Your Money

In other words, you need to know what your net worth is!

Have you ever taken a family trip where not long after getting in the car the kids started crying, “Are we there yet?” or “How much longer?” or “I’m bored”? I think we all have. Yet on the way home the trip seemed a lot faster and yet it was the same distance. Isn’t it weird how perception makes a huge difference to the overall picture? 

Chuck, you are starting to sound like you are heading towards budgeting. If that is what it takes, then I would suggest that you create a budget. What I am getting at is many people really don’t have a handle on what they spend. The key here is the age-old axiom that the way to financial success is to spend less than you make. Do you really know how much money you spend a month?

Your emergency fund is not a maybe or a “someday isle.”

The year 2020 has shown us the absolute necessity of an emergency fund. We cannot predict every challenge that will assail us. Planning is king. Whether we lose our job, get laid off, or get hit with an unexpected expense (car problems, need a new computer, fix a roof or washing machine, our family pet gets sick, or, worse, you get sick), we need to have something to fall back on. 

Before COVID-19, the personal debt figures were staggering, so are they now escalating exponentially? That is what most people think, but the opposite is true. What traditionally has been horrible has now improved slightly. According to the CMHC (Canada mortgage and housing corporation), the personal debt-to-income ratio in Canada has gone from 175% to 158%. Mortgage debt has gone from 115% to 105%.

But that still means for every $1 earning, we are still spending $1.58. Anyone can see that this is a recipe for disaster, as a day of reckoning will one day appear.

Our American neighbours have a debt-to-income ratio of 90%, meaning they spend only 90₵ for every $1 they earn. At one time, they were much higher than us.

So, what are we spending our money on?

Are you excited to go to work every day?

Do you have a job to go to?

The year 2020 has been a tough. In fact, the last few years have not been great for many. Changes in workload, automation, globalization, and go-nowhere jobs have been devastating.