We on the Globe and Mail personal finance team have our favourite contacts – the people we like to talk to the most because they offer value for our readers in clarity, insight and integrity. One of these people is Shannon Lee Simmons, a certified financial planner (CFP) who has been quoted in stories and interviewed on the Stress Test personal finance podcast for Gen Z and millennials. Ms. Simmons has a new book out – No-Regret Decisions: Making Good Choices During Difficult Times. On the basis that we’re living in difficult times right now, I invited Ms. Simmons to do a Q&A. Here’s the exchange we had by e-mail:
Q: Your new book is called No-Regret Decisions – what are the decisions that have caused your clients the most regret?
A: Panic-based decisions with high emotional and financial stakes. Sometimes, this is a home purchased, a home sold. A layoff, a job taken, a business started or ended, the handling of an inheritance, you name it. It’s not really about the nature of the decision or how it turned out that causes regret. The regret always stems from the fact that someone isn’t proud of the reasons they made they choices they did when looking back.
Q: We live in a time of extreme precariousness driven by the pandemic, expensive housing, soaring inflation, surging interest rates and probably a lot more stuff. What’s your best advice for helping people make calm, rational money decisions in these times?
A: Don’t make a panic-based decision. Find a way to pull yourself out of panic mode so you can think clearly, see options and make a decision that future you won’t regret, regardless of how things turn out.
Q: How much of our anxiety about making financial decisions is felt in relation to the fear of disappointing other people, of missing out on the great things they seem to be doing and not matching their status?
A: A lot, and I think that’s normal. Being good with money is actually just about spending less than you make each month. That’s easy math. The hard part is navigating the emotions behind what you earn, where you spend and the decisions you make every day. We are human. Our social community means so much to us. So, we don’t want to disappoint people and we don’t want to be left behind or not fit in with our community. This is biology at work, not poor willpower. It takes immense work to feel confident enough to say no to social obligatory spending or to not try to keep up.
Q: I like the idea in your book of setting micro-goals – it’s a comforting idea when long-term goals like home ownership and a fully funded retirement can seem out of reach. What might a micro goal be for a household that bought a house not too long ago and is struggling to keep up with rising mortgage payments and inflation?
A: Focus on living paycheque to paycheque. The biggest goal is to not go into more debt if you can help it.
Q: You discuss the idea of decision predictability in the book – choosing a course of action that gives you control, or at least the feeling of control. Can you tell us how you help clients make decisions that help them feel like they are taking control of their finances?
A: Breaking down what we can and cannot control is important. Stock market returns? Not in our control. Interest rates? Inflation? Housing and rent prices? Nope. So, focusing on what we can control comes down to the day-to-day financial decisions we make. How much to spend. What do we spend it on. This is all within our control.
Q: What are the financial decisions you can make in calm times to help you through potential future setbacks like a job loss, illness or, to use an example in the here and now, your mortgage payments go up by $700 a month?
A: I’ll say this until the day I retire – an emergency account. Life will throw you curve balls. If you have a bit of money set aside (not invested!) for this, it will help you feel more in control and confident when life inevitably gives you a lemon.
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Rob’s personal finance reading list
Renting vs. owning a home
A Washington Post columnist on how renting makes sense in your 20s and 30s, then loses its appeal.
Cheap cars that sip fuel
Can’t swing an EV, but want to keep fuel costs down? Check out these fuel-efficient gasoline-powered cars.
If your mortgage renews in 2023
Five thoughts to manage the burden of high rates, which are expected to persist though much of the year.
Are you a ‘kidult?’
One-quarter of toy sales are to adults buying things for themselves. Enjoy.
Today’s financial tool
What to do about Canada Pension Plan retirement benefits if your spouse dies.
The Money-Free Zone
Muodonmuuttaja, from the band Paakallo. Described as surf guitar meets Finnish melancholy.
Stress Test Season Seven
The Stress Test podcast team is about to start work on Season Seven. What topics would you like us to cover? Our focus is on personal finance and investing for Gen Z and millennials. E-mail my co-host, Globe personal finance editor Roma Luciw, with your ideas and suggestions. She is at rluciw@globeandmail.com.
Who I’m following on Twitter
Jonathan Chevreau, a veteran personal finance writer who has seen it all. When I broke into personal finance writing, Jon was my competition at the National Post.
Calling all retirees
Are you a retiree interested in discussing what life is like now that you’ve stopped working? Globe Investor is looking for Canadians to participate in its Tales from the Golden Age feature, which discusses the realities of retirement living. If you’re interested in being interviewed for this feature, and agree to use your full name and have a photo taken, please e-mail us a few details about your retirement life so far at: goldenageglobe@gmail.com
What I’ve been writing about
- This is the best time in ages to crashproof your RRIF
- Bad weather and blundering airlines have turned trip insurance into a travel essential
- 2023 will be a better year for homebuyers, mortgage holders, investors and people sick of greedflation
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Is the middle class dead for millennials and Gen Z? • Gas prices are soaring. Are electric vehicles an affordable solution? • Crypto is booming, but should you invest? • How are young Canadians dealing with soaring rents? • Inflation is squeezing our finances. What can we do about it? • Is a hot housing market squeezing Canadians out of their small towns?
- ✔️ The housing file: How bad is housing affordability? Even a crash won't help • Sell the family home to lock in profit and then rent? Better not • Why young adults can't afford houses: Hard work got you more in the past than it does now • Five reasons you should not buy a house till you're at least 30 • Now more than ever, owning a house is not a retirement plan
- 📈 Investing: The 2022 ETF buyer's guide: Best Canadian equity funds • The 2022 Globe and Mail digital broker ranking: Does the zero-commission revolution flip the script on who's best? • With bonds sinking, conservative investors are waking up to risks they never saw coming • A five-step plan for dealing with the sad fact that almost every investment is falling lately • The best financial advice in advance of retirement? Work on your marriage • One-year GICs are the best deal in town for safety seekers • What to do if the financial plan you paid thousands for disappoints
- 💰 Your money: Are you prepared for the pandemic wealth boom to blow up in our faces? • This hard-working 24-year-old is nailing it financially. But where’s the happiness? • Who should and shouldn’t worry about the wave of rate increases this year, and what every stressed-out borrower should do right now • Don’t make this potentially costly assumption about the CPP Survivor’s pension
