People don’t like to talk about money in polite society.
Truth is, most people don’t like to talk about money at all. That’s a big problem because knowing how to handle finances is an essential part of a balanced, productive life.
We need money to live. We’re glad when we have it, stressed when we don’t and consumed by worry when finances are unpredictable.
So why don’t we talk about money more? Maybe it’s because if we talked about our finances, eventually we’d have to take personal responsibility for them.
Taking ownership and being responsible is empowering. But it’s also scary and countercultural in a society where people feel they are entitled to the latest, greatest stuff even when they can’t afford it.
Around this time of year, something special happens: we spend and we spend and then we spend some more. Consumerism runs amok. It’s easy to expect our friends and family to spoil us with gifts and feasts, and to put pressure on ourselves to repay those favours. But when we honestly can’t afford something, why don’t we say no?
It seems easier, somehow, to borrow money using credit cards or loans without thinking about the consequences. This is not responsible, but it’s exactly what Canadians are doing.
Debt per household has surpassed $100,000, an increase of 46 per cent since 2000 according to the Current State of Canadian Family Finances 2010 Report by the Vanier Institute of the Family.
This isn’t an accident. It’s an out-of-control spending trend that has to be stopped before it leads to bankruptcy, ruined credit ratings and unnecessary stress that tears families apart.
National Post columnist Garry Marr recently reported money problems as a top reason for marital breakdown, but also insisted that couples stand a better chance of making it if both partners have clear and aligned financial goals.
The only way to align goals is to talk about them. But only 45 per cent of couples discuss money before getting married, according to an April 2011 survey by BMO Financial.
We need to smarten up. Mismanaging money is a major contributor to divorce, which not only exacts a futher financial toll on individuals, but also on society at large.
Government spending in Canada on programs such as welfare and childcare to address problems arising from family breakdown is $7 billion annually, according to a 2009 report by the Institute of Marriage and Family Canada.
But it doesn’t have to be this way. Start by educating yourself about money matters, thinking about your priorities and adjusting your attitude.
Many people don’t know that even if you have a $1 balance on your credit card, you will be charged interest on the entire balance for that month, finance guru Gail Vaz-Oxlade says on her website. Credit card interest isn’t cheap either, often as high as 29.5 per cent every month.
The solution is simple: pay the entire balance on your card. If you can’t pay for something in cash, don’t charge it. If you have a problem with compulsive buying, be responsible and don’t use credit cards.
We’re not entitled to stuff just because we want it.
That’s not to say we should give up trying to have everything we want. Rather, we should start taking satisfaction in the things we already have. If you can’t live on the money you’re making, half the solution is to take in more money.
Again, the temptation is to borrow to make up the shortfall. But there are other remedies.
For example, get a part-time job, even if you are already working full-time. Offer to take on more responsibility at your current workplace if that means getting more hours or a higher rate of pay. Be creative.
The other half of the equation is to spend less money than you take in. Make a budget so you know how much money you take in, how you spend it and what expenses you can cut. It’s simple math.
This degree of discipline takes a lot of self-control. It means realizing that you’re not entitled to everything you want right now and being realistic in your expectations. The things you want can be attained; you just have to earn them first.
Ultimately, this requires a fundamental attitude adjustment. We don’t deserve things simply because we live in a privileged country.
We deserve things because we work for them.
If you take this approach to money, you control it rather than letting it control you. And there’s stability and satisfaction in that control that you can’t put a price on.