Brain train for hearty, healthy finances
Author Walters explains how switching your approach to savings can help you long-term Author Stefon Walters only became aware of wealth inequality when he started university.
Walters, who grew up in a lowerincome family, began noticing that people from different backgrounds talked about money differently. “Some people talked about investing, while others were just worried about paying off their credit card bills,” he says.
Walters decided that financial literacy was a good way for people to take action to improve their own financial health. Hence, his book — Finessin’ Finances: The Refreshingly Entertaining Guide to Personal Finances — which looks at the basics of personal finance.
“A lot of material makes the assumption that you have a certain level of finance knowledge. But if you don’t have the foundation, it doesn’t click as well,” he says.
Walters answered a few questions about his book: Why are growth stocks like Rihanna?
They are both so attractive and so beautiful from the outside, like shiny, beautiful trophies in front of you. Looking at Rihanna, or a growth stock, without knowing anything more about them may be intriguing. But if you go on a date or do some research, respectively, you may see that you’re not such a good match. Don’t be fooled by the outward appearance. Do your homework. You talk about software wallets. Can I buy one from Gucci?
Unfortunately, you can’t, but I hope I’m first on the waiting list if they are ever created. A software wallet functions like a regular wallet, but online; it’s an app to hold your cryptocurrency.
If creating a budget isn’t difficult, why is budgeting itself so problematic?
Budgeting can be compared to a mental diet. First, your mind goes out to what it can’t have — and sticking to it feels like a chore, or a task. There are also no real boundaries to keep you
from overspending, so it’s easy to justify breaking it to yourself. Saving money is already hard, because people like to spend. If you use a spending plan instead, you are switching your psychological approach. You know how much money you can spend, so you can put a plan together and stay true to the financial goals you want to accomplish.
I didn’t play football in high school or university, but I’ve always dreamed about being a quarterback. Is it too late?
It’s never too late to be the quarterback of your spending plan — unless you give up. You can always get started being honest with yourself and where you stand financially. Like a football quarterback, if you’re not honest with yourself, you’ll never see any improvement, because you won’t admit to your weaknesses or where you need help. You need to know what you lack, so you have a starting point. It may be humbling.
Why isn’t ignorance bliss when it comes to finances?
Ignorance will leave you broke every time. It all goes back to being uncomfortable about analyzing your finances. Once you become aware of how bad the situation is, you’ll be more inclined to act on it by analyzing your lifestyle and considering changes in behaviour. I recently reviewed all of the subscriptions I have; they require payment on different days of the month. I added them all up and looked at what I really use. It was easier to ignore than assess their impact on my finances. I realized I had about $2,000 in subscriptions gathering virtual dust. Why is having a good credit score as important, or more important, as getting straight A’s in school?
I will say that the banks won’t look at your biology grade when they decide to loan you money. You can fail calculus and go into the bank with a good credit score of 800 and you’ll probably be able to get that $50,000 loan. As far as your financial life goes, so many things are tied to a good credit score: credit cards, loans, rentals, etc. In any aspect of life that has to do with finances, the chances are it will come back to your credit score, so you need to take it very, very seriously. It’s the foundation for many opportunities.
OK, I know the difference between hardware and software, but why does the difference between a hard credit inquiry and a soft one matter?
A hard inquiry, made by a lender who is considering a loan to you, has an impact on your credit score; it comprises 10 per cent of how that score is calculated. Too many of those inquiries within a short time frame will be seen as a red flag and you may be considered a lending risk, since it can appear as if you’re desperately in need of money. They add up. Soft inquiries, such as a pre-approval or a potential landlord checking to see if you can pay the rent, aren’t loan-related and don’t show up on your credit score.