This post is part of a series, where we ask some of Canada’s top personal finance bloggers to weigh in on topics that matter to Canadians. Click here for the full list of our favourite personal finance bloggers in Canada, or check out our curated Twitter list to follow them on Twitter.
Over the past few months, they’ve told us what Millennials should be doing to improve their financial situation, the best (and worst) financial advice they ever received, and their financial predictions looking into the future.
This month we asked:
“What is the most underused or under-rated financial tool available to the average Canadian?”
Can I say two? Too late, I already started:
- Our bank statement data solves the ubiquitous “I make good money but I don’t know where it all goes” problem. Here’s a post I wrote about it.
- Morningstar’s fund reports. We need to get more familiar with what’s going on in our investment accounts and less intimidated to ask questions of our advisors. Poking around inside top ten holdings, relative performance, fees, and asset allocations will make those conversations much more interesting.
Sandi Martin, Spring Personal Finance
A simple Excel spreadsheet to track your expenses and plan future spending. Most people dismiss budgeting as a waste of time, but I’ve yet to meet one person who didn’t find value in tracking their expenses for 3-6 months.
Robb Engen, Boomer&Echo
As with the theme of saving money, I think that Canadians underestimate the power of tracking your expenses. We funnel most of our expenses through a credit card for the points and tracking ability, then pay off the balance monthly. We connect the credit card to an online app like mint.com to automatically sort our transactions into categories where we can set budgets.
The most under-used financial tool available to the average Canadian is a budget. It’s easier to complain that everything costs too much or it’s unaffordable and explains why they are in debt. This is not the case, spending habits are the case. If you aren’t earning enough money to balance your financial situation and then some you’ve got big problems.
Half joking – I’d say it is their calculator. Simply taking the time to understand things and crunch a few numbers goes a really long way to opening your eyes about how much things are really costing you and where you are missing opportunities to improve your finances. In the free report I offer called 5 Simple Tools To Help You Save Big Money Every Day, I talk about 5 more tools that can make a big difference to your bottom line.
Stephen Weyman, How to Save Money
From speaking with people of all ages, I really have to say in a totally unbiased way that it’s robo-advisors. The fact that people can easily build a diversified, low-cost investment portfolio on their own – that will save them tens of thousands in fees over their investing lifetime – is amazing, and it’s all too often I talk to someone who isn’t using one. Instead, they’re paid 2% to 3% for mutual funds that aren’t consistently outperforming the market.
Desirae Odjick, Half Banked
I think robo-advisors like ModernAdvisor are the most underused financial tool available to Canadians. Robo-advisors solve most of the roadblocks to investors who are used to having to choose between too expensive or too complicated. I believe as the message gets out there, this new way of investing will continue to grow in Canada.
Tom Drake, Canadian Finance Blog
I mentioned it before – the opportunity to make savings automatic. Consider savings like a bill payment, To You Inc.
Set up your savings (for an emergency fund, or investment purposes) automatically with your bank and never stop. If you get a raise or bonus from work some year, bank it. As you pay down your mortgage or pay off your car, bank it. You can increase your savings contributions for investment purposes as you get older and as debt obligations go down.
By saving a little bit, off the top, from every paycheque you’ll form a good financial habit (and start a retirement nest egg) that your future self will thank you dearly for.
Mark Seed, My Own Advisor
A plain compound interest calculator. I think if people understood the power of compound interest, they would be encouraged to save and invest more.
Barry Choi, Money We Have