Content Sponsored by RBC Advice Centre
Give a man and woman an equal amount of money and how will they spend it? Answer – differently.
Research has long shown that the gender divide is alive and well in terms of how the sexes deal with finances. A recent survey found that while women tend to save for short-term goals, men are much better about putting money away for longer-term plans or future emergencies. A quarter of men said they’re saving for retirement, while only 14% of women were.
It’s especially important for mid-lifers to consider how to make their money work best. While there’s not the same pressure to pay for children or climb the housing ladder there once was, there may be college to plan for and of course, there’s your retirement.
Research reveals that as Canadians approach the age of retirement, a significant number of us are not aware of what it will take to support our lifestyles. It seems that 39 per cent of Canadians aged 55-64 are unclear on what to expect on the retirement front.
A straw poll of the mid-lifers I know shows that most of them have savings but that at the same time they are also carrying debt on credit cards. Consider this contradiction a hangover from the way we were brought up (save!) to the way many of us live now (debt!).
So what’s the best solution? Do you defiantly cling to your savings as an ‘in case of emergency’ fund or is it better to use those savings to eradicate debt?
Financial experts tend to advise the latter. The reason for this is simple – If you have both savings and debt, you are overspending noticeably and unnecessarily. While it feels good and responsible to put a little away each month, in the majority of cases debt costs more than savings earn and you could end up having to repay more than if you’d simply cleared off your credit card balances.
The wise choice is to keep your credit cards for emergencies. Use your savings to pay them off and you’ll instantly find yourself financially better off.
If you do decide to focus on becoming debt-free, start by making a list of everything you owe. Then work towards making existing debt as inexpensive as possible. Look into transferring credit balances to lower interest rate cards or try and renegotiate existing loans. The debt at the highest rate should be your first target.
Once you’ve managed to clear the worst of your debt, you can approach saving seriously again. To start the process, set up a savings plan with your bank – even if it’s small one. After a while you won’t even miss the money. Once you get the hang of this savings thing, set a larger savings goal for increased motivation. People who do this often see their savings increase faster.
So you may be a mid-lifer but it’s never too late to become the financially astute person you’ve always wanted to be. It will guarantee that your later years are secure with maximum financial benefits.