Can You Even Afford That?

Challenge your friends and family to see past their perceptions and actually assume reality.

Have you ever looked at someone one way and later realized that your view of them as a person was wrong the whole time? Before I knew anything about personal finance or how to manage my money, I was blinded by so many nice things. I wanted to have everything I couldn’t afford and I was willing to take out new credit cards just to ensure that happened. Nice cars, nice houses, and nice clothing are the dream of so many people – but not me. Not anymore. About a week ago, my fiancé said something to me that I hadn’t ever thought about. “I look at things so differently now,” he said. Intrigued, I asked him what he meant, and he said:

“I saw someone drive a nice car up to our condo building and thought to myself, nice car. But can you even afford that?”

Can you even afford that?

What a change in mindset. Instead of assuming someone is rich based on “stuff” that they may or may not have the ability to pay for – what if we actually knew what their financial situation was like? I don’t want to base my “Keeping up with the Joneses” on someone who can’t even keep up with themselves.

I would rather put 20% down on a new home that I can afford, than 5% down on a new home I can’t – but I’m likely the opposite of the majority here. Perception is a funny thing. Believing you have the financial means to pay your bills is a huge difference from actually having the financial means to pay your bills.

In this city, where the average salary is (was in 2010) $78,800, someone like me who makes less, probably owns more. 48% of Albertans are living paycheque to paycheque. Are you a part of that percentage?

All it took for me was the realization that if I continued down the path I was on, I would no longer be able to make my payments. Not even the minimums. Since that day, almost 10 months ago, I have changed at least 5 peoples’ views on money management.

Today, I challenge you to do the same. Challenge your friends and family to see past their perceptions and actually assume reality. They might be surprised.

Here are 5 quick facts to change your perception of wealth:

  1. 25% of Albertans say that they probably could not come up with $2,000 if an emergency arose within the next month.

  2. The national average spent on a new vehicle in Canada is $36,300

  3. Canadians average household spending on all goods and services is $58,600, Albertans topped the list spending an average of $71,430.

  4. Canada has an average debt-to-income ratio of more than 150%

  5. In one year, over 124,000 Canadians will file for bankruptcy.

Now how do you feel about your financial situation?

Rather than becoming a statistic or burying these facts in the back of our mind let’s remember them. Let’s keep them as a reminder that we need to live within our means, we need to manage our budgets, and we need to purchase things we can afford – not things we want to afford. Borrowing money from yourself in the future is a sure way to avoid retirement. Smart financial decisions you make today can bring a wealth of success in the future.

Motherly advice of the day – make good choices!  

What are your thoughts on perception? Let me know in the comments!