“Either you control your money or it controls you.” T. Harv Eker
I grew up in a household where money wasn’t talked about. Which is unfortunate because both my parents are good money managers: they believe in saving, living within your means and not carrying consumer debt.
However, not wanting to get into lengthy conversations about finances meant that their strategies were communicated in bullet points: save your money, don’t spend your money on stuff you don’t need, don’t borrow. Without the ‘whys’ to go with them, the bullet points sounded to me like a recipe for a really boring, frugal life and, the older I got, the more disconnected I became from their ideas.
Student loans, credit cards, and not paying attention to my money led me on a journey into debt and financial stress. When I finally had enough and decided to make a change, it became glaringly obvious to me that my parents had it right all along. Those three key habits (save; live within your means; avoid consumer debt) helped me manage my finances.
You can’t escape money. It’s the lifeblood of our society, and the reality is that the people who have it under their control have a huge advantage over those who don’t. There are plenty of reasons why people don’t take control of their money. However, what people often don’t realize is that, just as taking control of your money is a choice, so is not taking control of it.
Inaction is just as deliberate a choice as action. The decision to do nothing is a choice to hand over the financial reins to outside forces and keep your fingers crossed that you don’t crash and burn. Given that finger crossing has never been an effective way of making things happen, here are the three reasons to take control of your money.
1. It’s YOUR money
This is an obvious statement but it’s your money. You worked for it, you earned it. You have the ability to increase it or decrease it. All the power sits with you and doing what you choose with your money doesn’t make you selfish, greedy, arrogant, or fake. Of course, it makes sense to do things with your money that will help you build wealth and financial security, so you can do more for the people you care about, help others, and create a great life for yourself. However, if you choose to do none of these things, then recognize that the consequences of that choice are on your shoulders.
When it comes to money, we make our own luck by choosing to get in the game rather than sit on the sidelines. Taking control of your money doesn’t require an in-depth understanding of finance or a strong grasp of math. It takes a basic grasp of three principles: pay yourself first, live within your means, put your money to work, and then the discipline to put them into practice.
Just like a parent has a responsibility to care for a child, we each have a responsibility to care for our money. Doing so isn’t selfish. It’s just part of the process: you generate it, you determine what happens to it. You – not your bank, your credit card company, your family, your friends or your favourite retailer.
2. If You Don’t Control It, Someone Else Will
Having worked in the financial services industry, I can see that much of its power lies in smoke and mirrors. The more clients you have; the more money you make but, the more clients you have; the less time you have to take care of them. People rely on their advisors because they don’t believe that they have the ability to manage their own money and that the advisor will do a better job of looking after it. However, their lack of confidence in their own abilities and their lack of interest in managing their own money means that they’re unlikely to ever check to make sure that their advisor is doing anything with their account. In fact, many won’t even open their annual statements.
People buy into the idea that the advisor’s job is to look after their money, when in reality, the advisor often gets paid more for bringing in new business than for servicing existing clients. If you’re not a high net worth individual, there’s a good chance that you won’t be on your advisor’s radar, and the only changes that will be made to your account will be the ones you initiate.
I’m not saying that all financial advisors are bad, they’re not. I know a lot of great financial advisors. But most struggle with the fact that, in order to grow and sustain their business, they have to either deal exclusively with high net worth individuals or focus more on new clients than their existing ones.
Money has to have a purpose. If its purpose is growth, then it needs to be invested in something that will generate a reasonable rate of return over time. If its purpose is to pay bills, then it should be paying bills rather than spontaneously picking up the tab for dinner. If its purpose is fun, then have fun with it. Give every dollar you earn a purpose and then make sure it fulfills it. If you don’t, your money will find a purpose of its own and before you know it, your hard earned money isn’t working for you; it’s working for your bank, for your credit card company and your favourite retailers instead.
3. Financial Freedom
I’ve learned that financial freedom means different things to different people but, if you’re willing to do the work, it’s within reach of everyone. It doesn’t matter where or when you start, what matters is that you decide what it is that you want and understand what is driving you to get it. Then set a goal, take action, and keep moving until you reach it.
Your beliefs about money, rich people, and your own abilities, directly impact your ability to earn, hold, and grow money. If you’re constantly starting and stumbling or never starting at all because you feel like it’s too hard/you’re not capable/you’re doomed to fail/it’s a waste of time then the real obstacle you’re dealing with is you. The good news is it’s easier to change yourself than it is to change others; a little shift in perspective can have a dramatic impact on your financial future.
Being in charge of your own finances means that your financial future is in your hands. That might seem scary, but it’s less scary than dropping the reins and hoping that things turn out okay. If you’re not sure where to start, there are a ton of resources available online for free and some really great books, live events and online courses that will give you simple, step-by-step strategies to help you get to your financial goals and build a better life for yourself.