Crippled by student debt? Wondering how that 20-year-old is driving a Mercedes while you park your Skytrain four to five blocks away? Canada’s personal finance guru offers Vancouverites tips on financial plans that include savings with a side of indulgence.
As the best-selling author of Rich By 30 and Well-Heeled: The Smart Girl’s Guide to Getting Rich, an entrepreneur, speaker, and president of Rich By Inc., Lesley-Anne Scorgie has a hefty reputation for one so young. But during the course of our phone interview, I learned that she is as humble as she is successful, with a reasonable outlook on debt and climbing out of it – plus having some fun on the side. She is kind, cheerful, and willing to help 20-somethings turn no money into some.
You started saving at age 10, and now you give others – wealthy people – financial advice.
I volunteered in my high school class to help teach money management for young people. And that caught the attention of our local newspaper, which led to being on Oprah.
I had been saving money since I was 10. I purchased my first Canada Savings Bond with $100 that my grandparents had given me. My mom sat me down and said, “How about you buy this Canada Savings Bond? Do a few more weeks of your paper route, and soon, you’ll have another $100 and then you can buy a bicycle.”
Eight weeks later, I got the bike and I got the bond.
I didn’t realize at the time that that was how the wealthy did it too – they tucked away money and they still had the things that they wanted. Once I realized I could have what I wanted, save money, and earn interest, I was hooked.
My parents offered me advice on saving and tried to teach me to be money-smart. It failed. Did your parents help you or were you self-motivated?
I grew up in a home where we lived at the poverty line. I didn’t have new shoes until I bought them myself. My support was fear-based motivation that I’d end up like my parents. And because they had little money, I also learned how to manage a tight budget.
Not to give too much away here, but do you think there’s hope for someone in their 20s with crazy debt?
People in their mid-to-late 20s or early 30s, every one of them is carrying debt because of the cost of education, and also because of the availability of credit. We’ve all grown up receiving thousands of marketing messages to spend our money.
In my book, Well-Heeled, I outline a system called the “Crush It System” – named to crush your debt. Pay highest-interest debt first. Even if that means cutting back on a coffee or two every week, and come up with an extra $10 to $15 to put towards debt payments.
Once you’ve paid that off, with regular and extra payments, move to the next highest-interest debt and pay that off.
Negotiate the highest interest rate with your lender. You can call and say, “I want a lower rate, or I’m taking my business elsewhere.” So many people don’t take the ten minutes to make that phone call, even though it can save hundreds or thousands of dollars every year.
Can you live in Vancouver, save money, and still have fun and buy stuff?
The best way to reward yourself from time to time, and to save money, is to build it into a budget. I know it’s a bad word, the “B” word, but you have to plan ahead. It doesn’t need to be complicated. Write down that you want to treat yourself.
If you want to go on a trip, tuck away $100 every month so you can afford it. There’s nothing bad about wanting to treat yourself; making it work is about planning ahead. People who plan will be more successful at saving their money – especially the Vancouver crowd.
What shocks you about how people manage their money?
People using cash advance loans. Those are the most expensive rates. The second is incurring balance on high-interest credit cards.That’s a real head-scratcher: People can negotiate lower interest rates.
How do you change peoples’ spending habits?
My top recommendation is to move to a cash system. Basically, you have to pay cash for everything. You will be amazed, after six to eight weeks, how your habits change. At the beginning of each week, take out the cash you need. Then for the rest of the week, hide your cards – put them in a Ziplock bag and freeze them! After 7 days, let it thaw and get the next weeks’ worth of cash. Heads up: If you freeze your cards and try and chip the ice away, you’ll peel the strip off!
You’ve not only met people famous for their wealth, but are well-off yourself. What do rich people have in common that everyone else doesn’t get?
The first thing that they do is that they do not over spend. They use a budget and pay in cash. Second, they save approximately 10-15 per cent (or more) of everything that they make. The third thing that rich people have a knack for is making money. They start businesses on the side of their own jobs, or they ask for a raise. They find ways to generate extra income and are resourceful. And lastly, they always give back. Philanthropy is linked to greater wealth because of the networks and leadership opportunities it opens.
*End of Interview*.
Feature Image: Lesley-Anne Scorgie, Personal Finance Guru