What Are The Worst Possible Financial Mistakes People Make?

When it comes to financial education the truth is that most people from around the world do not really know much. The financial situation you are in will always be a combination of all the decisions that you made in the past. There is a huge possibility you did not learn much about the topic so learning as you go along is something that is necessary. You will make various bad choices and the truth is the following are those that can be considered as being the worst, according to financial experts at Infographics Graphics.

Using Savings To Pay Off Debt

When your debt is around 20% and you have a retirement account that is now making 4 percent you can be tempted to use the savings to pay off your debt. This is a bad idea since it is really easy to withdraw the funds while it is complicated to pay back retirement funds. You could borrow some money from the retirement accounts but it is a much better idea to look for other available options. In the event that the retirement fund is the only option available, the trick is to continue your life as if you were still in debt. This allows you to continue saving and get to a stable financial situation.

Not Having An Emergency Fund

We naturally want to think that nothing bad is going to happen to us and if this is the case our money will be enough to deal with it. Most of the households simply live from one paycheck to the next while the unforeseen problems can easily turn into a disaster. Financial planners always recommend that you have an amount equal to 3 months of expenses in a checking account so that fast access is possible. You never know when you can lose your job or something unexpected happens, like an accident.

Not Having A Budget Or A Plan

You do have to take time to do budgeting. It is boring and many think that it is not possible to go into debt. In reality, your financial future will be connected to what is done right now. It is not at all difficult to spend a few hours per week to check finances. The idea is that you always have to be aware of exactly where you stand so you do not spend too much in the near future.

Lack Of Insurance

Most people are not insured because they think that this is useless or that nothing bad is going to happen in the future. We never expect death or medical conditions. Insurance is here in order to protect us and the ones we care about. When living alone without dependents it is possible that no insurance is needed but whenever being a part of a family, it needs to be taken into account.

Not Taking Additional Income Options Into Account

In life we have no guarantees to when something will end. We have to invest money into different sources in order to protect ourselves in the future. Be sure that you consider every option and you invest so you can have more money.

Stay On Budget By Shopping Online

You’re trying to save to get together a down payment for a house, to go on a dream vacation, to get yourself out of debt, or to scrape by on a tight student budget. Financial experts tell you to create a budget and stick to it, and you’ve been doing great, skipping expensive meals out and other luxuries. It’s all going great, until you crack the screen on your phone, break a chair leg, or rip a hole in your favorite pair of jeans. Sometimes you can’t avoid making a purchase when you need to replace something essential, but the cost is way beyond your budget.

Thrifty shoppers have been buying everything second-hand for as long as thrift stores and flea markets have been around. With the rise of online classifieds, sites like Kijiji have become the thrifty shopper’s go-to destination for buying used goods. You can buy just about anything second hand thanks to online classifieds.

Furniture – Furniture is a big-ticket item and if you’re saving for a house, buying that expensive new sectional is a lot like putting the cart before the horse. Used furniture is one of the most popular categories on Kijiji with plenty to choose from, especially if you can pick up the furniture yourself. It’s even easier to sell online, which is why it’s often the first-place people go when they move or upgrade their furniture.

Textbooks – Textbooks are not only expensive, they are also often a surprise. Publishers have carte blanche when deciding how much to charge for textbooks, and professors often don’t even know what the price will be to their students when they place an order. You can save a lot of money by bypassing campus bookstore prices, including steeply priced buyback programs.

Electronics – You can buy just about any electronic online, from flat screens to DVD players to tablets, but smartphones are one of the most popular items sold in online classifieds. Not only do you save money right now by buying used, you can also earn some extra wiggle room in your budget by paying for a phone outright, instead of going on an installment plan where you inflate the price of your bill.

Bicycles – Fall and winter are great seasons for buying used bicycles, when interest in biking generally drops along with prices. If you use a bike to commute, or you want to save money by switching from a car or public transit passes, you can save even more by buying as the weather gets cold.

Cars – Buying a used car is one of the smartest financial moves you can make and it can save you thousands of dollars. A new car loses 9 percent of its value the minute you drive it off the lot, and a total of 31 percent within the first two years. Buying a car that’s 4 or 5 years old can save you as much as half the price as when it was new, especially when you buy straight from the owner. Search for used cars on Kijiji classified ads in Canada, check out the car you like, and take it for a test drive. Used cars aren’t just for teenagers, they’re for anyone who has too much sense to spend thousands of dollars on a new car smell.

When you need to replace your bike or your car, buy textbooks, or get a phone, you don’t have to break your careful budgeting. Buying second hand online means you get to stick to your financial goals, even when you can’t avoid that purchase.

6 Alternative Funding Sources in Ontario for Medical Supplies

The Canadian federal government and provincial governments provide funding programs for medical supplies, equipment and care, but in many cases, these programs do not cover the full cost of the equipment.

For residents of Ontario, there are several alternative programs that offer funding for essential medical supplies.

1. Assistive Devices Program

The Assistive Devices Program, or ADP, was created by the Ontario Ministry of Health to provide funding to local residents “who have long-term physical disabilities.” The program also provides access to personalized assistive devices.

The program covers more than 8,000 different pieces of equipment and supplies, including: mobility aids, prostheses, test strips for diabetes, eating and drinking aids, hearing aids, respiratory equipment, oxygen delivery equipment, and more.

To qualify, you must:

  • Live in Ontario
  • Have a disability requiring the supplies or equipment for at least six months
  • Possess a valid Ontario health card

Income is not considered when applying.

2. Ontario Disability Support Program

The Ontario Disability Support Program (ODSP) is run by the Ministry of Community, Family and Children’s Services. The program assists Ontario residents who have disabilities by providing income and employment.

Patients who are part of the program may also be eligible to receive assistance with:

  • Dental coverage
  • Medical supplies
  • Prescription drug coverage
  • Medical transportation
  • Nutritional allowance for pregnant/breastfeeding mothers

Medical supply coverage includes: diabetic supplies, surgical supplies, incontinence supplies and surgical dressings.

To quality for this program, applicants must:

  • Meet the definition of a person with a disability
  • Be at least 18 years of age
  • Be a resident of Ontario
  • Be in financial need

For patients under the age of 18, the application process can start up to six months before their 18th birthday.

3. Ontario Public Drug Programs

The Ontario Ministry of Health offers six programs that provide drug benefits, which includes related medical supplies, treatments and even equipment.

These programs are available to patients of all ages who live in Ontario and possess a valid Ontario Health Card.

4. Assistance for Children with Severe Disabilities Program

The Ministry of Children and Youth Services program provides assistance to qualifying residents to cover the costs of caring for a child with severe disabilities.

This program, which is income-dependent, can provide a parent or guardian with assistance for children:

  • Who are under the age of 18
  • Who have a severe disability
  • Who live at home

Benefits can range between $25 and $440 per month, and can be used to cover the costs of: medical transportation, assistive devices, wheelchair repairs, special shoes, dental care, hearing aids, eyeglasses and prescription drugs.

5. Veterans Affairs Canada

The Department of Veterans Affairs Canada can provide special funding for medical-related equipment, including mobility devices, assistive devices and home modifications.

6. Workplace Safety and Insurance Board

The Workplace Safety and Insurance Bond, or WSIB, is an independent agency that provides compensation and insurance to Ontario workers.

The agency may provide funding for health care equipment and supplies prescribed by a doctor provided it fits the appropriate criteria. Items that may be funded by the agency may include: assistive devices, adjustable bed frames, braces and supports, TENS units and more.

The Importance of a Financial Backup Plan

Financial setbacks and emergencies can derail even the most carefully planned budgets. Creating a financial backup plan can rescue you in those circumstances, and you may need more than one option.

How Does a Financial Backup Plan Help You?

Image via Flickr by ccPixs.com

You may live within your means, set aside money for savings, and take part in a 401(k) plan. Still, unexpected life events could drain your financial reserves, in which case you need a financial backup plan.

Several emergencies can arise without warning, from a broken-down vehicle to a serious injury or illness. You won’t use your backup plan unless you’re in a serious emergency, but you’ll feel confident because you know you have one when you need it.

Explore the following three financial backup plans you can set up for your peace of mind.

Borrow From Your Retirement Account

As Sonya Stinson pointed out in her Bankrate article about good reasons to borrow from your 401(k) account, you may need to use your retirement fund if you have no other recourse. For example, if you can’t pay the rent, make your mortgage payment, satisfy your car loan, or buy groceries for your family, a 401(k) loan can help you get back on your feet.

If you decide to borrow from your 401(k) account, calculate exactly how much money you need. If you borrow too much, you could put yourself in a worse financial predicament, especially if you can’t afford the monthly payments.

Ask Family and Friends

The people you love may have the extra funds necessary to help you out of a financial bind. You may call a parent, sibling, or other close family member or friend to explain your financial emergency. Let your friend or relative know exactly how much money you need and when you could pay back the loan.

Borrowing from friends and family can prove dangerous if you don’t hold up your end of the bargain. Relationships can get ruined because of money, so force yourself to approach the situation strategically. For example, if you can’t afford to repay $500 per month, don’t agree to do so.

Take Out a Line of Credit

Lines of credit work similarly to credit cards. They offer money when you need it, and you can continue borrowing from a line of credit until you reach your credit limit. Many lines of credit offer lower interest rates than credit cards, which can make them attractive alternatives.

You can also use a line of credit from an online lender such as Kabbage for your small business. If you need help buying inventory, paying suppliers, or hiring new employees, a line of credit may give you the financial boost you need to keep your business afloat.

As long as you qualify, you can keep a line of credit open indefinitely. This line of credit can help your personal or business credit rating, especially if you borrow less than the credit limit since the credit line adds to the credit amount available to you.

A financial emergency can strike at any moment, so don’t wait until something goes wrong to create a strategic solution. If you already have a backup plan in place, you can tackle the problem immediately and avoid putting unnecessary financial stress on your family or business

Unexpected Expenses Young Adults Overlook When Budgeting

Moving out of the parent’s house for the first time can be stressful and a bit disheveling for a young adult who is not fully prepared for the full time venture of living on their own.  There are a plethora of expenses to account for when planning out a monthly budget, but there are even more things that could unexpectedly cost cash.

The best way to prepare for sustaining a household is to devote plenty of time to research.  Check out this short synopsis of a few of the most common, yet unexpected, expenses young adults tend to overlook when formulating their monthly budget.

The most common unexpected expense

The most common budget buster for young and old people is a trip to the emergency room.  All it takes is one slip of the hand or one missed step to warrant a trip to the ER.  Chopping veggies in the kitchen could lead to a deep cut that needs stitching.

A slip in the shower could cause a concerning bump or bruise.  Whatever the case may be, there are plenty of reasons to plan for the unexpected hospital visit.  With the rising cost of health care, a hearty savings account is helpful when unexpected injuries arise.

Owning pets is a financial gamble

Young people tend to underestimate the expense of owning an animal.  There are plenty of obvious expenses that go along with keeping a pet around the house, but there are just as many hidden costs that should be acknowledged.

Pet injury is not cheap to fix.  The average veterinarian visit will cost a minimum of a hundred bucks.  Cats and dogs also get sick and need antibiotics.  Though these are easy to manage, they are not the most inexpensive challenges to conquer.

Most of us enjoy a well-functioning vehicle

The first aspect of owning a vehicle young adults seem to overlook is just how much money it takes to maintain a car.  An oil change costs around $50 and should be done every 3,000 miles.

Tires cost several hundred dollars to replace, and there are several different reasons why a car might need new tires unexpectedly.  The main point to remember is that paying for gas is only the beginning of the list of expenses accrued when owning and maintaining a vehicle.

The rarity of missing work does happen

We all know that no one ever calls out of work unless there is good reason, but sometimes we do miss work.  When the budget is set on a fixed amount of hours, missing work can throw a person’s financial plans for a loop.  It is important to expect the unexpected sick day.

If something urgent occurs that keeps a person out of work for several days, there should be some backup funding to replace the missing income.  Sick days are just another reason to keep a rainy day fund.

How does your annual spending compare to a typical Prime central London household?

south-kensington-houses-MEDA report on the Living Costs and Food Survey carried out by the Office for National Statistics has revealed that the people of Britain spend more and more each year. The total average weekly household expenditure was £531.30 in 2014, £14 more than the £517.30 weekly spend in 2013 and £16 more than in 2012. Although the last few years have seen a rise in household spending, Brits are paying about £22.50 less per week, than in 2006.

The four main categories households spend on are food, housing and fuel, transport, and recreation. More than 50 percent of family expenditure goes across these four categories.

HOW DO BRITS SPEND THEIR MONEY?

Typically, households in London and the South East spend the most each year, while people in the North East and Wales pay the least. Surprisingly, London families pay about £6 a week less than those in the South East and residents of the North East spend significantly more on transport than housing, with households across the nation using 14 percent of their expenditure on transport.

Residents in the United Kingdom spent the majority of their money on transportation in 2014, at £74.80 per week. The second highest category spend was housing, at £72.70, which includes fuel and power, but excludes mortgages. Families spend an average £63.90 on recreational purchases, including tickets, subscriptions, and pets; and £58.80 on food, with meat and fish averaging a quarter of the weekly food expense.

 

Another popular spending category for Brits is family holidays. The average British family of four spends a solid two months’ salary (based on an average £26,500 salary) on going away for the summer, at an average of £860 per person. April in usually the busiest month for bookings and December is the quietest, although Brits do enjoy the Winter sun. The biggest holiday spenders are those in the West Midlands, earmarking an average £1,084 per person. Families in Wales spend the second highest amount of their summer trips at an average £1,077 per person. London is third with £971 per person and individuals in the North East pay the least, at an average £675 per person.

PRIME CENTRAL LONDON ANNUAL EXPENDITURE

One of the most exclusive areas in prime central London is Mayfair. Living in Mayfair puts residents at the core of world-class dining, extraordinary culture, and select couture. Shoppers in the area spend £644,000 on clothing, shoes and accessories and £254,500 on food, leisure and entertainment, including flowers, wine and food. This level of spending is unsurprising with the range of choice locals have available to them, with over 66 percent of the top 100 retail brands available. Bond Street is an exceptional shopping destination, known across the globe, and attracts high demand from luxury brands looking for recognition on the high street. Demand has recently spread over into neighboring Albermarle Street and Dover Street and, as footfall has risen, so too have rental values.

 

According to data within a new report from Wetherell; administered by the Westminster City Council, Dataloft and EGI, the average homeowner residing in a property valued over £15 million, spends an estimated amount of £4.5 million in London a year. Residents of homes priced between £5 million and £15 million regularly spend around £2.75 million annually on local expenses. Of the £4.5 million, families spend approximately £2,700,000 on interior design and artwork each year, £644,000 on clothes, and £325,000 on employment. High-value homes hiring staff usually offer live-in contracts and high salaries. These employees have a significant disposable income and consuming patterns similar to those of their employers.

 

The tourist market of £22 billion a year is supported by the West End, where around 200 million visitors attend annually. These guests spend around £11 billion at bars, hotels, restaurants, and shops in the area alone, without including the world famous theatre district income. Despite the flourishing tourist revenue, the ‘Luxury Quarter’ is hugely supported by residents. Locals provide much more for the local economy and a recent survey conveyed on behalf of Bond Street retailers exhibits that the average spending of the local neighborhood is twice that of a non-resident Bond Street customer.

 

Norma Walton, Saving By Sharing Your Space

Saving money takes effort, work and self sacrifice.

A friend of mine saved money in his 20s and early 30s and bought a house north of the city.  In keeping with his savings mentality, he moved into the basement and rented out the main floor and upper floor to tenants.  He lived that way for five years until he got married, at which point he moved upstairs with his wife and rented out the basement.  Obviously he would have preferred to live upstairs from the beginning, but that willingness to sacrifice to save money helped him pay down the mortgage to the point where he could comfortably afford to move upstairs.  He, his wife and son now have a beautiful semi-detached home in Riverdale as a result of his savings mentality.

Sharing youroommatesr space is never ideal.  Yet in any larger city there are numerous people always looking to rent accommodation.  If you can handle a room mate or create a spot in your house that you can rent out, that money can be dedicated to paying off your mortgage faster or creating savings to purchase another house or condominium.  Many people in Toronto sacrifice privacy for the income provided by renters.  My god mom, who is from Portugal, was looking for a place to stay for a while and she moved in with an older Chinese couple and rented a room from them for far less than she would have paid for her own space. The cultural exchange was sometimes challenging but the savings were worth it for both.

 

Airbnb provides another outlet for turning your house into rental income.  In any large city there is demanairbnbd for short term rentals in lieu of hotels, particularly for larger groups that are coming into town for a wedding or a special event.  We have rented our house out through airbnb in the past and it permits us to spend time up north in the summer that we couldn’t otherwise afford.  It takes effort to ready your house for guests…with four children it takes our family a lot of effort.  But the benefits of canoeing down the Muskoka river with all four children in the boat are more than worth it.

 

Friends of mine ran an international student placement company.  They were always looking for welcoming families in which to place their European students.  Host families were compensated for accommodating those students and introducing them to Canadian culture.  From time to time there would be problems, like under age drinking or stupid behaviour, but that was the exception.  By and large the host families and the students had a good time together and often those relationships lasted long after the student had returned home.  One of those families just welcomed the student they formerly hosted, her husband and their toddler a decade after the hosting ended.

 

My girlfriend had five house mates in university to cut down on the costs of accommodation.  Six girlsroommates-2…one bathroom.  She is now in her early 50s and still gets together with them once a year.  This year was the 30th anniversary of them moving in together.  Each now has multiple bathrooms in her house but the memories they created together when they had to share just one resonate with them to this day.  Being willing to share your space can provide financial benefits along with lifelong emotional connections that may enrich your life and last far longer than the space sharing arrangement did.

 

A former client of mine got divorced and she didn’t want to sell her beautiful heritage house in Cabbagetown.  She started a Bed and Breakfast from it.  She now earns enough from renting out a couple of rooms and providing breakfast for her guests that she is able to maintain the house and pay all the costs associated with it.

Inge og Ole?s bolig
Inge og Ole?s bolig

With the above ideas in mind, take a look around at your space.  Consider whether there is any opportunity to share it to generate some additional income.

Norm Walton, House Rich or House Poor

Some days Torontonians love their real estate…and some days Torontonians hate their real estate.  That love-hate relationship can even happen all on the same day.

What is to love?

  • Toronto’s real estate is coveted internationally
  • There are approximately 100,000 new Canadians moving into the Greater Toronto Area each year, all needing housing
  • Toronto is cheaper than other major international cities
  • Toronto’s stock of freehold houses is relatively new and in decent shape relative to other large cities
  • Toronto is a fairly safe city
  • Toronto is the most multicultural city in the world and welcomes all people
  • Investments in improving residential houses in Toronto pays off when the property is then sold or refinanced

What is to hate?

traffic

  • There are no affordable freehold houses in Toronto
  • In a city of more than 2.6 million people, there are a mere handful of detached freehold houses for sale at any point in time, most of them adjacent to housing projects in far less desirable neighbourhoods in Toronto and even in those neighbourhoods, most freehold houses sell for closer to $1 million
  • Torontonians pay a large proportion of their take home pay on their housing costs, with most households paying at least 33% of take home pay on housing
  • Average mortgage costs in some higher end neighbourhoods are more than $10,000 per month
  • Average house costs in some higher end neighbourhoods are more than $2.5 million
  • The trend is to buy a house for $1 million plus and rip down whatever is there now to build a monster house to the maximum allowable density
  • Transaction costs in Toronto are far higher than surrounding areas because Toronto tacks on a city land transfer tax of about 1.5% of value in addition to the provincial tax of another 1.5% of value
  • There is a large number of condominium projects in the works and even the price points for condominiums is at least $250,000 for a tiny bachelor unit along with significant monthly common element fees

monster house 2

Predictions for the future:

  • In my opinion, Toronto’s freehold real estate will continue to increase in value over the long term given the demographics
  • Monster houses will continue to be built in higher end neighbourhoods, occupied by between two and four people at a ratio of 1 person per 1500 to 3000 square feet
  • There will continue to be a flight of young families and retirees to communities west, north and east of the city because they cannot possibly afford to live in the city
  • Basement apartments will be built in existing houses due to the immense demand for affordable rental housing of any kind and the need for homeowners to supplement their income to pay their mortgages
  • Despite the recent push by all levels of government to improve transit, commute times will continue to climb for those workers who live outside Toronto but work in the city and congestion on highways will worsen
  • The surrounding communities will benefit from an influx of numerous new residents as these bedroom communities evolve into hubs of their own over time
Happy young family spending time together outside in green nature.
Happy young family spending time together outside in green nature.

As illustrated above, the insatiable appetite for Toronto’s freehold real estate has both pros and cons.  Hence in the same day you can both love the market and hate the market.  The course of Toronto’s market seems unstoppable regardless of your personal views.  Hence you should probably either get on board with the lack of affordability in Toronto and embrace the city’s offerings or start looking for a house in the surrounding region and ensure your car has no kilometer restrictions on trade in.

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Norma Walton, Kid-Size Money Sense

“Mommy, I’d like a fitbit for my birthday.”Fitbit
“What is a fitbit?”
“Mommy!!  You know.  They track your steps and how much exercise you do each day.”
“Oh, how much do they cost?”
“I don’t know, mommy.  But if it is too expensive you don’t need to buy it for me.  Depending on the price maybe I can buy it for myself.”

My eldest son is almost 10 years old.  He is an athlete and very health conscious.  I have no doubt that he would use a fitbit and it is a great birthday present idea.  He is aware, though, that our family of six has a limited budget.  He and his siblings know that often we cannot afford the things they want us to buy.

Yesterday morning the kids and I purchased five pairs of used roller blades for $40.  The kids help me shop on kijiji and they usually come with me to view and purchase the items.  They also help me grocery shop and they know to look for items that are on sale as opposed to full price.

The kids are starting to learn how to analyze the value of the things they want.  They don’t yet have part-time jobs so they don’t yet calculate how many hours of work would be required to purchase the item, but hopefully that will come in future.  Their money sense is slowly, but surely developing.

I worked part-time from the time I was 13 years old.  My first job was at the Byron Public Library.  I loved that job and earned $3.75 per hour.  I would come home each night with at least four new books I wanted to read.  That job taught me how many hours I needed to work to pay for the things I wanted.  That job also made me appreciate that other jobs might make me more money and thus take a shorter amount of time to accumulate cash.  I subsequently waitressed and also worked on the line at Ford Motor Company, two jobs that made me far more money than the library although neither was as much fun.

Math photoLearning basic math was the first step to help our kids develop a sense of money.  Giving each of them wallets to keep their money was a second step.  Helping them understand the monetary gifts they receive and the money they earn from garage sales came next and gave them some responsibility and independence around money.  Permitting them to spend their money on items they want is also valuable as it helps them associate the cost versus the benefit of purchases.

I also find that the more involved the children are in the families’ financial decisions the more quickly they become able to analyze the choices that are being made.  My children play hockey and it costs a lot of money.  Their cousins travel to Aruba, Las Vegas and New York and get to do fun things in the sun during the winter that our family cannot afford.  Our children would love to do both but they were an integral part of the decision to allocate the money to their hockey instead of travel.  Hence they are content with that choice and don’t complain (much) about what they cannot do.

It is enjoyable to watch our children become good at understanding and managing money.  Hopefully that knowledge will help them make intelligent financial choices as they grow older.  In my view, financial prudence is similar to maintaining a healthy weight.  It is both a daily struggle and a lifelong journey.