Life is about choices. There are times when you think you can avoid making the tough ones only to discover, years later, that theyre still there waiting for you. Just ask anyone who is adding up whether they can start a family, buy a home or take that retirement. Why didnt I start saving earlier???
Kathy McGarrigle knows that of all the things we have to confront, financial choices can be the ones we least like to talk about. The Chief Operating Officer of Coast Capital also realizes that all of us probably know what we should be doing. Do we really need someone to tell us we shouldnt spend more than we earn?
Knowing what we should do is not the problem. Its finding the will and the way to do it.
For every dollar of income that Canadians earn, we owe $1.64, McGarrigle says. Only 38 per cent of Canadians have RRSPs, and even then, the average amount is only $55,000, certainly not enough to retire on. Stalwart Canadians, who used to save 15 per cent of their income, now only save an average of three per cent. Retirement will be pretty scary, McGarrigle warns.
Of course, just as we dont like to confront the inevitability of our death, we dont really like to do the math on how much we have to have in savings to retire. Maybe we think well get by with an inheritance from our parents, but, what if, since were all living longer, their savings goes towards living in a nursing home? Maybe we think our house is our nest egg. But when we sell it, where will we live? Will we even have the mortgage paid off by that time?
McGarrigle thinks that learning how to budget and plan for the future should be a prerequisite for graduating into adulthood. By starting young, and getting into good spending habits early, people make it much easier for themselves when, at 30, the things they need are much more expensive.
Were looking at the next generation and making sure they have the right foundation, she says. About a year ago, they introduced the Where Youre At Money Chat. There are iPads at the branch where people go through an online presentation about how to manage, save, grow and protect in a fun, non-intimidating way. So far, 45,000 people have had the chat.
The most important thing is to be honest about where youre at. Sit down with a financial advisor at institutions such as hers, the service is free but also do your own inventory of the money coming in and where its going. Ask a lot of questions.
McGarrigle says its important to take small steps. Bank service charges, cell phone bills and lattes can add up to $5,000 a year. Pay down your debt. Figure out the difference between what you want and what you need.
Or, as McGarrigle says, if you dont change your habits now, there will be significant and serious trade-offs in the future. (Sorry about that.)
Money is very personal and theres a lot of psychology attached, she says. Its understanding the bigger picture of what you do and why you do it. Life is about choices and trade-offs but it doesnt have to be onerous.
