By Lesley Scorgie
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If someone asked me fifteen years ago what a mutual fund was, I would have drawn a blank. Since then however, by getting money mentors and by using the resources available to me like books, articles and the Internet, I’ve learned about investments, debt, saving and savvy spending. And I’ve realized that money management and its sometimes confusing jargon isn’t nearly as difficult to understand as you might think. A little bit of knowledge coupled with some guidance is all you need to become financially successfull.
The majority of Canadians haven’t received formal money training through education or the services of a professional financial advisor. Many learn money skills through firsthand experiences which are often difficult – like a maxed out credit card or being declined for a loan. According to a study conducted by BMO Bank of Montreal in 2008, when younger professional Canadians finally get around to asking for financial advice, more than 90 per cent of the respondents polled said they discussed and received money advice from their parents as their number-one source of information. Second to that, they received advice from friends. Along the way we glean nuggets of financial information from people we trust – these are our money mentors.
My first money mentor was my mom and she encouraged me to buy my first Canada Savings Bond at 10 years old with $100 I’d received for my birthday. When I turned fourteen and got my first job at the local library shelving books for $400/month, I met my second money mentor named Ryan. Ryan worked at the local bank across from the library and he introduced me to mutual funds and also gave me advice on how to save for my fast approaching university education.
Since graduating from university in 2005, my savvy aunt, a Toronto-based multi-millionaire interior designer, has mentored me since toward developing habits and behaviours of self-made millionaires. Like many multi-millionaires, she doesn’t necessarily look the part, driving fancy cars and living in a mansion. Rather, she saves money by making frugal choices like driving a 2002 Toyota Highlander, carrying a stylish Roots bag, wearing second-hand jewellery, and traveling in economy class. According to her, not living how rich people “should” live has been critical to her success.
Her top piece of money advice to me has been this: it doesn’t matter how much money you have, if you don’t learn how to keep it, you’ll never be rich. That’s right, you could have $1 million and if you spend it all on image boosting non-assets like cars and stereo systems, in the long run, you’re no better off than the person with $10,000 who spends it the same way.
If you want to adopt a money mentor, look for some of the following characteristics.
- A good money mentor will have demonstrated their ability to build their net worth steadily over time through a combination of debt reduction and asset growth – like investing money or buying real estate.
- A good money mentor keeps and maintains a meticulous budget, living within their means. One of the primary reasons people go bankrupt or don’t have savings is due to improper cash-flow management. They spend more money than is available and run out. Often, they’re without a budget, or they blow their budget out of the water. A budget is a tool to keep you on track.
- Good money mentors are savvy spenders – the best way to shop is to first determine whether you actually need the product or just want it. If you don’t need it, don’t buy it; no matter how good the sale is. Being an overzealous, debt-ridden shopaholic is unhealthy and won’t help you achieve financial independence. A good deal you can’t afford is never a good deal. But, if you’re primed for a purchase, try paring down (choose the iPod Shuffle vs. the Nano) or buy ‘used’ through reputable online websites. For regular household items, buy in bulk or shop in stores with concrete floors. Also, sign up for loyalty programs so you can collect points – everyone loves freebies!
- They’ll give of their time and be willing to teach you things like how to make more money at your career, save more, and how to invest wisely. They also give money and their skills to worthy causes.
- If you want to sharpen your financial skills before you get a money mentor, you can also learn a tremendous amount from books and Internet Resources.
- Globe Investor (www.globeinvestor.com)
- Morningstar (www.morningstar.com or www.morningstar.ca)
- Buck Investor www.buckinvestor.com
- Yahoo! Finance www.finance.yahoo.com
- Any of Warren Buffet’s books
- Authomatic Millionaire by David Bach
- Wealthy Barber by David Chilton
- Rich Dad Poor Dad by Robert Kiyosaki’s
- Millionaire Next Door by Thomas Stanley and William Danko
- How to Make Money in Stocks by William O’Neil
- Value Investing by Janet Lowe
By getting a money mentor to give you guidance, you can take your natural desire to create financial freedom for yourself, learn some technical financial skills, and implement them to build your net worth.
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Category: Money, Rich by Thirty
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What always amazes me is how broke individuals attempt to give money advice so frequently. Perhaps it’s time to take your own guidance into consideration.