I read an interesting article on CTV News last night!  The lady was talking about the attitudes of the wealthy and was impressed that most wealthy people she interviewed, discussed wealth outside the terms of money.  Whenever money did come up, a list of generally accepted mindsets or attitudes began to develop and she shared them in her article here:

http://www.ctvnews.ca/5things/pattie-lovett-reid-engage-in-these-6-habits-of-the-wealthy-1.3374225

When I read this list, I was suddenly amazed at how my own family often accuses me of having a poverty mindset!  I had to add my own thoughts to the author’s 6 main points in the article above.  Before writing these out however, I showed my daughter this list and asked her how many of them are present in our home.  She responded with “most if not all of them”, although current finances prevent us from enacting one of the sub-points in this list.  It hasn’t however, stopped us from trying in the past, nor will it stop us from trying in the future.  Here are my own thoughts.  Anyone who has purchased my course “The Poor Man’s Budget: a Five Week Course – Learning to live within your means” will recognize some of these points.

Change your money mindset: Have a positive attitude, increase your knowledge base, have goals and get disciplined ~ This begins by being thankful for what you have and following that Biblical concept that if you have two of something, give to him who has none.  It can be tempting to hoard when you are financially struggling, living below the poverty line, or desperately battling debt.  But if you honestly end up with more of something than you realistically know you need (not want), giving it away to someone else in need also contributes to a more positive attitude.

Sweep away your financial dustballs or myths:
a) Self worth equals net worth (Clearly it doesn’t but some might think it does) ~ I run into many people who believe this lie.  Your self-worth is not found in things, nor in others around you.  Your self-worth is found in the One Who made you!  Your self-worth is found in Jesus Christ.  Believe what He says about you in His Word and lack or plenty won’t affect your view of yourself.  Secondarily, look after yourself no matter how much or little you have.  You can always use water from a public fountain to wash up in the morning if you live on the streets.  You can brush your hair and straighten your clothes.  Walk with purpose rather than ambling aimlessly.  Shake hands firmly and meet people eye to eye when greeting them.  Don’t let life’s problems define who you are.  Everyone, rich and poor have issues they battle with.  Hold your head up and don’t let your particular issues drag you into the dirt.

b) A little debt never hurt anyone (Yes it will) ~ Financial advisors will tell you on one hand that it isn’t wise to get into debt.  They will turn right around in the very next sentence and tell you to get a credit card so you can build up a positive credit rating.  They will then go into detail about how to manage that credit card so that you ideally never slip into debt.  Human nature, being what it is, will invariable see the credit limit, see an emergency, what Christmas approach, and decide to spend just a little bit more than they can pay off at the end of the month.  They will justify it by saying now they have a debt load against which to build that credit rating, because creditors will see the monthly efforts.  Now this is true to a point, but it will come back to bite you eventually.  Yes, unfortunately the modern financial world won’t sell you a car or house if you don’t have positive credit ratings, but a little debt has and will continue to hurt people.

c) I need at least $1 million to retire (No, you don’t) ~ What you need is to assess the lifestyle you want when you retire, what would it cost now and what is the current inflation rate?  Based on that inflation rate, how much will you need to have in savings when you retire to lead that kind of lifestyle month by month?

d) I need to be a math major (Also, not true) ~ No, the above calculations are basic math.  Addition and multiplication and maybe some division.  If you graduated grade 6, you have what it takes to figure out the previous answer.

e) I don’t have enough money to start investing (How about $25 a month?) ~ Most people can afford at least $25/mo.  Those living on fixed incomes may not be able to however, nor those living below the poverty line, but whenever possible, it is advisable to set aside even $5 a month if you can manage it.  What I find in our household is that I can get up to $3 or $400 saved up, then an emergency comes along or income takes a dive and I need the funds to buy gas and groceries.  I am looking forward to the day when income is steady and I can get that savings account above that particular threshold.

f) It’s too late for me to start building a nest egg (No it isn’t, and retirement could last a third of your life) ~ It’s true, you can start saving at any age, the earlier the better, but any time is a good time as long as it is sooner to your present than later.

g) Personal finance is all about investing (It is so much more encompassing: debt management, insurance, retirement planning and more) ~ The biggest point in personal finance, is budgeting based on what you are regularly earning at the time.  Then learning to stick to that budget.  Failure to get this step down will make any other financial management task more difficult.

h) I can do it alone (Maybe, but start by asking for help) ~ If you understand how to set money aside and not touch it, if you know about TFSA’s or RRSP’s already, sure, go it alone, but be almost religious about the plan you put into action.  Asking for help often involves paying an advisor for their time or using their ongoing services from which they get paid a commission. If you can’t afford to pay someone for help, start small and work from there.

Eliminate the spending habit: Live below your means and ditch your bad debts ~ Hear, hear!!!  This is the second worst problem I am seeing among those who claim to be struggling in their finances.  They still visit the corner store regularly.  They still buy cookies and candy bars regularly and sugary or other unhealthy food choices when grocery shopping.  They still think they can engage in bad habits that cost them anywhere from $200/mo to $500 or more and they wonder where their money is going!  Newsflash! You don’t need that jacket on sale when you have two others at home already.  You don’t need sugary drinks or foods when because you are struggling, you need healthier food options instead.  You don’t need to waste gas with extra-curricular activities when you can’t afford the gas to begin with.  Start walking more.  Cancel the Cable TV subscription and watch all your shows online.  If this step isn’t mastered, the previous ones will all be derailed by some justification to spend!

Create a savings habit: Pay yourself first ~ See the previous comments about saving and spending.

Embrace the investing and compound habit: Learn more to earn more and compound your earnings ~ This may be where you want to ask for help, but in a standard savings account, if you leave your money there, the interest accrued will compound based on what stays in the account, previous interest and all.  This can work in your favour.

Choose a destination: Get real and set goals ~ Revisit this entire list, master the other points and when you get to this one, write down those goals.  In a quick-fix, instant-access society, long-term gratification seems like punishment.  But if you can get over the need to spend and start actively saving toward your goals, you will discover the pride and personal joy in having achieved those goals on your own!  Start with small goals that you can reach if you are disciplined in a month.  Say perhaps you can get $25 put aside into savings.  Reward yourself with a hot bath that night.  Say perhaps you went for three months putting that money aside?  Take $5 and go buy a booster juice smoothie (remember the poor spending point above).  Say perhaps you managed to maintain your new saving regimen for an entire year, take $20 and go have pizza!  These examples are merely for savings goals, but you might have other goals, like paying for a college course, replacing a dieing vehicle, maybe even owning your own home and saving up for a down-payment.  Once you realize you can meet your smaller goals, these larger ones will become easier to achieve and you’ll have the necessary patience to see them through.