Spend within your means

Ellis Orlan, BA, CPA (IL), CGMA, SF Partnership LLP, Toronto, ON, CYBF Mentor, eorlan@sfgroup.ca

My father knew the value of a dollar and how to instill principles of prudent financial management in me. He would go on at length about “spending within your means” and saving for capital expenditures versus borrowing.

I think my dad knew where this country, and really the civilized world, was heading and I’m certain his solid financial principles would be coming faster and louder if he were here today to witness the state of debt in the world. I am talking about debt in terms of how individuals rarely (if ever), save up for anything anymore and how governments have promoted this over-borrowing economy as policy.

We live in a world where we have to spend, spend, spend, to keep up with the Smith’s and the Jones’s, and the concept of living within our means…well, it just seems like no one does that anymore.

I work with enough insolvency practitioners to know where people who continually spend beyond their means end up – eventually it always catches up with you. Just look at what is going on in the USA today, where they are about to make mandatory cuts to spending because of years of out of control spending by the last 50 years of spend-happy Democratic and Republican Governments.

The truth is, my dad knew exactly what he was talking about, and I have become a bit of a broken record with my own four kids. “Spend within your means,” I tell them. Thanks dad, your wisdom is timeless.