial plan and make sure that it is aligned with your current financial situation.

This is an important point to remember. Throughout Following The Goods, I talk about financial plans, but it’s important to remember that these aren’t “set it and forget it” plans. A financial plan is something that you should constantly be reviewing and revising whenever you make a change in your lifestyle, whether it’s getting a new job, losing a job, graduating from school, or moving out of your parents house.

Remember, it’s up to you to own your financial plans and future – if you don’t keep track of what’s going on, no one else will.

No related posts.