Rob Carrick, personal finance columnist for The Globe and Mail and author of four previous books that include How to Play Less and Keep More for Yourself and What’s Good, Bad and Downright Awful in Canadian Investments Today is back with a new book. Why? Well, in his own words, he feels for the young people today: “I feel for you because you’ve got money problems.”
To all young Canadians, his new book is an offer to help you out. It’s a guide to help you find your way in the world of money, avoiding mistakes that have long term consequences and getting your financial journey started on the right path, from affording university to weddings, to supporting kids, to formalizing insurance and wills for your young family in between.
Rob’s new book, entitled How Not To Move Back In With Your Parents – The Young Person’s Guide to Financial Empowerment is waiting online for you and on bookshelves now, but it’s also on the desk of My Own Advisor. Rob Carrick was kind enough to send me his new book to review and I’m going to giveaway my copy to one lucky reader.
Before that FREE book giveaway I want to provide you with an overview of Rob’s new book and some great takeaways.
Affording college or university isn’t cheap, so this chapter is especially helpful for would-be students and parents of students alike. Rob tells you why Registered Education Savings Plans (RESPs) rule, how to get financial help through scholarships and what it really costs to obtain a post-secondary education. Later on in this chapter, after all the hard work is done; the diploma or degree is framed on the wall, Rob tells you how student loan debt repayments work and offers some smart tax tips for students.
Rob cuts right to the chase here, saying “credit cards are a marvel. You present a colourful plastic card to a store clerk, take it back moments later than then walk away with the goods.” In your dreams, it’s that easy Rob writes. Rob is concerned most young people seem to view debt in mostly positive terms, something natural, than a burden, so this chapter is largely dedicated to debt education. He warns 20- and 30-somethings about the scandalous temptations of credit cards and offers some solid tips for building a solid credit rating.
“Banks are basically stores that offer financial products for sale” writes Rob. “They are in business to sell you stuff, not to be your adviser, your partner or your friend.” The banking needs of students are relatively simple, but this doesn’t mean there aren’t pitfalls to avoid, young Canadian or older. Rob takes the reader through various no-fee chequing account options and lists a host of banking blunders to avoid, including but not limited to avoiding excessive ATM fees, being careless with your banking PIN and making last-minute bill payments that cost you money in fees.
Whether you have to move back home or not, Rob introduces young Canadians to the world of budgeting in this chapter. Although the process of budgeting may not work for everyone, there are universal principles Rob endorses: prioritizing your money, visualizing/planning your expenses and establishing an emergency fund. Budgeting will help you stay away from excessive credit, something Rob explains this way: “Debit is far better than credit from the point of view of smart money management, and cash is better than debit. Credit creates the mirage of buying things without paying. Debit is closer to reality because, while no money changes hands at the store, the cost of a purchase is immediately taken out of your bank account. Cash is concrete.”
Chapter five is where Rob gets really passionate about his messaging to young Canadians. He discusses the ABCs of RRSPs and reminds readers about misunderstanding the RRSP tax refund. “This refund is not some sort of bonus designed to reward you for contributing to your own retirement saving. Rather, it’s designed to prevent you from being subjected to double taxation. You contribute to an RRSP with after-tax dollars, and then you’ll pay tax on RRSP withdrawals when you’re retired.” Rob then discusses the merits of a Tax Free Savings Account (TFSA), of which there are many. On the subject of TFSAs vs. RRSPs, Rob largely avoids favouring one account over the other and instead, says to contribute to both regularly but if you can’t, just “pick one or the other, and then contribute to it regularly.”
Rob encourages you to rethink the car in this chapter, not that he’s against cars but they are “wealth destroyers” for young adults. Before you get your car, Rob asks you to consider the alternatives first: moving closer to work, using a car-sharing service or getting a bike amongst other options. If you really want to have a car, consider making your first car a used car. Make sure you take advantage of any graduation discounts available and make sure you weigh the pros and cons of buying vs. leasing.
“Who doesn’t think buying a house is one of the few total no-brainers in personal finance? Houses appreciate in value, sometimes at rates that make the stock market look comatose.” Rob is spot on here, I think; the last few years Canadian real estate has been on a tear. However, Rob challenges conventional wisdom is this chapter, with his three money myths: houses are always a good investment, it’s smart to buy as much house as you can afford, your house will pay for your retirement. Rob is also quick to mention “the only thing keeping the housing market going was low interest rates” and Rob exclaims that won’t last forever. As a young adult, if you really want a house, just be prepared for everything that goes with it and read Rob’s “seven killer costs of home ownership that will surprise first-time buyers”.
Citing Weddingbells magazine, the average total cost of a wedding is now around $23,000, including the average $5,300 on a honeymoon. “Spending tens of thousands or more (on a wedding) may be fine if your parents have been saving for years for your wedding, or if they can swing the cost of a big bash without too much trouble” but this is a heavy price-tag that you need to be prepared for. Rob offers some tips to save money on your wedding and for those newlyweds who have already tied the knot, some “money talk” advice as you start planning your lifelong journey together. For 20- or 30-somethings already on the verge of baby talk, Rob chimes in with some sound financial advice many adults should take to heart.
So you’ve followed Rob’s new book, avoiding some of the pitfalls many young Canadians make. Chapter nine brings you into full-blown adulthood with the topics of insurance and wills. Because home and auto insurance are essential, Rob gives you some helpful websites to do some comparison shopping, and get the best coverage for money. Rob tells you why life insurance is important: “…to ensure the financial security of your dependents if you die. There’s nothing more to it than that, although a good portion of the life insurance industry is devoted to make you think otherwise.”
In closing, I enjoyed Rob Carrick’s new book. It was refreshing to read how well someone identified with my cohort (30-somethings) and also painted a realistic (and sometimes gloomy) picture of what young Canadians face today and tomorrow; the time-warp that precedes university, during university and the years afterwards. In reading Rob’s book, I found myself reflecting upon the financial mistakes I made and hopefully how I’ve started to right the ship in my 30s.
Today’s economic climate is tough, for everyone, but especially young adults. Gen X and Y need support, quality information and motivation to get off to a good financial start in life. Parents, grandparents, aunts and uncles can help young Canadians and so can Rob Carrick’s book.
You can order your copy of Rob Carrick’s new book, here: How Not to Move Back In With Your Parents or you can take a chance on my site to win a FREE COPY by entering below. You must login via Facebook or login using your email address to enter the giveaway.
Good luck! I look forward to all your comments and tweets!