The financial landscape for families these days is so tough that even the group representing elite financial planners is kind of stumped.
FP Canada recently published results of a survey on “quiet spending,” which means money spent either unconsciously or without prior planning. The survey found that 51 per cent of people are concerned about their current financial situation, but most in this group have not changed their quiet spending habits. Examples of quiet spending include buying things in the checkout line at stores, taking advantage of sales to buy more than you intended and putting monthly subscriptions on a credit card.
FP Canada oversees the Certified Financial Planner designation, which tells you a planner has been rigorously schooled. But these planning Einsteins have taken a wrong turn in publishing a survey that basically shames people for small missteps. And that’s saying it’s even a misstep to buy some streaming subs to entertain your family through a long winter of not going out much because you’re trying to cut spending.
Finance Minister Chrystia Freeland made a similar mistake recently when she sought to highlight government cost-cutting measures by mentioning that her family has cut its $13.99-a-month Disney+ subscription to save money. People don’t need lectures on cost-cutting right now – it’s already happening after a summer spending binge.
RBC Economics said in a note last week that spending by bank clients on credit and debt cards seems to have plateaued lately. “We expect discretionary purchases to slow more substantially as rising debt servicing costs and inflation cut further into household purchasing power,” the bank said.
If you’re heavily in debt, a non-profit credit counselling agency might be able to help lighten the load. For help with all your interconnected money issues, definitely consider using an accredited financial planner. Mind the cost, though. Planners could easily charge $1,000 to $5,000 and more for a consultation. Some will want to manage your investment portfolio, and throw in a financial plan as part of the services you get for your portfolio management fees.
Obviously, the planner route is for those with means. People who are so financially precarious that they can’t afford a Disney+ sub need not apply.
For more on money shaming, check out this episode of the Stress Test personal finance podcast.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
The 22 per cent rent increase
A Dalhousie University student and her roommates were recently told by their landlord that their rent will rise to $3,300 when their lease expires in May from $2,700. Across the country, soaring rents have created an affordability problem with no easy answers.
Meanwhile, in the housing market …
An analysis of 10 cities finds that affordability has improved since the summer. Prices have come down, while mortgage rates are up only a little. June 2022 may turn out to be the low point for affordability.
Has BNPL jumped the shark?
Usage of buy now, pay later services has dropped 46 per cent in the past five months, according to this report. I’m OK with that. BNPL allows you to buy something and pay for it in monthly installments. There aren’t usually any fees or interest charges, but BNPL makes it easy to overspend.
If I won the lottery
A writer dreams of winning the lottery so she can wreak revenge on the developer who starts construction on a home next door every day at 7 a.m.
Q: I looked up the Evolve High Interest Savings Account ETF that you mentioned in a recent column on my online broker’s website and it says this fund pays 1.66 per cent. That seems a long way from the 4 per cent yield you mentioned in your column … am I missing something?
A: It’s your broker that might be missing something. Here’s the product profile for HISA – it clearly says the gross yield is 4.24 per cent. Subtract the 0.14 per cent management expense ratio and you get 4.1 per cent on a net basis. Lesson: it never hurts to cross check what your broker’s website tells you about an exchange-traded fund with the online product profiles all ETF companies provide. These profiles are comprehensive and easy to follow. Must reading for ETF investors.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
There’s no user’s manual for the Canada Pension Plan, but this primer from a personal finance website isn’t a bad substitute. Here’s info on how to receive CPP and Old Age Security when you’re outside Canada.
The Money-Free Zone
Mavis Staples, Nick Lowe and members of Wilco rehearse the song, The Weight. Too good.
Scroll down this item to check out comedian Larry David’s commercial for FTX, the cryptocurrency exchange that has filed for bankruptcy. Very funny – in an awkward way. Mr. David is being sued along with other celebs who endorsed FTX.
What I’ve been writing about
- TFSAs to the rescue: How to use the higher 2023 limit to play both offence and defence in your finances
- These five ways to grab high rates on savings, GICs and more won’t last long
- High interest rates are an assault on young Canadians
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Is the middle class dead for millennials and Gen Z? • Gas prices are soaring. Are electric vehicles an affordable solution? • Crypto is booming, but should you invest? • How are young Canadians dealing with soaring rents? • Inflation is squeezing our finances. What can we do about it? • Is a hot housing market squeezing Canadians out of their small towns?
- ✔️ The housing file: How bad is housing affordability? Even a crash won't help • Sell the family home to lock in profit and then rent? Better not • Why young adults can't afford houses: Hard work got you more in the past than it does now • Five reasons you should not buy a house till you're at least 30 • Now more than ever, owning a house is not a retirement plan
- 📈 Investing: The 2022 ETF buyer's guide: Best Canadian equity funds • The 2022 Globe and Mail digital broker ranking: Does the zero-commission revolution flip the script on who's best? • With bonds sinking, conservative investors are waking up to risks they never saw coming • A five-step plan for dealing with the sad fact that almost every investment is falling lately • The best financial advice in advance of retirement? Work on your marriage • One-year GICs are the best deal in town for safety seekers • What to do if the financial plan you paid thousands for disappoints
- 💰 Your money: Are you prepared for the pandemic wealth boom to blow up in our faces? • This hard-working 24-year-old is nailing it financially. But where’s the happiness? • Who should and shouldn’t worry about the wave of rate increases this year, and what every stressed-out borrower should do right now • Don’t make this potentially costly assumption about the CPP Survivor’s pension