Talk Money to Me: How to Save, Spend, and Feel Good About Your Money During COVID and Other Times of Financial Distress

Introduction

I’ve made a career out of talking about money because I want people to feel good about it, and you can’t feel good about something unless you understand it. Whether you were on top of your financial life or not quite there yet, COVID-19 threw a stick of dynamite into the world’s finances, not just yours. Nobody wanted to talk about money before the pandemic and for the first time, many Canadians have found themselves needing to have many uncomfortable conversations. Many had no other option but to call up their banks and ask for payment deferrals because they had lost their jobs or had depleted their rainy-day funds (if they had any). Money continues to be the leading cause of stress in our lives, but ignoring your financial situation will never make it better.

I’m here to help. Will you be brave enough to let me walk you through these chapters to reclaim ownership over your finances? I promise you, you can! With some work and the right tools, you can feel good about your money, no matter how much you have.

I’ll be the first to admit it. There have been years in my life where not only was I not confident about money, I made just about every mistake you can imagine. I’ve learned from my missteps and from thousands of people with whom I’ve worked over the last number of decades. I hope by sharing my insights through the composite characters in this book, I can help you avoid the painful lessons that I, some of my past clients, and readers have endured. And I assure you; you won’t find any finger-wagging or guilt trips about what you have or haven’t done.

I have another confession to make. For most of my adulthood, and even now, I still struggle with what I call a poor kid syndrome. When I was eight years old, my parents split up, and suddenly my siblings and I were being raised by a single mother on the poverty line. My mother is an incredibly generous and wise woman, but she was raising three kids on her own with zero spousal support. She had previously given up continuing her education and her career to stay at home for our family, so when my father left, my mother began working as a dishwasher and then a waitress at a pancake house a few blocks from home. That’s what she could get with her limited skill set and education at the time. Money became a ruling force in our house—it was clear when we had it and abundantly obvious when we didn’t. There was limited government assistance, and even when my mother did briefly accept aid, she felt stripped of her dignity and became trapped in a hellish catch-22 of either being stuck with the meagre support forever or giving it up before she could regain solid financial footing.

I saw firsthand that people make poor decisions when they don’t have access to all that they need to survive and thrive in the world. COVID put a magnifying glass on everyone’s financial situations. After decades of working as a personal finance educator, I see that people aren’t able to do their best work or pursue their passions when they’re too worried about the four-letter word that nobody wants to talk about: debt. Growing up, I remember watching my mother struggle, but I had little context or understanding. I overheard teary conversations between my mother and her girlfriends about how much she wanted off of government assistance, and yet she earned more money by not working at all than she did by working more than fifty hours a week between her waitressing and dishwashing jobs. She wanted her autonomy and freedom so desperately but felt trapped by the government aid.

While I’m keenly aware of how our system makes it difficult for people at the bottom rung to move up, I’m happy to say that it’s possible to escape poverty. It’s possible to find that financial freedom. I know because I escaped it, my mother escaped it, and you can too.

When I was in the financial industry, I advised many clients with varying levels of wealth over the years, and I saw that happiness and prosperity come at every point on the spectrum. In fact, several years ago I had two clients with very different definitions of prosperity, and it really made me rethink how I talk and feel about money. The first client was worth over $50 million and had no immediate family members to inherit any of it. When I met him, he was in his eighties, and he still managed his finances with the extreme frugality he learned while living through the Depression—he lived in constant fear of being on the verge of poverty, no matter how much wealth he accumulated. The second client, on the other hand, netted $1 million a year for ten years but spent lavishly. He loved entertaining, he had two Mercedes, and he had gone through two expensive divorces. By the time I met him, he was millions of dollars in debt, but you’d never guess it based on appearance alone. Both clients were using their money in ways that brought them joy, yet neither was using it to its full potential. They needed my guidance to help them find a balance between earning, saving, and spending to truly feel good about money.

After helping those clients and hundreds of others, I decided to sell my company and start educating people full-time. In the last fifteen years as a personal finance educator, the number one question I get asked is, How is everyone else making it? Well, I’m here to tell you that they probably aren’t making it. Before COVID, more than half of Canadians were just $200 away from being unable to pay their bills, and one in five couldn’t afford to live for a week if their primary source of income disappeared. Many Canadians clearly don’t feel good about money or their financial situation, and if you also feel this way, I want to let you know that it’s not all your fault.

You may have heard that incentives drive the market, but right now, I’d argue that very low interest rates are driving the market, and with low interest rates come high levels of debt. To add to that, housing prices have soared because borrowing money is relatively cheap and people have easy access to lines of credit. And with a line of credit, you can make interest-only payments and have that debt stay with you forever. It’s cheap money, why not indulge? And therein lies the problem: we’re encouraged to spend more and use borrowed money if we have to! It’s good for the economy; it’s good for politicians; it’s good for banks and their stockholders. Spoiler alert: it’s not good for you.

I can’t control how you spend your time, but I can talk about money (in the hopes of improving your understanding of financial concepts) all day, and throughout the book I’ll help you understand whom you can trust with your money. I understand why you might be afraid of choosing the wrong person to meet your financial needs, so I’ll show you how to create and find the right support when you need it. You’ll learn how to empower yourself to interview the financial professionals you’ll need along the way on your journey to financial wellness.

I strongly believe in the power of financial literacy, and I wouldn’t be writing this book if I didn’t think it would make a difference in someone’s life, but you have to want to make a change to experience success. Given the fact that you’ve made it this far into the introduction, I’d say you’re ready to learn, and by the end of the book, you’ll be ready to put your newfound financial literacy to use. I write this not as someone who has always made the right financial decisions but as someone who has learned from past mistakes. I now have a happy relationship with money, and I’d like to help you get there too.

In this book, I do my best to dispel some of the confusion around personal finances. And, if you’re like the millions of Canadians that got knocked down financially, I’m going to help you pick yourself back up. If you’re struggling during COVID or from mortgage deferrals, missing credit card payments, or drowning in new debt, skip ahead to chapters 10 and 11. Once you’ve read those, circle back to the beginning for the basics.

No matter where you’re at or why you’re coming to this book, know this: The pandemic is not your fault and you’re not alone if your financial situation has worsened. It’s not hopeless and you can get back on track. But it may bring you comfort to know that according to a recent survey:

82 percent of respondents experienced a loss of income due to COVID-19

Only 12 percent had three months’ savings before the pandemic hit

20 percent had to take a loan to cover their expenses due to COVID-19

32 percent expect to add more debt to their credit cards, and

63 percent expect to miss paying some bills during the crisis.¹

I know I’m not the first person to compare financial health to physical health, but hear me out, because I think it’s a worthwhile comparison. Throughout the book, I’ll recommend that you reach out to a professional in certain situations where advice tailored to your specific financial issues will greatly benefit you. I work with a nutritionist for this very reason because I have specific health issues and a demanding work schedule that require a tailored health regime. My nutritionist, Jocelyn, understands that results come from incremental, consistent changes that will create a healthier lifestyle—which is no different from how you’ll see results in your financial life. I can get more sleep, find fifteen minutes for my daily meditation, and make an effort to regularly work out or, at the very least, walk around the block, and I’ll know that I’ve made a difference in my health without drastically changing my routine. This is self-efficacy at its finest—these doable changes allow me to believe in my ability to achieve a goal—and I hope it’s an approach that makes your financial goals seem possible.

Just as Jocelyn would never ask me to try a new fad diet that requires severe restrictions or counting calories, I’m not going to ask you to create a budget. Asking you to account for every dollar you spend for the rest of your life sounds about as sustainable as asking me to count every calorie I ingest for the rest of my life—essentially, it sounds impossible and impractical. I’m more concerned about giving you the tools necessary to create long-term change. So I promise not to tell you to make a budget. Instead, I’ll ask you to put in some work, make better choices, and create awareness, but it’ll never be about making sacrifices. You need to have fun with your money, so I’ll teach you exercises in awareness and behavioural change that will empower you to save and spend responsibly.

You’ll come to learn that I am a little odd as you read the book, so there’s no sense in hiding it from you now. One (among several) of my oddities is that I have thought about the following two quotations every day of my life for the past fourteen years:

The definition of insanity is doing the same thing over and over again and expecting a different result.

—ATTRIBUTED TO ALBERT EINSTEIN

This first quote speaks to me because it addresses two common human tendencies: stubbornness and a hesitancy toward change based on the possibility of failure. The human brain has evolved to prefer comfort to discomfort, so it’s only natural that we avoid stressful situations and challenging environments in order to stay within our comfort zones. It’s tempting and easy to keep doing the same thing over and over again, and I find that people tend to avoid the possibility of failure (which nobody likes) and maintain their comfort levels (which our brains love) at all costs. But over the years, while thinking about this quote, I’ve realized that we also open ourselves up to criticism (which people hate) when we do something different in the hopes of seeing a new result (which is scary in itself). It’s normal to crave social acceptance, so it can be unnerving to go against expectations by saving money, dressing for the job you want even if you’re unemployed, asking for that raise, or buying flowers for yourself. After years of thinking about this first quote, I am here to tell you that I believe in you: embrace change as you work toward creating a better financial life for yourself.

We cannot solve problems with the same level of thinking that created them.

—ATTRIBUTED TO ALBERT EINSTEIN

This second quotation is a kind of solution to the first: we need an outside force to show us the solution to our problems. This is where I come in! I’m so excited to provide you with insight and guidance to help you think differently about money, celebrate what you’re doing right, and recognize what’s holding you back from change.

You might be suffering from a huge loss, a business going bankrupt, the fallout of being a victim of fraud, or maybe you’re simply spending your money too quickly. With the right attitude, whatever you’re going through can serve as a catalyst for building financial resiliency. As you read this book and start working on rebuilding financial stability, imagine you’re earning points on your financial loyalty card—you know those customer loyalty cards you have for your favourite smoothie place or coffee shop? It’s like that, but instead of spending money to get points, you’re saving money! If I could be there to give you a gold star every time you learned from my advice, I would, but since I can’t be there, every time you perform a task that contributes to your financial well-being, imagine checking off a box on your card.

I truly just want Canadians to be happy, especially when it comes to their financial well-being, and I don’t mean that you need a lot of money to be happy. While research shows that there is indeed a correlation between happiness and income, the increase in happiness levels out around $75,000 a year. So while money might not buy you happiness, for every extra $10,000 you earn each year, your level of happiness can grow until you reach a $75,000 annual income. That being said, research has also shown that if you win the lottery, six months after winning, your level of happiness will return to your pre-jackpot baseline. The relationship between money and happiness is complex, but it is my belief that if you gather the required knowledge and skills to manage whatever income you have, you’ll be able to feel good about money.

The journey won’t always be easy, but you owe it to yourself to live your life with a firm financial foundation. With the right tools, you can pass on a solid financial foundation (in both wealth and wisdom) to your family and friends. I assure you that success in money matters is sustainable and can lead to a happier life. If you work to empower yourself with the necessary strategies, and open your eyes to the tricks and tactics available to you, you’ll be richer in knowledge and wealth by the end of this book.

Here’s to your new and continued prosperity—let’s talk about money!

1

Cash or Credit?

Lately, I’ve been noticing that stores are starting to accept only credit card payments, which always makes me stop in my tracks. I remember when stores accepted only cash, but that already feels antiquated. I don’t think either extreme is in anyone’s best interest, but it does raise the question of how do you determine when to use cash and when to use a card. I hope you’re not paying for everything in cash, but as I will advise throughout this book, it’s best to find the right balance.

Ian has always been good at saving money. He had a part-time job throughout undergrad and worked full-time during the summers to save enough for tuition. He was always frugal, and as far as he knows, he did everything right with his money. His hard work meant he didn’t need to take out any student loans. Some of his friends already had credit cards, but he was not tempted by aggressive credit offers from banks—instead, Ian had a second card from his mom’s account that he could use in case of emergencies. Otherwise, Ian only used cash and debit cards. He bought something only if he could afford it.

Now, Ian lives with his friends but wants to get an apartment of his own with the hope that Crystal, his girlfriend, will move in with him. Unfortunately, he just found out that a landlord will be looking for a high credit score, and he doesn’t even have a credit file. Everyone keeps asking for a credit check, but he has no credit to check!

Crystal keeps hitting roadblocks on her own foray into adulthood as well. She doesn’t have enough experience yet to land her dream job, so she’s thinking of starting her own business as a freelancer. She needs some starting capital, but the bank has refused her a loan because she has no credit. Her cellphone is still on her parents’ plan, and she, like Ian, has never had her own credit card. She’ll need a car for her business, but now she’s wondering if she’ll even be approved for a car loan without this seemingly requisite credit.

WHERE THEY WENT WRONG

Growing up, Ian always thought that cash was king, but he is rapidly learning that is not always the case. While it still makes sense to use cash at points in your life, not having any established credit or access to a credit card will quickly limit what is available to you as you navigate toward independence. There will be several times in your life when it might not be possible to save up for what you want (or even need)—like a new house or a car, for example. There are also some things that cash simply can’t buy anymore.

While Ian and Crystal are doing all the right things to avoid accumulating debt, they need to think about their future. Obtaining credit and building a great credit score will help them now and in the future. Credit cards don’t have to create unnecessary debt, and the reality is that we are moving rapidly into a cashless society. Without establishing a strong credit history, it will be difficult to get approval for major purchases or rentals. Plus, there are several advantages to using plastic, especially if you pay your bills off fully and on time.

Misstep #1: Heading Out into the World without (Good) Credit

Good credit will afford you more than just being able to buy a snack on a plane throughout your life. By not having any established credit, Ian and Crystal can’t gain any independence. Their credit will be checked (and required to be good) time and time again—when Ian tries to rent his own apartment, when Crystal gets her own cell phone, and when they apply for their car and home insurance, for example. A poor credit score will impede both big and small goals. Thankfully, having no credit is not as hard to correct as having a low score. If you, like Ian and Crystal, are just starting to build a life for yourself, it’s important to understand the importance credit plays in Canada. You need to learn how to play the game effectively for you and your family’s future.

Misstep #2: Not Getting Your Own Credit Card

Ian had access to a credit card that looks like it is uniquely his, which he mistakenly thought was helping him build credit. However, it was in fact a supplementary card for his mom’s account—she can get as many supplementary cards as she’d like, which is often the case for spouses, children, or personal assistants. A supplementary credit card