Don’t Be Embarrassed By The Way You Manage Your Money
Building wealth is possible for everyone. Explore practical steps to change your financial habits and secure your future.
At least once a week, I get an email from a fan who tells me they are tired of being broke, have lots of debt, and want to start building wealth now rather than later.
Not only is that a brilliant idea, it’s the beginning of a journey back to square one, where you get to clean your financial slate and do it right.
Are you embarrassed by the personal finance decisions that you are making?
You should be if you’re making simple mistakes, causing you to spend more money than you should, especially when you have technology at your fingertips.
Rate comparison for everything is available to us, but when it comes to financial rate comparisons, it takes a back seat to everything else.
Related: Stop blaming the government for all of your debt problems.
Not having money and surviving on a low income or struggling with a high debt ratio can be embarrassing for people, so what they tend to do is avoid personal finance conversations.
I have yet to meet someone who is content with having a limited income and not being able to explore the world.
You might enjoy simple pleasures, but deep down, if you had extra money, you’d undoubtedly find ways to spend it, or better yet, invest it.
I’m sure you know someone who acts like they are rich but far from it, because their credit cards have more power over them than their supposed wealth does.
There’s a big difference between building wealth the right way and believing you are when you’re not.
Wealth building begins with priorities, which means if you have them backwards or slanted, then you’re missing out on cash-saving opportunities.
Neglecting to compare
In a recent Ipsos study of 2501 Canadians released in September 2016 titled “Are Canadians Making Embarrassing Financial Decisions,” the results show that we aren’t doing so hot with our personal finance making decisions.
Am I shocked?
Not really because we don’t think about the cost-savings when it comes to finding the most affordable rates when it comes to what I like to think of as the “Big Stuff” that we need, rather than what we want.
According to the Ipsos report. Canadians are not doing their due diligence when it comes to personal finance.
Canadians love to shop around, but priorities are not placed on our biggest financial decisions first.
Most people would agree that saving money on groceries is smart, as is price-matching to get the best deal on just about anything these days.
67% of Canadian mortgage holders say taking a mortgage is a ‘very important’ financial decision. But they spend nearly as much time picking a new piece of furniture and significantly more time planning their next vacation.- Ipsos Report
It’s easier to plan renovations for some Canadians who put hours of effort into finding the perfect paint colour rather than investing time into finding the best mortgage or auto insurance rates.
52% of Canadian drivers say auto insurance is a ‘very important’ financial decision.
However, they’re spending less time finding the right insurance and more time making other minor decisions, like picking a paint colour.
What’s wrong with that picture?
I’ll tell you.
We are consumed with the easy stuff and put less effort into the financial aspect that will impact our lives for the short and long term.
Established businesses get first thoughts because that’s what everyone else has chosen, rather than taking a chance on something new.
I like to compare this situation to deciding what chocolate bar to buy from the mega variety at the convenience store, to finding out how much a 0.5% rate difference on a $400,000 mortgage will cost you.
By the way, 0.5% over the long-haul would save you a whopping $30,000 according to the Ipsos report, which I’m sure many of you would agree you’d have no problem spending.
That breaks down to savings of $100 a month and $1200 a year.
A financially savvy person would look at the big picture rather than it’s only $100 bucks, who cares.
Of the 2501 Canadians surveyed, 32% of them held a mortgage, spending a whopping 7.5 hours planning a vacation over choosing a mortgage at 5.75 hours.
Priorities.
Where do you bank?
Often, we get asked why we chose to bank with Simplii Financial when the Big 5 Canadian banks were what was considered to be more secure and convenient.
Related: Are my bank savings Safe and Protected?
The reality was and still is that Simplii Financial is an excellent bank that is secured the same way as the other banks, but you pay fewer fees.
Besides, Simplii Financial is a subsidiary of CIBC where all services are provided.
When a customer needs something from Simplii Financial, they have it done with CIBC.
Only 8% of respondents have used rate comparison sites to source their most recent mortgage, even though 60% said they’d be likely to use one in the future.
67% of respondents sourced their mortgage through a bank, followed by 22% through a broker and 13% through a credit union.
Forget about the big-name brands and check out what others have to offer.
Comparing rates is great, but don’t settle for what your bank has to offer when your mortgage broker can get you a better deal.
I have always sourced a mortgage through a broker including our first mortgage online through a rate comparison site.
Did I have regrets about it?
No, they were still there at the end of a phone, and we still had the opportunity to make extra payments so we could quickly discharge our mortgage.
Lucky for us, through our frugal ways, it took us only 5 years to reach mortgage freedom.
At no point did we suffer from a lack of service.
Related: Comparing the Comparison Sites In Canada
My wife and I always use rate comparison sites online to search out the best deals before making financial decisions, big or small.
I was quite versed in using comparison sites, as back in the UK, they have comparison sites for all sorts of products, including domestic gas rates and even electricity rates.
Don’t be scared to do your homework even when it comes to credit cards.
Don’t just go with the company that will give you a credit card; shop around to get the best rates.
Distressingly, 72% of respondents who owned a credit card put more hours into picking furniture than they did sourcing credit card rates.
Why?
The easy, fun stuff takes priority.
Yes, shopping for just about anything is considered fun because it means you’re buying something you didn’t have before, whether it be new or used.
The importance here is the savings rates Canadians are missing because of the priority choices.
Do you catch my drift?
Building wealth without worry
Can you see how poor financial decision-making can look silly to someone who understands the basics of building wealth and applies them?
I’ve listened to countless friends, family, and fans tell me about how they are saving money and are on the right track when they still have consumer debt, yet they are jetting off on vacation every year.
It’s great while you’re soaking up the sun, but when you get back home, you must deal with the expenses of happiness you’ve chosen first.
You can’t have it all but you can proportion life with balanced personal finance management.
You’re expectations of what you think you deserve and what you can afford might be two different things.
I’m not saying you have to put having fun on hold with your life but there is a fine line between having the cash to do something when you have too much debt.
There are always “other” ways to enjoy life that won’t cost you a fortune and that are perfectly acceptable ways of saying you lived your life to the fullest.
Not everyone who doesn’t get the opportunity to travel believes they’ve lived a sheltered life, provided they enjoy it by creating happiness.
The above jet-setting scenario makes little to no sense to money-smart people who put building wealth at the top of their urgency list.
Is building wealth urgent? Depends really on how important having money is to you and what you envision for your future.
Building wealth takes time for most people, so the earlier you start, the better.
I watched a video on YouTube the other day about Rich Kids Going Shopping with a bit of jealousy, but not for their money, rather their priorities and drive for building wealth.
I anticipated the Rich Kids who were showered in cash from their parents.
Boy, was I wrong.
I was amazed at what these young entrepreneurs have done with their lives.
They have the be your own boss attitude, and they’ve just left their teenage years.
One young and rich entrepreneur said that you make your money so you can spend it without worrying so much about the price tag.
Smart thinking.
I know that sounds silly, but when you have all your eggs in a row, money only becomes a number.
You’ve earned it.
You’ve worked hard for it. You should be able to spend it.
The only difference here is that you aren’t consumed by debt and worry that someone is going to default on your mortgage for non-payment.
Yes, the rich can go bankrupt, but I’d rather bank money and manage it than struggle.
Priorities.
Rate-saving winners
These days, the millennials are the winners when it comes to comparing rates because they are technology savvy and are in the loop since many are logged into the web almost at all times of the day.
According to the survey 18% of those aged 18-34 were more comfortable using the internet to compare rates over those who were aged 35-54, where only 6% were comfortable.
For those over 55, only 4% would compare their mortgage rate online.
My baby boomer parents recently got a tablet after much begging and are still struggling with their newfound technology.
It’s easier for them to do things the way they’ve always done them rather than tap into change.
Not everyone embraces change, even if it means saving themselves some money.
How to make good decisions with your money
Stop following everybody else and follow your wealth dreams. Personal finance management starts deep within.
You must want it rather than think you need it.
No one is pressuring you into building wealth if you’re perfectly happy living your life the way you are.
For those of you who want to save money, follow the steps and put the brakes on the stops that enable you to make poor financial decisions.
Embrace personal rate comparison sites when it comes to finding the best deals for your money.
Educate yourself, compare rates, use a monthly budget, and don’t let anyone tell you that you can’t or won’t succeed with whatever you choose to do.
Work hard and the money will come. I truly believe this.
So the next time you ask yourself how to become wealthy, the answer should be priorities.
You can make money now and play later, or play now and hope your financial future is secure.
The choice is yours.
Discussion Question: How have you changed the way you make financial decisions?
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I always try to come up with informed decisions when it comes to finances because it enables me to weigh the pros and cons especially the consequences of my decisions. More importantly, it makes me feel that I am in control like in cash flow vs stock returns.
we all make poor decisions and the only thing that differentiates those who managed to be successful despite of it from those who weren’t able to was the ability to learn from their mistake.