Can You Even Afford That?

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!

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