Piggy bank with coinsJason Verschoor/Getty Images/iStockphoto
I've been devoting a considerable amount of thought to my finances ahead of the March 1st RRSP deadline. I'm consumed by questions of how much to contribute and where to allocate my contributions. These are not easy decisions and I find myself torn between different saving and investing strategies.
Still, even if I make the wrong move, I take comfort in knowing that I've made an effort. And there's evidence to suggest that good returns eventually come to those who spend time on their finances.
This week, personal finance blog Thicken My Wallet posited that there is a positive correlation between the amount of time spent on planning personal finance and household net worth.
He cites the book The Millionaire Next Door which found that "financially prudent" households spend 8.4 hours a month, or 100 hours a year, on their finances. Less financially successful households spent only 4.6 hours a month planning their saving and investment decisions. The households that spent more time planning eventually amassed more than five times the net worth of those families that devoted less time.
While "8.4 hours a month may seem like a lot of time for most young families," the blogger writes, "compare 8.4 hours a month with how much time spent watching television, mindlessly surfing the internet or playing video games."
Thicken My Wallet suggests setting aside a designated time every week to review your financial state of affairs. Look at your bank statements, your credit card statements, and your investment portfolio.
"The less time one spends on personal finance, the more likely such indifference will be costly in the long run," he writes.
On a related note, this week the Financial Literacy Task Force kicked off its consultations with Canadians. The Task Force, established last year by the Federal Finance Minister, is charged with developing a national strategy to improve financial awareness.
"By focusing on financial literacy, we can provide people with the knowledge to help keep their heads above water," Federal Finance Minister Jim Flaherty has said.
It seems clear that financial literacy begins with spending time thinking about your money, not just earning it.
If you want to have your say on how to strengthen financial literacy in Canada, the Task Force is accepting feedback through its website. The task force is also going on tour across the country in April and May to meet with regular Canadians and consult with them on themes such as managing debt, saving and investing, retirement planning, and preventing fraud.
Between April 6 and May 13, sessions with Task Force members will be held in every province and territory - in Calgary, Charlottetown, Halifax, Iqaluit, Moncton, Montreal, Ottawa, Quebec City, St. John's, Saskatoon, Toronto, Vancouver, Whitehorse, Winnipeg and Yellowknife.