Finances

Why are you always broke?

Here are my 7 top reasons why money is burning a hole in your pocket.

1- You punish and reward yourself through shopping.

It’s true! Look at yourself! You use your wallet as a shrink!
— My children are hopeless; I’ll go buy a pretty dress!
— My boss thinks I am a mess, I’ll buy a home theater!

Subtly visiting a shrink would be a better investment than visiting Best Buy or Simons! So take a break when the “false need” to buy something expensive appear. When it happens, wait and breathe through your nose. Ask yourself: “Do I really need it? Do I want a reward, entertainment or to evacuate frustrations?” If this is the case, going to the movies, even in the afternoon, could do the trick!

2- You amplify the expression “Seize the day”

… And you underrate the one that says “Save for your old days”. We all agree that life is short and we must have fun daily. Have you ever heard the word dosage? Using 10% to 15% of your revenue to have fun… later is possible. There is no worse scenario than being old, healthy… and broke. That will make you sick. Outliving your savings is a nightmare! One of my personal motivations to save money is the fear of becoming a financial burden for my family. There are no small savings!  You can very well start a savings plan in a good mutual fund with as little as $50 per month.

3- Money is not wealth.

But wealth can be easily calculated with your net worth. You can have $875,000 of assets, accounts receivable and investments but also have a $580,000 mortgage, $60,000 on credit cards, 2 BM financed at $80,000 and a SME margin of $170,000. You are poor! You owe $15,000. If you demonstrate every day that you cannot manage $60,000 (or your revenue), do you think you can do it with $500,000 or a million?

4- Goods give the illusion of real wealth

A boat, a four-wheeler, a rented cabin, nice furniture, an Audi Q7 are no investments. They are expenses. Period. None of these treats will increase in value over time. They will only lose value. Worst even, they can lose 50% of their value as soon as you walk out of the store.

5- The difference between savings and investments.

Having $125,000 in GICs is not an investment. It is a coma! You do not participate in the economy. You do not get involved in projects. You only lend money to a bank that lends it back (for more money) to someone else who does have projects. When you have a small business, mutual funds, stocks, a duplex… you have investments that will probably grow faster than inflation. And then, a little miracle will happen: you will make money while you sleep!

6- You don’t have long-term vision.

Do you wait for your next payday? With a two weeks vision, what did you expect? That money would grow on trees? Your wealth expectations may only be magical thinking: inheritance, surprise bonuses, gifts, lottery, etc. What if you launched a crazy project with your brother or your best friend? An online shopping website, a restaurant, a boutique, etc. I’m sure that you have as many ideas as you have excuses, give yourself wings this time.

7- You have the wrong target.

If you want to become rich to have a big pile of cash, you are wrong. To become rich or financially independent, target THE exciting project. The rigor and intensity that you will put into it will feed it. Wealth is innovation; sharing the idea is the journey. Money will come as a consequence. If your prioritize money first, your business will only look cold and opportunist. Passion fascinates, gathers and mobilizes!


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