Financial Skeletons in Your Closet?
It’s Time to Shine a Light on What’s Really Happening With Your Money
Halloween is the time of year when we expect a few skeletons to come out of the closet.
But what about the financial ones?
I’m talking about those things we know we should probably be paying attention to, but somehow never quite get around to addressing.
The credit card balance that keeps creeping up.
The monthly expenses we haven’t reviewed in years.
The retirement savings we keep promising ourselves we’ll start contributing to.
Or perhaps the biggest skeleton of all…
Not really knowing where we stand financially.
Over the years, I’ve had countless conversations with people about their money, and I’ve learned something interesting.
Sometimes, the things we avoid looking at are the very things that could make the biggest difference to our financial future.
So, in keeping with the spirit of Halloween, let’s open a few closet doors!
Skeleton #1: Do You REALLY Know Where Your Money Goes?
Here’s a question I like to ask:
Without looking at your bank statements, can you tell me how much you spend every month?
Not approximately. What do you actually spend?
Hydro. Water. Groceries. Fuel. Insurance. Property taxes. Dining out. Subscriptions. Entertainment.
And what about those smaller purchases that don’t seem like much at the time? It’s amazing how quickly they can add up.
I often find that people have a pretty good idea of their major expenses, but it’s everything in between that surprises them.
And here’s the thing.
You can’t make informed financial decisions if you don’t understand where your money is going.
I’m not suggesting you stop enjoying life. Quite the opposite!
At YourStyle Financial, our philosophy has always been to live for today and plan for tomorrow.
But to do that successfully, you need to understand what your lifestyle actually costs.
Not what you think it costs. What it REALLY costs.
A Simple Exercise Worth Trying
Take a look at your last three months of bank and credit card statements.
Add up what you’ve spent in different categories.
Then ask yourself:
- Did anything surprise me?
- Am I spending money on things that aren’t particularly important to me?
- Are there expenses I could reduce without affecting my lifestyle?
- Is my spending helping me achieve what’s important to me?
Don’t forget to account for expenses that don’t happen every month, such as property taxes, home repairs, vehicle maintenance and vacations.
You might be surprised by what you discover.
And sometimes, those discoveries are exactly what we need to start making better decisions.
Skeleton #2: Are You Saving at Least 10% of Every Paycheque?
Now here’s another question.
Are YOU putting away at least 10% of every paycheque for savings or retirement?
If you’re not, why not?
I know. Life is expensive.
Between housing, groceries, utilities, raising a family and everything else, it can feel like there’s never anything left over. But that’s exactly why saving needs to become a priority rather than an afterthought. For many people, setting aside 10% of their income is a reasonable starting goal.
Depending on your age, income, existing savings and retirement expectations, you may need to save more. And if you’re not able to save 10% right now, start with what you can reasonably afford.
The important thing is to develop the habit.
What Does 10% Actually Look Like?
Let’s say you take home $4,000 a month.
Saving 10% means putting aside $400.
That’s $4,800 over a year.
Over ten years, that’s $48,000 in contributions alone, before considering any investment growth.
Of course, investment returns aren’t guaranteed, and the amount you’ll ultimately need depends on your personal circumstances.
But imagine what consistently saving could mean over twenty or thirty years.
The earlier you start, the more time you give your money to work for you.
And if you’re already approaching retirement?
That’s where proper financial planning becomes even more important. We can look at what you’ve accumulated, what you still need and what adjustments might help you achieve your goals.
Skeleton #3: Are You Avoiding the Bigger Financial Questions?
Sometimes the biggest financial skeleton isn’t an expense or a missed savings contribution.
It’s a conversation we don’t want to have.
Questions like:
Will I have enough money to retire?
What happens if I can’t work anymore?
Is my family properly protected?
When was the last time I reviewed my will?
Can I afford to help my children or grandchildren?
Am I going to outlive my money?
These are important questions. And I understand why people sometimes avoid them. Nobody particularly enjoys thinking about what could go wrong. But avoiding the conversation doesn’t make the uncertainty disappear. In fact, it often makes the worry worse.
One of the most valuable things financial planning can provide is clarity. Once we understand where you are today, we can start mapping out where you want to go.
And sometimes, the picture is much better than you expected.
Financial Planning Shouldn’t Be Scary
I think one of the reasons people hesitate to speak with a financial advisor is that they’re afraid of what they’ll hear.
Maybe they haven’t saved enough.
Maybe they’ve accumulated some debt.
Maybe they’ve made financial decisions they wish they could change.
Here’s what I’d say to that.
You don’t need to have everything figured out before you come and see us.
That’s why we’re here! At YourStyle Financial in Winnipeg, we work with people at different stages of life.
Some are just beginning to build their savings. Others are approaching retirement. And some have accumulated significant wealth but still aren’t sure how much they can comfortably spend.
The conversations are different, but our approach is the same.
We start by understanding you.
Your lifestyle.
Your priorities.
Your concerns.
And what you want your money to help you accomplish.
Then we build a plan around those things.
Live for Today. Plan for Tomorrow.
I don’t believe financial planning should mean giving up everything you enjoy today just so you can have more money tomorrow.
But I also don’t believe you should ignore tomorrow and hope everything works out. There needs to be a balance.
Understanding your expenses helps you make better decisions about spending. Developing consistent savings habits helps you prepare for the future. And having a financial plan helps you understand how those decisions fit together.
That’s how you create the confidence to enjoy your life today while preparing for the years ahead.
Time to Let Those Skeletons Out!
So, as we continue past this Halloween, I’m going to leave you with three questions.
1. Do you REALLY know where your money goes every month?
2. Are you saving at least 10% of every paycheque, or working towards a savings goal that fits your circumstances?
3. Are there financial questions you’ve been avoiding because you’re afraid of the answers?
If any of those questions make you a little uncomfortable, perhaps it’s time for a conversation.
At YourStyle Financial, we can help you understand where you stand, identify opportunities and create a plan that supports the lifestyle you want.
Because the only thing scarier than finding a financial skeleton in your closet…
Is leaving it there for another ten years!
Hope you had a Happy Halloween!
— Doug