Last week in the Globe and Mail there was a great article on the old rules and new norms for personal finance. The old go to school, get a good education, get a job, get married, have kids and buy a house as quickly as possible is not cutting it in today’s society. I’m starting to see it now that I’m into my 30’s and hearing about people’s finances and where they are in life and how it’s not living up to what they expected.
The article talks about a few different rules that have been passed down by the generation before us. The older generation that used to think the following:
1. Finish school, get a job, get married, have children, and buy a house as quickly as possible. Delay saving for retirement until your 50s.
2. Buy the biggest house you can afford. Have a big family and pay of your mortgage fast.
3. Find a steady job with a good pension and don’t worry about investing for retirement. Stay there for 35 years and retire with a guaranteed monthly income.
I love all of these because I see so many people doing exactly that. While some people are starting to save earlier, most are spending it and their credit like they are drunken sailors. The second one is so especially true because it also ties in with status and buying that huge house, although nobody is paying it off fast. They get the largest mortgage they can with the lowest payments, only to find themselves in deep doo doo when they renew and the interest rates have gone up. Say bye bye house. Lastly the third one, there is no such thing as a steady job, job security is dead. I’ve seen it first hand where I work and if anyone actually pays attention to the news or where they work they’d understand that as well. Gone are the days where people work 20-30-40 years at one job.
So what are the new rules according to this news article?
1. Recognize that life unfolds differently now. If you have no home or family and spend your way through your 20s, saving for retirement will take longer.
2. Consider whether – and when – home ownership makes financial sense. Think about buying a smaller house or renting until you have a big down-payment.
3. Recognize that you are in the driver’s seat. If you don’t have a job with a secure pension, you have to make sure you plan and save for your retirement.
A lot of these make simple sense yet sometimes people cannot wrap their heads around it or they are counselling with their parents on the old style rules which is only causing people to fail in life. Now this doesn’t apply to everyone however if you’ve been keeping up with the news you’ll see that debt to income ratio is at an all time high of 153%. One positive note is credit debt is finally slowing down, but its taken a very long time for that to happen.
The key to this story is right here “recognize you are in the driver’s seat”. That is why so many people are looking for other opportunities outside of their full time job. That is why so many people are looking at an opportunity like Amway or other Network Marketing Opportunities. That’s why when I talk to some people they are already involved in something else part time outside of their job be it another job, Network Marketing, Home Business, or starting their own traditional business. Amway North America and Network Marketing is growing and that trend isn’t stopping despite what you may read elsewhere. It’s growing so much they are actually teaching it in College now.
So get in the drivers seat and take control of your finances, stop relying on the government or your job to take care of you because they won’t.
