Financial Experiment for 2020

It’s almost the end of the first month of the year. Did you set financial goals to start the year? Are you actively working toward them or are you just hoping that they happen? January 17th was the worldwide ditch your New Year’s Resolutions day and then January 20th was Blue Monday when people get their credit card statements. Have you lasted longer?

Here’s a financial experiment for you to start the year with that might make financial goal setting a little more of an urgent reality.

Did you know that the average combined CPP and OAS payment in Canada last year was $1286 per month? If you are married and are both receiving the average CPP payment and maxing out OAS, your combined monthly income would be about $2275 per month.
I’m sure you have all seen the meme’s on Facebook saying that the government needs to increase senior’s pensions, however, many fail to realize that this pension is based on YOUR contributions over your working years based on your salary. Your employer contributed to this amount as well. If you are self-employed, you paid both. If you take dividends, you won’t get that at all.

Here’s the experiment….

Can you live on $2275 per month? This includes everything. Mortgage or rent, cable, vehicles, groceries, cell phones, if you pay for it now, figure out the cost. Or pay your mortgage and then see if you can pay all your other bills and expenses with $2275 per month. If you can’t do it now, why do you expect yourself to do it later? If you can do it now, and if you have money left over, why are you not saving the extra? What kind of retirement do you want? I’m sure you don’t want to have one that is just scraping by.
Right now, I am reading Napoleon Hill “The Laws of Success in 16 Lessons”. I love Napoleon Hill. His books were written in the 1920’s and 1930’s but they are still as relevant today as they were back then. You can actually download this book for free, as well as “Think and Grow Rich”, another amazing book!

Napoleon Hill’s fourth law of success is the Habit of Saving. Everyone knows it has to be done. There really is no getting around it. In fact, because so few people have done it over the years, the government created the mandatory contributions into CPP so that people would have at least a little something in retirement. When you take a look at the $2275 per month for a couple, compare it with your existing monthly expenditures, it probably is very little compared to what you would like to have, or probably even need.
Do you have a habit of saving or a habit of spending?

Lots of people have this built in belief system that in order to accumulate wealth or financial freedom that they have to make more money first. Now in some instances that is definitely true, however, for the majority of people it’s not. Everyone has a lot of wants on their money list. Charlie Munger said, “It’s not greed that drives the world, but envy.” So much of our lives are spent in the “Keeping up with the Jones’” mentality. That’s envy.

Napoleon Hill actually gives people who are on a salary the following breakdown for how their budget should look:

Savings account – 20%
Living – Clothes, food and shelter – 50%
Education – 10%
Recreation – 10%
Life insurance – 10%

What he found was people’s budget’s actually looks like this:

Savings account – nothing
Living – Clothes, food and shelter – 60%
Education – 0%
Recreation – 35%
Life Insurance – 5%

I will be honest, it’s actually rare for people to spend 5% of their income on life insurance.

What should you do? A good reality check! Be honest with yourself and make this the year to create the habit of saving. Most people have the extra room in their budget, or could simply create the extra room, to save a few dollars and it adds up. In fact, according to Napoleon Hill, and I’m not going to doubt him as I have clients who do live by his principles and have accumulated substantial wealth, the more you save, the more you will end up earning, the more opportunities that will open up for you and the happier you will be.

Start small. Create some financial goals for yourself. How much debt do you want to pay off? How much money do you want to have saved? Wealth is not a one-time event. It doesn’t just happen. It has to become a habit.
Once you have a clear idea about what you want, prioritize it! There has never been a time in history that it is simpler to create good financial habits and yet so few people do because there has never been a time in history that it has been simpler to just spend money. You can have money go into savings automatically each and every paycheck without having to find the energy and time to do it. Ok, so initially you might have to find the energy and the time to get it set up, but if it’s important, you will do it. And then it’s simple from there.

And notice that I said SIMPLE, not EASY.

It’s not always easy. It might not be easy to take a look at spending habits and find that if you cut something out that you don’t really need in order to pay off that credit card bill faster, but it’s simple. It might not be easy to cancel the cable and put that extra hundred bucks a month into savings, but it’s simple. I mean, who has cable anymore anyways? And if one of your friends has it, go over to their house to watch that hockey game, it’s more fun that way.

Do something today that your future self will thank you for. It’s that simple!

I am looking for people who want to change their financial future, who want to have more than $2275 per month in retirement. Is that you? Let’s have a simple conversation about it today.

“O Divine Providence, I ask not for more riches but more wisdom with which to make wiser use of the riches you gave me at birth, consisting in the power to control and direct my own mind to whatever ends I might desire.” Napoleon Hill

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