How Not to Move Back in with Your Parents

The title of Rob Carrick’s latest book, How Not to Move Back in with Your Parents, makes it very clear that he is aiming at young adult readers. He delivers sound and understandable financial advice about school, debt, banks, investing, cars, homes, weddings, and insurance without being preachy. I suspect that many people a little older than his target market would benefit from reading this book as well.

One of the main strengths of this book is Carrick’s ability to give practical advice to people in a range of different circumstances. He acknowledges that contributing to RRSPs, TFSAs, and RESPs is a difficult to achieve ideal and explains how to choose just one if you must. And failing that, at least don’t run up your credit cards.

Another of this book’s strengths is the focus on the important issues rather than details. Before launching into the ins and outs of car ownership, Carrick offers some very sensible advice on buying a car: “put it off for as long as possible.” On mortgages, he says “the lowest possible interest rate is your top priority.”

The book contains a number of profiles of young people who have made a few mistakes, but mostly they model positive financial behaviour. These profiles create a feeling that the young reader is getting advice from a peer rather than from an old man (sorry, Rob).

On debt, Carrick says “zero debt is an ideal financial state,” but “let’s not get puritanical here and act like debt is evil and must be resisted at all costs. Debt is a tool” that must be controlled “or it will burn you.”

An interesting tidbit I learned about low-fee student bank accounts is that students must periodically prove that they are still going to school. Otherwise they risk being charged regular fees like other adults.

The book contains a number of “hotlists” including a very useful list of banking blunders topped by “racking up excessive ATM fees.” It’s amazing how many people are willing to pay $3 to take $20 or $40 out of an ATM. Another good list is the “costs of home ownership that will surprise first-time home-buyers.” In the hotlist of “reasons not to buy mortgage life insurance from your bank” I think Carrick missed the top reason which is that the insurer doesn’t check whether to grant you coverage until after you die. There are cases of people paying for this insurance, dying, and then the insurance company refusing to pay off the mortgage.

Unlike many authors, Carrick takes a calm approach rather than sounding alarms. A good example of this is his thinking on retirement savings: “I don’t buy into the never-ending drama in this country about how people simply aren’t saving enough for retirement. In large part, that’s financial industry propaganda designed to sell mutual funds.”

Carrick quoted a poll “indicating that the number of young adults aged 18 to 34 with RRSPs had fallen close to the lowest level in a decade, at 39 per cent.” I wonder if this is largely because some young people have chosen to save in TFSAs instead.

One interesting piece of advice for young people planning their financial futures was to gently check on the state of their parents’ retirement savings to find out if their parents are likely to need financial help in the future. Carrick advises broaching the subject under the guise of asking for advice. That would certainly work on me if one of my sons tried it.

A quote from Jamie Golombek: “80 per cent of all RRSP withdrawals are done by people under the age of 60.” Since most retired people convert their RRSPs to RRIFs before making withdrawals, is this a surprising statistic?

In conclusion, I highly recommend this book to young adults looking for solid information and sound financial advice. Their parents might do well to read it, too.