Pattie Lovett-Reid: How to take control of your money
There are money moments in our life that can define us. Costs associated with post-secondary education, your first car, a marriage, your first home and maybe the birth of a child. There are of course many more throughout your whole life. However, when you spend large sums of money, even if you can afford it, it can leave you filled with anxiety, fear and even a little panicked about being financially vulnerable.
Oprah Winfrey once said she worried about becoming a bag lady with a fear of being penniless. Intuitively we know that wasn’t going happen, but the fear was very real.
So how do you break it down into a framework without the fear of financial ruin?
Begin by clearly understanding your values. Are you someone who loves to travel yet are feeling the pressure to buy a new home? You need to fully understand what will give you the biggest bang for your buck. Align your purchases to the things that matter to your most. You get to spend your money as you would like to spend it. It is your money. Trust your gut and live your values.
When trying to save money, do not buy into someone suggesting what it is you should save your money for. When they are your goals, and you own the goals, you are less likely so spend mindlessly -- and that reduces the fear of going broke.
Try not to borrow from your financial future. If you have been savvy enough to pay yourself first into registered plans such as RRSPs and TFSAs, try not to dip into that money to satisfy an urge. We all need an emergency fund in the event we run into a difficult situation. For example, my colleague just repaired a leaky basement to the tune of $7,000: not an expense he wanted or anticipated but the emergency fund covered it off.
Finally don’t buy into lifestyle inflation costs. You may be climbing the corporate ladder or your entrepreneurship might be starting to pay off, but that doesn’t mean your lifestyle needs to become more expensive.
Mindless spending and total disregard for the future can lead to financial regret. The good news is that it’s all within your control if you take charge now.