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Turning Common Sense into Money in the Bank

Old or young, rich or not-so-rich, highly educated or not, people are woefully unprepared to handle their money. The problem is so significant, in fact, that the government stepped in to see if it could help. (Lord love a duck)
With much fanfare, the task force on financial literacy was struck. The objective: to create a national strategy on financial literacy. Old white men in suits talked to a lot of people and, at the beginning for 2011, produced a report. Since then? NOTHING. Zip, zilch, zero. Y’know why? Because there’s only one solution to the financial literacy issue: Personal responsibility.

When a journalist asked me about “financial literacy” recently, I asked back, “What does that mean?” He started listing things everyone should know like the terms of your credit card agreement, your APR, your grace period. I thought to myself, hey, all you have to know about credit cards is to pay your balance off in full and on time so you never, Never, pay interest. That’s using a CC to your advantage.

BTW, you know that minimum payment that tell you what you can get away with paying on your CC every month? Research has been done that shows when that minimum payment amount ISN’T THERE, people pay more than the minimum payment would have been. That’s right. That Minimum Payment is an anchor to keep you in debt. No one in the industry is going to tell you that, and that’s why “financial literacy” can’t be driven by the very industry that seeks to keep you in the dark to make a profit.

In my book, the buzz words “financial literacy” is the blah blah blah for figuring out how to use your money to your advantage. So don’t let the blah, blah, blah confuse you. If you’re using your money well, if you’ve got your I’s dotted and Ts crossed, if you’re getting to where you want to be, you’re financially literate!
People always seem to be looking for “The Answer”… the solution that will make them less frustrated, less scared, and less susceptible to the scam artists that abound.

You might be surprised where some of those scam artists live. They’re not all dressed in checkered suits with slicked-back hair and a greasy smile. Some of them look pretty much like you and me. Some of them work for companies you’ve come to think of as having your best interests at heart. You couldn’t be WRONGER!
We have a love/hate relationship with our banks. We love ‘em so much that we let them steer us in any direction they like. We hate the fact that we feel so powerless in their presence. That’s our fault. We’ve given them way more control than they deserve.

Would you walk onto a used car lot and say to the checkered-suited, slick-haired salesman, “Sir, please, tell me which car to buy and how much I should pay?”

Sounds ridiculous. Yet every day we do just that when we walk into a bank and say, “how much can I afford to borrow?” “sell me some of that insurance you have that you might not pay out on” and “which investment is right for me?”

I recently used the analogy of the used car salesman and the banker on television and then got some angry email from automotive folk who HATED that I’d compared them with bankers!

You do know that banks are corporations whose primary mandate is to make a profit for their shareholders, right? Just like the used car salesman, bankers have sales targets and are told to push product regardless of your needs. If you’re following the old rule that bank have a fiduciary responsibility to you – that they’re looking out for your best interests —  you’re woefully behind the times.  They’re selling products and services that can do YOU HARM even as they get richer. And they can do that because you drank the koolaid… you bought the BS that you can hand over responsibility for your money to someone else. STOP IT!

If you’re waiting for some federal, provincial or local can-opener to pry open your skull and make money make sense to you, you’re going to be old and broke.  You work hard for your money. Through rain and snow, searing heat and sickness your drag your sorry butt to work every day to make money. Shouldn’t you be spending a little time managing it?

Canadians spend 28.5 hours a week watching TV. I just want you to take one of those hours back to manage your money. Just one. Only 1. Simply 1. I hour a week. You can do that right?

There is no magic to money management. It’s not rocket-science, it’s discipline. So much of what you see, hear, read about money makes it sound far more complicated than it really is.  Can I tell you now that 85% of money is simple. The experts sent to guide you only make it sound hard, look hard, feel hard because they want you to feel out of your depth. STOP IT! Don’t let them do that to you. There is about 15% that gets very complicated: investing, estate planning, some insurance stuff. But the majority of what you have to do to make your money work for you is pretty straight forward: don’t spend more than you make, save some, pay as little in interest as humanly possible.
I’m not quite sure why people are so unwilling to pick up the reins of their money. I usually say there are two reasons: because folks are lazy or stupid. But at a recent presentation I gave at a college one perceptive young woman said she thought it was because folks are afraid. And it gave me pause.
You don’t have to be afraid. You don’t have to feel overwhelmed. Most of the stuff you have to know is dead simple. But what you have to do, while simple, won’t be easy. It’ll mean changing how you BEHAVE.

So your next question is “Where do I start?”

Remember I said this was simple but not easy? The first step is the hardest. It requires that you look at what you’ve been doing with your money and make a plan for what you want to do with it moving forward. Simple. Not easy. Not easy because it takes a little work and it requires a lot of gumption to face up to just what an idiot you’ve been.

YOUR money is YOUR responsibility. And this is at the crux of the financial literacy problem everyone is blah blah blahing about.
If you are under the impression that anyone is interested in really helping you to figure out your money, you drank the koolaid. For while commissions will be struck, meetings will be held and experts will propound on the importance of being financially literate, only YOU will really know what’s right for you. And only you can ACT in a way that demonstrates you’re serious about your money and making it work for YOU.