Jan 142016

Financial Literacy Around the World

Only 1/3rd of the world’s adult population is financially literate according to a report by S&P and the World Bank. The research looked at the response from 150,000 people from 140 different countries in 2014. Subjects were asked to answer a series of questions that measure fundamental personal finance concepts. There were 4 questions in total. The last question was split into two parts. Only one part needed to be answered correctly in order to get a passing mark for that question.

A person is considered financially literate when he or she correctly answered at least 3 out of the 4 financial questions. Based on this definition, the study determined that 33% of adults worldwide are financially literate.

68% of Canadians are Financially Literate

The Scandivania countries topped the rankings in a three-way tie. Canada and Israel tied for 4th place. The United States may be the world’s richest country, but it came in at 14th place, which is still in the top 10% of all the countries that participated. 🙂


The report notes that most people in major advanced economies are financially literate. But in contrast, the major emerging economies such as Brazil, India, and South Africa have a financial literacy rate of only 28% on average.

It’s sad how developing economies tend to have a lower rate of financial literacy because those are often the countries that face the worst financial problems. The financial literacy rate in Puerto Rico is only 32%. It defaulted on its $174 Million debt payment earlier this month because it literally ran out of money. It still owes over $70 Billion and more defaults are expected to come. One of its options is to file for Chapter 9 municipal bankruptcy so it can ask the U.S. Congress for debt relief. If nothing is done then the worsening financial problems could turn into a humanitarian crisis. Puerto Rico’s economy is slowly becoming a basket case. The small island territory appears to have more issues than MoneySense magazine.

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Jun 152015

There’s no shortage of personal finance blogs and financial new sites on the internet to help broaden your financial education. But many of those articles out there are regurgitated filler without much useful material. So I have gathered some practical one-liners I’ve found from around the web and placed them all in this one post. Below is a compilation of over 100 suggestions on financial management and quotes about money. Many of these are chosen from Morgan Housel’s articles which I found on Huffington Post and fool.com, as well as Ray Dalio quotes. As usual there are no hard rules when it comes to finance. mBut this list is a good start to help you save, invest, and make overall better money decisions in your life. Master these financial tips and tricks and you’ll understand 99% of everything there is to know about personal finance and investing. 😉



? Top Financial Tips From Around The Net ?

  1. Spend less than you earn. Invest the difference in a diversified portfolio of index finds and you’ll retire richer than most people.
  2. Next time you’re about to make an impulse purchase, imagine someone offering you the product you want to buy in one hand, and an equivalent amount of cash to buy that product in the other hand. Then ask yourself which would you rather take?
  3. When in doubt choose the investment with the lowest fees.
  4. One of people’s biggest expense is interest, which comes from living beyond their means, and buying things they think will impress others.
  5. You don’t need to spend a lot of money to have a good time. Adopting cheap or free hobbies such as hiking, biking, or reading, can be a large, yet hidden, asset on your personal balance sheet.
  6. Index investing works for most people because you can afford not to be a great investor, but you probably can’t afford to be a bad one.
  7. Some people hate finance, think it’s confusing, and don’t want anything to do with it. But they love money. And they don’t see the irony in this.
  8. Dollar-cost average for your entire life and you’ll beat almost everyone who doesn’t.
  9. The business models of banks and other financial institutions rely on exploiting the fears, emotions, and lack of eduction of their customers.
  10. Only invest in products and companies you can explain to a 6 year old.
  11. Wanting to become a millionaire because you want to spend a million dollars is actually the opposite of being a millionaire.
  12. Don’t accept or reject an argument based on how well it fits your pre-defined beliefs. Treat your finances objectively.
  13. Only invest in businesses that you truly understand.
  14. Every 5 to 8 years, people tend to forget that recessions usually occur every 5 to 8 years.
  15. Don’t underestimate how fast a company can go from “blue chip” to bankrupt.
  16. Most people are twice as biased as they think they are.
  17. You have to change your opinions about markets, the economy, and your investments when the fundamental change. Don’t be stubborn. Change your mind as often as the facts change.
  18. Read more books, and fewer articles.
  19. Don’t cave to peer pressure and go to college just because your friends are. Post secondary education is expensive. Only attend college if you are serious, have a game plan for post graduation, and are well prepared.
  20. Don’t worry about things you can’t control. Focus on things that you can.
  21. Read more history, and fewer forecasts.
  22. You don’t need to check your bank account balance or investments every day. Financial planning is long term. You don’t need to micro manage it. After all, your health is probably more important than money but you only go to the doctor for a check up once a year.
  23. Don’t ignore history, only to base your actions on your own limited experience.
  24. “Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.” James W. Frick
  25. When reading about how stupid and irrational retail investors can act, be mindful that you are reading about people like yourself.
  26. Take a balanced approach to life and finances. Don’t work so long and hard to make money that you don’t have time to even plan your finances or enjoy what you have.
  27. Your circle of competence is probably 80% smaller than you think it is.
  28. Your portfolio is only diversified when some of your investments perform worse than others.
  29. If you plan to retire at 62 keep in mind that if you live to be 90 years old, you would be spending almost 1/3rd of your life living off your investments.
  30. Large risks will always be played down. Small risks tend to be blown out of proportion.
  31. Don’t rely too much on what the economy is doing to make your stock investment decisions because the two really have very little correlation.
  32. Check your brokerage account as infrequently as it takes to prevent rash decisions.
  33. Renting a home is not throwing money away because it provides a constant roof over your head, and is a better alternative to owning for some people.
  34. Owning a home has been one of the most common ways for the middle class to successfully grow their net worths in the long run.
  35. Don’t think of the stock market as numbers that go up and down. Instead, think of them as ownership stakes in real businesses with real assets, products, services, and value.
  36. A 2% management fee may not sound like much, but if the market returns 8% a year on average, then that management fee is costing you a quarter (25%) of your long term returns.
  37. Once your basic needs are met the amount of happiness each additional dollar of income provides diminishes quickly. Don’t spend your life chasing some arbitrary number which probably won’t make you happy.
  38. Emotional intelligence is more important than book intelligence.
  39. A 10% annual return for 20 years generates more money than a 20% return for 10 years. Time can be a more important factor than the rate of return when building wealth. Time is also the one thing you have control over.
  40. The more you learn about the economy, the more you realize you have no idea what’s going on.
  41. Don’t blow money on frivolous stuff to impress people. In reality it makes you look like an insecure, pompous jerk. This is particularly common among young people who obtain a lot of money for the first time.
  42. When you receive any kind of inheritance. Leave it in your savings account for at least a week before spending any of it. Use that time to work out a calculated plan on how to use it.
  43. “Business is the art of extracting money from another man’s pocket without resorting to violence.” Max Amsterdam
  44. Start saving for college before your kid is even born. You might feel silly when you start but you’ll feel like a genius when you finish.
  45. Travelling to a poorer country can make people realize what true financial hardship looks like, and that life doesn’t care how entitled one feels, what one think is “fair.”
  46. The most powerful way to grow your money is learning to live with less. Any money you save now will last longer because you don’t need as much of it later. You also have complete control over your spending.
  47. If you spend money on things, you will end up with the things and not the money.
  48. The stock market is risky because it’s volatile. But the bigger risk you face isn’t volatility; It’s not being able to grow your assets enough by the time you want to retire.
  49. “There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can.”  Mark Twain
  50. You have no obligation to have an opinion about anything. But for the benefit of your finances you do have an obligation to not have an opinion about things you don’t understand.
  51. No one attending private school should be on student loans. Community and state schools provide just as good an education for a fraction of the price.
  52. You shouldn’t feel strongly about any investment you haven’t spent at least a week thinking about.
  53. Holding 60% of your assets in stocks and 40% in bonds isn’t perfect for everyone; but there are probably 1,000 worse strategies.
  54. Acknowledge the role luck plays when you make the occasional successful investment. And respect the role luck has played on some of your role models.
  55. It’s probably not a good idea to take out $100,000 in student loans for anything other than medical school.
  56. Many so called “legendary” investors whose only real skill is marketing themselves. Their career track record probably lags a money market fund.
  57. Read last year’s market predictions and you’ll never again take this year’s predictions seriously.
  58. Being greedy when others are fearful is not something everyone can do. Theory and practice are two separate things.
  59. Sleep on every major investment decision for at least 72 hours, then run it by a trusted friend before acting.
  60. High SAT scores and Ivy League degrees doesn’t qualify anyone of being a financial genius. The most important skill in finance is control over one’s emotions, not control over a Greek formula.
  61. “Formal education will make you a living; self-education will make you a fortune.” Jim Rohn
  62. To make yourself a better investor, increase both the amount of time you’re investing for and the humility you put into your ideas.
  63. Some people’s perception of history extends back about five years when economic cycles can last for up to decades.
  64. Some people anchor to whatever price they bought a stock for, without realizing that the market neither knows nor cares what they think is a “fair” price.
  65. Just as you should dress appropriately for your age, you should spend appropriately for your income.
  66. Admit and own up to your financial mistakes. Don’t ignore them, bury them, blame others, or make excuses. Be truthful to yourself.
  67. Don’t associate all of your financial successes with skill, and all of your financial failures with bad luck.
  68. Don’t try to make money you don’t have and don’t need by risking what you do have and do need.
  69. $1 million use to be a glamorously large amount of money but today it’s just enough to cover a pretty mediocre retirement.
  70. Most people are twice as gullible as they think they are.
  71. There’s no need to try to keep up with the Joneses or be jealous of them because the Joneses are buried in debt, and are no happier than you.
  72. Learn more from your poor financial judgements than your good ones.
  73. Be an optimist when it comes to money. The universal law of attraction suggests what we focus on grows. Banish toxic money thoughts. If you psych yourself out before you even get started (“I’ll never pay off debt!”), then you’re setting yourself up to fail.
  74. Judge investors by the quality of their arguments, not the performance of their last trade.
  75. Some people choose to work in a stressful job in order to make enough money to have a stress-free life, and they don’t see the irony in that.
  76. Buying and holding onto stable, large cap, dividend paying stocks may be boring, but the purpose of investing isn’t to minimize boredom; it’s to maximize returns.
  77. Teach your kids about money before they’re old enough to earn their own.
  78. “Early to bed, early to rise, keeps you healthy, wealthy and wise.” Benjamin Franklin
  79. Don’t be thrilled that the credit card you’re paying 22% interest on offers 1% cash back on all purchases.
  80. About half of all Americans can’t come up with $2,000 in 30 days for an emergency. But practically everyone will run into an emergency sooner or later.
  81. Imagine how much crap you’d have to make up if you were forced to talk money every day. Remember this when watching financial news on TV.
  82. Many young adults think they’re invincible, and don’t need health insurance. Then icy sidewalks, moving cars, and rapidly dividing cells prove them wrong.
  83. Assume the worst, hope for the best, accept reality.
  84. Save for your own retirement in full; assume Social Security and private pensions won’t be around (even though they probably will.)
  85. Learn vicariously from other people’s financial misfortunes.
  86. If you’re not good at predicting the market, then don’t predict the market. Focus on what you actually know.
  87. The correlation between confidence and future regret is incredibly high.
  88. During the last 100 years, there have been more 10% market pullbacks than Christmases. Everyone knows Christmas will come; think of volatility the same way.
  89. Don’t spend lots of money on material stuff to impress other people because those people simply don’t care that much about you and your purchases.
  90. For people who don’t understand the value of a dollar, when they receive a $1 raise their desires increase by $2.
  91. Not taking advantage of an employer match on your 401(k)/RRSP is no different than declining a raise.
  92. “Money never made a man happy yet, nor will it. The more a man has, the more he wants. Instead of filling a vacuum, it makes one.” Benjamin Franklin
  93. You may suffer unknowingly from the Dunning-Kruger effect, which can falsely mislead you into believing you know more about finances than you actually do.
  94. Don’t let your definition of “long term” be defined by the time between now and the next bear market, whenever that is.
  95. Don’t let politics sway your investment decisions. Congress has been a dysfunctional body since 1789, and stocks have done well since then.
  96. Sometimes things take longer to happen than you think they will, and then happen faster than you thought they could.
  97. “Invest in what you know” is dangerously simplified.
  98. Most day-traders should quit, and donate their money to charity instead. Same financial result for them, but a better outcome for society.
  99. Reaching for yield to increase your income is often like sticking your hands in a fire to warm them up — good in theory, disastrous in practice.
  100. There’s a strong negative correlation between flaunting money and being rich.
  101. Investors were probably better informed 20 years ago when there was 90% less financial news.
  102. Get paid what you’re worth and spend less than you earn. Conduct an evaluation of your skills, productivity, tasks, and contribution to the company.
  103. Contrary to what some people believe maintaining a balance on a credit card does not improve your credit score so it’s better to pay off the balance every month.
  104. Drink less alcohol. Especially when eating out, booze can drive further frivolous consumption and is a very high margin product for restaurants and bars.
  105. Cancel unused club memberships and subscriptions you don’t use anymore.
  106. “Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” Ayn Rand
  107. The art to financial success is not in making money, but in keeping it.
  108. Money is usually attracted, not pursued.
  109. De-clutter to simplify your living environment. Donate your unwanted items or sell them for cash. A less cluttered home also saves you time and money cleaning it.
  110. Track your spending and net worth. You will discover areas where you can cut back spending, save more money, and watch your wealth grow over time.
  111. “Beware of little expenses. A small leak will sink a great ship.” Benjamin Franklin
  112. “Wealth consists not in having great possessions, but in having few wants.” Epictetus
  113. “Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.” Warren Buffett
  114. Finding money in your clothes is like a gift to you, from yourself.
  115. “A bank is a place that will lend you money if you can prove that you don’t need it.” Bob Hope
  116. Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.
  117. “Opportunity is missed by most people because it is dressed in overalls and looks like work.” Thomas Edison
  118. “Look outside of the financial services industry for information on the true risks of equity investing.” Kurt
  119. Risk comes from not know what you are getting yourself into.
  120. Experiences become more meaningful and will outweigh possessions.
  121. Get a money buddy. Friends with similar traits can pick up good habits from each other – this applies to your money too.
  122. Keep your credit use below 30% of your total available credit. If your credit utilization rate is too high it can ding your credit score.
  123. There are 4 typical financial emergencies. Losing a job, car breaks down, unexpected home expenses (like a leaky roof,) and travel for a funeral.
  124. “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” Suze Orman
  125. To thrive in today’s economy, you must challenge the status quo and get the financial education necessary to succeed.
  126. Sometimes you will have to step out of your comfort zone when investing to realize meaningful returns because what is comfortable is rarely profitable.
  127. “Know what you own, and know why you own it.”  Peter Lynch
  128. “Financial peace isn’t the acquisition of stuff. It’s learning to live on less than you make, so you can give money back and have money to invest. You can’t win until you do this.” Dave Ramsey
  129. “Watch out for people who think it’s embarrassing not to know.” Ray Dalio
  130. “Be wary of the arrogant intellectual who comments from the stands without having played on the field.”
  131. “Don’t worry about looking good – worry about achieving your goals.”
  132. Reject having some things you want in order to get other things you want more.
  133. “People who confuse what they wish were true with what is really true create distorted pictures of reality that make it impossible for them to make the best choices.” Ray Dalio
  134. “There is an excellent correlation between giving society what it wants and making money, and almost no correlation between the desire to make money and how much money one makes.” Ray Dalio
  135. Do not acquire things beyond their usefulness. Otherwise you could experience negative consequences, as with any form of greed.
  136. Success is achieved by people who deeply understand reality and know how to use it to get what they want.
  137. Be an effective imperfectionist.
  138. “Experience creates internalization. A huge difference exists between memory-based “book” learning and hands-on, internalized learning. A medical student who has “learned” to perform an operation in his medical school class has not learned it in the same way as a doctor who has already conducted several operations.” Ray Dalio
  139. Don’t let minor financial grievances fester.
  140. The education system doesn’t prepare students for real life — unless their lives are spent following instructions and pleasing authorities.

As with other lists shared on this blog I will probably add more content to this page over time.

Reaching financial enlightenment is easier to achieve than most people think. Fortunately it’s not about making more money. There are plenty of unhappy millionaires who are constantly stressed out. 😕 The secret to financial success is actually fostering a positive relationship with money and understanding the important role that money can play in your life. You do this by asking yourself questions like what does money mean to you? How do you feel about losing money? Do you buy things for yourself or to impress someone else? What kind of life do you want to live? Once you have a clear understanding of what money means to you, the next step is developing your overall financial knowledge. 🙂 This means learning about budgets, debt, investing, retirement, and other financial topics.

Ultimately what you want to do is combine your personal relationship towards money with a healthy dose of financial literacy to develop your own financial identity! Your financial identity is unique to you and defines who you are when it comes to financial matters. You will have a solid understanding of how money can be applied in almost every aspect of your life. This understanding removes uncertainty and creates confidence. Confidence leads to a sense of control, purpose, and security. You will have control over your life, purpose in your decision making, and most importantly, you will attain financial security. Becoming financially enlightened is all about being content and comfortable with your personal money situation and never worry about money again. 😀

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Feb 152015

A new study by the University of Pennsylvania’s Wharton School found that adults in many countries make money decisions with surprisingly little financial knowledge. Researchers asked people in 18 countries THREE simple financial literacy questions about interest rates, inflation and investing.

When Americans over 50 years old were asked these 3 questions, only 50% could answer the first two questions correctly. Furthermore, just 33% knew the correct answer to all three questions. “Even well-educated people are not necessarily savvy about money,” according to the report. Among people with post-graduate degrees, 64% were able to ace the quiz. That’s better than the average, 🙂 but still less than my expectations.

Do you think you are smarter than most Americans? According to the report, answering each additional question correctly is associated with a 3% to 4% greater probability of planning for retirement.


The Wharton study found that men (38%) were more likely than women (23%) to know the answer to all three questions. The guys also claimed to feel more confident about their financial knowledge, even when they answered incorrectly. The ladies, on the other hand, were more likely to admit that they didn’t know the answer to a question. Women are so modest. 😳

So how many did you get right on your first try? Feel free to spoil the answers below in the comments section if you think you know the correct answers. 😉 I’ll verify by tomorrow. Financially literate individuals save more, earn more on their investments, and manage their money better. So if you got 3 out of 3 correct then congrats! Your financial future is looking bright. 😀 Otherwise, keep brushing up on your personal finance knowledge. 🙂

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Jan 202015

The Struggle

We can’t get the numbers to work and would appreciate some help,” pleads Eric, a 41 year old physician who lives in Vancouver, B.C. and makes $300,000 a year. His wife is a dentist and together they typically earn a combined household income of $450,000. 😯 Eric regrets “not having bought a house years ago.” He further admits that he has “no pension whatsover.” It’s clear that the couple in this Globe & Mail article has trouble making ends meet.


Furthermore, Eric and his wife do not have life nor disability insurance, which is a dangerous and unnecessary risk, especially when they have five children. With annual expenses totaling $300,000 a year, this desultory family is basically living paycheque to paycheque. So far they’ve put their lifestyles ahead of their financial matters and now, like a crab in financial difficulty, they are starting to feel the pinch. 😀 Oh woe is them. 🙄

Financial Literacy

Vancouver may not be the cheapest city to raise a family in, but no amount of money can fix the problem of living carelessly beyond one’s means. Money can buy a lot of things, but ironically it cannot buy financial freedom, which is where financial literacy comes in. Having money alone is not enough to be complacent. Financial literacy is also paramount to our financial security, and helps us discover what money truly represents. Because what does $1,000,000 in the bank actually mean if we don’t even understand the value of money. 😐

We can also learn to spend with value in mind, prioritizing what’s important to us over the non-essential expenses. We can use these strategies to experience satisfaction and the raptures of life without spending an arm and a leg. Unfortunately no one ever told Eric and his wife about this because they spend $24,000 a year on family vacations, and send their kids to private schools, yet they can barely afford to keep their heads above water, let alone save for their own retirements.

Many celebrities, professional athletes, and lottery winners who were once wealthy are now facing financial difficulties. All those people, just like Eric, have one thing in common; they lack basic financial management skills like budgeting, investing, and financial planning.

Medical professionals are some of the hardest working, and smartest people I know. And they deserve every dollar they make. But having money alone clearly isn’t enough. We must also be financially literate to survive in today’s economy. Intelligence and talent will only affect our abilities to earn a living, but they DO NOT determine our aptitude to keep any of it. 😕 Hard work leads to money, but financial literacy shows us what to do with the money once we get it. 😉

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Dec 022014

We often become what we repeatedly do because we are creatures of habit, and usually the best way to form a habit is to start early. 🙂

In a book I once read, Secrets of the Millionaire Mind, there’s a story about a successful professional who makes a six-figure salary and lives in a nice house with expensive cars. But for some reason he never has any savings. Despite his high income he’s always in debt. His net worth is negative, his investments tend to under perform, and he’s living paycheque to paycheque. The root of his financial struggle lies in his childhood. When he was growing up his parents were poor. They resented rich people, and blamed economic inequality and other social problems on money. Growing up in a household where money was considered bad and corrupt gave him the notion that having a money is bad. As an adult being wealthy would give him a sense of guilt. So whenever he makes money he would subconsciously try to spend it all. Many people lack the skills to take care of their own money because they were either never given the proper management tools to begin with, or were simply misinformed. By not forming good financial habits at an early age consumers might have a hard time getting out of debt when they become adults.

A recent survey by Consolidated Credit, a non-profit credit counselling service, shows that roughly a third of consumers had to turn to family or friends for financial help at one point.


Not surprisingly the biggest challenge for many when facing financial hardship is being unable to pay for housing.

Becoming financially literate.

The way to tackle financial literacy can be done on two fronts. At home parents need to make financial education a priority in their household. At school there should be a full length course for basic personal finance. Children have to learn to work with money instead of being afraid of it or being told that money will lead to problems. The lack of knowledge is usually what leads to economic problems later on in life. It’s important to instill in children responsible spending habits and budgeting skills from an early age. 🙂 As Aristotle once said, “Good habits formed at youth make all the difference.

Random Useless Fact:
Some 40% of Canadian families carry an outstanding balance on their credit cards, with a median amount of roughly $3,000.