By: John Robson
Oh great. The government is going to teach us to be financially responsible. As if things weren’t bad enough already.
No, really. A press release just told me the Financial Consumer Agency of Canada has published a “new resource” for young people launching their leaky boats on the ocean of life. Apparently “This resource provides information to help them identify the costs, assess their options and make the best decisions for themselves.”
I don’t even know why they call it a “resource”. I mean, no normal person comes up to you and says “I just published a resource” or “Say, could you pass me the resource.” Nor do I know why the press release doesn’t have a direct link to the “resource”. But these are bagatelles. Here’s what makes me howl: What business does the government of Canada have telling anyone how to manage their finances?
OK, “This resource explains all the expenses people will incur when they move into their own place for the first time: regular costs like rent, utilities, laundry, parking, taxes and maintenance, as well as the one-time “start-up” costs such as moving expenses, furniture and dishes, cable and Internet connections, legal fees and a security deposit.” Which is good. But do you think the government shows any sign of knowing what its expenses will be when it shrinks then expands then shrinks the public service? Heck, did they know what it would cost to renovate West Bloc?
Look. What if the government was a person? Just striking out on their own after, as FCAC Commissioner Ursula Menke patronizingly says, being “used to relying on their parents to manage finances”? The federal government actually makes about $250 billion a year which most young people will not whatever their self-esteem councillors led them to consider a reasonable starting salary for a person as gol-durn special as them. So let’s make the math simple in case they went to a public school, and assume their starting salary will be $25,000 (this way we can just divide everything by 10 million).
Unfortunately our putative young person has annual expenses of $28,000. So they’re going $3,000 into the hole every year. Which might be sort of OK, even though it’s 1/8 of their income… except they also have debts of $57,000, causing interest payments of $3,300 a year, so they’re borrowing every year just to pay interest and falling further behind as they go.
What’s worse, he or she somehow acquired the obligation to fund a bunch of hapless nephews and nieces with expensive social lives. And curried favour with elderly relatives by promising to support them to the tune, accountants estimate, of about $150,000 in “unfunded liabilities”. Which carry nominal interest of around $9,000 a year, so in fact debts are eating up half their income and rising.
Now FCAC helpfully suggests that before moving out you “Consider options to reduce costs, such as sharing accommodations.” But it’s kind of hard for the Government of Canada to move in with another nation, especially as we’re so big. It’s not like we could fit into some of the unused bits of Mali.
Then there’s “Make a budget: learn how to tell your wants from your needs, and set up a realistic budget that takes into account your financial goals, saving for emergencies, paying down debt and saving for the future.” Ayuh. There’s a plan for you. Start by listing the core duties of government, namely protection of persons and property, and give up the party lifestyle that makes you popular because you buy stuff for everybody who even conceivably might vote for you.
FCAC also says “Check your credit report and credit score.” But when you’re in the mess Joe Canada is, that’s not a good idea. It will scare you silly and you won’t dare approach a landlord knowing what they’re about to learn about you.”
Under the circumstances, you might think bluff and bluster is your best plan. Especially if the government of Canada really is your role model, with its massive recent increases in spending, staffing and deficits, which just prompted this piece of self-satisfied bafflegab from the Finance Minister about what he will, won’t or might do to reduce, control or increase spending depending what happens or doesn’t: “Canada stands ready to respond again in a flexible and pragmatic manner if the economic challenges from beyond our shores begin to threaten jobs and the economy here. But we must always remember that we will only hold onto our advantages by continuing to pursue those strategies that made us so resilient in the first place—responsibility, discipline and determination.”
OK, that was smooth, right? Maybe if you can talk like that you can forget all this painful talk of responsibility and cutting expenses and just talk your way through everything awkward. But you should bear in mind that, unlike Slick Jim, you don’t have the power to impose taxes.
And while Ben Franklin was right that you sometimes get very good advice from people who don’t practice what they preach because “He that’s aground knows where the shoal doth lie”, as this advice from the government is not offered in anything resembling a spirit of contrition I’d stay as far from it as your legs will carry you.
So what’s to do if your balance sheet looks like theirs? One option is to move out and declare bankruptcy. Another is to stay home, hide under the bed, sponge off your parents and fire whatever dunce has been giving you financial advice to this point. Because I can tell you one thing: If you move out with this balance sheet and keep listening to whatever Keynesian genius got you into this mess, you are going to wind up living in a van down by the river with cardboard over the windows.
Especially given your adviser’s lack of shame.
I’m John Robson, and that’s the Byline.