Balance is the Key

Life is all about maintaining a healthy balance. We need to eat, exercise, work, rest, and play. Since money is an important aspect in our life, in order to be successful in managing it we need to employ the skill of balance to this aspect as well.

Financial balance means being conscious of how we invest our money on a daily basis. If you put all your focus on only one area of your monetary existence you will quickly put your life off kilter.

Too many people put all their mental energies onto debt. Either racking it up or fretting about how to pay it off. Others concentrate of sacrificing for a “rainy day” or retirement or their children’s education funds. Neither of these drastic approaches work.

Successful and happy people have found a way to bridge both the desire for financial security and fun. Three vital components are included in their budgets: Financial Freedom, Debt Reduction, and Play. If you are fortunate and are without debt then fabulous, you can focus on the other two.

Financial Freedom is money that you put aside and DO NOT TOUCH. These are your money seeds that grow and grow and grow. These are your long term investments. These funds can start small, very small, and grow through compound interest and your growing knowledge. Where we put our attention, our efforts, and our money expands.

Debt Reduction is another form of investing. By eliminating credit card, vehicle debt, lines of credit, loans, and mortgages we free ourselves and our wallets for bigger and better things. By putting together a reasonable and executable plan to reduce and eliminate our debt we free our minds to learn about creating more money in our lives.

Play money is what allows us to stick with our financial plans. We cannot be serious, responsible, and hard working all the time. Without the ability to relax, laugh, and just enjoy life and money what is the point of life? By putting a portion of all our income aside for purely fun and enjoyable things we are motivated to stick with our budgets. This money is a reward for doing the right things in handling our money. I highly recommend that you spend this money monthly. Small, regular rewards have been proven to be much more effective than one big reward in some far off, distant future. You can still have the big rewards (like a tropical vacation), but it shouldn’t be the only reward.

By taking a balanced approach to money management you get to eat your cake and have it too.

“You have a divine right to abundance, and if you are anything less than a millionaire, you haven’t had your fair share.”
Stuart Wilde

Garage Sales are Your Friend

Spring cleaning time is here and I love it! With even the hint of warmer weather and sunshine I get a major itch to simplify my life and clean my spaces from unwanted clutter. Freeing yourself from the over accumulation of “stuff” in your life serves so many positive purposes.

The first advantage of a good spring clean is you take time to sort through everything. Find what works; what needs fixing; what has been outgrown; what you don’t need, want, use, or have space for anymore; and forgotten, yet still loved items. You can then make a plan to deal with it. Get it fixed. Throw it out. Recycle it. Clean it and put it where you can find it and use it. Put it into your “have a garage sale pile.”

The second advantage is you get the opportunity to better organize your life. Put things in their place. Get rid of the things you’ve been storing for who knows how long or for what reason. How much time do we lose and how much stress do we cause ourselves because we cannot find the thing we want buried amongst all the things you don’t want.

The third advantage is it gives you an opportunity to make some money. Garage sale season is approaching and it is the perfect opportunity to clear your space of your no longer loved items while making some cash. If you don’t think you have enough for your own garage sale, get together with a group of friends that also want to free their lives of a few things. You can then take the money you earn and put it into something you actually want like your vacation fund.

The fourth advantage is getting a good look at all the things you have spent your hard earned money on. Do they bring you joy? Do you use them regularly? Or do they just collect dust, take up space, and add to the debt on your credit card? Facing our consumption head on gives us the opportunity to choose to be more conscious in our lives going forward.

The fifth advantage is seeing what you need to replace or figure out what you want to get before garage sale season. If your kids need to get new skates or sporting equipment because they have outgrown it you can keep your eyes open to replace it at garage sales. If you are wanting to try out a new sport or replace worn out equipment this is also a great opportunity for you.

The fifth advantage to a good spring clean is how much lighter and more energized you feel after completing it. You know where your stuff is, you’ve dealt with the clutter, and you made some new, and hopefully healthier, decisions.

I challenge you to tackle the closets, drawers, corners, garages, and storage areas in your home. Find your treasures and find future treasures for others. You’ll be glad you did it.

“I had more clothes than I had closets, more cars than garage space, but no money.”
Sammy Davis Jr.

Shopping is NOT a Sport

Everywhere we go the world is set up to part us with our money. It may only be a few dollars, maybe a few more, but it’s okay. You want this gadget, article of clothing, candy, tool, whatever. We put it in our cart, we add it to the till, we pull out our wallet. Next thing we know our bank account is smaller than we were expecting and our wallet is thinner while our credit card statement is thicker.

We have all been bitten by the impulse purchase. All of us. If you think you are immune, let me ask you one question: “If I were to go to your home and open up your closets, your cupboards, go into your garage, your tool shed would I find anything that you spent your hard earned money on that you used once or NEVER?” If you can honestly say no, then my hat is off to you. If you are like the vast majority of people (myself included) you would find an item or two.

So the million dollar question is how do we minimize our useless spending. And yes, I did call it useless spending. The fact is if it really was something we wanted or needed it would have been used more than once or never. The reality of life is that we will have some pointless spending. It isn’t a bad thing as long as we keep it in check, but it is a big problem if it gets out of control.

Conquering the frivolous shopping problem breaks down into a few steps or options. The first step is to stop looking at shopping as a sport. Unfortunately too many people resort to “Retail Therapy” to deal with emotional issues. This works as well as alcohol, drugs, or junk food for a lot of people. It doesn’t fix the problem it makes it worse because the high wears of quickly and now we are out money. If going on a shopping spree is your way if dealing with the stresses of life find another outlet. Preferably a healthy one like exercising, going for a walk with a friend, or meditation just as some examples.

The second step / option is to put yourself on a cash budget and allow yourself some play money. That way you can still enjoy a little frivolous spending without breaking your budget. In fact if you plan for it, it isn’t wasted money, just a part of your overall plan for financial success.

The third, and most important, step is to ask yourself this questions every time before you spend money on anything, “Do I really want this?” By slowing down and asking yourself this very simple, but extremely powerful, question you put into motion your biggest ally, your brain. Most of our spending is unconscious. We are creatures of habit that operate on auto pilot. By taking the moment to ask ourselves this all important question we move from unconscious to conscious. A lot of the time we will look at the item and decide no, this isn’t going to give me what I really want. I’d rather save for my Hawaii vacation, or pay off my credit card faster, or stick with my diet (candy and coffee are regular “wasted” purchases) or whatever may be a bigger want for you. If you can honestly say, “yes, I do want this” then go for it without guilt.

No one is taking away your right to choose how you spend your money. But we all make much better long term and short term decisions when the best part of us is fully engaged in making our decisions. Now go out and wake up when it comes to how you are investing your hard earned dollars and cents.

“Too many people spend money they haven’t earned to buy things they don’t want to impress people they don’t like.”
Will Smith

Squashing the Biggest Mosquito

Now that we have figured out a lot of our spending patterns and started putting together a working budget you may have discovered a few areas where you might want to be cutting back on your spending. For the vast majority of Canadians the biggest budget killing mosquito is eating out.

For families living in urban centres it is not uncommon for their eating out spending to be as much as or even more than the mortgage. Yes, I know the little voice in your head is screaming “That can’t be true!” but in way more cases than you can imagine it is. When you add up all the coffees, the doughnuts, the quick deli or fast food lunches, grabbing take out or eat in the car food on the way from work to activities, and the actual sit down meals in a restaurant the numbers are sobering.

This is not to say that all eating out is bad. It can be a nice break from routine, a reward or celebration, and sometimes it is the easiest and best option on the super busy days that have us running all over the place. The main problem is that most people are completely unconscious when it comes to the money they are spending on the various forms of eating out because it goes out the wallet in small, but very regular, chunks.

In order to make your budget work AND improve your health and diet (restaurant food isn’t only expensive it is usually loaded in fat, sodium, and extra calories) is to cook more at home. With a little bit of advance planning you can easily cut your eating out expenditures in half.

I personally like to do my big grocery shopping trips early on a Saturday or Sunday morning. The stores are quiet, they are well stocked, and I can go home and do a lot of meal prep for the week in minimal time. I cut up my veggies, cook a few dishes (it takes almost no extra time to cook 3 – 4 meals rather than just 1), and save myself a lot of time and grief during my busy week. Also, whenever I cook I try to make a large meal for my small family of three and break up the leftovers into TV dinners for my husband and I to have for lunches or quick, busy night dinners.

Having a ‘fancy’ coffee machine at home allows me to have my chai tea latte treat for a fraction of the cost of buying one. Having healthy, grab from home snacks for the kids (and yourself) that you can keep in the vehicle can save you a lot while holding every one over until you can get home to dinner.

Unfortunately the art of cooking is quickly dying. It blows my mind that we have college kids that don’t have any skills in the kitchen. Spending quality time with our kids teaching them how to prepare healthy food is a great way to build relationship while teaching them valuable life skills. If you don’t know where to start visit your local library and check out a few cookbooks and find some that you like. Sign up for a cooking class. Ask a skilled in the kitchen friend or family member to give you a few lessons.

With a little bit of forethought and a tiny bit of preparation time you can easily squash this huge mosquito.

“Business is good for the restaurant industry. Americans now spend roughly half their food budget dining out.”
Christine Bokelman

Start Thinking Christmas NOW

Yes, you read that right Start thinking Christmas Now. Christmas (or whatever major gift giving holiday you celebrate) has a bad habit of sneaking up on people and destroying all the best laid budgets. So how do we save our budgets, our sanity, and still enjoy a generous and joy filled holiday? The key is to plan out as much as possible well ahead of time.

The first step is to create a list of everyone we wish to give gifts too. This covers family, friends, neighbours, co-workers, service providers, and hostess gifts. For some people this is a short list, for others it is a long list. Putting it down on paper makes it much easier to sort and decide.

The second step is to put a dollar amount beside each person’s name. Then total everything up. If you are okay with the number at the bottom then everything is great and you really don’t need to read any further. Most people though are more than a little surprised when they see just how much money they have going out in gift giving generosity.

The third step is to ask yourself do you really want to give a gift to each of the people on your list? A lot of the time we give gifts out of a feeling of obligation rather than from the heart. When we are giving out of obligation or beyond our budget we are missing the whole purpose and just adding stress to our lives. Some families have moved to drawing names and putting a price range on the gifts.

The fourth step is to decide if you need to spend money on everyone. I don’t know about you, but in my case I know I’ve been given (and have been guilty of giving) bobbles and doodads that I really didn’t need, didn’t like, and wish I hadn’t received. I understand that someone was trying to tell me that they loved me, but just didn’t quite know how to give it in a way that I would love. On the other hand I have been given some absolutely amazing gifts that cost no money but totally rocked my world. Things such as babysitting coupons, help with a household project, baking, and beautifully crafted handmade items.

The fifth step is to start coming up with gift giving ideas for each person on the list. If we have an idea of what each person needs, wants, likes it allows us to take advantage of great deals we might come across, and saves us from spending money on something that is just a check mark on our list.

The sixth step is to set up a gift giving budget. Some people prefer to shop all year round to even out the spending and lessen the shopping stress during the Christmas months. Other people choose to put money aside on a monthly basis to have available for when they do go shopping in November and December. No matter how you choose to do it it is still going to cost you money and that needs to be planned for. You might also want to look into using any credit card points or reward plan points. I love using my AirMiles for Movie Night Out Passes as gifts and have received much positive feedback from the people that receive them.

Now take a bit of time now to save yourself money, time, and stress come Christmas. Then when the snow flies you can sit back sipping your eggnog and knowing you’ve done a fabulous job and stayed on budget.

“Maybe Christmas, the Grinch thought, doesn’t come from a store.”
Dr. Seuss

Self-Education is THE Path to Prosperity

You are playing the Money Game. There is no way to take yourself out of the game. It is just a fact of life. The good news is you can learn how to play the game better. How you do that is by committing to getting an education on money and to make learning about money (and learning in general) a regular part of your life.

Fortunately there are so many ways that you can learn about this wonderful and exciting game. Take a course or two, that are offered through the internet, correspondence courses, or classes offered through your local continuing education office. Start talking to financially successful people to find out how they make their financial decisions and what has worked for them. Watch a television show that deals with the subject of money.

Go to your local library and check out all the many available books on the subjects of budgeting, investing, insurance, and emotions around money or better yet go to your local book store and start building your own collection. A few good authors on the various topics surrounding money that I recommend are:
Dr. Thomas Stanley
T. Harv Eker
Suze Orman
David Chilton
Gail Vaz-Oxlade
David Bach
Robert Kiyosaki
Gordon Pape

There are so many wonderful resources available to anyone that is willing to look. Start learning, start questioning, and start taking an active role in your financial life. It is a decision that you will never regret.

If you would like to start your kids or grandchildren off on the path to prosperity I would highly recommend (and yes I know I’m biased) my children’s financial books.

As you learn more about money you will automatically make better choices that will move you forward. Go out there and start asking questions and finding the answers.

“Nourish the mind like you would your body. The mind cannot survive on junk food.”
Jim Rohn

Teaching Kids How to Make Healthy Financial Choices

Every parent wants their children to grow up to be financially responsible. They want them to be able to look after themselves, achieve the Canadian dream of homeownership and financial security. The big question that the parent’s have is not what, but HOW? Unfortunately financial responsibility and literacy is not something that is taught in school. It is a task that falls under the area of parenting.

Children and adults learn best when they actually get to deal with things themselves. The same is true for learning about money. I am a huge supporter of giving children an allowance and teaching them to divide it into five categories: Financial Freedom, Education, Long Term Savings for Spending, Charity, Gifts, and Play. If a child is not given parameters to work within they will spend everything, have very little if anything to show for it, and learn nothing in the process.

My nine year old daughter gets an allowance of $12 a week. To make it simple for her to understand we give her six twoonies. I have used paying her her allowance as an opportunity to teach her about money and fractions for years. Now she is in Grade Four and has a very good grasp the concepts that are now being taught to her in math.

Princess likes to ask me about the jars and we spend time discussing their different purposes. Investing is a bit above her nine year old comprehension right now, but she is curious about the concept. I have explained to her that each dollar is a money seed and her job is to plant the money seed in such a way that it can grow and produce lots of fruit. The education jar is used to buy books of her choosing from the Scholastic Flyer she gets at school, but Mommy does make suggestions. The charity jar is for things like putting money in the Christmas kettle manned by the Salvation Army at Christmas, putting it in the plate at church, or giving to the fundraising drives they have at her school. For Long Term Savings for Spending she is saving to buy a game for her Nintendo DS. The Gift jar is used to buy birthday and Christmas presents for her friends and family. The last jar is her play jar and every month she gets to take her money out, put it in her very own purse, and go shopping with Mommy. Her last purchase was a flowering plant for her room. If she wants to buy candy or trinkets at the dollar store I do not interfere. It is her money to do with however she chooses.

Whenever she is deciding to spend the money in any of her jars, I make her physically count out the money and hand it over. I ask her questions like, “Do you want to spend all of this money on this one thing or in this one place?” Kids can be impulsive, so we need to help them slow down a bit and think through their actions. We are not giving them the answers, but helping them figure out what questions they need to ask themselves.

Children are much smarter than we sometimes give them credit for. By providing them with the opportunity to make decisions, ask questions, and deal with financial consequences they learn to make better decisions. The earlier you start teaching them the better, but whatever age they are take the opportunity to help them grow into financially responsible adults.

“The more your kids feel the allowance is fair, the more likely they’ll think before they spend. Giving your child the experience of spending his own money is empowering.”
Jim Gallo

The Financial Concerns with “Grey” Divorce

Overall divorce rates have been dropping over the last couple of decades – with one notable exception. Divorce rates among  people now in the over-50 age group have nearly doubled over that same period.  Here are some financial concerns that couples in this situation should think about:

  1. Housing – Can you afford to continue living in the house you’re in. What’s the cost of moving?
  2.  Short  term & long term financial stability – Need to create a budget allowing for  changes in lifestyle which may include paying off debt and increasing savings
  3.  Lifestyle adjustment –  Older couples have less time to re-establish themselves financially.  You may be faced with liquidating assets to maintain lifestyle. You may face living on half of what you planned on for retirement.  Living longer and faced with the fear of  outliving savings
  4. Retirement funds – RRSPs/ LIRA accounts are divisible property.
  5. Company Pensions – They can be considered an Asset or Income.  New rules about valuing and dividing pensions in Ontario Jan 2012
  6.  Insurance  – You need to understand what you currently have.  Going forward as a single person, you’ll need to consider life, property/casualty, disability and critical illness insurance
  7.   Medical Benefits –  can you get continued coverage on your “ex’ plan.. who qualifies as “spouse”  How much will individual  “plan” cost.. is it worth it?
  8.   Account Beneficiaries – you need to consider who are current beneficiaries , if you want to change them and any tax implications in making those changes
  9.   Getting back into the workforce.. Hard for anyone  who’s been out of the workforce for a period of time to get back into the workforce
  10.   Changing your will –  you may have to look at beneficiary designations as well as who is your  Executor
  11.   Business – Your business may be your biggest  asset. What’s if really worth?

 It’s not easy to deal with the end of a marriage..especially  if you’ve been together for a long time.  I welcome you to visit Mutual Solutions    –  providing complete divorce solutions  if you are  considering ending a long term marriage. 


Who’s Handling the Family Finances?

I met with Amy (not her real name) the other day who told me she managed her finances perfectly well while she was single. Once she married, she agreed to let her husband handle the family finances. Now facing divorce, she found herself in financial difficulty because of her husband’s spending habits. She regretted not paying attention to the family finances  during their marriage and had to deal with  the added  guilt of not being aware of key financial information when the marriage finally ended.

When we marry, most coupled agree to a practical division of labour and responsibilities.  Each partner takes on specific “jobs” throughout the marriage. One may take out the garbage and handles the carpooling duties while the other spouse agrees to prepare meals and pays the bills. As we’re creatures of habit, we tend to keep those same “jobs” for our entire married life.  If it hasn’t been your “job” to deal with the finances, it is imperative that you stay in touch with the family finances regardless.

How do you do that?

You should attend meetings with accountants, financial planners, insurance agents to develop their own relationships with these key advisors. Too often I hear women say  “I ‘ve never even met the insurance agent” or “I’m finding it difficult to get information from the accountant since he and my spouse are old friends and golf together every weekend.”

You should look over monthly bank statements and credit card bills even if you are not the partner actually making the payments.

Pam (not her real name) found a lack of her own active credit history worked against her as she was offered high rate cards with small lines of credit when she applied for a card on her own after her husband left. You should be sure that the credit card you are using has been set up in your own name and not an account in your husband’s name with you being simply an authorized user. 

Couples should keep three bank accounts (his, hers and ours) and maintain separate credit cards.

Couples are divorcing at later ages.  Many married women don’t make retirement savings a priority. If your husband is the main wage earner, you  trust him to save for  your retirement.  Clare (not her real name) assumed the Spousal RRSP her husband set up belonged to him and not her and wasn’t clear that he hadn’t been adding to her Spousal RRSP for awhile.  You need to understand that once you’re on your own, you need to make saving for retirement a priority.

Looking over a spouse’s shoulder from time to time is important even if you trust they’re doing a good job.

My divorce will cost what?

I was recently at a lunch meeting with other divorce professionals… and the topic of costs of divorce came up. We all face the “what do you charge and how much will it cost question” that all potential clients ask.  People facing divorce all have some preconceived ideas based on a friend’s experience, hearsay, media reports etc. Most people believe their own situation is not a complicated one and should fit in the “average cost range”.   As experienced professionals, we know that few divorcing clients fit the “average model” and the “cheapest price’ may not be that cheap in the long run. You only have one chance at a settlement which will affect you for the rest of your life. You want to be sure to get it right.

So how do divorce costs pile up?

The choice you make in how you will arrive at a settlement agreement directly affects the cost.

A do-it-yourself scenario where you work everything out between yourselves may be very effective and least costly but may best work in situations where there are no children, few assets and fewer complications.

Mediation allows couples to come up and come to agreement mainly on their own with a mediator who facilitates with the couple in reaching an agreement. Couples share the cost of the mediator. Each spouse in turn may have their own lawyer providing independent legal advice as required.

Collaborative Practice involves clients each with their own lawyer and the possible involvement of other professionals such as family specialists and financial specialists all working together to reach an enduring settlement.   A Collaborative divorce is a holistic approach where each professional charges at their own rate and divorcing couples have control over how much involvement from each professional there may be depending on their own  unique needs.

Traditional litigation can be costly if negotiations fail and end up in court.  Trial costs can be  enormous.

Legal fees represent only part of the costs. Other factors can impact the total cost of your divorce, such as:

  • The nature and complexity of the couples’ situation itself.
  • Your lack of financial knowledge or familiarity with your own finances
  • The need for involving other professionals to assist with valuations of such things as home, other properties, pensions, businesses,  stock options, tracing assets.
  • Your emotional state which may affect the duration and cost the time involved in reaching a settlement
  • Your decision to fire lawyers or lawyer’s decision to fire you.

The “what ifs” are the most painful and avoidable elements in divorce everyone should face head on. You should embrace the opportunity to pay for this knowledge to have peace of mind post-divorce. A divorce financial planner is the expert you want and need during divorce to make strategic recommendations in a cost-efficient manner no matter what method you choose to deal with your divorce.

The expertise of divorce financial planners is essential during divorce: To help budget for this process; source funds to pay for the divorce; educate clients and professionals about complex financial issues; analyze choices with greater expertise and less expensively than lawyers; produce precise analysis for desired outcomes; and provide financial counseling to clients post divorce. This is what you get when you pay for it!

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