“My take on debt has changed over time”: Eva Wong on saving and investing

What was the biggest money lesson you learned as an adult? 

The biggest money lesson I’ve learned as an adult, I learned at Borrowell and through our members. What I’ve learned from interviewing some of them is that a lot of people who struggle with money are actually very good at managing money, but they don’t have enough income. 

I probably had prejudices before, thinking that people who struggle with money just aren’t managing their money well. But what I’ve found is that when you live on a very narrow margin, you actually have to be very good at managing your money. If you’re like me, making a salary that covers my expenses, I don’t have to be good at managing my grocery bill, or worry about my car breaking down, because I know I have enough money to pay for it. I don’t have to be that good with my money because I have an income that’s higher than my expenses.

But for people who are living paycheque-to-paycheque, a lot of them are very good at managing their money because they have to be. It was good for me to learn that, because it can be easy to say that someone has a spending problem but, for a lot of people, they actually have an income problem, and it doesn’t mean that they’re not diligent with managing their money. That’s why it’s important to have good credit, so that people can access funds if there is an emergency, because they often don’t have savings to fall back on.

What’s the best money advice you’ve ever received?

To start from a young age the habit of saving at least 10% from your earned money. 

What’s the worst money advice you’ve ever received?

Having an emergency fund when you have outstanding debt, and if you have access to a line of credit, doesn’t make sense. So, the worst money advice is putting a significant amount of money into an emergency fund of cash that just sits there.

If you have a line of credit you could draw from in case of emergency, I would use the [emergency fund] money to pay off debt. If you have debt, that’s a guaranteed interest cost, as opposed to just paying interest when you use your line of credit. Later, when you’ve paid your debt, you can start an emergency fund or invest your money. But pay off your debt first. 

Would you rather receive a large sum of money all at once or a smaller amount regularly for life? 

I’d rather receive a lump sum all at once. It gives you more flexibility to do something impactful and meaningful with it. I feel like having a smaller amount every week or month is more like a safety net and more of a safe answer. 

What do you think is the most underrated financial tip?

Paying off debts, especially the ones with high interest, like credit card debt, is underrated. A lot of people get caught up in thinking they have to contribute to an RRSP, or they have to save, or they need an emergency fund, but if you’re carrying a balance on a credit card and paying 20% interest, I think the better financial choice is to pay off debt.