We took a road trip to California this past August as I had a conference to attend there and we were looking for an excuse to escape the mess of a renovation that was scheduled to start.
Disneyland was definitely part of our plan.
The funny thing about Disneyland is that the prices seem to steadily increase beyond the inflation rate and yet the lineups continue to grow.
They have mastered the art of tapping into our need for escape and creating an experience that none of us ever grow too old for.
Pirates of the Caribbean is one of the oldest rides there and still manages to draw a crowd.
I think this is due, in large measure, to our fascination with the thought of discovering buried treasure on some deserted island, cashing it in and solving all our financial woes.
Why go to Disneyland though?
I think we often have buried treasure in our own backyards and don’t even know it. There is a term for this: “human capital.”
Put simply and in economic terms, it is the present value of what the market pays you for the value you deliver to the world in your job or in your business.
In a simplified example, if you earn an average income of $100,000 per year over a 40 year career that’s $4 million!
The buried treasure in this is not necessarily the income you receive but, rather, the income you save.
You see, along the way, there is a very persuasive marketplace that has covetous eyes on every dollar that comes your way and there is one tool that makes their job much easier — the credit card.
I recently watched a video of Warren Buffett imparting three simple pieces of advice to a group of Nebraska students in reaching their financial goals: start saving right away, spend wisely and avoid credit cards.
Buffet’s advice is profound in its simplicity and most people will never heed it.
Over the past few decades, more and more merchants have willingly paid credit card fees of at least two per cent on every dollar you spend simply because you are likely to spend more than if you pay in cash.
Compound this with the fact that many will go through life making minimum payments on their credit cards at 22 per cent interest!
Moving to a cash or debit card lifestyle, combined with a solid financial and cash flow plan, will go a long way to helping you reach your goals.
You will also need to set goals that are powerful and meaningful enough that they won’t get side-swiped by those shallower impulse buys that are often cleverly disguised as needs.
The opinions expressed are those of Richard Vetter, BA, CFP, CLU, ChFC. Vetter is a certified financial planner and owner of WealthSmart Financial Group in Richmond, BC, www.wealthsmart.ca
