Want financial freedom and success? These 4 tips will get you on your way

This is intended to be a basic primer for setting you on the right course for financial strength throughout your life. As you become more and more successful, you will seek out more sophisticated information – and there’s lots of that widely available in books, newspapers, and on the internet.

It’s impossible to cater to everyone in one place – some people make hundreds of thousands of dollars per year, while many others struggle from pay check to pay check.

Some of you are just starting out in the work force, and others are nearing retirement.

Many of you are struggling to cope with financial pressures seemingly coming at you from all directions at the same time. Food, shelter, transportation are our core requirements.

These secrets will help people in all circumstances, but mostly every day people facing every day challenges. If you are a financial superstar, you need to seek advice elsewhere.

1. Spend less than you make.

Sounds incredibly naïve – but the fact is many people get themselves into hot water by making financial commitments they really cannot honor.

With access to easy credit at every store, the temptations are large. Want a new TV but don’t have the cash? Not to worry – the store will grant you instant credit – and maybe jazz it up with no payments for several months.

But the payments will kick in – and often, after the payment holiday expires, the entire purchase is subject to a very high interest rate, retroactive to the day you bought the TV.

Your girl loves to play hockey, and every year you dutifully sign her up for the next level of play; buying replacement equipment (they grow so quickly) and arranging to head off to games and tournaments all over the GTA – perhaps beyond and into the USA.

But can the family really afford this?

If you have ever been really poor at some point in your life (many university students can relate to this) you learned how to adapt to a very low income. You simply had no choice. Then as things improved and money began to come in on a regular basis, you found no matter how much more you made, there was still none left over at the end of the month.

We adapt. We adjust our spending to reflect our new realities. But the longer we can maintain a careful, even frugal, lifestyle, the better of we will be.

2. Use credit cards like debit cards with benefits.

Only use your credit card when you know you can pay the balance in full as soon as you are required to do so.

If collecting Air Miles or cash dividends or travel rewards is your thing – for sure – charge your daily spending to that credit card, and build up some free stuff for future benefit.

3. Don’t waste money – you can never get it back once it’s spent.

My sixteen year old son works at a pizza store. He told me how many people will order 4 or 6 cans of pop with their pizza order – adding several dollars to their bill. He said, “Dad I don’t understand why they wouldn’t just go the grocery store and buy a 12 pack or even a 24 pack on sale for the same money.”

Or how about all the people who cry poor but routinely withdraw cash from an ATM machine other than their own bank? That $20 might get hit with charges from your bank and the machine owner you tapped into. You could easily give away $3 or $4 from every $20 you worked so hard to earn. Does that make sense to you?

I love espressos and café lattes – but at $4 or more per drink at Starbucks or Second Cup, that can surely add up over the month. Two drinks per day, and you have wasted close to $3,000 over a year.

When you sat down in January to figure out your finances, did you give yourself permission to spend $3,000 on fancy coffees? Do you think there might have been a better way to spend that money? (And of course, to make that $3,000 after taxes and deductions, maybe you actually had to earn as much as $5,000 pre tax !!)

Growing up in a large family of six kids, we each had our school uniform (with two shirts to alternate) and one set of play clothes. As we became teenagers, if we wanted more stuff, we were expected to find jobs, and then we could indulge ourselves with more clothing or whatever else we thought we ‘needed’.

Now yes, that would seem extreme to almost everyone today, but the fact is, it was a non issue. My parents chose to spend their discretionary dollars elsewhere. Each year they took us on a family vacation and we accumulated so many warm childhood memories.

4. No matter how little you make, you need to regularly save some money.

The reason “pay yourself first” works is because you treat your savings plan with the same respect and importance you attach to your rent or car payment.

You consider your savings plan a highly important monthly bill which must be honored no matter what.

David Chilton and many others advocate at least 10% of what you earn is yours to keep. It’s a good number. But if that seems intimidating or unattainable, set yourself a lower amount, and just do it. $20 a week will build more than $1,000 in a year.

Remember, if you don’t have the money, you shouldn’t be committing to an expense. So if you do want that new flat screen TV, better make sure you can pay for it in full when the payments are due.

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