Episode #23: Why the financial advice you've been getting MIGHT be wrong (and where to find the RIGHT advice)

I want to tell you a story.  A little while ago, I was sitting in a coffee shop (this is back when we were allowed to sit in a coffee shop) and there was a group of young professionals behind me.  One of them was talking loudly about how to start investing.  His dad had just encouraged him to set up an investment account, and he was stoked about it, and trying to make sure his friends started doing the same.  He was telling them about this investment account called an RRSP, and that they had to open one up and start putting their savings into it.  If they put their retirement savings into the RRSP it would grow 11% a year, every year, until they were ready to retire and take out the savings.  

Now I’m going to hit pause on this story.  How many of you can pick out what’s incorrect about the financial advice he was giving his friends? 

He was sort of on the right track.  He was right in explaining to people that they should be using an RRSP to start saving for the future, but he was missing some key information.  What he was missing was that when you put money into an RRSP, you then have to invest that money.  Sure some RRSP’s offer a baseline return rate of 1-2%, but that doesn’t even keep up with inflation.  And this is something a lot of people get confused about. When you put money into an RRSP, you then have to invest it to really start earning with it. Simply putting money into an RRSP is not investing your money.  Second, he had taken what has historically been the rate of return for the last 30 years, around 11%, and misunderstood this as meaning that his money would continue to grow by 11% every year.  First off, while we do have to use the past to predict the future growth of the stock market, there’s nothing saying that we’re going to average an 11% rate of return again for the next 30 years.  Second, this is the average, and there’s been dips and spikes in the stock market over that 30 year period, it’s not consistently 11%, and this has to be taken into account when you’re doing the math.  

So, maybe he misunderstood when he was taught, maybe he just wasn’t taught clearly, maybe his dad was never fully clear on how an RRSP worked.  Either way, the reason why I’m telling you this story is to talk about the importance of becoming accountable for your own financial well being, as well as taking charge of your own financial learning.  We’re not taught this stuff in school, and nobody is born knowing how to file taxes, so it’s completely okay if you feel like you’re starting from square 1 when it comes to learning how to manage your personal finances properly.  That’s normal, everyone has to start learning somewhere, so in today’s episode of the How To Adult Show, I wanted to talk about how to make sure you’re learning from the right resources, and setting yourself up for success by becoming accountable for your own learning.  Even as an adult, it turns out, we’re never done learning. 

Again, none of us inherently know how to manage money.  It’s a skill that has to be taught, but that many of us aren’t taught, so don’t feel bad about not knowing much yet!  When you’re starting to learn though, it’s important that you’re getting information from the right sources. 

Seek out information from people who are successful at what they’re talking about.  

Just like you don’t want to take relationship advice from a friend who constantly blows up their relationships, you want to be careful about accepting financial advice from people who don’t actually have their act together financially.  This can be tricky when your friends, or especially your family are sharing financial information, and this is how a lot of people end up with some financial misconceptions that they learn from family.  Now I’m definitely not saying don’t talk about this stuff with your friends and family.  If anything I want to encourage conversations like this, and normalize talking about money with one another, because it’s important.  Rather, I just want to emphasize that you never just blindly accept information like this from a personal source, and that you take the time to fact check or research any financial lesson after you’re taught it, and make sure that you feel like it’s the right information for you.

Use all the information offered by financial professionals.

There are also so many people who are qualified in financial fields, and who want to teach you.  That’s their life’s work, they’ve made it their job, so take advantage of it, and learn from them.  Pick up books on financial management, go to seminars and take courses offered by finance pro’s, and find yourself a financial advisor to help organize the nitty gritty details of your personal finances.  There are lots of experts out there, and they want to share information with you.  They write books, they give lectures, they offer coaching and professional advice, take advantage of that.   

Use the internet to find free information, but make sure you fact check it across various sources.

There’s lots of great financial information available for free on the internet. That being said, if you turn to the internet, just remember that it can be a big and scary place.  Be aware that you will encounter some strange financial opinions out there as well as good information.  As a general rule of thumb, if the source sounds like a 2am informational for a Slapchop, maybe steer clear of that source.  Getting a diversity of information is also important.  So don’t pick just one finance educator and read all their books or attend all their webinars and just stop there.  Find other people to learn from, strive to read a variety of finance books, and expose yourself to lots of different theories and ways of thinking so that you can get a more well rounded view of everything, and decide for yourself what information is right for you.  

Keep sharing financial information with one another. 

When you feel like you’ve found good information, then you can absolutely go ahead and share that information and those resources with other people!  At the how to adult school, we’re in the process of building an entire resource library full of personal finance information and further resources for you to explore.  We’re carefully vetting each resource before it goes on there, and  I’m always looking for your input about other good sources and information that you’ve found!  If you have a financial resource that you loved, and that helped you immensely, please share it with me.  If the information seems sound, it’ll go up into the resource library section of the how to adult school website, and from there it will be available to help so many other people learn about managing their personal finances as well.  We’re all about helping one another out by sharing information here, so I would love your input.  Drop your favourite resources in the comments for this episode, or send me an email through the website with your favourite resources.

Linked Resources

Want to learn more about managing your finances like an adult?  Sign up for the free back to basics beginner finance course.  

Join The How To Adult School on Instagram

Follow The How To Adult School on Tiktok

NOTE: This page contains affiliate links that allow you to find the items mentioned in this episode and support the show at no cost to you. While this show may earn minimal sums when the viewer uses the links, the viewer is in NO WAY obligated to use these links. Thank you for your support!