My Bank – Friend or Enemy?

A common frustration I seem to hear when working with people looking for a financial strategy to get ahead is:

“…but the bank has always been really good to me, I don’t know what the issue is?”

While our brain tells us how good the bank is to us our rationale struggles with why we just don’t seem to get ahead. Our debt keeps going up while our savings dwindle away or become non existent. The unfortunate thing in all of this is for some it has become an assumption that more debt will fix their financial situation. As a result we turn to our bank (our assumed friend) and thank them for the increased debt with little or no thought as to how we will get rid of it again.

Today’s article is about the second, the danger of assuming your bank is your friend.

Definition of Friend: a person with whom one has a bond of mutual affection, typically one exclusive of sexual or family relations. An ally or comrade.

Certainly not how we would see our bank but unfortunately we confuse what is perceived as help in our time of need “the immediate access to money to fund something we can’t yet afford” in this manner. After all if you saw your friend in need wouldn’t you help them if you could. This misguided subconscious action can have us place the wrong association to the relationship we have with our bank.

Definition of Enemy:   a person or entity that is actively opposed or hostile to someone or something.

Hey slow down I hear you say, my personal banker isn’t like that, don’t panic I’m on your page. Most front line staff I have come across are very pleasant and helpful people. The issue isn’t the person or the framework of the organisation they represent, the issue is our lack of acceptance that a bank is simply a business. As such we as individuals need to have a mechanism to base our own decisions on when it comes to borrowing money.

It is important we stop operating on an assumption that if the bank lent it to me it must be okay and take personal responsibility for our financial decisions especially if we are serious about getting ahead financially.

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The following explanation may help you see what I mean.

Think of it in the context of a mechanic, his job and how he generates income and profitability is reliant on 2 key factors. Firstly he will need cars that need repairing, secondly owners without the ability to repair it themselves. If car owners have the ability to repair their own cars then the need for a mechanic reduces or possibly even become extinct. The mechanics profitability would be at risk. They may give you tips on basic maintenance like checking the oil regularly, or the benefit of regular servicing but they will never train or teach you to maintain and repair your car. That’s not what they are in buisness to do.

Now apply that same thinking to your bank.

A lender should always give you advice or guidance on the best type of accounts to have, how you might be able to reduce your fees, what rates are available to fix your mortgage however it is highly unlikely a lender will help you understand correct boundaries of debt servicing that allow you to reduce debt sooner whilst also saving which minimizes your need for debt in the future. Assisting you to reach a position where the need to borrow is reduced or eliminated is detrimental to their growth and profitability.

Our bank is neither our friend nor our enemy; it is simply a business providing us, their customer’s service and products.

An independent voice/advocate such as a financial adviser, broker or financial coach is a great asset also so don’t rely solely on your bank when it comes to financial decisions. Make sure you have someone you work alongside whose interest is to help you achieve your goals and not just simply facilitate lending you money. Contact us if you are interested in exploring how we can help. We would love to assist.

It is vital that we all understand where our limits are when it comes to debt commitments. Our online calculator is a great starting point that can assist you to understand how financially healthy you are, check it out here.

You may also want to download our free E-Book ‘Think Smart, Act Smart’ which can challenge your thinking and give you a few tips to begin getting ahead. Go for it, it’s free just enter your details to download a free copy now!!

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