Introduction
There’s only one thing that causes Canadians more stress than our winters. After all, they’re frigid, dark and unrelenting. Everyone has a traumatic winter experience to best any story a friend may share. But at the same time, our winters allow for a slew of enjoyable activities. You can skate, sled, drink hot chocolate by the fire or most importantly—as I’ve now learned—build a snowman.
The answer to the question likely on your mind is personal finance. It’s the only thing Canadians consistently find more stressful than winter months—and for many of the same reasons. Student loans, housing affordability and financial illiteracy bring feelings of being restricted, left out in the cold and helpless.
The Challenge
Financial products, like insurance, a mortgage or an investment account, are confusing. There are countless options to choose from and lines of fine print to read. In addition, Canadians continue to borrow more money than ever before and pay higher fees relative to other countries. Selecting the wrong product for your needs can add thousands in additional costs each year. Not taking advantage of certain products altogether can be even worse. You could miss out on hundreds of thousands in growth on your savings or place your family in financial hardship if something terrible were to happen.
While we face unique challenges in Canada, the fact remains that managing money is hard for everyone. As a species, we’ve only needed to budget our money for the future for a small portion of our existence. Many of the behaviours that served us well in the past make it difficult to take the steps required to be financially successful.
The Solution
While the cards seem to be stacked against us, similarly to our winters, this doesn’t have to be the case. Improving your financial literacy will allow you to take advantage of the right products and mindsets to better manage your money. This blog provides simple and actionable steps to help you do just that. The best part is that these steps are as rewarding and simple to understand as building a snowman after a fresh snowfall.
Origins of The Snowman’s Guide
The first idea for this blog originated in 2012 after a dinner with my younger brother and a close friend. I was impressed to learn my brother had set aside a handy amount of money from years of saving. However, as an older brother—and then finance student—concern arose as I learned his money was in a chequing account.
Immediately, I mentioned the need to invest for the future to protect his savings from inflation. I tried to explain that each day his money was worth less because things generally become more expensive over time.
In the end, I found success through a simple analogy. I explained that his money in a chequing account was like water in a bucket sitting in the sun. Even though you can’t see anything happening, the sun slowly evaporates the water until there’s nothing left. Money sitting in a chequing account without earning interest slowly becomes less useful to you. Gradually, the value diminishes until it’s effectively gone.
I realized two things at that moment. Fundamentals of personal finance are less widely known than I’d thought, and analogies can bridge the gap between what people know and what they want to learn.
Since that first idea in 2012, I’ve focused a great deal of my time to help Canadians save and invest their money. I’ve learned the theories and best practices through thousands of hours of study for school and industry exams. I’ve also learned practical approaches that Canadians follow through over 10,000 conversations with investors. Through combining theory and practice, this blog provides steps that work and explains why.
How to Use This Blog
This blog is broken into three sections to provide you with the foundation you need to be financially successful. In addition, it’s intended to serve as a reference point for the future. Not all topics may be relevant to your current situation, but by learning about them now, you’ll be able to use them later.
Part I outlines saving and investing.
Part II provides additional tools, like budgeting and account options.
Part III explains where to go next and what to consider along the way.
The analogy of building a snowman is used throughout the blog to provide a consistent framework, tying everything together. This will help you understand and recall these important ideas as they become relevant for your life. If you have questions or feedback as you progress through the material, please let me know at steven@snowmansguide.com.
This blog is a duplicate of the recently self-published book The Snowman’s Guide to Personal Finance available for purchase here.