A conversation on personal finance and saving during the pandemic

Jane Rooney is an expert on financial literacy currently working with the Canadian Government within the Innovation Science and Connected Canada branch.

There, she works on a wide range of projects which include; providing underrepresented populations the access and skills to have the confidence to participate in digital economy, building the digital skills of unemployed post-secondary students and connecting them to employers, and creating a more cyber secure Canada – ensuring safety on the internet and making sure organizations have the right procedures in place.

She formerly worked as Canada’s foremost Financial Literacy Leader, working within the Financial Consumer Agency of Canada (FCAC), to strengthen the financial literacy of Canadians.

Question One: What is your number one tip for saving for young people?

So the number one tip would be to save on a regular basis, even a small amount, because we know through research that the FCAC has done and work that’s been done internationally, that people have greater financial resilience with greater habits.

You can make better decisions and have access to funds if you save on a regular basis. So, number one, tip, take it off your paycheck. If you’re being paid through some sort of employment, try to save even very small amounts on a regular basis. Since you’ll be building your financial wellbeing and rather than taking on debt later, you’ll be able to access savings.

If you have an emergency, your cell phone falls and breaks and you don’t have Apple insurance, and you need a new phone. Well, you can dip into your savings rather than accessing credit products.

You know, it seems so obvious that if you save on a regular basis, you’re better off and you have better financial wellbeing, which, you know, has its own definition about, about resilience and being able to do what you want to do rather than what you have to do with your money.

It’s quite a nuanced thing, right. What you want, right. Do versus what you need to do, what you must do. So of course, that’s obvious if you have some savings, but you’re building healthy habits even more than the savings. What we know through research is that when people are saving on a regular basis, they’re better budgeters. They pay their bills. They pay their bills on time, more often than others. There’s other healthy money habits built from that one action of saving on a regular basis. It’s better for you for your whole life.

Question Two: Is there something different today about saving in the COVID environment? And how can you take advantage or approach to the new situation? How can you save during this time when there’s potentially more opportunities for saving or maybe the environment has changed?

Jane: Yeah. If there’s one thing that seems to have been a benefit of COVID, if you can even look at benefits at all, is that people are spending less. Often, you know, students are spending money, on coffee shops or on campus for your nearest snack or the pub, there’s lots of ways of spending money, but during COVID. Those things have really changed. So now’s the time to take advantage of investing the money in like a TFSA, a tax-free savings account, where you can build your money and withdraw it later on without paying taxes. But it’s also looking at the other vehicles about thinking about the long-term. Well, now maybe you’re able to save a little bit more.

Maybe it’s because you’re getting a student benefit or EDI because you’ve lost a job, but maybe now’s the time to look at what is a TFSA versus a registered retirement savings plan. And start that. Now the younger you are when you open up these savings vehicles, the more money you’ll have in the long-term.

So it’s all about harnessing the savings and opening up opportunities for the future.

So what are your goals? If you want to, you know, move out on your own after university or you want to buy a vehicle or you want to travel when we’re able to travel again, like a lot of people are looking for what’s next, right? And now’s the time to start using those good savings vehicles, like a TFSA, which is what I would say to all students who have a TFSA now, so that you’re the future that you can contribute to. And, you can withdraw it without paying taxes.

Question Three: If you could return to your university self. What would you do differently in terms of personal finance?

I hesitate to say if you can live at home, do it and save some money because that’s just not everybody’s reality. But I would say there are times, I probably spent more money than I needed to in university, again, the TFSA didn’t exist when I was in university, but I had both my kids open a TFSA as soon as they turned 18.

So advice, I would say like, look at your options for what kinds of vehicles are out there. You know, I had both kids get a credit card too, but they’re using the credit card the way they should be used, which is for necessary expenses. They pay the balance off in full and, and they have money saved up to pay that in full, if it’s not a necessary expense, right?

Like, I’m not saying you shouldn’t use your credit card for what you want to. I’m just saying that these are the types of things that I asked my kids to do, which I’ve probably learned since my own university days. There’s lots of ways to save and spend money better.