More $$ in the bank is always a good thing
In theory, personal finance is pretty straightforward: You earn some money, you spend that money and, somewhere along the way, you save enough to buy a house and a few nice things, and then, hey presto, you retire at 65—with the funds to while away your golden years in Florida.
Looking for a first step on that journey? Her health metaphor extends to that too. “You need to step on the scale and weigh in financially,” she says. Open your credit card statements, check those account balances online, add up what you owe, check to see if you maybe have an RRSP at work—anything to paint the most complete picture of your actual financial situation as it stands today.
Learn about “reverse compounding” If compounding is all about growing what you do have, “reverse compounding” is calculating how much money you might be losing to interest payments. It works like this, explains Keehn: If you have $4,000 in debt on a high-interest credit card and you’re only paying the minimum payment, it might take you something like 82 years to pay it off.
Think of saving as an expense Barrar bought his first stock at age nine , so he’s been “good” with his money for a long time. The real lightbulb moment for him, however, only came when he decided to stop seeing investing as something he just did with “leftover” money. “I changed my mindset and said, “Just like my credit card bill or my car payment, I’m putting investing into my budget as a fixed expense.” This way it becomes a non-negotiable as opposed to an optional extra when times are good.
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