Avoiding debt, delaying mortgage and getting early start on retirement savings key for young Canadians, says author
Rob Carrick admits that he was “not a very financially-savvy young adult,” but he “gradually wised up.”
That might be an understatement. Carrick, who has been writing about business and economics for nearly 20 years, is currently a personal finance columnist for “The Globe and Mail.”
He recently released a new book called “How to Not Move Back in With Your Parents: The Young Person’s Guide to Financial Empowerment.”
The impetus for the book — Carrick’s third — grew from his belief that young adults lack access to financial advice.
“There are all kinds of financial advice out there for established adults and senior citizens. There is nothing for the young adult,” Carrick says.

The recession and global financial crisis of 2008 and 2009 also played into his motivation to write the book.Rob Carrick has gone from ‘not very financially-savvy young adult’ to personal finance columnist.
Photo courtesy of: Rob Carrick
“I was starting to read more and more about adults who were moving home, and heard the phrase ‘boomerang generation.’ It caught my eye,” Carrick says.
“I think young adults have it especially tough right now. I thought they could use some financial advice.”
But while the book is geared at young adults, Carrick says that gaining financial empowerment is an ongoing activity — even for him.
“I am still wising up. I am still making changes in how I manage my money and realizing that I could be more effective. Learning about money is a continual process.
“Very few people figure it out. But I think if you read a book like mine and find out what some of the basic principles are, then you will save yourself a lot of grief because so many people learn about money by making mistakes,” Carrick says.
Interview questions and answers have been edited for length.
Who should read this book?
My target audience is those aged 18 to 35 years old. I would like people to read it as they are going into university, and after they have graduated from university. It’s a guide that people could use for a 10 or 15-year period.
What sort of challenges do you believe young people face today when it comes to obtaining financial security?
One challenge is that the cost of a college or university education is soaring. As a result, students are graduating with high debt.

When you graduate, it’s a very tough job market out there. It’s hard to find a first job — and we are talking about career building here, we are not talking about finding hours at a coffee shop. And once you do, you’ve got your student loans to pay off. You want to get into the housing market? Houses are super-expensive right now. You want to buy a car? Gasoline is also super-expensive right now. These are some of the challenges that young people face.
It can be very intimidating to know where to being with financial planning. Where would you suggest that a person should start if they have little or no experience with money management?
Priority one when managing money is to eliminate debt. Or, at the very least, it’s to get yourself on a track to repaying your debt. Then, even as a young person, start putting an eye on retirement. I go for a hand-in-hand approach, where you make a priority of student loan reduction but you also get into retirement savings as well.
So tackle debt first, and then ease into the retirement savings. Then you can start to think about putting away money for a car or a down payment on a house. I have just talked about putting away money for all these different purposes. You can decide which to emphasize and which to de-emphasize. You have to make judgments, but that’s really what it is all about.
In the book you use the phrase ‘saving intelligently.’ What do you mean by that?
Saving intelligently is about figuring out, given your personal cash flow situation, how much you need to live on and how much you can devote to savings. You don’t want to cripple yourself by saving too much. But on the other hand, you don’t want to get yourself in a situation where you say, “I can’t afford to save anything, so I won’t.” It’s very easy to stay on that track for a long time. But the next thing you know, you have missed out on 10 years of saving.
You say, “The less skilled you are at saving, the less independent you are.” What do you mean by that?
What I mean is that the usual outcome of not saving money is being in debt. If you are in debt, its like putting handcuffs on. It means you can’t move on with your life.

In addition to financial advice and money-saving tips, Carrick’s book offers case study interviews with young Canadians about their own money managing experiences.
Photo by: Karry TaylorDo you have any strategies for the best way to budget?
I am not a huge believer in budgeting. What I suggest is that whenever you get paid, money is automatically diverted through electronic banking to various saving accounts. You never see the money — and you have covered your obligations.
What do you say to a 20 year old who might not be considering things like life insurance and retirement savings because the need for them seems so far off in the future?
I say this: if you start putting aside a little bit of money in your early 20s, you are going to be in so much better shape than if you didn’t. I know that young people want to live in the present and that retirement seems so far away. You don’t have to stick all of your money into retirement. But if you start early, you take the edge off and you can do things slowly and gradually.
What’s the biggest financial mistake a young person can make?
Getting overloaded with debt. We are part of a society that owes way too much compared to how much money we make. It’s the gateway problem that wrecks your financial future. But it’s hard because everywhere you go, the message is “buy this, buy that.”
What are the five most important financial tips you have for young people?
1. Treat debt like it is painful. You may have to put up with the pain, but try to minimize your debt. That goes to student debt and everything else.
2. Avoid credit cards until you have full-time employment and you have a good salary that will allow you to pay your credit card bills in full each month.
3. Start your retirement savings in your 20s. You don’t have to make a huge priority of it. But at least make a token entry into saving for retirement.
4. Rent housing until you can comfortably afford to buy a house. Don’t let anybody rush you into the housing market. That will get you so far over your head that you won’t know what hit you. People always say renting is “stupid.” Renting is not stupid. Buying a house you can’t afford — that is stupid.
5. Don’t rush to buy a car. Don’t go buy yourself a junky car that you can barely afford. Buy yourself a great bike, which costs nothing to upkeep. A car will take money out of your pocket in a way that you just cannot imagine until you own one.
ktaylor@cjournal.ca