I’m not one to judge but every so often I’ll hear a comment about money that just makes me shake my head. I’m not even talking about people being misinformed; some of these statements I’ve heard are straight out crazy.
“I want a risk free investment that returns 7%+”
I get it, interest rates are low and you want a higher return on your savings, but I’m sorry no such investment exists. If you want a better return then you’ll have to take some risks, that’s just how investing works.
If you ever come across a person promising you a risk free investment with high returns, run, run as far away as you can. The odds are this person is lying or pulling off a Ponzi scheme.
“I don’t want to pick up more shifts because I’ll make less money”
The person who said this was working 3 days a week at the time, and he refused to apply for full time. He falsely believed that working the extra hours would put him in a higher tax bracket. With this logic he believed that going full time would decrease his income so it made more sense for him to stick to part time hours.
Even after it was explained to him that we’re taxed on a marginal basis in Canada, and it was impossible to work more hours and make less money, he didn’t believe it. I suspect it was simply a lie he told himself to make himself feel better about not wanting to work full-time.
“I don’t make enough money to pay my rent”
Said by someone who makes $30K and renting a $1,900 a month condo. Seriously what are you doing spending that much on rent? Your salary isn’t the problem; your spending is the issue here.
Rent a cheaper place and that’ll solve your problem. Too many people feel entitled these days and aren’t willing to save or cut expenses. If you really can’t afford something, take a look at your budget and make some adjustments.
“I don’t want to join the pension plan because I’m not sure how long I’ll be with the company”
Pensions are becoming increasingly rare so whenever I hear someone make this statement it makes me cringe. What difference does it make if you’re not sure how long you’re going to be with the company? They’re offering you free money and you should take it. Sure some pensions require a vesting period, but even if you do leave early, at the minimum you’ll get your contribution back.
Final word
I find that the people who make these kinds of statements are usually not interested in taking control of their finances. Don’t be a money moron. Take the time to educate yourself and make your money work for you.
Those are some crazy things Barry. Thanks to Barry Choi for this post. Barry blogs about personal finance and budget travel at Moneywehave.com. You can follow him on Twitter: @barrychoi
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
I read that leasing is like car dealers selling crack cocaine. Once customers start leasing they will never buy again because they never have the discipline to save for a purchase and have nothing to trade in.
Too funny. I could see that. It’s like any toy. Once you rent/lease they have you hooked.
Why should I buy a cheap car when I can lease a much nicer car for the same money.
Another good one. What’s your take on buying new cars Steve and holding them for a decade or more?
I buy cars 2-3 years old and drive them until they are done. I got $200 for my last one after getting about 14 years and 200,000km use out of it.
I’m there with my 2000 Mazda Steve, 15 years old now and just crossed 200,000km. I hope to have it until it dies.
“But if I buy brand new I am eligible for 0% financing!”
Lol
Yup, just lots of debt at 0% interest 🙂
I’ve been there with cars but I drive them for 15+ years.
“What’s the point of saving money if you can die at any moment?”
We plan for tomorrow and live for today.
co-worker A:
– “I pay my financial advisor $3,000 by year…” a bit more later: “…I need to take some cash from the investment but I feel awkward to ask to my financial advisor”
farco: “Well, he/she surely doesn’t feel awkward to take $3000/yr from you…”
co-worker B:
– “My financial advisor do 12% by year with my investment…” later: “…if the stock market crash it’s OK since I will go back to my initial amount”
Yup, that’s wealth building…
co-worker C:
– “oh yeah you can put stock into a TFSA? But I don’t remember that my BANK allows me to do that”
farco: “Well, you must have a TFSA as an investment account by a broker”
C: “Oh I will ask to my BANK”
I let the discussion here, that was too much
co-worker D:
– “8 %… it’s awesome, but I don’t want something too risky, can I have that buying GICs through a broker?”
farco: “nope, just perhaps some 1/10 of % better than what your bank offers you for their GICs”
D: “oh…”
Cheers
Those are good! Too bad they are real! 🙂
An interesting post Mark. I couldn’t possibly recall a tiny fraction of the misinformed statements I’ve read or heard over the years.
A surprising number of people don’t know much about their finances or investing, and many don’t seem to want to.
While I find this somewhat disturbing I’ve learned that unless someone truly wants to learn themselves or seek advice, efforts to help have proved less than fruitless.
I would agree Deane, you can lead a horse to water but if they don’t want to…..
People that cash cheques at cash stores because they don’t “trust” banks.Y
Ha. This is a good one Steve. Thanks for sharing.
I think Canadian Government needs to change Tax Free Saving Account (TFSA)’s name into Tax Free Account, Tax Free Plan, etc… I don’t know who came up with the name but in my opinion, it is confusing to so many people and I can’t blame people who really use it as a saving account. I agree that people are needed to be educated but politicians need to look into the mirror and fix their mistakes. (Or maybe the naming was done intentionally to gain some votes with little cost by creating some confusion)
BSR
Did you ever read this post?
https://www.myownadvisor.ca/name-changes-needed-canadian-financial-accounts/
I suspect the naming was intentional but also I bet the politicians could not foresee some folks having six-figures in these accounts eventually.
“I’m going to invest in dividend paying stocks rather than index funds”
Crazy talk!
LOL. Well, what about some dividend stocks Glenn? 🙂
How about ” i have GIC in my RRSP because thats all you can put in them”.
Oh boy…I don’t know where to begin on that one! I’ve heard something similar: “I need to buy RRSPs this year” or “I need to buy TFSAs this year”. *sigh*
Or my TFSA is a savings account because it says so in the name.
“It’s a tax deduction”. (implication being that it’s ‘free’)
Like, I don’t have to pay for it now or something?
I think that’s the implication Glenn. I try to avoid using the word “free”, ever, myself, nothing in life is really “free” – there are small (and big) costs to everything and opportunity cost abounds! Thanks for checking in.
Thanks for sharing MOA. A lot of people never want to take accountability for their actions. They blame everything else but themselves. It’s such a sensitive subject, Finances and so one day when you become aware and want to change is when they can really take hold of managing their money. Until then, we can’t help someone that doesn’t want help. Take care MOA.
Dividend Hustler,
The list I came up with covered different things, but these same people are constantly saying the dumbest things about their finances. You’re right, they’re not taking accountability for their actions.
Personal finance is a very sensitive subject and it charges people emotionally. I’m slowly detaching myself from that actually, and it feels good. I think this is because our plan is tailored for our needs and wants in life and that’s all that matters…isn’t it?
I agree Mark , take the emotion out , have a plan , be rational. don’t try and keep up with next door they are probably in debt anyway.
In our neighbourhood I feel we’re the runt of the litter! We just do what we can and that’s it Kathy. Thanks for your comment.
I loved the “if I work more I’ll make less” one. Unfortunately I’ve heard that before and it just makes no sense. One of my mom’s friends had a similar situation. They had a pension from a former employer that would work out to something like $500 per month. My mom rightfully took the monthly payout as soon as she could whereas her friend waited because she didn’t want to move into a higher tax bracket. And the worst part is that her future payouts don’t get increased if she waits so she’s just passing on free money. My mom tried to explain that to her but unfortunately it didn’t click. You can lead a horse to water…
JC,
With my company if you’ve put in X years with the company you get full pension benefits, so it actually makes sense to retire early. Yet there’s a ton of people I work with who qualify and are still working.
Sure they’ll make a little less than their regular salary but honestly, why work 40 hours a week to make 20% more? Many of them would qualify for OAS which would help bridge the gap.
Thanks for sharing JC. More often than not, I’m a fan of a bird in the hand.
I’m shaking my head as I read this too. Some people are just crazy when it comes to money.
Today at the bank I overheard a teller explaining to a client how interest on credit cards work. The customer had no clue what interest was.
Absolutely. Barry included some good ones.
I have a relative who has made me cringe on more than one occasion with her comments.
1. Her husband is the only one working, pulling in maybe $50-60K doing contracting work. She doesn’t work, stating that she doesn’t have anyone to look after her kids (who are all in school full-time). And yet she’s looking to spend $10,000 to renovate a powder room (note: powder room, not a full bathroom). On one hand, she’s complaining she doesn’t have money, on the other she’s fed up of her two year old powder room.
2. On more than one occasion, she’s bragged about money she will possibly inherit from her father. Understand that the man was very frugal and ran a successful business, but to already lay claim before he’s even passed on only shows what is really important to her.
There are other examples as well, but that’s probably enough ‘cringe’ for today. 🙂
Tom,
A couple I knew recently bought a house and started doing renovations on their own. The reason for the DIY renovations? They couldn’t afford a contractor due to buying too much house. Of course buying a smaller house or not doing renovations never crossed their minds.
Re: 1. A $10,000 powder room? Geez, must be a nice one 🙂
Re: 2. I struggle when folks talk about inheritances. I wish folks wouldn’t “bank on that” but to each their own as well Tom. Thanks for sharing.