This is more of a personal post, but I still hope you all can learn from my experiences and my mistakes. When I was born, my parents set up a savings account that they would put money into over the years as a way to ensure that I would have some money if I ever needed it. Being 18 and naive, I stupidly decided that I needed the money right then and there and proceeded to blow almost all of that money over the course of a year. To be fair, I did not have a job this year because I was away at university, but thinking back to all the dumb things I spent money on, namely clothes, I want to kick myself.
Now, I’m not saying I need that money now either, I have a savings account that I am proud of. It would just have been nice if I hadn’t of spent all that money my parents saved up for me, it was not in good taste. I could have a nice cushion with that money right now; I could have bought a car, used it towards a down payment on a house, or taken a few months off work to travel.
Aside from my savings, I have a spending problem. I thought that I could buy whatever I wanted, whenever I wanted without any regard to how much money I was actually spitting out. As soon as I turned 18, I got a credit card and it all went downhill from there. To be fair, I have made payments every month on the credit card and I was never late or delinquent on a payment. Even so, I did not need to be buying half of the things I was. This is why I decided that 2016 would be the year I would take control of my finances.
My first step was to add up all the credit card debt I had incurred over 3 (3!!!!) credit cards. Thankfully, the debt amount was trivial in comparison to the debt that people actually accumulate. I am fortunate enough to not have incurred any school loans because my parents are paying for my school. However, credit card debt is still serious and frankly it was getting out of hand. I used the money that was in my savings to pay off all of my credit cards, thankfully still having enough money to sit in my savings (although not much). I then proceeded to cancel 1 of the 3 cards, because let’s be real, it’s not necessary to have 3 credit cards. I know people say that it improves your credit reliability to have a few cards, but I did not like the temptation sitting there and I didn’t see a point in keeping a card if I wasn’t going to use it. I decided to keep my AMEX that has amazing travel rewards and my VISA that has a low interest rate, and cancelled my MasterCard.
I then went to a financial planner and set up pre-authorized contributions to my savings account. That way, no matter what, I knew money would be going into my savings account at the end of the month. Just to clarify, I have a TFSA that I cannot access on my own, if I need to take out or put in money, I have to go see a financial advisor. I set up a small pre-authorization of $100 to my TFSA, and continued with the $50 a month into my RRSP. I then vowed to only buy things that I could immediately pay for. No more buying things and saying “I’ll pay this with my next paycheque.”
This is the year I take control of my finances. This is the year where I succeed.