Reddit mentions of The Wealthy Barber: The Common Sense Guide to Successful Financial Planning

Hello! Also from Ontario Canada! The best advice I can give you is.... Spend less than you make (create a budget and stick to it), pay off all your credit cards in full every month, try to keep the life style creep to a minimum, and live in a low cost of living (LCOL) area (if you can).

In terms of buying vs renting there are calculators for that and it's personal choice, but try not to buy more house than you can handle (we live in the GTA so house prices are crazy right now...) If you can live with your parents for a while, you can save a lot of money that way too (just contribute to the household!! If not in cash, at least do the dishes and laundry or something...!).

If you want to buy and do nice things, budget and save for them! Striving towards FI doesn't mean you have to live like a pauper... But be reasonable and have your ultimate goal in mind.

Some nice books to read (that are Canadian!) Would be Millionaire Teacher by Andrew Hallam and The Wealthy Barber/The Wealthy Barber Returns by David Chilton (you can just borrow from the library as an e-book or actual book!).

Since you are unionized and have a pension, I would say max out your TFSA first (check out the index fund model portfolios from Canadian Couch Potato and then your RRSP (whatever room you have left after your pension adjustment) and once you still have money left over open a marginal account (if you you are married by then,max out both those accounts for your spouse before you open any marginal accounts).

Also, read the side bar and the stickied posts. Enjoy your journey to FI. It's important to plan for the future, but you shouldn't forget to enjoy the present as well!

Well I was actually going edit the original post to say that I'm not qualified offer investment advice in any professional capacity (You probably want to talk to a CFA or CFP. Also you asked a very hard question Why. I'll try to answer it as best I can.

Generally transaction involving money can be broken down into four categories:

• Assets - transactions that result in something that has some value - stocks, a car or a house
  
• Expenses - transactions that are spent and nothing lasting is gained - food that you eat
  
• Income - transactions where you gain money from some work you doing - pay from your job
  
• Liabilities - transactions where you gain money temporary and later have to pay someone back - a car loan
  
  When you invest you specifically look at the assets category. Assets can be things that you expect to either gain value or lose money over time. You car for example grow less valuable over time so it's a depreciating. The other side of this is things you expect to gain value over time; for example a house. When you invest money you purchase things with that money that you expect will gain value over time. For example if you buy a coke for $0.50 knowing that later that day you can sell if for $1 you've invested in the coke.
  
  Generally when people talk about investing they are talking about the stock market. Your bank can help you get started if you want. I would recommend you read up on it a bit more before doing anything (a good starting book is The Wealthy Barber) and I wouldn't do it with any money you don't feel comfortable losing until your entirely comfortable with it.

Uh oh. Maybe you'd better buy a Canadian personal finance book.

So first I will soapbox then tell you what I do personally. Hah, apparently this is a 10k+ essay so will split in 2.


Step 1: Pay yourself first. If you are "budgeting" for savings but end up at the end of the month with no savings you are NOT really saving. Pick your savings vehicle and set up direct deposit. Schedule so that the day your paycheck is cashed you have $500 automatically withdrawn from your account that same day to be applied to your investment directly. For you something like: Vanguard Target Retirement 2060 Fund (VTTSX).
https://investor.vanguard.com/mutual-funds/target-retirement/#/mini/overview/1691
MER of 0.18%


So go to the library and borrow and read "The wealthy barber"
http://www.amazon.ca/The-Wealthy-Barber-Successful-Financial/dp/0773762167


In the same vein read: The Richest Man in Babylon. True when written in 1926 and still true now.
http://www.ccsales.com/the_richest_man_in_babylon.pdf
Audio version:
https://www.youtube.com/watch?v=TRomaM-yxYs


Step 2: Take a long, hard look at why you spend. You are trying to fill a hole thinking spending will make you happy. You are realizing that it does not. What is new and shiny now will have a new version come along in 6 months. What makes you happy? Quality time with friends and family? Experiences? Leaning new things? Looking at the end of the year at your IRA/401k balance. Looking at your house down payment savings account? Make a list of the times you were the happiest you have felt in the last year then go to step 3.


Step 3: After determining what makes you happy start saving and budgeting towards that goal. Steam has a 75% sale on YNAB right now.
http://store.steampowered.com/app/227320/


Buy it, use it. Determine what you need to LIVE, then allocate the surplus. The Richest Man in Babylon says live on 70%, pay down debt with 20%, invest 10%. I propose it is income dependent. As a single guy I think you should be able to live well on a salary of $45k/yr and save/invest the rest.


Now you don't have to be like John Wesley (http://www.missionfrontiers.org/issue/article/what-wesley-practiced-and-preached-about-money) but look at what made him happy. Giving to the poor. He lived on 28 pounds a year and "saved" the rest to apply to what was his number one mission in life.


"1731 Wesley began to limit his expenses so that he would have more money to give to the poor. He records that one year his income was 30 pounds and his living expenses 28 pounds, so he had 2 pounds to give away. The next year his income doubled, but he still managed to live on 28 pounds, so he had 32 pounds to give to the poor. In the third year, his income jumped to 90 pounds. One year his income was a little over 1400 pounds. He lived on 30 pounds and gave away nearly 1400 pounds. When he died in 1791, the only money mentioned in his will was the miscellaneous coins to be found in his pockets and dresser drawers. Most of the 30,000 pounds he had earned in his lifetime he had given away."


As income rises let your quality of life rise a proportion of the increase but let your savings/investing take the majority of the increase.


Step 4: Seriously consider volunteering at something. Can be as little as 1-2 hours per week. Pick a mission or organization that has deep personal meaning for yourself. Animal shelter. Big brother/sister. Help underprivileged kids read at your local library. Absolutely ANYTHING but pick SOMETHING. Do this for weekly for 6 months and if you do not feel rewarded and that you wasted your time over the last 6 months PM me with the phone number of your supervisor/most responsible person at the place you volunteered so I can confirm you were actually there regularly for 6 months and I will send you $100 (I'm in Canada so would have to figure out how to send you a amazon gift card or something). Requirement is you going 6 months weekly for a minimum of 1hr.


1 - you will meet amazing co-volunteers.
2 - you will see how blessed you are. Instead of comparing yourself to the Johnses at the country club you will compare yourself to the people you meet at your volunteer gig. I will pretty much guarantee that at the end of 6 months you will find other things to do with your $400/month country club membership.

Hey, I’m not gatekeeping or shaming! I’m just trying to draw attention to the opportunity you have here to do well for yourself.

Not a financial advisor, not your financial advisor, do your own research and make your own decisions. The TFSA is usually considered best utilized when it’s not just used as a “savings” account within a bank, but as an “investment” account. Banks like Tangerine have fairly easy to understand options to do that (invest your money), but if you’d like to go a step deeper down the rabbit hole, a discount brokerage (a company that can buy and sell stocks, bonds, and funds on your behalf) like Questrade is both cheaper and more powerful in what you can do with it. Here’s why you might want to consider one of those.

Your ~1.5% per year interest in a TFSA “savings” account is very secure and consistent, but you’re technically losing money against inflation, which is typically between ~2-3% per year. A significant amount of people subscribe to the idea that investing is as easy as buying a fund (such as a mutual fund or an ETF, exchange-traded fund) that holds a collection of other stocks and bonds in order to represent the entire market. That is to say: if the entire market goes up, your money increases; if the entire market goes down, your money decreases. This was an approach pioneered by a very smart man named John Bogle, which you could learn more about in r/bogleheads.

Index-based investing, as described above, has returned an average of 10% per year for the last several decades. However, this is a higher-risk investment, and if you expect to need the money inside of 5-10 years, you should consider looking in lower-risk areas, or potentially splitting your lump sum into smaller chunks to invest at different risk levels. There are a lot of really good resources on this concept, called risk-management or asset-allocation, but this is an excellent resource that I like to link.

I would also recommend you take a look at this website, which is a solid introduction into taking charge of your own financial future. The “How do I become a Couch Potato?” section would be a good start.

If you’re still interested after all that, then here’s a good dump of information to explore.

• https://www.canadianportfoliomanagerblog.com/
  
  
• r/PersonalFinanceCanada
  
  
• https://www.mrmoneymustache.com/
  
  
• r/FinancialIndependence
  
  
• https://www.amazon.ca/Wealthy-Barber-Successful-Financial-Planning/dp/0773762167/

Save. Always and forever save as much as you can when you have the opportunity to. Keep putting money away now, each paycheck, even if for a week you can only put in $5.

There are various ways to save, obviously RRSP's are great for retirement, but there are also ways to save money that you can access if the need to do so arises. Definitely put money away separately for your children, for their education and such. Yes, there are student loans, but there could always be extra costs or fees outside of school, such as medical costs, bail, etc...

It is good to have at least 6 months worth of your expenses saved up, so that 7k is an ideal saving to have and you are already in a good position by having it. The reason to have that much saved up is so that if anything were to happen, in terms of either, or both of you, losing employment you have the finances to cover the costs during that period. Being broke is bad enough, but being broke and not being able to support ourselves, or the people that we should be providing for, is quite depressing to say the least. To reiterate you are already off to a good start with your bank savings.

The Wealthy Barber is a great book to read that provides insight into being intelligent with money, while I'm going to put an article for you to consider perusing: 4 Personal Finance Principles That Would Make Your Grandfather Proud


The Wealthy Barber

The Wealthy Barber


https://www.amazon.ca/Wealthy-Barber-Successful-Financial-Planning/dp/0773762167