Financial Friday 172: MythBusters: Enriched Academy Episode

Enriched Academy was launched more than 10 years ago after a successful appearance on the TV show Dragons’ Den by co-founders Kevin Cochran and Jay Seabrook. Although they would have loved to appear on the hit TV show MythBusters as well, fact-checking financial advice didn't have much audience appeal!


Undeterred, Kevin and Jay started talking to Canadians about their finances and ten years later, they have uncovered a mound of damaging money myths. We mentioned a few of these last month, but this week we are taking a deeper dive.... and adding a few new financial fallacies to the pile!


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. Many Canadians have few if any plans (and even fewer actual savings) for how they are going to live out their supposedly “golden years”. A September, 2022 survey found more than half of Canadians say they live paycheque-to-paycheque, and things certainly haven’t gotten better in 2023!


Despite how things appear, and one of the country’s largest banks constantly claiming in their advertisements that we are richer than we think, this myth is completely busted! Financial stress is a huge issue for most Canadians and affects family life, job performance, mental wellness, even our physical health!


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 that one third of millionaires never made six figures in any single working year of their career.


Check out our webinar with Millionaire Teacher author Andrew Hallam when he visited us back in 2022.He explains how he parlayed a modest teacher's salary and some basic investing principles to fund an early and very comfortable retirement. Sorry, but the "you need money to make money" myth is busted!


Myth #3: 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.


Myth #4: Investing is too risky.
It might be easy to say this one is true given the mediocre performance of many financial indexes over the last two years. The TSX, Dow Jones and S&P 500 indices all sit almost exactly where they did back in August of 2021. However, they are all significantly higher than they were five years ago. Financial markets have a long history of resiliency and holding a well diversified portfolio of equities and other financial assets over a number of years is a proven investing strategy.


Yes, investing can be risky, but you can learn how to adjust that risk to match your tolerance — diversification and asset allocation, your targeted rate of return, your age/life stage, and your investing timeline are all part of the risk management equation. The myth that investing is too risky is busted!

Join investing expert Arian Beyzaei on Sept. 12 to learn all about stock markets and managing your risk.

Financial myths can be debilitating and put all sorts of mental obstacles in your path that just don’t need to be there. Financial education and knowledge will help you separate fact from fiction and help you build the confidence and money mindset you need to live a financially secure life.
 

Resources:

Mortgage payments not keeping pace with interest rate hikes
Three of the "Big Five Banks" just disclosed a significant increase in mortgages that are actually growing in size (negative amortization) as monthly payments fail to cover the interest — borrowers are having to increase payments and make lump-sum payments to get back on the path to home ownership.


Six choices that can easily derail your retirement plan
If you’re planning for retirement, it’s important that you start making the right decisions earlier in life.


Canadians turn to credit cards as payment shock materializes
Higher interest rates are driving more and more Canadians to depend on their credit cards to get by — a troubling sign that debt loads are getting unmanageable.


Four reasons automating your savings makes it easier to build wealth
If you don't understand why the expression "pay yourself first" comes up in any discussion of personal finance, this 2-minute read will drive home the point, and tell you how simple today's banking can make it happen.


My mortgage is coming up for renewal – what should I do now?
Fixed? variable? 5-year term? HELOC? If you are now looking for a mortgage or up for renewal, some very good analysis and number crunching in this one to illustrate your options.