September 16, 2008, 6:00 am

Canadians Are Not Comfortable In Regards To Their Personal Finance

by: The Financial Blogger    Category: Assets and Net Worth,Personal Finance
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When I think about what we learn at school, I am not surprise that we have so many problems handling our personal finance. You will actually speak about taboo subject such as sex for hours, but they will never hit real taboos… such as personal finance. Same thing at home, you will probably find out about your parent sexual habits before you find out how they make and how much they have in their investment portfolio!



I recently read a study done by BMO relating the Canadians difficulties and dissatisfaction managing their personal finance. In fact, the study revealed that 46% Canadians are not comfortable to speak about personal finance and 53% regret not being able to managed them more closely. This proportion drops to 35% for family making more than $100,000 a year.

71% of them think they need help to manage their personal finance. While those statistics are disastrous as a modern society, they are good news for all the financial planners and PF bloggers 😀

I think the major problem lies within the fact that talking about finance (46% of Canadians claim it is taboo in their family) is more taboo than religion (34%) and politics (20%). Maybe it is because people are afraid to find out that they are financially worst than their neighbor? Or they simply don’t want to face the truth about their financial situation? Or they are aware and they fell ashamed?

As it is the case for any other taboo, talking about personal finance with people around you will put an end to this madness and probably an end to most of your financial problems! I am not saying that you should listen to John Do’s opinion about how to manage your debt, but if you share experiences within your friends and family, you will definitely find ways to optimize your financial situation.

I will never say it enough; sharing your financial experience with your kids will definitely help them managing their own finance when they grow up. Frugal Dad shared one of his tricks to explain his 8 year-old girl the power of compounding interest. The most valuable heritage you could leave to your children is to show them how to handle money.

You might find it funny but one of the biggest lesson I learned from my parents is when my father had to declare bankruptcy when I was 15. We were living the good life (actually the very good life) for the past five years and then, all of a sudden, we were forced to move in a small “cage”. I only had $100 remaining from my summer job and I decided to use it to buy posters in order to decorate my new 8’X8’ room.

This is when I realized that overconsumption will lead you to financial nightmares. It doesn’t matter if you can afford the monthly payment or if you can make the minimum payment on your credit card. If you don’t have the ability to pay off your debts or to save money on a regular basis, you will not get out of your hole alive!

I was lucky enough that my parents told me the truth about their bankruptcy. They were honest and didn’t try to hide that they had to borrow from friends and family members to eat at one point.

Because of their hard work, this is now only a good story to be told since they are now in a good financial situation again. Since I learned from their mistakes, I won’t have to make them to understand how to manage my own money. This is why it is so important to share your good and bad financial experience with your children.

I guess this is probably why finance blogs are getting more and more popular. As a financial planner and a PF bloggers, I can’t be more happy 😉 I am curious to know if you are talking about your financial situation with family, friends or colleagues?

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Comments

In the US, we are taught to spend on credit till it hurts, file bankruptcy, and do it all over again!!! At least that is what I learned in school. I always thought it was weird that they teach us how to spend and not save. Then again, that is probably the biggest reason for the national deficit to be someone in the trillions and rising.

I was actually financially strong when I was younger. Had a few debts, payed on time, had spare money. Even set my self up to be debt free within 2 years (even just after purchasing a brand new car. This was all before I got married. Then, well, life hit and hit hard. Been recovering ever since.

As far as talking about our situation, I’ll blare it to the world. I don’t care who knows. They will also learn about how we are fixing it and where we are heading. They can listen if they want, or not. They can also choose to let me fix their problems so they don’t go through what we did, or they can repeat our mistakes and get in worse shape. (we lost 2 houses before even getting the loans because of either family or companies going under).

I should stop now before I make a blog post for you. You always have a good read.

Thanks, again.

by: The Financial Blogger | September 16th, 2008 (6:49 am)

Richard,
I must admit that I was quite surprised to see the US Government sending cheques to the population and telling them to spend it in Disney World while people are having a hard time making their mortgage payment!

Mickey and Goofie won’t do any good to negotiate with your banker after three late payments!

What made those checks worse, they were merely advances on the income tax refund.

If someone is supposed to get a higher refund, that check will be deducted from it. If less, then they got free money.

It is the same with the $7500 tax credit to buy a house now. It is recouped over the years.

I’ve started talking with people about my finances about two years ago when I started my blog. I was uncomfortable with it for a while, until the day I was in the National Post which my boss read on the way home from a business trip. Suddenly I was the money guy in the office and I was giving my thoughts on all sorts of ideas and directing people to reading blogs and books. Before you know it most people in my office have index funds in their RRSP’s and an investment account with a divident paying stock or two. It’s good to know I can corrupt others into talking about their money too. *grin*

Tim

I would be careful with giving out advice like that without a license and a full understanding of their situation.

Don’t get me wrong, it is great you are helping your fellow man. However, if the issues in the states will tell you anything, they can sue you if they loose money. Then again, you can sue here for spilling coffee on your self and taking your kids to fast food chains to get fattened up instead of cooking a healthy meal.

Hey, nobody ever said we were the smartest of the bunch.

I’m with you there, talking to your kids about personal finance and savings is very important indeed and will possibly save them from many headaches 🙂

When I first came to the US, I was stunned by peoples compulsive spending behavior, it was truly hard to understand… but time has passed and now I find it hard to stay away from heh..

You are lucky if you ever met someone who isn’t in debt 😛

by: The Financial Blogger | September 16th, 2008 (9:27 pm)

CD;
At least some people are listening to you 🙂
My parents hear me but can’t remember a thing I tell them about their own finance! That is too bad that people around us won’t necessarily listen… I would listen to my neighbor in regards to my car problem if he is a mechanic!

I have to disagree with you on something TFB, I don’t care if my neighbor is a mechanic or not. If he knows how to fix my problem, I’m happy about it.

My family sees me as a computer guy, not a money man. They don’t listen to anything I have to say and it has cost them over 600/yr in insurance premiums and about $20k plus in excess taxes.

If there is one thing I have learned from my years (few they may be), what your job is has no bearing on what you know or are capable of.

Now, if I can just get them to stop treating me like a scam artist.

by: The Financial Blogger | September 17th, 2008 (6:44 am)

Richard,

I get your point but technically, you should know a little bit more about your job than somebody that doesn’t work in that field… hopefully 😉

What I was trying to say is that money is so taboo that even if you have a multi millionaire entrepreneur in your family, chances are that nobody will ever listen to his advices on how to make money.

That is true. The biggest reason so many people don’t listen to the people making the money is because they are “off” a bit. It’s different therefore it is a bad thing. That difference separates the poor from the millionaires. And the millionaires from the billionaires.

And the operative word is SHOULD. I have met several “professionals” that could not work there way out of a paper sack that I had to fix afterwords. And it wasn’t my field at that time either.

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