Written For Younger Investors, By Younger Investors
Welcome to our first Just the Facts newsletter for 2022! For new readers, the purpose of this newsletter is to provide useful tips and insights to demystify personal finance and investing.
To kick things off though, we’d love to hear from you! What topics would you like to see covered? Send us an email:firstname.lastname@example.org
Let’s dive in!
“Today you are you, that is truer than true. There is no one alive who is You-er than You.” – Dr. Seuss
As discussed in our last edition, personal finance is more personal than finance. There are no “one size fits all” solutions and really the best place to start is defining your life goals and philosophy is at a very high level. Below are some questions to get you thinking or to help start the conversation with your significant other. It’s critical you get into the right headspace for this exercise and these conversations should be judgement-free. Try scheduling this as something to think/chat about over some after work drinks or a morning coffee on a day off.
Start High Level
- What do you want your life to look like?
- If you find this one is a bit too broad, try “if you were much older and looking back on everything you’ve accomplished in your life, what would make you the proudest?”
- How would you describe your relationship with money?
- Do you have any strong positive/negative experiences?
- Do you have any savings/investments?
- How long do your paycheques last?
- Where do you want to live?
- What are your hobbies? How do you relax?
- If you came into an extra $10/$100/$1,000/$10,000 how would you spend it?
- How are things on the career front?
- What do you think things will like in 1 year? What about 5 years? 10?
This is a great way to narrow your focus, get a better understanding of your core values and to take the temperature on your relationship with money. Even if you just identify what you DON’T want, this is still very helpful!
Now Work Bottom-Up
Next comes grounding these goals, dreams and ambitions into smaller, day-to-day actions. You’ll need to build a finance tracker but rather than build it from scratch, take advantage of one of many free templates you can find in Excel or online. It might seem like a lot, but try not to get too overwhelmed! Sitting down and seeing how you spent your money last month is a great exercise to understand how things currently stand. If you’ve never done this before it’s going to be uncomfortable, but remember this first-pass is judgement free! This is simply taking a look at how money was spent and is merely a snapshot in time, not a life sentence. Putting down your spending from the last month into a spreadsheet gives you valuable insight into what you’re actually doing with your money.
- Does your spending align with your goals that you described above?
- How do you feel seeing it laid out?
- Are there any positive surprises or obvious areas for some improvement?
Even if it’s as simple as a 2 column spreadsheet: Money In vs. Money Out, the single most important part of this exercise is that you stick with it month after month!!! If you stop reading here, honestly that’s fine, but putting a system into place and the importance of making this a weekly/monthly routine cannot be understated. A massive factor in investing is time, and when you’re young you have plenty of that on your side. Investing even a little while your young can make a very significant difference in helping you to achieve your future plans.
The power of compounding, how to go about investing and things to consider are some great topics to cover in future posts, but for now give yourself a huge pat on the back for taking a massive first step in your journey towards financial success!
Just The Facts Library
Past editions can be found here. Our December edition, New Year, New You, was all about setting up systems to help you achieve your financial goals this year. How have those been going by the way? If your answer is some version of “not as well as I’d hoped”, not to worry. This 4 minute video How to Get Back on Track After Slipping Up (Habits, Diet, etc.) has some great insight on ways to go about making that happen.
- Awesome Video: What Every Young Investor Needs to Know
- This is a US video so substitute 401K with Registered Retirement Savings Plan (RRSP) and Roth IRA with Tax Free Savings Account (TFSA).
- This can easily be a topic for a future Just The Facts, but for now here’s a Quick Overview.
- What Should Young Investors Read? - Irrelevant Investor
- If You Want to Get Closer to Your Partner, Start Talking About Money - NPR