So credit cards... They're like your frienemy: they are great to you if you treat them right but if you don't play nice for one moment, they can back stab you and cause you harm.
Now I personally LOVE credit cards. I think the reason why others tend to shy away from them is because we were never taught in school or anywhere else on HOW to use them PROPERLY. They say all debt is bad, but really, they're not. Debt is bad when you don't know how to effectively and properly use it. Let me share with you what I've learned.
Credit cards provide you with convenience, fraud protection, rewards, help build your credit score, save you in financial emergencies and more. But the ugly side comes out when you hold a balance on your card for too long. In other words, you've spent more than you can afford...
I had a friend reach out to me a while back in need of some financial advice. She was a couple thousand dollars in debt on her credit card and had no idea how to get rid of it. She kept paying as much as she could but the balance seemed to get larger and larger each statement. We sat down together, went through it together and found a few things out.
Wow, how a month can fly by just like that! I'll admit: I've been MIA. But the amount of learning I've done this month has been incredible. Let me tell you what's been up.
As some of you may know, I have been pursuing my Chartered Professional Accountant (CPA) designation and just recently, wrote one of my exams. On top of that, I've been attending various workshops for continuing education for insurance and investments.
I must say though: being out of university made me forget how to study for these kinds of exams. You see, for the CPA exam for taxation, only a small portion of the exam was multiple choice where you answer 1 of 4 choices, and if you really didn't know the answer, you could guess! But that was for less than 10% of the exam! They provide you with cases in which you would analyze data and the client's situation while you deal with a bunch of calculations, tax planning, financial forecasting, and even a bit of ethical dilemmas! You would then present your analysis as if you were presenting to the client, face to face, with a memo stating the best decisions, alternatives, and of course a breakdown of how you came to such a conclusion! And as for the multiple choice, they were heavy technically and a lot of calculations were needed, but nonetheless, they were multiple choice. Overall, you either knew how to provide quality, useful and correct advice or you didn't.
I will tell you this: the exams are not meant to be easy. I am pleased by the challenge of the taxation exam I wrote, and am confident in my knowledge and skill set. The format of these exams and its quality test our professional judgement and opinion. If anything, going through this rigorous process will groom me into a more well rounded advisor. I am constantly studying and refreshing myself with accounting knowledge, but also in insurance and investment knowledge too!
This month has also been heavy on attending workshops set up by our trusted product providers. When our clients need a certain insurance policy or investment, I would be able to provide them with the best advice for their needs thanks to this continuous educational development. In our business, you're constantly learning. If you don't keep up to date with the latest information and changes, you will fall behind and be living in the past.
I've always been a big picture, future thinker. Just like with this business, I am seeing the long game. What is it? To provide my generation, the millennials, with access to financial knowledge and literacy to make informed decisions for their future. Both you and I, we're always studying, always learning, and always growing. I want to specialize here, in personal finance and tax, so that you don't have to. But I want to provide you with a foundation so that with or without me, you can make solid financial decisions without hesitation.
With that said, keep an eye out for little tips and tricks on our Instagram and Facebook. We'll be sharing short posts with quality information that can provide you with some insight into what I've learned and continue to learn about personal finance. We're very excited about this and can't wait to share and grow with you all.
We all need to start from somewhere, right?
Do you remember that New Year's Resolution you gave yourself to go get active and hit the gym? Now remember how hard those first two weeks were to consistently go to the gym?
All habits are formed within a couple or more weeks of consistent routine. Now what I'm about to share with you has to do with your financial health. And guess what? It's easy to maintain, and its realistic. Let me explain.
Just like going to the gym 3-5 times a week after several weeks, it becomes a habit and a part of your lifestyle. What I've been doing personally for a number of years has been to pay my future self first every week. How?
As a millennial, I've grown up with technology all my life. Since I was 16, online banking was available to me, so it's been really easy for me to set up an automatic savings plan for myself. What I've done differently in the past years, however, was change that automatic savings plan into an automatic investing plan.
Each Wednesday, I would allocate $70 to my savings account. Before you know it, my tiny $70 weekly contribution to my savings account became a massive cash cow and needed to be invested. So I did that. For my first two years, my savings account had $7,200 in cash that I saved until I could legally invest. And when that day in June arrived, I transferred all the funds to my investment account and bought some stocks. I continued to invest this $70 per week into the account, and it has grown since then.
Check out the way our dollar bills can grow at 9% annual returns, investing $70 every week for 52 weeks:
The result? $70 a week turns into $3,600 in your savings account over a year. And if you invest it instead? You could potentially grow it at 9% and turn it into $3,800! That's one way your money can work hard for you.
But in order for you to do this, you need to be greedy and pay your future self first. Your pay is biweekly? No problem: pay your future self $140 each pay cheque. Twice a month? $150 per paycheque. The point is: be greedy and make it a priority.
Now, you may be thinking: "Ary, this is too much for me to save each week! I got rent and bills to pay!" To that, I say true. But when you think about it, that's actually just $10 per day you are already spending on coffees, dining out, seeing a movie once in a while, etc. Can you give up your $6 Starbucks Pumpkin Spice Latte for the day (sorry I don't know many of the drinks at Starbucks, haha) or your $30 meal and $8 glass of wine for the dinner out on Friday? Can you work one more hour per day, even at minimum wage ($11.40 in Ontario), to make that extra $10?
Now, don't get me wrong: spend and treat yourself to enjoy your life! But be aware that "little" expenses do add up! So track what and how you are spending your earnings periodically. But that's a post for another time.
With that said, it's true that many of us know how to spend our money, but don't know how to save and invest it. Let's start a new habit in our lives and fund the future you with a nest egg of investments to pave your path to financial freedom. It just takes $10 a day to start.