Jul 24, 2018
Financial Advice to My Younger Self: Rina DeGrazia, Vice President, Financial Education
Vice President, Financial Education
It was one of those days where everything that could go wrong, did.
It was about 10 years ago, and I was working at TD Wealth. Most days, I loved my job, my team, coming into the office, and the work I was doing.
This, however, was not one of those days. This also happened to be the day I learned just how emotional our relationship with money can be.
Looking back, I don’t remember the details, just the overwhelming feeling of the pressure mounting. I was reaching a tipping point—the moment when the straw that breaks the camel’s back would materialize.
Then the phone rang again.
So, I did what any rational person would do – I decided to remove myself and get some air. I grabbed my purse, sent calls to voicemail and left for lunch. A neat little row of taxi cabs greeted me just outside the building, waiting to transport me to my place of solace – which in my mind was anywhere but where I was.
My cab driver asked: where to? And before I knew it I replied, Bay and Bloor. For anyone unfamiliar, this is home to Toronto's most stylish – and expensive – shopping strip.
Now, it’s worth noting that I am the kind of person who has always been very responsible with money. I grew up in a family with four children, so I knew the importance of stretching a dollar. I worked to help pay my way through university and managed to fund my education in real time and avoid a student loan. When my husband and I were married, I acted as household CFO to ensure we were accelerating our mortgage payments while still saving for retirement.
But like I said, money is emotional.
As the cab approached my destination that day I asked myself where I was going and what I was doing. When the cab pulled over, I asked him to wait to leave the meter running.
I had never in my life been shopping at Bay and Bloor and had no idea what I was looking for. But like so many women, I have always had a passion for shoes (you gain 10 pounds, you lose 10 pounds, outfits come and go, but your shoes always fit.)
I walked into the first shoe store I saw and my eyes were immediately drawn to a magnificent pair of black four-inch heel boots. They sat alone on a table, displayed like a piece of art.
The next thing I knew I was swiping my credit card.
Distracted by my new purchase, my anxiety disappeared and the 10 minute cab ride back to the office was almost serene.
It was not until I returned, triumphant with the package in hand that one of my colleagues inquired what was in the bag. As I carefully unpacked and displayed them, she asked the question: how much did those cost?
It was in that moment that I realized, I didn’t know.
And then the emotion, the impulse and now a new anxiety of splurging all caught up with me. I had signed the credit card slip without checking the price. Worse yet, I hadn’t even asked.
Imagine my face, in front of my colleague, when I saw the receipt, I had just dropped over a thousand dollars.
The store didn’t have a refund policy, so 10 years later, these boots remain the most expensive pair of shoes I have ever owned. They also remain the most uncomfortable pair I have ever owned. They hurt my feet just as much as they hurt my wallet and I can count the number of times I have worn them on one hand.
But I’ve held on to these boots and keep them in a closet – just visible enough to serve as a valuable lesson for me and a reminder of how emotional money can be.
Those boots are also a physical manifestation of how important budgeting is. Everyone budgets differently, but I find that separating money into different accounts is helpful – one for bills and rent, another for savings, and a third for what my grandmother called "mad money."
At the same time, I also learned that when you are shopping on impulse, it's always best to pay in cash. Handing over cold, hard cash always seems to register mentally on a different level over tapping a credit or debit card. Behavioral economics calls this 'the pain of payment principle' and it can help discourage frivolous purchases.
These days, when I find myself on the verge of making an impulse purchase, I always ask the store to hold the item for 24 hours. If I can go home and think rationally about the purchase, I often decide it's not something I need.
For so many of us, these kind of purchases come down to understanding that there's a difference between being able to pay for something and actually being able to afford it.