The MapleMoney Show » How to Save Money » Budgeting

Millennial Struggles with Money, with Jessica Moorhouse

Presented by Borrowell

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

My guest is millennial money expert, Jessica Moorhouse. She’s an Accredited Financial Counsellor Canada, and is well versed on many of the financial issues facing millennials today. You can find her at jessicamoorhouse.com or listen to her very popular, Mo’ Money Podcast.

In this episode, Jessica and I discuss the struggles that many millennials are facing when it comes to their finances. As expected, Jessica offers a wealth of insight, as the conversation ranges from robo-advisors to why she avoids most personal finance apps.

Jessica also shares a recent habit she’s developed that’s driving her husband crazy!

This episode is made possible by our sponsors at Borrowell. Whether you’re looking for a personal loan, a car loan or a mortgage, it’s important to know your credit score. Borrowell will provide you with your Equifax Credit score, for free, and the process only takes a few minutes. Access your credit score today!

Episode Summary

  • The #1 financial struggle facing millennials.
  • Why you should be cautious when receiving financial advice from others.
  • Find out why Jessica’s favourite debt repayment plan has a lot to do with investing.
  • Snowballs, Snowflakes and Avalanches.
  • 3 things that will have you feeling confident about managing your money
  • Why so many personal finance apps are overrated.
  • Jessica recalls an embarrassing money mistake.
  • The one thing people don’t think about when it comes to money.
Read transcript

Welcome to the Money Maple Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom.

Today on the show we’re going to be talking the struggles millennial are facing when it comes to their finances. To do that, I brought on millennial money expert, Jessica Moorhouse. She’s an accredited financial counselor in Canada and you can find her at jessicamoorhouse.com or you can listen to the Mo’ Money podcast.

Before we move on though, I want to thank our sponsor, Borrowell. It’s important to know your credit whether you’re looking for a personal loan, a car loan or a mortgage. All of that is affected by your credit score. Not only can you get the loan but what interest rate you’re paying. Luckily, Borrowell has the Equifax credit score. You can get it completely for free. My wife and I both did it and it took us less than 3 minutes each. You just need to head over to maplemoney.com/borrowell where you can get your free credit score today. Now let’s chat with Jessica…

Tom: Hi Jessica, welcome to the Maple Money Show.

Jessica: Well, thank you for having me on, Tom.

Tom: You’re my very first guest. This is the second episode. The reason I brought you on is because you’re a big name in Canada, especially with your podcast, and I know you deal with a lot of millennial issues and I wanted to talk about that.

Jessica: I’m super excited to dive in. Thanks for having me as your first guest. I’m so honored.

Tom: Thanks for being on. Right off the bat, is there a number one struggle you hear from millennials?

Jessica: I would say there are two, possibly three. These are the most common ones I get all the time. It’s either they are starting to get to know more about money management. They’re getting older and realizing, “Oh, I’ve got to get my stuff together.” Usually they take a look at what’s going on with their finances and they realize they have a huge student debt, credit card debt, all this debt, basically and they start panicking. They’re like, “Oh my God! I had no idea I am actually $35,000 in the hole! What do I do?” That’s the big struggle, “How do I actually attack this? I didn’t realize it had gotten so bad.” The other big struggle is for people (similar to me) in that I’ve never really dealt with a debt but I’ve always had this issue with whether I’m doing it right—that financial confidence. That would be the number one thing and then the debt component after that. A lot of people that read my blog and listen to my show are women who have this issue. They think they’re doing it the right way. They’re listening to my podcast and other people’s blogs. They’re very knowledgeable but they’re not sure or confident if they’re on the right path. I used to be the same exact way too. I mean, I’ve been blogging for almost seven years and it really wasn’t up until maybe three years ago that I started to feel as though I could have a conversation with someone at a party about investments and hold my own and not feel like I’m an imposter. The imposter syndrome with finance is so real, it’s insane.

Tom: So this is more of a confidence issue for a lot of them?

Jessica: Yeah, because we’re in this really great age where there’s so much free information out there. And yes, there’s bad advice and information out there too but, in general, if you really just take some time to educate yourself you’ll be able to figure out how to manage your own finances totally fine. I think a lot of us need—and maybe this has a lot to do with how we were brought up in our generation; getting those gold stars all the time, always having teachers… I don’t know. We always feel like someone has to tell us, this is right, right? I was the exact same way. What I try to educate people about is, if you don’t quite understand you really just have to take more time to educate yourself. That’s how that confidence builds. For me, I’m self-taught with all this. I read books and listened to podcasts and stuff but it wasn’t until I actually took my first personal finance course at the Canadian Securities Institute that I said, “Oh, yeah, I know this.” I already knew that so why did I not think I knew that? Again, that’s a millennial thing. I needed to take a course to know I knew what I was doing.

Tom: Yeah, I think your story is similar to mine where you start off just consuming all the information from books or blogs and everything. That will take you a long way. Really, one of the things is, there’s not always a right way, is there? Sometimes you almost have to try things out and maybe make some mistakes to figure out what works for you.

Jessica: Exactly. And that’s also another hard thing to really grasp and understand. It isn’t all black and white in personal finance. There isn’t always a right way or wrong way. There is for a lot of things where you can say, “Yes, you’ve got to do it this way because it will definitely work,” but there’s a lot of different topics where you can do something completely different from some else and still get a really result. One thing I notice, especially talking to other people in the personal finance space or just people who were interested in personal finance and did a lot of research is that a lot of people have very strong opinions. And sometimes, if you’re not confident with the information you have, you’ll take their opinions as fact. Then you’re think, “Oh, maybe I’m doing it wrong. Maybe I should do this.” But when you look more into it you say, “No, actually, I think they’re wrong,” or “I don’t agree with how they’re doing it. It doesn’t work for me personally” so there are a lot of different elements. It’s not just about financial literacy. It’s a very important component but a lot of it is really understanding who you are, what your goals are, what your values are and understanding when people communicate to you about personal finance, what’s their MO? Where are they coming from? What are their values and opinions? And that will give you a better understanding, “Oh, okay. I get what they’re talking about but I just don’t agree. It’s not for me.”

Tom: Exactly. That’s what I was thinking, especially with bigger celebrities. They sort of have to draw that line in the sand where they say something—and they keep it simple so people can follow it, but sometimes simple isn’t always right. You may not get a 12 percent return on your investments just because they say you will. You have to use some common sense and just try things out. You had mentioned paying off debt as being a big problem. How do you respond to that when someone brings that up? Do you have a favourite way of dealing with that?

Jessica: A favourite way… One thing I usually get in that conversation is that people think, “Yeah, I have debt and I don’t know what to do. But, I also am really interested in investing because that’s way sexier than paying off debt.” To them, paying off debt is that you’re dealing with an issue, a problem that you started three, five or ten years ago and even though they know they should deal with that, investing looks cool too. If they invest their money, they can make money. That’s way more enticing. What I encourage people to do is to make a debt repayment plan but there is also nothing wrong with investing at the same time. I feel like a lot of the information I consumed in my 20s about debt repayment was so focused on doing everything you can to pay off your debt. Throw all your money at debt. A lot of these people would get back into debt after that zero mark because they didn’t actually know what steps to take afterward. That’s all they knew was how to repay debt so they get into this sort of ‘debt cycle’. You need to create better habits for yourself—saving habits, investing habits. Once you have become debt-free you can easily just transfer that money you were dedicating to debt into savings accounts and into investments. That’s what I encourage them to do. If you are paying off debt, I think it’s so important to (at the same time) be putting money into your savings account for your emergency fund and also starting to slowly invest. Nowadays, it’s so easy to set up an investment account with a robo-advisor or doing it yourself and you don’t need that much money to start. I think most robo-advisors don’t have a minimum so you can have $100 or something to start. So, that’s something I always encourage people to do. You also feel like you’re taking care of your problem but you’re also doing that exciting part of investing and seeing your net worth grow.

Tom: I like that idea of starting the habit of investing. I was a strict numbers guy. I had a little bit of debt from college. Nothing major, but just looking straight numbers I did the format of paying the highest interest debt first to narrow it down then I started saving and investing. That worked for me just because all I see is numbers so that habit of paying off debt and investing is just a great idea. Can we get into some of those debt payment ideas—

Jessica: Yes.

Tom: Different options for these different kinds of people?

Jessica: Yes, well you mentioned one of them. When I talk to people about debt there’s two (and a bonus one I wrote about for my blog). They are the three main ones that everyone should be aware of. There’s the debt avalanche method which is tackling your most expensive debt first. That’s the one with the highest interest, paying the minimum balances on all the rest of your debts but throwing extra money (as much as you can afford within your budget) onto your most expensive debt. The next one is the debt snowball which I’ve found when talking to people, honestly, they seem to gravitate more towards that one. That one was made popular by Dave Ramsay who is really big in the United States. That one is really about attacking your smallest debt first. And, yes, honestly, you are going to be spending more money on interest doing that method but for me, if I were in a debt situation I would probably go with that method too because you get that easy win right off the bat. So, if you had three different debts—one was $10,000, one was $5,000 and one was $1,000 you can knock that first debt off pretty quickly because it’s pretty small. Then you get that win and think, “Oh, look… I’m one-third of the way there! I’m almost debt-free” and all because you were able to knock that first debt off. On top of that (and something to add on) is the debt snowflake method which is if you get any kind of free money, additional money— a tax refund, a monetary gift for your birthday or holiday, or if you have a little ‘side hustle’ and you don’t know what to do with the money, or a bonus from work, you can throw that extra money onto your debt so it accelerates how long it will take to pay off all of your debts.

Tom: A lot of this sounds like people just needing to get organized with their debt payment. Are there any other issues where people are maybe getting disorganized with their finances? Again, these optimizing things—are there other time that’s happening?

Jessica: When people approach me to work with me as a financial counselor that’s the main thing. They’re terrible with their money or they have some debt but think they’re doing something wrong. A lot of it is because they feel so disorganized and stressed out about it. For me, I’m a spreadsheet person. I love to organize and lately I’ve been getting into this weird habit of cleaning everything in the house at 10 pm. It really annoys my husband but I’m an ‘organizing issues’ freak. But really, there are a couple of foundational things that everyone needs to know even if they don’t have debt but they still feel like they’re floundering or coasting with their finances and don’t know what to do. These are things I do in my own life. They’ve really, really helped me feel like I know what’s going on with my money at all times. It’s setting up a budget which is just a spending plan. I know people hate the word, budget, and I totally get that because it’s very overused. That’s why I usually like to say it’s a spending plan. It’s literally just where you want to allocate your income and organizing that into things like where you’re going to save your money, your savings buckets, your savings goals and then allocating the rest of the income to your fixed expenses and variable expenses. It’s very simple. Next is tracking your spending. This is something that I personally do manually because, for me, I’ve tried pretty much every app out there and none of them really work. It’s a nice idea to automate it but sorry, it’s not going to change your spending habits. You’re just going to perpetuate the problem. So, this is something I do. I’ve got a spreadsheet and I just download the information from my bank and credit card companies. I usually download a CSV file then just copy and paste the information into my spreadsheet so I know exactly how much I’m spending each month. This way you can see if it’s close to your budget or off a bit or under so you know what’s going on. The last component is tracking your net worth so you see your progresses month-to-month and year-over-year. Once you have those things set, you will feel so much more confident and you’ll say, “Oh, I know what’s going on” because you have all that information. That’s really the most important thing you need to do.

Tom: Exactly, that’s great. You mentioned not liking an app and it seems there are a lot of apps for finance and they’re normally geared toward millennials. Are there any apps you do like? Anything from saving money to investing money… any kind of app that’s connected to money.

Jessica: I think a lot of my issues with these apps—and I’ve talked to a lot of people behind these apps, is that none of them really come from a place of actually knowing about money. They’re developers, marketers and business people. They don’t come from a finance background so they just see this industry niche and decide to create an app for it. But, if you actually talk to these people and ask how they manage their money, they probably don’t use that app. I’ve talked to a lot of successful people that are doing really well in their careers and making good money who use a spreadsheet. So, if those people are killing it (and they’ve got more complicated finances than I do) and they’re just using a simple spreadsheet, that’s probably the route to go. But, since you asked me about some apps, I am a big fan of robo-advisors for investment. I think they’re a great invention and I’m so glad that they’re here. One thing I have started to use but don’t use frequently even though I like the idea of it is Ebates. I try not to do a lot of shopping. I try to live a pretty frugal lifestyle relatively, but when I do buy stuff online from Amazon or whatever, I go through Ebates just to make a little bit of extra money. But, I’m always kind of conscious of the fact that if a lot of people were to use Ebates more they may be enticed to spend more because of that. So, I’m on the fence about that. I like it because I know I won’t abuse it but I feel like most people may abuse it unconsciously. Let me see if there’s another one (app)… No, there’s not. To be fair though, I do hear from a lot of my readers and people from the Facebook group who really like YNAB (You Need A Budget). Again, it’s like anything—if there’s something out there that helps you with your money then I say, do it. But, for me, I’ve tried all of them and they just do not work for me. They just do not.

Tom: One thing you mentioned with Ebates, I used to spend a lot of time on the deal section of Red Flag Deals—

Jessica: Yeah, I used to do the same!

Tom: I was buying so much stuff because it was a deal. It was a bit of the Costco effect too, for me. Everything’s a deal so you do end up spending more.

Jessica: Yeah, when you think about spending more, you’re on all these coupon sites and sites to help you save money—and I don’t really do couponing because that’s a whole different world I just don’t care about. If that’s what your passionate about, that’s great. The same with credit card rewards and stuff, that is great, but I don’t really care. I know I could probably be getting free trips and all that stuff but it’s not my passion so I don’t do it. But I feel that if you’re going to these types of websites or using these apps you start thinking about buying more so you almost (unintentionally) spend more money. For me, that’s why I need to make sure I clear my cache every once in awhile because I’ll be retargeted all the time. I go to lots of websites and do a lot of window shopping by putting things in my cart then just abandoning them saying, “No, you don’t need that. Move away!” Then I retarget and think about it.

Tom: Yeah, if you look at anything, it’s going to follow you around until you buy it.

Jessica: Yeah, I know. It’s evil.

Tom: You’ve been pretty good with your money even before you started blogging and everything. Is there one good story of a mistake that you’ve made before?

Jessica: Oh, I’ve made tons of mistakes.

Tom: Okay, what’s the worst?

Jessica: I’d say a big recent one was—and this is not really a big one but just a stupid, embarrassing, “Jessica, you should know better” one. It was maybe about 6 months ago. My husband and I chose to move financial institutions and it’s such a terrible process because there’s so much paperwork. You have to track things to see if they’ve moved over yet and you worry about how you’re going to pay your credit card…from this account or this account? Or is this account closed yet? In the process of doing this we also went on vacation that week. We shut off—didn’t look at our phones and our mortgage bounced. I thought it was going to go out of one account but it actually went out to the other one and there was no money in that one. So, that was embarrassing. I remember getting a voicemail from the mortgage bank saying it bounced and I thought, “This is so unlike me. What happened?” That was a recent money mistake and that’s just how it goes. I felt so bad. I called them immediately and said, “I’m so sorry. I had the money, it was just in a different account.”

Tom: I’ll have to admit, I did the exact same thing when switching banks. It wasn’t the mortgage though. I think it was a utility bill that was coming out. And sure enough, it bounced. My first thought was, “I’m a personal finance blogger. I can’t do this.”

Jessica: (Laughs) And you say, “I can’t tell anyone this.”

Tom: Yeah.

Jessica: You know what I think? This is something I used to think as a prude millennial money expert, I can’t make a mistake because people expect an expert to be perfect. But actually, when I share money mistakes and stupid things I’ve done, most people appreciate it because it humanizes you. And it’s true, I’m human. I’m good with my money because it’s something I’ve developed over years and it’s something that I actively do but it doesn’t mean that I don’t suck once in awhile.

Tom: I always figured it’s the same. I watch a lot of hockey, the Edmonton Oilers at least, but even the best players can do something dumb sometimes so it does happen. One more question I wanted to ask you, everybody is coming to you via your Facebook group as a counselor and everything, is there something that people who come to you should be asking but don’t?

Jessica: Hmm, that’s a really good question. I would say a lot of people come to me to ask questions like, “What do you think about this, this or this” and a lot of them don’t really think about the “‘why” actually. They think about the “how” and the “what” but they don’t necessarily think about what the general picture here really is. Why do you want to do this? What are your values? It’s kind of getting a little bit more into that psychology of money-minds and stuff. A lot of people don’t even know, unless you’re really into the personal finance world, that mindfulness is really trending now. No one knows about that kind of crap so I think when I initially talk to someone, really going through the problems asking how they want to solve it, I take a step back and talk about how they got into the situation, why do they want to get out and what do they want their future to look like. And a lot of them have never actually really thought about that, they just know they have to save for retirement. They’ve never really thought about what retirement looks like, when they want to retire or anything like that.

Tom: They know enough to go through the motions but necessarily—

Jessica: Yeah. I hear over and over, “I know I’m supposed to do this,” but they never really think about why. Lots of people don’t even talk about why. They’re like, “Stop spending money! Pay down debt!” But why, though?

Tom: Actually, that’s a good point. Well, thanks for being on the show. Can you tell everyone where to find you?

Jessica: Absolutely. You can find me on my website; jessicamoorhouse.com. And, of course, I’ve got my own podcast called, Mo’ Money Podcast. You can find that on iTunes or anywhere there’s a podcast app. And, you can always hit me up on Twitter, I’m there most all the time at; @jessi_moorhouse.

Tom: Great, thanks for being on the show.

Jessica: Thanks for having me.

Thanks again to Jessica for coming on the show. You can find show notes for this episode at maplemoney.com/jessicamoorhouse. If you’re a new listener you can subscribe to the show on iTunes for audio or YouTube for video. Thanks for listening to the Maple Money Show.

'A lot of people don’t talk about the why, it’s just Stop spending money! Pay down debt! Yeah, but why?' - Jessica Moorhouse, on the importance of having a money mindset.Click to Tweet

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