Financial Friday #141: Why does managing money have to be so hard?

Why are Modern Day Finances So Hard?

Do you feel like you need to be a financial analyst, banker, accountant, and economist just to manage your finances?
 
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 money might have seemed a lot easier a couple of years ago – before inflation and interest rates went into overdrive and the stock markets and real estate values nosedived 15%. Most of us were just trying to get by financially in 2022 and being buried by an avalanche of ideas and alternatives on how to survive the financial tsunami got very overwhelming and made it hard to decide on anything!
 
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, all-in-one ETFs, MERs and other investment fees, asset allocation, portfolio diversification, how RRSPs & TFSAs actually work and their many rules and regs, DIY online investment platforms, robo advisors... and the list goes on!
 
Unfortunately, personal finance is likely to get more difficult and more complicated in the future. If you are lucky, some employers are now offering financial literacy programs as part of their benefits. Enriched Academy is also working with schools, colleges and universities in several provinces to ensure that students learn the basics of personal finance before they start their career path. This is great news for your kids and their financial future, but it isn’t going to help you…. unless you want to put your kids in charge of the household budget.
 
The biggest issue we see over and over is focusing way too much on making money and spending far too little time looking at where our money goes, and how to manage it better and make it work for us. Earning more money won't solve your financial problems if you continue to spend too much, make poor spending decisions, fail to invest, and have no goals to help guide you and measure your financial progress.
 
The reality is that most of us are on our own when it comes to managing our money. The good news is that mastering the basics is a lot simpler than most of us realize. 
 
Although it may seem daunting at times, building your financial literacy is an investment that will pay huge dividends over the course of your lifetime. Even if you come to rely on a professional for advice (some financial issues are very complex and consulting an expert is a wise move), a little knowledge will help you evaluate their recommendations and make sound decisions, as well as provide an extra layer of reassurance and confidence.
 
It’s a new year and a new start. We hope taking some concrete actions to improve your financial literacy and putting that knowledge to practical use to better your financial situation is top of your resolution list.
 
The choice of how you improve your financial literacy is up to you. Our advice is simple — make it a priority in 2023 and just dive in!
 

Resources:

Why your TFSA investing strategies need a rethink in 2023
Higher interest rates on savings, bottomed out? financial markets, higher debt service cost, the new FHSA... these are all good reason to take a close look at your TFSA in 2023.
 
Consumer insolvencies reach highest number since pandemic
If you are having trouble making ends meets you have plenty of company, but bankruptcy is only an option of last resort
 
11 tax changes and new rules that will affect your finances in 2023
Some good news and some bad news depending on your situation. Great little summary and well worth a look to see how you may be affected.
 
Don’t let these investing pitfalls hold you back in 2023
From trying to time the market to chasing trends, this one highlights some easy to fall into traps that even experienced investors need to be wary of.
 
How to double your savings
There are tons of YouTubers - this video stands out because it shows you how to easily track and analyze expenses with Google sheets using real-life data — all in about 15 minutes.