You had your best-laid plans and then COVID-19 came along and hammered the entire economy. But you’ve got this – if you have the right information. Join Rob Carrick and Roma Luciw on Stress Test, a podcast guiding you through one of the biggest challenges your finances will ever face.
Rob: Drink lots of water. Get enough sleep. Floss your teeth. We know we should do these things.
Roma: But not everyone does. Even though it doesn’t take a whole lot of effort. The same is true when it comes to good money habits.
Rob: Welcome to Stress Test, a personal finance podcast for millennials and Gen Z. I’m Rob Carrick, a personal finance columnist at the Globe and Mail.
Roma: And I’m Roma Luciw, personal finance editor at the Globe. Somehow, we’re at the end of another season. To cap things off, we wanted to leave you with a checklist. Think of it as your 2024 personal finance self-care routine.
Rob: It’s like the financial equivalent of flossing. There are some basic things we can all do to set ourselves up for less money Stress. Roma, this episode will sound a little different than our usual ones. Let’s go over how we set this one up.
Roma: We came up with a list of personal finance questions, you know, sort of a back-to-the-basics thing. Then we went out and asked a group of people in their twenties and thirties how they felt about them and what their responses were to these questions.
Rob: At the end of each one of these, we’re going to offer some takeaways for you to help you get your New Year set up right for personal finance. Think of it as a New Year’s resolution in personal finance.
Roma: We know that looking after your money is hard. We know there are a million other things going on. We know some of you might be feeling down. So, we really wanted to give you five pretty simple things that you could do to make things easier and better.
Rob: First up, we ask our guests, Do you know how much money you spend on eating out and take-out food? That’s after the break.
Roma: We all know that eating out and getting takeout is more expensive than cooking. So we asked our listeners. How much money have you spent on restaurants in 2023?
Guest 1: In the last year? Woof. I can tell you this: it’s probably too much.
Guest 2: Oh, yeah. I would probably have an idea of how much I’ve spent have been. You know, it’s probably about, I would say, $ 12,000 to $ 15,000.
Guest 2: Oh, my god. I guess I could come through my receipts. Thousands of dollars, I am sure.
Guest 1: And I know it’s probably my largest expense just because, you know, I live downtown Toronto, and I love eating out. I love the city’s food scene. So it’s pretty much where outside of rent and utilities goes. That’s probably where my budget goes.
Guest 3: I would say I have “budget light.” There’s an Excel spreadsheet that I go into maybe once every few months. And I’m not hard on myself, if I go over that for fun.
Guest 4: How much money have I spent on eating out and takeout? I honestly don’t know. It’s way more than I should. And, you know, I think it’s because my husband is the one who tracks these things. And I just prefer not to know because we should be saving our money, but eating out, we’re not tracking that very closely.
Guest 5: And I don’t want to know the answer to how much cellphone time, food, eating out, takeout, and delivery.
Guest 6: In the past, when it came to eating out and getting takeout, I did not budget for it. I would do it if I wanted to. And it wasn’t essentially in my disposable funds, things like that. I definitely budget for it now, knowing how expensive it is to eat out, and even just, you know, one dinner a month can still add up. And so I definitely budget for it. Now.
Guest 7: I have no sense as to how much money I’ve spent in the past year on all those things. No idea. To be honest, I don’t really budget for eating out or takeout for restaurants.
Guest 8: I think my relationship with considering spending money at restaurants is very much like, I can afford to do this. And it’s like trying not to do this as much as possible. My philosophy with takeout and Uber Eats and stuff like that is, like, there was a time in the pandemic when I felt like I was really entitling myself to have treats. But now I’m very much of the mindset that that’s reserved or if you’re broken, hungover, exhausted, or had a big day. Like the idea of doing anything other than ordering food is painful to you. Like that’s when it’s allowed. I would love to just kind of live my life in a way that I don’t have to overthink it, and it’s within my means.
Roma: It’s easy to let your spending get away from you when you’re ordering in food two or three times a week when you’re getting coffee every day. I mean, everybody knows how much they’ve set aside for the rent for their mortgage payment if they’re saving for a holiday. But it’s not as easy to keep track of things like food because it goes out in the little bits and it goes out all the time.
Rob: We’re not going to tell you to stop eating at restaurants because that’s one of the joys in life. What we urge you to do is to keep closer track of how much you’re spending and make sure it’s within your affordability.
Roma: Here’s your first resolution: start tracking your restaurant spending. When you see the total, you might decide you want to cut back, but at the very least, be more strategic about where you eat in order from. These days, you can get exciting, delicious food at places that offer it at reasonable prices.
Rob: Next question. You’re young, and you’re probably going to live for a very long time. But what would happen if you or your partner died? We want to know. Do you have a will?
Guest 3: I do not have a will because I have never thought about it. I suppose if I had any worth, like if I. Right now, I’m sort of operating in debt. I did look into this, and my debt goes with me. So once I have something to leave, I imagine I’ll make a will.
Guest 7: Well, I don’t have kids yet, so I didn’t think it was necessary at all. I will say now that I have reached the age of 30, that I started to think about getting a well, but maybe that’s something I’ll do in my 30th year.
Guest 3: I do not have a will, and I need to get a will because I have a child now, and we’ve been talking about doing it for ages, and we just it’s one of those things that we haven’t got around to it, but I know we need to do it.
Guest 7: I’ve never thought of getting will.
Guest 1: I guess in terms of a will, I don’t think I have any assets to meet anybody, which might change next year when I move into my condo. But as of now, no.
Guest 3: I have always thought it was something that you would do, kind of like later in life.
Guest 2: Oh, my God. I’ve never even thought about it. Now I’m nervous. Should I?
Guest 6: I do not have a will. I’ve Looked into it because just thinking about as a young adult having more assets and having a pension and things that I’m paying towards and items that I currently own. I definitely should. But it hasn’t been something that I’ve thought about because it hasn’t been something that I’ve needed to think about.
Roma [00:06:50] So, Rob, one thing that strikes me is that no one here has a will, and they all mentioned, well, do I need this if I don’t have kids? So what’s the answer to that? Do you only need a will when you have a kid?
Rob: Well, if you have a partner who depends on you for some amount of income to run your household, and if you have a lot of assets like a big TFSA, Yeah. You need a will. You need to explain how you want your assets to be dispersed after you pass away. And that’s what a will does.
Roma: I mean, it seems to me if you have any specific desires or ideas about where you want your stuff to go, and it’s not just kids, it can be, as you mentioned, a home, it can be money, it can be your pet. I mean, you have to make provisions for where the things that you care about go. And we get it. No one wants to think about dying, but really, I think it’s best to just think of this as a planning step. This is something that will relieve stress.
Rob: Resolution 2: get a will if you have any dependents or assets you would leave behind. You can do this online now for a couple of hundred bucks. Don’t forget to include an updated list of passwords so your loved ones have access to your digital assets.
Roma: Question three is about the first-time home savings account. The federal government introduced these accounts in April. They let first-time homebuyers save up to $40,000 tax-free to use to buy a home. So we asked, Do you have a first home savings account?
Guest 3: Yeah, I don’t have a first-time homebuyer savings account because I think, just realistically, I’m so far away from being able to afford a home. I’m looking at renting for the next, like, at least five or six years. And again, operating in the red and so on. So it’s sort of just about moving debts around, and I haven’t gotten around to it.
Guest 7: Yeah, I have one. I have a first health savings account with Wealthsimple.
Guest 8: I do not have a first-time homebuyer savings account. I have inquired about one but have not gone through and actually started one yet.
Guest 6: I’m aware of a first homebuyer’s savings account, but I have a tax-free savings account. I would not know the difference, truthfully. I honestly just. I went to the bank, and I picked the savings account that I thought was best for me at the time. And that was honestly the one that they offered to me because they knew that I wasn’t in the market for buying my own home, at least by myself. And so I wouldn’t know what to say if they asked me the difference between those two.
Roma: So, this is a fairly new product. If you haven’t heard of one or you don’t know how they work, don’t stress out. Rob, can you give us a lowdown on how these work?
Rob: First-home savings accounts are kind of a no-brainer for young adults who want to own a house someday. You can put in $8,000 a year to a maximum of $40,000. You get a tax deduction for the money you contribute, like an RRSP or a TFSA. The money inside the FHSA compounds is free, and you can withdraw it tax-free. And if you never buy a house, it just goes into your RRSP. It is a pretty great little savings mechanism. It’s not going to get you all the way to a down payment, but it’s a good head start. And don’t forget that two partners buying a house together can each use their own HSA.
Roma: So, resolution three, if you plan to buy a home, even if it’s a long shot, get an FHSA. There are no drawbacks. After the break, we’ll talk about just how much you’re spending on your credit card.
Rob: One-click here, and you’ve agreed to pay a couple of bucks a month to store your photos in the cloud. One more click, and you subscribe to a third streaming service. But did you remember to cancel it after you watched that one show you really needed to see? We asked our guests, How often do you read your credit card statement line by line?
Guest 6: Truthfully, I don’t really go through my credit card statement. I know what the balance is, and that’s what I look for. Or if I notice that something doesn’t line up, I’ll check it. But I don’t typically do that.
Guest 7: I mean, it must have been like a while ago because I don’t think I’ve actually ever really gone through my credit card statement line by line. Maybe just brief check-ups on, like, recent transactions.
Guest 6: I opened my credit card statement probably once a week. You know, there’s an app, and I am on there.
Guest 1: I think I break down my credit card statement when I feel like the number looks high. If I look at the number when the balance comes out, it feels lower to me. I feel like I don’t spend too much time thinking about it, but when it’s high, I need to understand kind of what I’ve done.
Guest 4: I open my credit card statement maybe every other day, which I feel is probably more than some people. I’m a bit compulsive about that. Yeah. And I also just have this thing about credit. I just like paying off my credit card. So I do it a couple of times a week.
Guest 1: I usually look at my credit card statement whenever it comes due at the end of every month. And yeah, that’s it. It’s usually just a once-a-month type look at each credit card statement that I have.
Guest 4: I would say I open and read my credit card statement, Max, once every three months. Sometimes, I hear about people getting scammed, and I wonder if I’m being scammed. And so if I see that it’s maybe more than I can reasonably figure out in my head, I’ll look and think, Oh, yeah, I know I did spend that money, but I have to sort of have the thought that someone stole my identity. I spent my money.
Rob: Roma, how often do you read your credit card statement line by line?
Roma: My husband and I have a credit card that we share to get points, and so we go through it every month. And that’s in part because we are not clear on where some of the charges came from. We’re not familiar with them. Did you buy this? How much was this? What’s that? So, it serves as a natural time for us to sort of update and check-in. It also helps us basically understand how much we’re spending each month. What about you? How often do you look?
Rob: Maybe I’m a little hyper-vigilant, but I look a couple of times a week. I like to know where we’re spending and where the money is going to come from. And are we getting out, too, in front of our savings with our spending, and constant monitoring helps me keep it all in balance? And every so often, a charge comes up, and I think, what is that? And I’ll ask my wife, and she may know. And if she doesn’t, I don’t think on my credit card I’ve ever had a fraudulent charge, but I certainly have on my debit card. So I caught that by just doing a careful reading. So I think the reason to do it is to keep track of your spending and also to look for fraud.
Roma: You know, we’re in the thick of Christmas shopping now. So, another reason I’m checking regularly is to make sure that my refunds go through some returning stuff that doesn’t fit. And so that’s another big deal.
Rob: Resolution four: read your credit card bill line by line. Do this every month. And if you want to start the year off with a quick win for your bank account, cancel at least one subscription that you don’t often use.
Roma: Speaking of credit, we’re at our final question. Do you know what your credit score is?
Guest 2: No, I do not know what my credit score is. I’ve never really had a reason to look. No one’s ever asked me for my credit score. I actually don’t even know, you know, how it’s defined or what it means. But I pay for everything on time.
Guest 5: I don’t know what my credit score is. I got a credit assessment for my apartment three years ago. But I forgot the number. I am ultimately comfortable not knowing what it is.
Guest 6: I do know what my credit score is. That’s one thing that I actually actively checked, especially when I was looking for apartments. They asked for my credit score, and so once I was done with university, that’s something that I’ve kept an eye on.
Guest 3: No, I have no idea what my credit score is. I looked at this; Scotiabank got a feature where they allowed you to see it quite easily, like two years ago. I think that was the last time I looked at it, and it was in the middle.
Guest 1: So I know there are two majors, I guess, credit score companies and Equifax. And there’s another one that came to my mind. I usually only check my credit score when I feel like there’s a need to, like applying for a mortgage or trying to qualify for a loan or he like or what have you, something that that kind of requires. It’s not something I really stress about.
Guest 7: So, my credit score, I believe, is 785, if I’m not mistaken. I found out using the RBC Credit credit score tracker that they have online at the moment; I’m not really aware, but I’m sure it’s probably not as good as it used to be.
Guest 4: I don’t know what my credit score is. I know it’s good. I can’t remember the last time it was checked, but I’m not worried about it. But I haven’t checked lately.
Rob: Credit scores are more important than they ever have been because everybody’s looking at your credit score. Your prospective employer could be looking at it. Some of your insurance companies could be looking at it. Your landlord could be looking at it. Your mortgage lender could be looking at it. Your car dealer could be looking at it. It has become a vital piece of your identity in the personal finance world.
Roma: I mean, we get asked all the time about how to game, how to make sure that your credit score is, you know, how do I get the best mark I can? Having a good credit score is actually quite easy. Pay what you owe on time. That’s it. That’s all you really need to do. But the reason that you need to check it is you need to find out if there are any mistakes on there. And that and that can happen. There can be mistakes that are made. So, checking in is worthwhile. Rob, where can you go to find your credit score?
Rob: It’s really easy now. A lot of banks have a link on their websites for clients where you can just click through and look at your credit score. And sometimes, you can even get more or more broader information that’s in your credit file. And the two credit reporting agencies, TransUnion and Equifax, make them available as well. It used to be super difficult to use to have to request something in the mail, if you can believe it, to get your credit score. Now, I think you could have it in 5 minutes if you really put your mind to it.
Roma: Your resolution: know your credit score. The worst time to find out you have bad credit is when a lender checks it for you, and in terms of keeping your credit score healthy, pay what you owe on time each month.
Rob: No one has perfect personal finance habits. So, if you’re feeling bad after listening to this episode, don’t.
Roma: What we wanted to do with this episode is empower you with specific simple steps you can take to feel more confident about managing your money.
Rob: So, if you make New Year’s resolutions, and even if you don’t, here’s a checklist to improve your personal finance hygiene in 2024. One: Be strategic about your food spending. Two: Get a will. Three: if you want to buy a first home, even if it’s years in the future, open a first home savings account. Four: Read your credit card bills line by line every month. Five: Know your credit score.
Roma: Thank you for listening to season eight of Stress Test. Our show was produced by Kyle Fulton.
Kyle: Yeah. So, I actually know exactly how much I spent on takeout in 2023. I’m a bit too embarrassed to say, but the results were sobering.
Roma: Anna Stafford.
Anna: I do not have a first home savings account. I know I probably should, but I think it’s just some personal admin that I have been procrastinating.
Roma: And Emily Jackson.
Emily: Okay, so I don’t have a will. And that is really horrifying and embarrassing because, in the past year, I had my second kid and bought a house. So, yeah, that’s got to be a New Year’s resolution.
Roma: Our executive producer is Alisha Sawhney.
Alisha: I didn’t check my credit card statement for about three months over the summer, and I was charged these really strange gym membership fees from some gym in Florida. I have no idea. And I was charged a thousand bucks. And now, after that, I have really learned my lesson. And you bet I look at that credit card statement line by line every month.
Roma: Thank you to all our guests for answering our rapid-fire questions.
Rob: You can find Stress Test wherever you listen to podcasts. If you like this episode, please give us a five-star rating and share it with your friends. Make sure you follow our podcast so you’ll know when we’re back with our next season.
Roma: Until then, find us at the Globe and Mail dot com. Happy New Year, and thanks for listening.
