I roll my eyes when financial literacy experts talk about the good they could do if they were able to teach kids about the wonders of compounding and the time value of money.
That is so not going to work. There are really two branches of personal finance – one for people who “get it,” and another for people who have yet to start their journey to enlightenment. Compounding and the time value of money are important concepts, but they’re just blah-blah jargon for personal finance newbies of all ages.
For them, I suggest they enroll in the MoneySmart Bootcamp created by Globe and Mail personal finance reporter Erica Alini. This is real world stuff, starting with the basics you need to master before concepts like compounding start to mean something.
MoneySmart Bootcamp begins with ideas on getting control of your spending, then progresses to debt and borrowing, investing, housing and emergency funds. This is exactly the right order of operations for personal finance. Before investing, you have to start spending less than you earn.
Investing is the more exciting part of personal finance, even after the setbacks for stocks, bonds and cryptocurrency in 2022. People of all ages were drawn to investing in 2020 and 2021, a period when they were locked down and looking for diversion. Stocks soared, and a lot of money was made.
It was fun while it lasted. Now, we’re in a much more challenging period, with high inflation, rising interest rates and stocks lurching up and down, depending on the day. This is a time when personal finance basics are paramount. You might have all you can handle in paying your household bills without going into debt. Saving and investing may have to wait a bit.
MoneySmart Bootcamp can help you through these challenging times. As Ms. Alini writes, it’s the personal finance crash course you never got in school.
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Rob’s personal finance reading list
Canada’s favourite reward credit cards
A reader’s choice poll on the RewardsCanada website produced this list of favourite reward credit cards in 10 different categories. The big story here is the popularity of cards linked to Aeroplan. Now for the best reward cards as chosen by a financial website called Hardbacon.
How to cancel a credit card
It’s a surprisingly involved process to cancel a credit card, and it can in some cases hurt your credit score. I learned a bunch from this blog post.
So much for the billionaire genius
Washington Post columnist Helaine Olen uses the crack-up at crypto exchange FTX to remind readers how often people fall for the myth of the genius billionaire. FTX founder Sam Bankman-Fried was, until recently, an all-star member of that club.
The unhappy retiree
I’ve seen this point made many times, but it bears repeating. A happy retirement depends as much on planning what you want to do with your time as it does on having sufficient savings.
Q: I am giving a small stock portfolio to a conservancy in Muskoka, Ont. What is the charitable tax credit I will receive from them?
A: Here’s a guide to the tax benefits of donating stocks to charity.
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
The Benefits Wayfinder can help you find government benefits you’re entitled to. This online tool now offers enhanced help for disabled people.
The Money-Free Zone
Loving the song Try Love by the veteran Jamaican dub artist Horace Andy.
Listen to this
The Planet Money podcast presents the 1970s song Inflation by Earnest Jackson, which seems awfully relevant right now.
From the Twitterverse
A financial planner starts a smoking hot thread with a tweet about whole life insurance. Here’s some information on the differences between term life insurance, which is what most people need, compared to whole life.
What I’ve been writing about
- Recent home buyers on erupting mortgage payments, how their parents are helping and who they blame for rising rates
- Eight things a brutally honest investment adviser would tell you about fees, returns and more
- Some in the investment industry frown on GICs – what’s their deal?
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