Managing Your Money

We’ve all heard the saying, “it’s not what you make, it’s what you keep”. And generally that implies “what you keep after taxes”. But let’s take it one step further and ask, “What do you keep for yourself?” It’s too easy today to get caught up in the rat race of consumerism. A generation ago, you bought a fridge or TV, and it could last 30 years. Cars were easily kept for 20 years. If something broke, you fixed it. Today, stuff is made to be disposable. New technology has people buying the newer and better TV every few years. Cars, often leased, are changed every 3-4 years. Something breaks, we just replace it. It’s become the way of life today, and is made so easy by the accessibility to credit.

Whether it’s to “keep up with the Jones”, or just because we’re a society that likes “new” stuff, and just having stuff in general, our spending habits have changed significantly over the last generation. And why is this a problem?  Well, where do I start?

I work with a sweet older couple who are millionaires. They are in their 80s. In his highest salary years, he earned no more than $35,000. She never worked out of the house, but stayed home to raise their two sons. He’s been retired for many years. How did they amass such a fortune? I’ll tell you their secret….they saved. They were from a generation which lived through war, depression, and poverty. They understood the security they would feel by having money. They lived simply, spend on what they needed, and saved their money. They lived within their means. These were the parents of the Baby Boomers, and there is so much we can learn from them.

In my work, I can see a problem growing through the generations – a little in the Baby Boomers, more so in Gen-X and Y, and look out for Generation Me. None of these generations have experienced financial hardship the way The Silent Generation did. The parents of each of these generations have tried to continuously give their children more than what they had. The sense of entitlement keeps growing, and so does the desire to have things immediately. “Save for a vacation….pffff!…. I’ll use credit, and pay for it later!” If you’ve heard the expression “YOLO”, “you-only-live-once”, commonly used by today’s youth, it expresses their desire to live in the moment.

The problem is, savings rates have declined significantly, (stats) because obviously lots of people have no money left to save, they’re spending it all on living for today. So, many people are getting into bigger debt, and not even getting close to building any financial security. Along with the fact that pensions are being delayed and people are living longer, this is a brewing disaster that many people are going to be slapped with when they least expect it.

Unfortunately, I’ve seen it….many times. The happy couple who’s been living a fun filled, live in the moment kinda life, decided to buy their dream house, sadly to be told they’re nowhere even close financially to affording it.  The hard working couple who has given their children everything, but failed to keep enough for themselves, devastating learning that they’ll never be able to live the retirement life they’ve spent their lives dreaming about.

In times of war, depression, poverty, we instinctively try to plan for the security that we so lack. But those who have only known good times, expect the best, and enjoy the ride…..until they hit a wall that is.  Dreaming without planning is guaranteed to end in disappointment. Expecting everything will work out fine, is like Russian roulette. Financial security is one of the most coveted things people want, after good health, but it doesn’t happen on its own.

You CAN have it all – live for today and plan for tomorrow. Find the balance by assessing your values, considering your goals, and coming up with a realistic plan. Many of my clients who are from older generations worry more about their children and leaving an inheritance without a plan, than they do about themselves. Regardless of what stage of life you’re in, planning will usually relieve much stress and anxiety regarding money and finances.

Important Note:
Alison Lush, Professional Organizer, and I will be presenting some workshops together, with tips and tricks for living an organized life, both financially and otherwise. These events will be in spring 2017 (dates TBD).  Please contact us at 514-981-5796 to receive a complimentary invitation to these workshops.

Lynn MacNeil, F.PL. Vice President, Investment Advisor, is a Financial Planner with Richardson GMP Limited in Montreal, with over 20 years of experience working with retirees and pre-retirees. For a private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5795 or Lynn.MacNeil@RichardsonGMP.com.

The opinions expressed in this article are the opinions of Lynn MacNeil and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Richardson GMP Limited, Member Canadian Investor Protection Fund.