Saving For Your Future

Dear 20-, 30- and 40-somethings reading this.

In my soon-to-be-released book Retire Fit, Fit & Fit I talk about the benefit of starting to save for your future when you’re young. I know what you’re thinking; there’s tons of time before I retire, I’ll figure it out by then. However, “Then” will come much sooner than you think.

When I was just out of high school and bouncing from job to job and trying to figure out what I wanted to do with my life, I got caught by an unexpected (to me) layoff. It was then that one of my soon-to-be-ex co-workers who was considerably older than me gave me some startling advice. He said:

You should always keep about a month’s salary in the bank for when you are between jobs.

Biff! Pow! Holy bank account Batman, I had never heard this before, and all of a sudden it made infinite sense. But somehow it also dawned on me: Why stop at a month’s salary? Why not 2 months or 12 months? It was some years later that I heard this next incentive (as if I really needed one by then):

The rich plan for three generations; the poor plan for Saturday night.

I just love this quote, attributed to Gloria Steinem. Go on, read it again, it’s worth it.

Then today I read this article by Neal Gabler in The Atlantic. It is rather lengthy but worth your time. The most startling revelation for me is that 47% of Americans couldn’t cover a $400 emergency expense without borrowing or selling something. I have no data but I suspect that, more or less, the same could be said for Canadians. Which brings me to the last quote for this blog entry:

Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

From David Copperfield by Charles Dickens

If you are in the same position as these 47% and need to reduce your spending and increase your saving (for your retirement, your children’s education, or just for a $400 emergency), may I suggest you take these quotes to heart and seek advice on how to change your financial future.

Financially Fit: Educate Or Legislate?

As a retired adult educator I found two articles that crossed my desk last week to be rather troubling. The first one from The Economist – Anti-Choice suggests that Americans have poor, to very poor, financial literacy. This seems to be especially true for baby-boomers and those close on their heels. The article concludes with some despair that financial education doesn’t appear to work–they don’t mention how the knowledge was imparted to the students or any other pertinent information like age-range, sex, socio-economic, etc. But the gist of the article seems to reinforce the idea, that because of their inability or unwillingness to educate themselves, legislation is needed to “protect” people from their own ignorance.

The second article from the Canadian Payroll Reporter – Nearly one-third of millennials ‘not at all knowledgable’ about RRSP savings: Poll  restricts their poll demographics to Millennials; although, their sample size is very small–just 613 Millennials (18 – 33 years old) were polled. Another 1,502 older than 33 years old were also polled but those results were not mentioned in the article. In any case, they appear to have tested those polled on their knowledge of the rules and regulations surrounding RRSPs (Registered Retirement Savings Plans) — 401(k) for my American readers. The article points out the rather weak knowledge these young adults have about RRSPs. Can this lack of knowledge about RRSPs be used as an indicator of more general financial illiteracy, as discussed in the Anti-Choice article? I don’t know.

If you’re an adult and you feel you don’t know enough about managing your personal finances, you’re not alone; but this stuff is important! Important for you; for your spouse; for your children; for your working life and for your retirement. I admit, the math and the jargon can be intimidating, but so was other math and jargon you’ve learned–baseball, hockey, football–you know it all. The only difference is that sports jargon and stats have no bearing on you, your family or your retirement, so make the effort to learn this stuff. Get yourself FINANCIALLY FIT and it will only enhance your life.

Ask your family and friends, find out how they educated themselves and what you can learn from them. There are many free seminars given by financial advisors who are incredibly knowledgeable and want to share their knowledge with you. And consider hiring a financial advisor; a big part of their job is to educate you.

As a retired adult educator, I have to believe that education and not legislation is the solution. In my opinion, we already have far too much legislation designed to protect us from ourselves and we pay dearly for civil servants to manage and enforce it. So do yourself a favour and learn.