I've got a confession to make.
As much as I'd like to believe otherwise, I'm not much good at this "tough love" stuff. Just ask my four-year-old son. Oh, sure, I pull out the dad voice when it's needed, but I really don't like it.
That said, when it comes to money, my resolve hardens. It helps that I don't have to read this article out loud using a stern voice.
There is a lot that is wrong with the financial services industry. A lot. Bad advice, overpriced and over-featured insurance, conflicted advisers, fund managers who deliver sub-par results… as I said, a lot.
And in an area where most people are at a very serious informational and expertise disadvantage – and the dollar amounts are so high – more needs to be done by regulators and industry bodies to fix the problems.
That said, many of us don't help ourselves, either. And when your own money is at stake, that's just crazy. Here's some tough financial love that will hopefully help.
Budgeting
It still boggles my mind, thinking about how many people don't budget. Or, when they do, they don't stick to it. Talk about an own goal. Yes, yes, life is busy. Things are hard. Tell that to your future self when you're complaining about how little you saved.
Interest Charges
Are you paying interest on your credit card? You're mad.
Banks charge 17 per cent, 19 per cent and more on that debt. That's almost official usury. They probably shouldn't be allowed to get away with it, but they can only charge you that interest if you don't pay your card balance in full every month. If you can't afford to pay the balance, you really can't afford 20 per cent interest, either. If you want something, save up for it.
Speaking of interest, when was the last time you called your bank for a better mortgage rate? I am stunned by how many people are paying 0.2 per cent, 0.3 per cent or even 0.5 per cent more than they need to. You're not made of money … why the hell are you giving the banks more than you should?
Bills
When was the last time you compared your phone plan? Your electricity bill? Your internet plan? Yes, it's hard. It takes time. That's exactly what they want you to think, so you just won't bother. They're messing with us, but only if we let them. Do 15 minutes of research, find yourself a better rate, then call your provider and ask them to match it. They probably will.
Investing
This could be a topic all of its own, but let's break it down. You've saved hard, you've invested. And how much are you wasting?
If you're paying an adviser or fund manager an ongoing fee and they're not beating the market, you're being taken for a ride.
If you're speculating on the latest hot tip, you're not investing … you're gambling. If you wouldn't go to the casino and put $1000 on black, what on earth are you doing punting it on some company you'd never heard of?
And trust me when I say your broker isn't so poor that he (it's almost always a "he") needs you to trade multiple times each month so he can put his kid through private school. Which is what you're doing if you can't learn to stop trading. You're not Gordon Gekko.
Foolish takeaway
There are two types of people: those who make changes and those who make excuses. And the latter won't pay for your retirement.
Now, if you'll excuse me, my son is calling.
