Everyone fantasizes about what it would be like to have all the money in the world. You could do everything you’ve ever wanted, and own everything you’ve ever wanted. What’s not to like? So when are you planning on starting to save towards that? Let’s all say it together… “WHEN I MAKE MORE MONEY”.
Having talked to people from all walks of life about their personal situation, and talking to other financial advisors about their experiences with their clients, I suspect that there’s very little correlation between having more money and being more responsible with it. Which is interesting because across the board the people who have objections to planning their finances almost always have the same reason… “I’ll wait until I make more money”.
The simple truth of the matter is that if you weren’t responsible with money early on, making more of it has very little bearing on whether you will be later on when you make more. It’s always the case that this change happens internally, when someone one day understands how vulnerable he is financially. Unfortunately for most this typically happens after the damage has been done.
A great example of this is none other than the former heavyweight boxing champion of the world, Mike Tyson. The retired fighter averaged winnings of $5 million per fight coming to a total of $300 million over the life of his career. Despite this, in 2003 Mike Tyson filed for bankruptcy. To give you an idea of how someone could blow that kind of money, on average he spent $4 million a year on limos alone. I’m no limo expert but I do know that you can buy a whole limo to yourself for around $100k and you can easily hire a buddy to drive you around for another $100k.
So, what went wrong? It’s very easy to be an outside observer looking and judge people for their poor decisions when they’ve been given the money to live a life that could be void of bad financial decisions. This is a great example of how little a correlation there is between the amount of money you make and the level of thoughtfulness you put into your decisions.
There really is no time like the present to start learning about how to save. An easy way to start is to write out a monthly budget to have a better understanding of your expenditures. Next, start saving small. If for no other reason than to make saving money as intuitive as paying our phone bill. Start with $25 a month into an RRSP into a conservative investment. Simply build it up year after year.
Mike’s excuse was that he never had anyone to tell him any of this… What’s yours?
Aaron Koo is a passionate networker and entrepreneur who gets people out of that “someday” mentality about understanding their finances.