FINANCIAL THINGS PEOPLE SAY THAT HURT THEMSELVES AND OTHERS
LIE #1 - We pay off our credit card each month in full!
Have you ever noticed how many people use credit cards on a daily basis? In today’s digital age, it is almost impossible to not have some form of credit card. You need a credit card for most subscription services and to book or buy anything online. Have you ever tried to rent a car without a credit card? What about when you get a new cell phone, hook up your internet or need basic utilities -yep you need a credit card.
With all this usage, it always amazes me when I hear a room full of people claim they always pay off their credit cards in full each month! Really? Everyone? Always? Come on people, there is no way I only know people that are financial rockstars. Even I can admit that I have had months when I have carried a credit card balance. Not every month and not all the time, but life happens to all of us. Don’t get me wrong, I know there are people out there that actually do pay off their credit cards each month and use them for points, but they are definitely not the majority.
The truth is, Canadians have reached the “significant milestone” of having outstanding credit card balances exceeding $100 billion. This has come at a huge cost both financially and mentally for many people. In a society that is working so hard to improve the stigma around mental health. Why are we still not addressing the role that financial health is having on people's mental and emotional well being? The amount of stress, fear and shame that people already have around their debt is overwhelming. Then you add the social pressures of feeling like you are the only one that does not have it all together and you end up with the perfect storm for all the financial lies we tell ourselves and others.
So, here’s some advice. Next time you’re in a room full of self proclaimed financial rockstars. Instead of feeling bad or joining in on the I pay off all my debts conversations, maybe it's best to stay silent and sarcastically think - I sure hope someday I get to meet someone who actually contributed to this mysterious $100 billion credit card debt!
Signed Cheapo Jo - who actually has had a credit balance!
Budgeting with teenagers - Not for the faint of heart!
Let me be honest, there are days that just surviving with your sanity is a big win when raising teenagers or children in general. In today’s world of social media, YouTube and online shopping. Teens and preteens are being bombarded by advertising, targeted marketing, and social pressure to have it all. When I was a teenager, my version of social media was a Polaroid camera. The only tube we had was the big TV that sat in the living room. And my version of online shopping was circling what I wanted in the Sears Wish Book. (Yep, I feel really old now). When it comes to teenagers wanting it all and the social pressures that goes along with that, you cannot deny that times have changed. Put this with the social pressure of keeping up with the Facebook Jones, Kardashian's, or whomever you are comparing your life to. And, it's easy to see why so many Canadian families are falling behind and accumulating unprecedented personal debts. Don’t get me wrong, this is just one of the many pieces, but it’s one of those things that nobody's really talking about.
The Pressure to be Perfect
Are you suffering from the pressure to be or “appear” to be a perfect parent? What about, the pressure to have perfect children that are your best friends? If you're like me, this has been an impossible and unrealistic task that I myself have spent years trying to achieve. But, here’s the truth. I am not a perfect parent. Our daughters are my favorite people in the world, but definitely not perfect. And, no matter what I have done for them, they don’t want to be my best friends - and that’s actually ok! Let me be honest though, it wasn't always ok! Here is a few of the tough lessons and realization I have made in my journey of raising teenagers while being cheap by choice.
Teens Love Verbal Daggers
Lesson one, either way you slice it, you can't avoid verbal daggers. Verbal daggers are those heart wrenching words your children and teens use to make you pay for saying no! You know the ones I mean. The, "I hate you, you're so mean, you never give me anything" stuff that teenagers love to say. If you're like most people who utilize financial planning, goal setting and budgeting. You cannot avoid the dreaded, “You’re the Worst Parent Ever” version of verbal daggers your precious children and teenager like to throw. For example, my daughters verbal dagger of choice is “OMG Mom, it’s not like you can't afford it, you are so cheap sometimes”! It doesn't matter if you are budgeting out of necessity or by choice, there are always verbal daggers. We live in a society where saying yes and spoiling our children have become a status symbol for financial success. And, within that new social norm, there is this need to be best friends with your children and teens. This idea has led parents to go to any lengths to avoid the verbal wrath of their teenagers. To be honest with you. If you have any hope of getting or staying on track financially. You're going to have to embrace the fact that your new financial choices are NOT going to help you be friends with your children. At least not while they are financially dependent on you. Here are a few things to keep in mind and to help you out with this friend thing. True friends don’t throw verbal dagger at you. True friends don’t put their wants and needs ahead of your financial well-being. True friends don’t care what you drive or how uncool you are. Now, if you're one of the lucky ones that have children that really do fit that description of "True" friends. Then let's be honest, they are either grown adults or pets you love like children. But, not likely teenagers.
The new "Status symbol" of choice
Here is the second tough lesson. You can't retire on being friends with your children and making sure they have everything they want. This new idea of always saying "yes and giving your children everything" has come at a huge cost for some Canadian families. We have seen unprecedented consumer debt among middle to high income families with little to no short or long term savings or retirement planning. This is a huge change from past generations who valued, mortgage free homes, paying cash for cars, having education funds and early retirement plans. Those actual or real status symbols helped set people up for financial success and it shows. How does it show, you ask? Well, let's take the "baby boomers" for example, often referred to as the richest generation ever. This is a generation that worked hard for what they had, and raised their children to do the same. In addition to this they valued some of the old status symbols like home ownership and purchasing assets for cash. For these reasons and many others, it's estimated that “Baby Boomers” continue to hold over $1 trillion dollars of wealth. (Yep, that says trillion).
So, what can we learn from all this? First, if someone can't quickly figure out how to cash-in or retire on this new financial status symbol of saying “yes, anything you want at any cost”, then many families may need to make some tough choices. Second, maybe we need to take a page or two out of the "baby boomers" financial playbook and start growing our net worth and paying off and keeping some assets.
As for me, I have come this far raising my daughters and being cheap by choice. So, I think I will stay the course and continue to take on those rare verbal daggers that still come my way. In hopes, that some day even my own daughters fit the description of the true friend that I know we are all secretly hoping for.
When you think of the words cheap and budget, I bet that like most people, you cringe or have a negative reaction. You probably remember when someone called you or someone you know a cheapo, cheapskate, cheap-a$$..... You get the point! What about the time someone said “it's not in the budget” or “sorry we can’t afford it, we are on a budget”. These words have been used to indicate a lack or financial hardship for many years, but why?
In the business and corporate world, every successful company has a tight budget, they set it up annually, monitor it monthly and adjust to stay on track when needed. This is how most small businesses and large corporations grow, achieve their goals and make tons of profit. And if you think in some areas these companies are not cheap, think again. Finding ways to be cheap in business is called “cost saving” aka being cheap! My point is, how can coming in under budget and finding cost savings to meet your goals in business be so highly respected and yet be so loathed in your personal finances. Who decided that being cheap or being on a budget meant you had no money and could not meet your goals?
As a matter of fact, after 23 years in banking and finance, I can tell you that most people and families who run with a goal based budget, know their priorities and are cheap by choice, are the most successful and financially stable clients I ever meet. I bet we all know that one person in our community or family, that wears velcro shoes from the 80’s, drives a beat up old vehicle, and yet is so stinkin’ rich and seems happy as a clam! That is a prime example of Cheap by Choice. For whatever reason, they have chosen not to spend money on shoes, or a fancy everyday driver, and yet seems pretty happy about their choices. Don’t get me wrong, I completely understand this is an extreme example and I as a shoe lover myself, I am not saying to go find $2 velcro shoes to wear. The point I am making it that you have to figure out what is important to you. Not what’s important to the neighbors, your parents, your friends, or everyone else who’s probably living way outside their financial means. It’s time for everyone to embrace their inner cheapo, sets some goals and make a budget!
Signed… CHEAPO JO WHO’S ON A BUDGET
Jodie Stauffer, CFP is a wife, mother and Certified Financial Planner. "Being CHEAP has always been in my DNA. But let me tell you, juggling my business, household finances, financial goals with the needs or more accurately WANTS of my daughters, while staying on a budget has not always been smooth sailing." Cheap by Choice is about finding what's