According to recent surveys, North Americans are facing serious financial challenges.
– 35% of Canadians do not have any savings or investments.
– Only 27% of private sector workers have an employer- funded pension plan.
– The average savings in Registered Retirement Savings Plans (RRSP) is only $55,000.*
The U.S. picture is even gloomier.
– 33%, or more than 77 million, of Americans don’t pay their bills on time.
– 39% carry credit card debt from month to month.
– Only 59% of adults say they have savings.
– Worse, more than half now think it’s acceptable to default on their mortgage if they can’t afford to pay it.**
Most of us don’t wait to become a statistic to know that we’re in trouble. These problems are all around us. They happen to our own family and our friends’ families.
It’s ironic that we live in one of the wealthiest countries in the world, but we always have money problems. We can work hard all our lives but retire poor. We do so much to raise our kids just to see them finish college with a lot of debt. Debt becomes a way of life.
We don’t have much, and we don’t know much. Nobody teaches us how to manage our money in school. Financial issues are not often discussed, and financial products not always explained. Most people have trouble balancing their own checkbook and reading a financial statement. We use credit cards every day and don’t always understand all the hidden charges. We buy insurance policies and stick them in a file cabinet. We contribute to our 401k or RRSP and hope someone will take care of it. We all want to have a comfortable retirement, but few have a plan. We may be active spenders but passive savers.
It’s possible that we don’t know what we don’t know. Even though the financial industry is one of the largest industries in the world, and even though the financial industry is one of the largest industries in the world, and even though we are flooded with financial news, channels, and websites, financial literacy is as murky as ever.
There is a jungle of complex rules and regulations for the thousands of stocks, bonds, funds, savings plans, credit cards, and loans out there.
We need to change, and the task won’t be easy. But we need understanding first. The old days of passive dependence have to end. A new era of proactivism and financial freedom must begin.
For this book, we want to explain finance as how a friend would talk to another friend. We want to make it simple enough, using common language for common people. We don’t intend to get into a lot of detail but are more focused on the fundamentals of how money works. We try to use simple examples and common assumptions.
The best we can hope for is to get your attention and interest into financial matters and for you to obtain some basics of how money works. It’s the first step toward your financial future. Like many of us, once you enter the gate of financial knowledge, you’ll discover that it’s doable to understand, plan, and build a financial foundation for your family.
Remember: There is nobody more interested in your financial future than you are, definitely not the government or your employer. It’s your responsibility to learn the simple rules of how money works. Understanding how money works is part of taking care of your family. You can do it. You can control your future.