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Wealthy Barber Advice is to Live Within Your Means

Wealthy Barber Advice is to Live Within Your Means

Whether it’s helping millions of Canadians achieve personal financial success or investing in low-fat cookbooks, David Chilton has always had a knack for recognizing great ventures, a skill he proudly leverages as a “dragon” on CBC television’s #1 hit show, Dragons’ Den. Called “charming, unpretentious, and funny,” by The Chicago Sun-Times, David puts his business expertise and life experience to work in his informative and inspiring talks. The Calgary Herald caught up with David recently to talk about the growing problem of personal debt:

The fact about half of Canadians are living paycheque to paycheque these days doesn’t come as a big surprise to one of the country’s leading educators in the area of personal finances.

David Chilton, well-known author of The Wealthy Barber and television personality with Dragons’ Den, said he’s still very worried about the level of personal debt Canadians have taken on over the years.

“No question about it. In general, our knowledge in personal finance is improving . . . But I’m still worried about the debt,” Chilton said in an interview with the Herald Tuesday following a speech he gave in Calgary at the 46th Annual Economic Developers Association of Canada conference.

“With these (low) interest rates, we’ve been able to survive . . . People point out there’s a low default rate but there’s also a low savings rate. And the reason the low savings rate is in existence is because we’re using so much of our cash flow to repay our debt. And I still think people are living beyond their means in too many instances.”

The recent sixth annual National Payroll Week Research Survey, conducted by the Canadian Payroll Association, pointed to a weakening financial picture for working Canadians and Albertans across the country. Many are feeling the financial squeeze these days, living paycheque to paycheque, saving less, postponing retirement and feeling overwhelmed by debt.

In Alberta, 42 per cent of respondents, the lowest in the country, said they are living paycheque to paycheque, down from an average of 48 per cent over the past three years.

That’s better than nationally where 51 per cent of employees reported that it would be difficult to meet their financial obligations if their paycheque was delayed by a single week. This is up from an average of 49 per cent over the past three years.

The report also found that 39 per cent nationally and 37 per cent in Alberta say they feel overwhelmed by their level of debt (versus an average of 32 per cent and 37 per cent respectively over the past two years).

“I see so many financial plans. What really surprises me is that it’s just not low-income Canadians,” said Chilton, of people finding themselves in financial straits. “That makes sense. Their goal is to survive. It’s very tough to plan for the future when you’re having trouble making payments and putting food on the plate. We all understand that. We need hopefully to get their incomes up.

“But what’s really interesting is we not only have middle-class income families but upper middle-class families who are living paycheque to paycheque. They just bought so much stuff and they’ve stretched so much to buy it on debt that their cash flow is going to servicing the debt and going for lifestyle reasons but at some point they’re going to have to make some changes to their habits and set aside more money for the future.”

He said if interest rates ever went up significantly by 200 or 300 basis points Canada will have quite a number of financially-pinched people.

Chilton said the bottom line is that people have to learn to live within their means.

“I find people who live within their means are happier,” he said. “There’s a misconception out there that if you sacrifice today you’re going to be less happy today but you’ll be well taken care of. It’s not true. You’re happier today too because you’re not stressed about your financial future and you’re also not caught up in the materialism of always trying to own things.”

By Mario Toneguzzi/Calgary Herald/October, 2014