Some of my best personal finance advice – so you don’t have to make the same mistakes I did!
Human behaviour is a funny thing. Some folks like to talk a big game about lessons learned but fail to act accordingly.
Why is that?
What makes our behaviours so painfully difficult to change?
We’ve all heard “where there’s a will….there’s a way” but that’s just part of the behaviour-change equation in my opinion.
In my workplace role, change is all around me; it’s what I do and what I help manage but I certainly can’t do things alone. I require teams, a good culture/environment, skills (some that I certainly don’t have) and much more to be successful.
In their change model, they identify five key ingredients for change that must be present, arguably in different quantities depending upon your context or situation to have a hope:
ADKAR® stands for:
- Awareness – including change drivers such as the need for change, “the whys” and includes “what’s in it for me.”
- Desire – ultimately the personal choice about motivation.
- Knowledge – knowing how to change.
- Ability – the skills to actually get the know-how done.
- Reinforcement – forms of recognition, rewards, and celebrations.
Over the years, thanks in help to running this blog, I’d like to think I’ve changed my personal finances for the better. I have some awareness, desire, knowledge, ability and I see the rewards that come with saving, investing, paying down debt and simplifying my life. My lessons learned have been harsh at times but in most cases, they have made me a better CFO at home.
For today’s post I thought I would recap some of my major money fails, highlight what I’ve done over the years (and in recent years) to right-the-ship per se – so you don’t have to follow my path! Consider this a small chance to pay it forward a little bit. And….even if you don’t really want to take anything I wrote to heart, at least you read enough of this article today for your chance to with a MacBook!
Just click the link above, and tell them your lessons learned. If you tell them the best money advice you’ve ever received, you’ll be entered into their #MyMoneyAdvice contest (for that MacBook). Good luck!
OK, now to my list?!
Carrying a balance on credit cards or on a line of credit
We don’t carry a balance on our credit cards. We did and do however use our HELOC for major purchases, including our condo. If you can avoid using your HELOC like an automated teller, and you pay that debt down religiously each month I know you’ll have more money in your pocket over time.
Letting expenses get out of control
Overall, I’d like to think we’ve been pretty good on this one since our early 30s but it doesn’t mean I wasn’t an impulsive spender in my 20s. Nowadays, my wife and I review expenses every week and ensure our budget, including some forced savings to Us Inc. (such as RRSP contributions) are made without fail.
Having no emergency fund
We have a small emergency fund but not six months in cash, what some financial experts deem is appropriate. For most working families that would likely mean at least $40k in cash. That’s a BIG number sitting around earning next to nothing. (I arrived at that number based on this older data here – average household expenditures so maybe it could be lower for you.) Unfortunately, whether you like it or not, financial $hit will hit the fan. I know we’re thankful to have our emergency fund in place but it wasn’t always that way.
Buying too much house
Guilty as charged! Look, we love our home but we’ve decided to downsize and move back into the city in another year. My advice is to avoid taking on too much debt (to afford any home) you can’t reasonably pay off in 10-15 years.
Not (always) saving for retirement
If you think the government or your workplace pension might be enough for retirement, think again Gen X. The story is even worse for Gen Y. This is the new (minimum) savings rate for a decent retirement. I came to my senses around the time I started this blog, almost 10 years ago. I started making our savings for retirement purposes automatic so my lizard financial brain didn’t get in the way of my future self. I think saving anything less than 10% net income today will leave you with less options down the line: working longer or spending less. Either one isn’t ideal.
I’ve got more money regrets but you get the idea. Avoiding these money mistakes should make you wealthier so hopefully you can take these considerations to heart (and in doing so, you might even get a new Apple product to follow this blog)!
What is your #MyMoneyAdvice to family or friends? What are your lessons learned for a better financial future?