Happy Financial Literacy Month! We've rounded up some of our most valuable money lessons at the Invisor office to share with you. What are some lessons you swear by, or things you've learned while navigating your own financial journey? Pop down into the comments and let us know!
Josh Miszk, Vice President
My grandmother taught me that it's important to keep it simple when it comes to finance or anything else in life. She doesn't have a lot of frills, and when she does buy things, she makes sure they are good quality. Even when she cooks she keeps the ingredients list simple, and I've never had a better apple pie. The fewer things you have, the easier it is to manage them. Just like with your finances, minimize the number of products (like credit cards) you have so you don't lose track, and when it comes to investing, pick good quality investments.
James Deadman, Senior Developer
A company I worked for during the tech boom had an IPO around $8 and shot up past $36 in a matter of months. Much of the company staff had invested through the IPO, ESOP or options and became obsessed with tracking the stock price minute-by-minute. There was a euphoric feeling that it would just keep going and we would all retire rich. The project that drove the market hype ended up failing and was sold to an overseas company for $1. After it crashed back down the company morale was devastated; only a few had cashed out at the right time. Lessons: Invest based on a long-term goal (not just to make a quick buck), keep realistic expectations, don't follow the hype, and don't put all your eggs in one basket.
Melissa Motyka, Marketing Manager
My dad taught me to start building my financial future early. He helped me open an investment account and set up pre-authorized contributions when I started university, and encouraged me to also move money into my savings account regularly. Truthfully, I wasn't even sure what I was saving towards when I started, but when it was time for me to buy a car, I was able to put money down. And when I was saving for a house, I had a good starting point. When you're in your early twenties, the big things in life sneak up on your quicker than you think they will. It feels good to be prepared! TFSAs are a great way to start saving when your goals are still unclear.
Tanya Tantalo, Operations Associate
When I was a child I only had an allowance to spend. I did get money for special occasions, but I always invested it – at the time it was with Canada Savings Bonds. After one such occasion I asked my mom how much I should save. She suggested: spend a third of the money and invest the rest. I looked at the “stack” of cash. A third would have been a few hundred dollars. I thought that amount of money was insane! What was an 8-year-old who loved the dollar store going to do with that much money? I asked my mom for $50 and told her to invest the rest. That became my pattern, so I relied only on my allowance of $5 per week and I got into the habit of saving double what I actually needed to buy something – I always wanted money left over. If I was buying something for $5 I had to have at least $5 left over. So, when I decided to buy my first CD – I saved up $40 to spend $17.25. The sad thing was, I didn’t like the band, but all my friends did and would tease me. I saved for 2 months and spent what to me was a lot of money on something I didn’t really care for because everyone else had it. I kept that CD, and still have it to remind myself that FOMO is real, but not on my dime.
Pramod Udiaver, President and Co-Founder
Andrew Carnegie said, “If you want to be happy, set a goal that commands your thoughts, liberates your energy and inspires your hopes.” Managing one’s financial life should follow the principle in this quote. When a goal is set and tracked, all your actions over time, will most certainly lead you towards the goal. Not having one would be like getting on a road trip without knowing where you are headed. So, set your financial goals today if don’t have them already.
Ian Meir, Lead Developer
If it's the case that the company you work for offers an RRSP contribution plan, you should always participate. Additionally, if there is a choice of contribution size, always select the maximum amount. It's generally a good idea to put away some savings with each paycheck but having it automatically part of the paycheck deductions makes it much easier to commit to such a plan. Plus, if the company matches your contribution, then that's free money yo. There is also the added tax rebate bonus that you could get for your RRSP contributions each year.
When tax season comes around, the amount of a tax rebate you get back is pretty heavily affected by the amount of RRSP contributions you make over the past year. It is my parent's belief that whatever you get as a rebate, you should put that directly into your existing RRSP. This hopefully creates a rebate-growth cycle that can help you a lot down the road.
Also, it seems like all new mortgages with all modern banks are forcing you to get Mortgage insurance. This is, of course, something that no one should get. It is always better to get Life or Disability Insurance instead. Because with both types you want a fixed monthly payment to keep you insured, but as time goes by the payout value of the mortgage insurance goes down (as you pay off your mortgage), but the payout value of Life or Disability Insurance always remains the same. So, if the bank makes you take mortgage insurance, in order to get a lower interest rate (this was the case with my local credit union), you can always call one week later and cancel the mortgage insurance without effecting the mortgage itself.
Dan Poole, Senior Vice President + Co-Founder
“Put away a little money every day, and it will add up.” My father-in-law had a large tin that he used to keep his spare change in. Like a grown-up piggy bank. Whenever he came from work, or bowling, or a day spent shopping or running errands, he would empty all of the change he had in his pockets into the large can. Everyone knew that this was the family’s ‘vacation fund’ and that money could only go in to, never out of the can. Each year, around the time they would plan their vacation, my father-in-law would take the can to the bank and have all the change rolled and counted. It was usually $500 or $600 dollars…and this was before loonies and toonies existed! That made a big difference in the holiday for this young family! The lesson is to put aside a little every day, and it will add up. Think about what discipline and compound interest can do for your family. It may not seem like you are doing much now, but over time, the savings will be significant!
Rudie Shahinian, Director of IT
I learned a great lesson from this one extreme case. I read this article about a 30-year-old guy, Sean Cooper, who paid off his $250k mortgage in 3 years. He worked 3 jobs, lived extremely frugally, and just committed everything to paying off his mortgage. Although it’s a very extreme story, it conveys a really powerful lesson: sticking to a financial goal pays off. Prioritizing your finances and figuring out what’s important is one part of it, but following through, even if it means making some sacrifices, is really the way you’re going to achieve your goal.