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Give me the strength to save!

Give me the strength to save!

Posted on: March 14, 2011
Author: Staff

One of the reasons that Canadians find themselves in debt is because they lack financial self-discipline, according to a report on financial literacy released in December 2010 by the Institute for Research on Public Policy. It’s not about financial education. Newspapers have published financial tips for half a century before the Internet inundated us with financial dos and don’ts. Canadians already know the basics:

  1. Spend less than you earn
  2. Get out of debt (pay off your high-interest debts first)
  3. Save for the future

But if it’s so easy, why are so many Canadians still in debt?

Understand your financial needs

Sometimes we don’t do a great job of distinguishing between our financial needs and wants. We need to go on a vacation, we need that pair of shoes, and we need to eat out at restaurants. Our children need to have the latest technology gadgets and they need 101 TV channels. Then, when we get worried about our finances, we need to soothe our stress away with a day at the spa. But as much as we may want these things, we really don’t need them.

What if we stopped, and said: What I really need is to be financially secure. What I really need is to know that my children can have a good education and that they’ve learned about financial priorities. What I really need is to be able to look after myself in my old age. What I really need is to be able to relax and know that my family has a stable financial foundation.

Have a vision and a plan

Sure, saving money is about self-discipline. Paying off debt isn’t as fun as spending money. But how can you expect to save when you don’t know what you’re saving for? First, you need to envision the life that you really need, and create a plan to make it happen. Take the time to figure out how much money you need for you and your family to be financially secure. How much money do you need to make sure your children get a good education? How much do you need to build a nest-egg that will protect your family if your income is interrupted for a period of time? How much money will you need when you retire? And then ask yourself, “How am I going to make that happen?” Because, if you’re like many Canadians, you’re the only one who can make those things happen! And you don’t want to leave the important things to chance.

Create a financial plan and then commit yourself to success. Find ways to cut your spending and pay your savings before anything else. Be sure to take a close look at what the dangers are of not keeping to your plan—that’s often very motivating! Look at your plan every six months or so to see if it’s working, make adjustments, and congratulate yourself on your successes.

Give yourself the financial security you deserve

So next time you tell yourself that you really need to go to Mexico, or go out for a steak dinner, or just grab a latte, stop and pause for a moment. If you’re sticking to your financial plan to get yourself out of debt and save the money you need to be financially secure, then go ahead and enjoy it if it’s in your budget! But if you don’t have a financial plan, take that money (even if it’s only $4.25) and put it towards your credit card debt. You deserve financial security even more than that latte.