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Canadians are strapped. Many people have barely enough money to make ends meet. Our savings rates are down to a measly 3.9 per cent. A survey released this week by the Canadian Payroll Association found that more than half the people they surveyed – 51 per cent – would be in real trouble if they had to skip even one paycheque. So what's the problem? Stagnant wages, creeping inflation, galloping house prices. The usual.

But those aren't the real problem. The real problem is in the mirror. A lot of us are clueless about managing our money. We have no financial discipline. We've erased the difference between what we want and what we need. This is an enormous cultural challenge. If you think I'm being mean, visit a savings society like China. Chinese people make a fraction of what we do and save 30 or 40 per cent of it. They do it because they don't have a social safety net. They don't have credit cards, either.

My one piece of advice to kids starting out today is: Live like I did in my 20s. If you do that till you're 30, you will have a decent shot at financial success.

Yes, I can hear you now. Life was easy then! And in many ways it was. But it wasn't cheap. In 1972, armed with a newly minted MA, I got my first real job. My salary was $5,500 a year – $31,425 in today's dollars. It didn't go that far. I stayed in my student flat and saved as much as I could. Home was a furnished attic with an illegal two-burner kitchenette and a bathroom (downstairs) that I shared with a family of five. In retrospect, I'm lucky the place didn't burn down.

I came of age before credit cards. That helped. I used to put my allowance and babysitting money into envelopes: one for savings, one for clothes and one for gifts. Whatever was left over was for fun. My mom, who was allergic to debt, passed the frugal gene along to me.

It's amazing how much you can save if you try. Don't eat out. Don't drive a car. Don't drink large mochaccinos from the coffee shop. Don't even enter a clothing or a shoe store unless you absolutely need to buy something. It helps if you learn to cook. Once you make a habit of these things, you won't feel too deprived.

In some ways, though, it's true that the 1970s were cheaper. One reason is that many of today's middle-class necessities were just fantasies then. Few people went on cruises and Caribbean vacations. Only wealthy women got manicures and pedicures. (I didn't visit a nail salon till I was 52.) Nobody had granite counter tops or en suite bathrooms. They didn't feel deprived, because no one else had them, either.

In the money survey, people said it's hard to save because they're spending all their extra income on things like home renovations and children. What they really mean is that yesterday's luxuries have become today's necessities. Much of that money goes toward what's called "competitive expenses" – not the flooded basement, but the new great room off the kitchen and the marble bathroom with the steam shower.

As for kids – well, they're more expensive too. It's hard to dress them in hand-me-downs if all the other kids have the latest backpacks. If the other kids are building schools in Africa to enhance their university applications, then your kids will probably feel cheated if they don't.

People spend far more on their kids than they have to. They squander fortunes buying houses in the right school district, or sending little Amy off to private school. After all, their children deserve the best chance they can give them. Yet there's plenty of evidence that the "right" school doesn't make a shred of difference to their life outcomes. I have a few friends who've chosen to live in small towns (where houses cost a third of what they do in Toronto) and send their kids to perfectly decent local schools. Guess what? Their kids do as well as the kids in Forest Hill. And they're much better acquainted with people who live like the majority of Canadians.

Then there are the people who are just plain foolish with their money. I know more than one high-achieving woman who decided she needed a luxury condo and a closet full of designer clothes and Louboutins to reward herself for how hard she worked. Now these women are nearing the end of their careers and they're strapped. Not fun.

I was lucky to marry a man as cheap as me. He's never cared about clothes or cars or toys for boys. We got married in our back yard and had a perfectly nice wedding with all our friends for less than what some people spend on the flowers. We even skipped the engagement ring, because we decided we'd rather pay down the mortgage. Maybe someone can explain to me why modern weddings cost more than a house downpayment, because I just don't get it.

Today, we're better off than we ever dreamed we'd be. Life wasn't always smooth. We've survived recessions, a divorce (his), mortgage rates of 18 per cent (I took in boarders), job changes (not always voluntary) and the roller coaster ride of freelance work. We've been incredibly lucky, and we try to be grateful for our good fortune every day. We still don't eat out much, though. We'd feel too guilty.

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