As a young person I learned my best lesson from my manager at McDonald’s where I worked part time. I had borrowed my dad’s car to go to work, and Tony the manager asked if I would give him a ride home since his old Volkswagen was in the shop needing repairs. I agreed, and in exchange got a free education in personal finance.

Tony was in his mid-30’s, single, and owned 8 homes in London Ontario which he rented. Since he lived in Toronto, his sister managed the properties and tenants for him. I was impressed. That lead me to ask Tony why he would drive an old car, when he could afford to own all these houses?

His answer was simple.

“Houses appreciate and grow in value over time, so I afford to take a loan to pay for them. A car only decreases in value, so I pay cash for a car. At the time I bought the Volkswagen, that was all I the cash I had to buy a car. Never borrow money for something that loses its value.”

Those words stayed with me from that day forward and have served me well as I applied them for myself.

If you go beyond the car or home, you can always talk yourself into justifying a new wardrobe or that vacation in the sun during the winter. The lesson was about being able to pay for this with the money you have in the bank now. Taking a trip or a cruise and charging it on your credit card is easy to do. If you have the money in the bank to pay that credit card bill in full when it is due, that is fantastic and a great gift to yourself. However, if you end up having to make monthly payments for the next 12 months, it’s hard to rationalize the value of a week of fun in the sun, and 365 days to pay for those 7 days!

Living with Financial Confidence & a Budget

Living within your means is what will help you live with less stress, and lead to “getting ahead” financially.

I recently sat in on a session of the CAP (Christians Against Poverty) course, led by Pastor Louise & Gary Ford, which provided skills and tools for money management. The workbook provided was a great tool to put all the expenses on paper and really helped show what things cost and what it all added up to. It was a real eye opener to some who never really saw the total of their expenses, and how that compared to their income.

Writing out a BUDGET will help you to sort out the “need to have” versus the “nice to have”.

The goal in the end is to make sure you live within your means; hence earnings should meet or exceed your expenses. Often when the expense exceeds your income it adds extra stress to your life, and the problem will not go away by itself. Failure to address the issue in many cases adds to personal debt by using the credit card. Credit cards also charge extreme interest rates that often only make the problem worse.

For people challenged with their finances CAP recommends that you only use cash and divide the cash into buckets or envelops of spending (groceries, transportation, personal hygiene, etc.). You basically give yourself an allowance, and then hold yourself to the limit of what was set aside. We heard some great testimonies of how this really worked
for people.

In the same way that you would plan a road map for trip, your BUDGET is your road map to Financial Confidence.

Here are a few suggestions:

  • Set a BUDGET, and review it weekly/monthly & adjust as needed
  • Look at what is “nice to have or do” and challenge yourself to do without
  • Use credit cards only in an emergency, and if possible, have the cash in the bank to pay the bill when due
  • Work towards saving 10% of your net pay. This can be used in an emergency or help to buy gifts at Christmas, birthdays, etc
  • Work towards tithing. You may only be able to start off small, but setting a goal to increase as you improve your finances
  • Setting goals is essential, but also meeting the goals should be celebrated

I would encourage anyone who would like to be better educated & understanding of how to manage your finances to register for the next CAP course. It is a great resource for today and the rest of your life.

Ferdinand Schroeder - Former franchise owner and now Treasurer & Elder at Aurora Cornerstone Church.