Marcel Legros - Play the Game of Life

Most of us have a strange concept of wealth. We aren’t taught properly in school how to manage money even though it’s crucial to our success. Parents often teach that money isn’t important or denounce it as ‘the root of all evil.’ They watch celebrities on tv and say, “Wow! Wouldn’t it be great to have millions and live like that?” We’re taught to place no value on money, but to desperately wish for the lifestyle it affords. What a horrible irony.

Creating wealth is first achieved by changing your attitude about it.

• Money isn’t evil.
• You can create incredible riches if you educate yourself about finance. Strive towards making money work for you, instead of having to always work for money.

How Long Can You Survive If You Lost Your Job Tomorrow?

Don’t confuse wealth with earnings, possessions or flashy appearances. Wealth is measured in time, not dollars. If you stopped working today, how many weeks, months, or years can you cover all your living expenses? If the answer is “forever,” then you’re wealthy.

Assets and Liabilities

I learned a lot about assets and liabilities from Robert T. Kiyosaki’s book, “Rich Dad, Poor Dad.” It’s deadly simple:

• Assets earn money even when you aren’t physically there, working for it.
• Liabilities cost you money - usually in the form of monthly payments.

The problem is, we think our possessions are assets, when they are actually liabilities. Do you realize your home isn’t an asset, but your single greatest liability? Until you pay it off, your home is only an asset to the bank. The word ‘mortgage’ comes from the French, loosely meaning “contract until death,” or “death pledge.” No wonder most of us are in debt our whole lives!

Always work towards building your assets and cutting your liabilities. Only purchase a luxury if you are sure your assets can pay for it. Do your assets pay for your lifestyle or is the bank getting fabulously rich at your expense?

If You’re In Debt, Here is Your Escape Route

1. Record your expenses and your income. Create a detailed budget. Resolve to spend less than you earn. Aim to have at least $200 a month left over at the end of every month. It may not seem like a lot, but it will quickly add up.
2. If you are carrying high interest debt, aggressively pay it off. If you have multiple credit cards, identify the one with the highest interest rate and pay as much as you can on that card each month. Make only the minimum payment on all other cards or loans. When you pay off the card with the highest interest, move to the next highest. Pay the minimum plus what you were paying on the first card. This payment strategy quickly gains momentum - even huge debts can usually be paid off within 1-3 years.
3. Once you’re debt free, you’ll suddenly have a large cash surplus every month. Don’t use this as an excuse to spend more! Put the surplus into a high interest investment account. Save until you have 3 months worth of living expenses.
4. Keep saving and put the monthly surplus into a tax-sheltered retirement savings plan. RSP’s lower your taxable income - you’ll owe less taxes at the end of the year. Your money is beginning to work for you now.
5. Educate yourself about money, business, and investing. As your knowledge and surplus grows, begin acquiring investments (rental properties, businesses, stocks, bonds, etc.). Aim for investments with a passive source of income (you don’t have to work for it.) Remember, if an investment takes money out of your pocket, it’s a liability and you should avoid it like the plague.

If you follow these basic steps and take an interest in your financial future, true wealth is within your grasp. Good luck, it’s a great adventure!