Financial Friday #94: Why are Modern Day Finances So Hard?
Do you feel like you need to be a banker, accountant, economist and stock market analyst just to keep the family finances check?
Should it really be so hard to cover the household bills, make the payments on the car and mortgage, put away a little for the kid’s education, and make some solid investments that will hopefully leave you with enough left over for a reasonably comfortable retirement?
Managing your finances might have seemed a lot simpler in the past but considering the early 1980’s had interest rates of 15% with inflation over 10%, we are not so sure! What has changed is the amount of information, resources and alternatives we have to "help us" — we are simply overloaded, and it can get overwhelming very quickly.
For example, if you are looking for options to invest those hard-earned TFSA contributions, there are around 5000 mutual funds and 1000 ETFs in Canada to choose from! But that's only if you are already up to speed on the differences between mutual funds and ETFs, MERs and other investment fees, asset allocation, portfolio diversification, how RRSPs & TFSAs work and their many rules and regs, DIY online investment platforms, robo advisors... and the list goes on!
The reality is that personal finance is likely to get more difficult and more complicated in the future. If you are lucky, a few employers are now offering financial literacy programs as part of their employee wellness and employee retention efforts. Enriched Academy is also working with the school system in several provinces to ensure that students have the opportunity to learn the basics of personal finance before they graduate from high school. This is great news for your kids and their financial future, but it isn’t going to do much for you unless you want to put them in charge of the household finances?
The reality is that most of us are on our own when it comes managing our money. There are some great tools and information resources that can help immensely, but the easiest, most cost effective, and most reliable option for the majority of us is building our own financial knowledge.
The good news is that mastering the basics is a lot simpler than most of us realize. You can still use a pencil and paper to track your expenses and one, hour-long webinar could easily cover the basics of getting started with the stock market.
The problem for most of us is we focus way too much on making money and spend far too little time looking at where our money goes, or how to manage it better and make that money work for us. Earning more money won't solve many problems if you continue to spend too much, make poor decisions, fail to invest, and have no goals to help guide you and measure your financial progress.
It’ a new year and a new start. We hope taking some concrete actions to improve your financial knowledge and putting that knowledge to practical use and bettering your financial situation is top of your resolution’s list.
We will do what we can to help you throughout the year with plenty of tips, tricks and advice in our free weekly webinars, Financial Friday newsletter and social media platforms. We also offer an online personal finance mastery program as well as one-on-one financial coaching services.
The choice of how you improve your financial literacy is up to you. Our advice is simple — make it a priority in 2022 and just get started!
Resources
A new year, and new tax rates to go with it!
Federal and provincial 2022 tax rates as well as CPP/EI contributions are tied to inflation, so be prepared for higher payroll deductions this year. The good news is that benefits are also indexed to inflation so you may come out even depending on your situation
5 graphics that will define the Canadian housing market in 2022
If you are tired of "opinions" on which way the housing market is going, check out these five charts selected by Maclean's magazine for the data that is going to drive home prices .
The top 70 personal finance blogs in Canada
Looking for more ways to build your financial literacy? This article is easy to flip through and includes many of our favourites — you may find just the financial inspiration you need with a couple of clicks.
4 out of 10 Canadians have finances among their 2022 resolutions
A recent Ipsos poll reveals 41% of Canadians will make a New Year’s resolution about their finances with nearly half resolved to pay off debts, while the same proportion (48%) considers the price of food as their major financial barrier.
Recommended reads to get your 2022 financial life in order
As we said above, how you improve your financial literacy is up to you and if you prefer a good book to a livestream, these 5 (including one by Enriched Academy contributor Kelly Keehn) will get you up-to-speed.