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When I was growing up, personal finance was never taught in school. Instead of getting money advice, I learned the numeric value of pi and how to multiply fractions; compound interest wasn’t in any of my textbooks. While I don’t have any experience with the current education system, I can imagine that not much has changed.

For many of us, we rely on our parents or friends to give us advice, but just how accurate is that advice in today’s economic climate? Times have changed and everything appears to be much more expensive. My parents bought their first home in cash – something that I will never be able to do. That doesn’t mean their advice is wrong; it just means I need to apply it to how things are now. Here’s some of the money advice I have picked up over the years.

"Spend less than You Make"

Regardless of our income, spending less than we make are always wise words to live by but we also need to factor in savings (I’ll focus on that a bit later). Perhaps what people really mean when they say this is simply to avoid credit. Years ago, applying for credit was a process that required careful vetting before a potential cardholder was approved. These days, we can be instantly approved online.

The problem with credit is that it can make everything appear affordable. Those low monthly payments seem manageable but the long-term costs are incredibly steep. It’s also easy to abuse credit, and that’s something that never ends well. Instead of just looking at the low monthly payments, we should worry more about our cash flow and how we can cut our expenses to pay off any remaining debt.

“Save for a Rainy Day”

A rainy day refers to unexpected costs that pop out of nowhere. Just about every personal finance expert recommends building an emergency fund of three to six months’ worth of expenses. The idea is that if we’re ever laid off, we’ll have enough cash on hand to keep us going in the case of unforeseen expenses, such as car repairs, fixing a leaky roof or an emergency visit to far-away relatives.

Keep in mind that a rainy day doesn’t mean taking a vacation or buying the newest gadget. This money is meant for real emergencies and should be kept in a bank account that is easily accessible.

“Save 10 per cent of your Income”

My parents always suggested saving as much as possible. We used to be told to save 10% of our income, with the idea that it allows us to comfortably enjoy vacations, take part in hobbies, purchase a home and save for retirement.

Let’s be realistic, 10% just won’t cut it anymore. The cost of real estate in Canada is at all-time highs and we have more expenses than ever before. Putting away 10% of our income will barely even cover our retirement savings. I can’t recommend an exact number as everyone has different needs, but what I will suggest is to make sure that savings are part of your budget. That means prioritizing saving before spending. Besides, what do people do with the other 90% of their incomes?

“Keeping up with the Joneses”

This is a term that I started to hear when I first began reading about personal finance. While it’s not exactly a piece of advice, it’s a saying that everyone knows – comparing yourself to your neighbours in terms of social class and accumulation. This of course is a bit ridiculous since every family has different circumstances. Many people may consider appearances to be the driving factor in their lives. For all we know, our neighbours have that big house and fancy car but they’re heavy in debt because of those purchases. I personally don’t worry about what others are doing and just focus on my own situation.

The Final Word

The advice we get is good in general terms, but what may have worked in the past may not be relevant anymore. That doesn’t mean we shouldn’t take the advice to heart – it just means we need to apply it to our individual situations.

Need some help to start putting that money away for a rainy day?

Barry Choi

Barry Choi is a personal finance and budget travel expert at He has been quoted by media in Canada and the United States including The Financial Post, The Toronto Star, Business Insider, The Globe and Mail, and has appeared on HuffPost Live.

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