4 Dec 2015

Financial Balance is True Wealth

Financial Balance is True WealthMoney does not make us happy—but constant worry about lack of financial security can make us miserable.

Women often enter their 40’s (and beyond) with a murky financial picture. We have put a great deal of our energy, earning time, and cold cash into being there for our children, our spouses, our family, and even our friends but along the way we forget to be there for ourselves. We are typically uncomfortable with asking for help, even after consistently giving to the people in our lives.

Good news! It is never too late to create the resources that will allow us enjoy our days without worrying about whether we can afford life’s necessities and pleasures. However we often have to make choices and changes to reach this point. We may have to wean ourselves from spending habits that ultimately bring more stress than pleasure. We may need to decide to continue at our work for an extra year or two or, if we are already retired, take a part-time job.

A few sticking points for women and money:

Spending

We shy away from big money purchases with worries of “what if” but can nickel and dime ourselves to financial death on seemingly inconsequential purchases that add up to long-term financial instability. Or we reserve the right to spend big bucks on family and friends—never comfortable investing in our own dreams.

Building Equity

As a mortgage specialist with Dominion Lending Centres, I’m probably biased, but I think one of the easiest ways for us to build up cash for retirement is through home ownership and the right mortgage. It’s just as easy to pay a sensible mortgage as it is to pay rent. And each dollar that goes down on the principal, along with the rise of your home’s value, becomes money in a future bank.

You can almost always sock even more away by using a mortgage professional who has access to dozens of lenders, rather than just a single borrowing source (as is the case for banks and credit unions). This holds true whether applying for a first mortgage or replacing an existing one. Especially right now while interest rates are fairly low. Just one percentage point of difference on a typical Ottawa mortgage is worth almost $10,000 in savings on a three year mortgage!

As equity builds, it can be transformed into cash and the proceeds invested in dividend-paying stocks, income properties, education, and such.

The Kids

We love our kids and we want to give them everything their heart’s desire. But sometimes this urge gets in the way of allowing our children the opportunity to grow up—to discover for themselves the joys of self-reliance. Helping them is fine, but what kind of lessons do we teach if we put our own futures at risk?

Education is becoming increasingly expensive. Make it clear to your teenagers that they will be expected to contribute and that tuition fees, living expenses, and travel costs will all be factors in deciding what secondary institution they will be able to attend. In most parts of the country, a car is not a need; it is simply an expensive convenience. Activity fees and equipment can be expensive. Ask your teenagers to prioritize, rather than join everything that strikes their fancy.

The big white wedding has become even bigger in recent years. If you are planning on contributing to your adult children’s wedding, know what you can afford well in advance. Make a point of telling your children what you will be able to contribute and that there is no room for “creep” or extra money from the Bank of Mom.

The “boomerang” phenomenon of an adult child returning to the family home is becoming increasingly common. You need to be clear that your child is expected to make financial contributions and carry his or her own share of chores. They are not returning to the cocoon of childhood. They are returning as an adult and a loving parent understands that it is in the child’s best interests if grown-up responsibilities are expected.

Get Comfortable with a Little Risk

Women are conservative investors. We have almost no comfort zone with risk.

The “free” financial advisors offered by banks may well be experts, but their job is to look after the bank’s profits first and then yours. Do a little research and find an independent financial investor who comes with solid recommendations. The investment of a consultation fee with an independent expert is worth it—you can evaluate your current financial picture, and then ask for advice on putting a small portion towards higher risk investments that can pay bigger dividends.

You Deserve It—Restore the Balance

You have the right to financial comfort and stability. If you don’t feel like you are in a safe place with money, then it is time to pull back some of the energy you put into others and restore the balance by putting it into your own issues. This is easy advice to give, but can be tough to put into action after a lifetime of putting yourself second. Let’s face it, saying “No” to people we care about is hard. But remember the flight safety demonstration—if the oxygen masks drop down, we need to put our own masks on before we can help our seatmates.

Most women find that it takes a blend of practical actions, new boundaries with family and friends, the willingness to accept progress rather than perfection, and even therapy to get comfortable with building financial balance. It works best when it is part of a holistic process that encompasses all aspects of life, building the true wealth of secure happiness.

Jacqueline Richards

Jacqueline Richards

Dominion Lending Centres - Accredited Mortgage Professional
Jacqueline is part of DLC The Mortgage Source based in Ottawa, ON.

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