Learning life’s financial lessons can be a tough battle. No one likes drowning in credit card debt, buying too much (or not enough) insurance, or putting money into the wrong investment. Watching someone else struggle is a bit easier. Smile.
Enter Saving Penny, a series of ten web video episodes featuring a young couple — Penny and Doug — who are finding their fiscal way in today’s financial world.
Penny is a shoe-loving fun-spirited girl who lives life to the max, and her credit card bills show it. Doug, on the other hand, has retirement savings, knows how to invest, and looks at the big picture before blowing his paycheck on fancy vacations and costly restaurants. Penny’s close friend Allison is also good with money, and shares her financial hits and misses with Penny throughout the series.
Explaining complex financial topics in a five minute video is no easy feat, so I can see why the series has been nominated for a Rockie at the 2010 Banff World Television Awards. And even though Saving Penny is produced by Sympatico as a Canadian feature on YourMoney.ca, I think many of the issues these video touch on can help a wider audience — Americans can learn lots too. After viewing the series, I’d like to share 5 Money Lessons Learned from Saving Penny, and encourage you to check it out!
Lesson 1: Discuss money with your “better half”
While many couples wait until after their weddings to discuss money matters, I waited until my second date before asking Carl about his views on finances. Sure, go ahead and laugh. But I seriously didn’t care about Carl’s favorite shirt color or food preferences. Nope. I cared more about our financial compatibility. I wanted a financial love match, not someone who could order the perfect burger.
Shacking up with that “special someone” is a big deal in my books, and I wasn’t about to waste my time dating a man who lived life as a splurging spender while I fought to be a frugal saver. The math just wouldn’t work.
Money is a hot-button topic when it comes to relationships, and there are endless books and studies detailing how couples can resolve financial spats. But why not deal with cash as a couple before walking down the aisle? This is exactly what Penny does in Saving Penny: Episode 9, where she figures out:
- How to deal with shared expenses
- If she should have a separate bank account
- How to fund a joint account
- How to deal with divorce and money
- How common-law relationships work
These are pretty heavy topics for a four minute video, and it’s easily my favorite of the series.
Lesson 2: Track your grocery spending, start a budget.
In Saving Penny: Episode 1 Penny gets on track with her grocery spending and learns to make a budget.
I’m a huge fan of the grocery list. Over the years I’ve found that making a grocery shopping list (and checking it twice) can save you lots of money (and time) when shopping for food. Give it a try by downloading this free Printable Grocery Shopping List.
Penny also finds that building a balanced budget is a vital step for tracking her financial health. If you don’t know where your cash is going, then it’s impossible to meet your financial goals. My series on How to make a budget the unboring way offers several free budget worksheets and budget spreadsheets to help you along the way.
Lesson 3: Get real about credit card debt.
Have you ever had your credit card rejected? Penny does in Episode 2. Her choice in purple stilettos isn’t exactly my idea of stepping out in style, but getting real about her maxed out credit cards is definitely a step in the right direction.
I’ve always been a fan of screwing your credit card company (the legal way) by paying more than the minimum balance and learning the trickster ways those plastic people use to get you to spend.
Want to see how much paying the minimum balance is really costing you? Check out the Credit Card Calculator for the scary numbers. You’ll be shocked. Penny sure was.
Lesson 4: Invest in a diversified portfolio.
In Episode 6 Penny and her boyfriend Doug discuss investing basics. Penny learns about stocks, bonds, and how to build a diversified portfolio.
Long time readers know I invest in a diversified portfolio of index funds and exchange traded funds (ETFs). Americans can find ETF portfolio building advice at Bogleheads. Canadians can learn to build a balanced portfolio using index funds and ETFs at these popular blogs:
All of these sites — both American and Canadian — encourage investors to take note of investment fees such as management expense ratios (MERs) and loads. If you currently invest in mutual funds, be sure to calculate how much you’re paying in fees with the Portfolio MER Calculator. You might not like the results. Sorry.
Lesson 5: Save for your first home.
In Saving Penny: Episode 9 Penny and Doug discuss buying their first home. Penny spies a “cute yellow house” for sale just down the street. But after careful consideration, they decide the mortgage might be too much to carry.
This video reminds me waaaaay back when Carl and I first looked into buying a condo in Vancouver B.C. — a pretty pricey city. Sure, we wanted a place, but after adding up our household net worth, running the numbers using this Mortgage Calculator, and meeting with a mortgage broker, we decided to keep saving for a down payment. Dealing with a mortgage meltdown wasn’t going to be in our financial future. Penny and Doug would agree. 
Squawkback: What was your biggest financial lesson? Ever make a big money mistake?
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Your Two Cents:
Nice idea with the videos, but it would have been nice if they hadn’t used such tired cliches for “Penny”.
The videos are really fun to watch. Thanks for sharing! My biggest financial lesson: never by a stock when the price “drop” – I had lost 3 900$ in Timmino (TIM) in 2008 while trying to do it like Eric Sprott lol. I first invest in 100 stocks of Timminco at around 20$ per unit. Than, when I saw the price was loosing in value, I purchased 100 extra other stocks. Stupiest thing I ever done in my entire life. After the “incident”, I stick to Derek Foster books and portfolio: since that time, I never had the same problem. I still own of the same stocks of Timminco, so my 3 900$ lost is not official, still hope to see it jump, maybe not to its old value, but still hope. In my case, I had to go through this kind of experience to understand the stock market. Better sooner than later. I had been doing great ever since that time, earning dividend and so on. The best is ahead, I hope, despite worlwide economic situation.
Thanks for the mention Kerry! I should check these videos out sometime. Sounds like fun.
This is a really interesting series. I wish it had mentioned investing in index funds with a low MER.
All too often people go to a financial adviser without knowing that they are actually salespeople who try to put them in mutual funds with a 2% MER. Many advisers don’t even offer an index fund with a low MER (1/3%). It is like sending lambs to the slaughter.
First mortgage planning is the key step at the beginning of your career. While low interest rates now may seem tempting, I would be extremely careful. Be sure your job is secured and you have gained enough experience and skills to maximize your potential on labour market. And also have solid cash buffer stored aside downpayment. I think Penny and Doug would agree!
In thinking about “Lesson 1: Discuss Money With Your Better Half”, I couldn’t agree more. They say that the top 3 most stressful things for a marriage is children, communication and MONEY. So, it would be good to avoid the stress by planning, talking about and being honest about your financial plans and goals. I’ve heard of horror stories too about couples in marriage preparation courses who reveal their financial situation (ie. big debts) and it nearly destroys the upcoming wedding!
“..many couples wait until after their weddings to discuss money matters” And right THERE is the reason the divorce rate is so high.