A bit less political than our past and upcoming episodes, but a few key tax dates are quickly approaching. Brush up your knowledge to maximize your return or to ensure you receive your 2020 social assistance.
This week we chatted about some common money myths and why talking about money is taboo. Talking to others about your money can make you feel vulnerable and judged. We think that the short term awkwardness is worth the potential long term gains in evening out the gender pay gap and investment and saving differences. Even just having a sounding board of friends to bounce spending, investing, and saving ideas off of is invaluable. You could even chat about these common myths, if they’re relevant to you, and if you were guilty of buying into any of them.
Myth 1 busted: You need to be rich to start investing and building wealth. There are so many platforms that allow you to invest with very little and at a variety of risk levels. Most savings accounts won’t pay you enough to beat inflation over the decades that you save. Tara likes to say that savings accounts are for what you plan to spend in the next year. Let’s stop letting inflation eat away at our savings and make the most of every dollar that you can save.
Myth 2 busted: Repay debt and stop saving. We chat about the pitfalls of this strategy and the importance of building up a safety net even if you’re knee-deep in consumer debt. Going 100% to debt repayment doesn’t allow for an emergency fund or for lifestyle spending. If an emergency does pop up or emotional spending comes into play, the credit that was just paid down can creep back up again. Going into debt for some purchases like cars, houses, even everyday spending has become pretty normalized, until you mention that you’re struggling to pay it back. Paying down debt or admitting that you really couldn’t afford the repayment plan can be a pretty shameful experience. Finding a balance between debt repayment, lifestyle spending, and future savings gets us on the right track for the debt we currently have, enjoying life now and planning for the future.
Myth 3 busted: Renting is a waste of money. Even though we are both homeowners, there is a real case for renting long term. Sharing our personal experiences, I think we both would have made different decisions if we lived elsewhere with a wider rental market. Renting can be worth it just looking at the return on equity and cost of ownership but is more about what is the best choice for your lifestyle and where you live and work.
Myth 4 busted: Earning more money will leave them with less overall. We’re in Canada and have marginal tax rates both provincially and federally. That means when you earn enough to get into the next tax bracket, it’s only the dollars in the next tax bracket that is taxed at that rate. We talked about the emotions behind this myth and we think it comes down to just feeling like you can’t get ahead. With an ever-increasing income disparity between the ultra-wealthy and the very poor as well as the erosion of the middle class, this myth might have more to do with outdated tax brackets than it does with the marginal system as a whole. The bottom line is if you’re earning more money you will still have more net income after than what you did when you were earning less.
Pink tax rebate:
Chat with friends and family about money this week. Let us know how it goes! What kinds of things came up and how did you feel? Use #FemmeFinances to share your story!