Posted on

The ABC’s of RESPs

ABCs of RESPs

An “RESP” (a Registered Education Savings Plan) is similar to an RRSP in that it uses “registered” savings to tax-defer the growth in the plan. An RESP is often used to save for a child’s post-secondary education, but can be used for anyone planning to attend a qualifying program.

For children’s RESPs, the government also contributes between 20-40% (to a maximum) through the Canada Education Savings Grant (CESG). As with the RRSP, the earlier you open an RESP, the longer your savings have to grow.

While it’s not crucial that you use an RESP to save for education costs, it is important to plan how and who will be covering the cost. As we all know, the cost of a post-secondary degree is climbing and, with inflation, it’s a whopping big number. The Globe and Mail points out a few things to keep in mind about RESPs and if you’re in BC, don’t miss out on the age 6 BC Training & Education Savings Grant (BCTESG) of $1,200. 

There are a number of questions to ask, before opening an RESP (here is a short list):

  1. Are there any fees (account opening, annually, transfers out, closing the account, etc.)?
  2. What are the investment choices available?
  3. What happens if the child does not attend a qualifying program?

For more information, visit:
Government of Canada Guide to RESPs  

Posted on

Your Holiday Budget Guide

Did you know that 42% of Canadians don’t have a budget for the Holidays? A CPA Canada study says that most of us PLAN to spend less but only about half will budget. And 1 in 5 admit they’re gonna blow whatever budget they didn’t create. In response, we’ve created Your Holiday Budget Guide!

Use this guide to plan your Holiday budget and check out our Take the Mystery out of Your Money worksheet for the New Year!

Holidays are busy and budgeting isn’t fun. But, and especially if lowering stress and self-care is going to be a New Year’s Resolution, it’s a necessity!

What can you do about it? Well, we’re glad you asked!

Click for Your Holiday Budget Guide

When it comes to budgeting, making a plan is the best route! There are 10 tips in your Holiday Budget Guide. You’ll find a few of them have helpful links – be sure to click on those!

Grab your freebie below!

1. Think back to last year:

How much did you spend? Did it seem worth it?

2. Pick a number: 

BEFORE you get to the store, decide how much you’ll spend on each person, and keep track of that number.

3. Shop for deals: 

We all have a little computer stashed in our pocket (your smartphone!). Before you hand your card over, do a quick search online and see if another store has a sale on that item.

4. Send an e-card:

If you like to send a Holiday card each year, why not send an e-card? It’s MUCH cheaper (FREE most often) and so much better for the environment.

5. Know why you’re giving the gift: 

Think of that one person (or group of people) that you “have to buy a gift for.” Just in case you need it, here’s your permission to NOT buy them anything. It doesn’t make you cheap or a scrooge. You’re not obliged to buy presents! That’s an idea that’s been sold to you.

6. How many leftovers do you want?:

In our family, we joke about ‘pawning off’ the leftovers so the cook doesn’t have to eat half a turkey 😆 But think about how silly that is! If you find you have a tonne of leftovers each year, try cooking a little less. Now that’s a win-win! Another option is that, after dinner, you bring a warm dinner and a fork downtown for a homeless neighbour.

7. Pick a name: 

For the last few years, our family has been drawing names using this program. (not an affiliate link) It’s made Christmas so much easier! We each pick one name and have a spending limit. It’s really helped our budget and we all leave with things we actually wanted; no ‘filler presents’.

8. Try a more needs-based approach to buying for kids:

One thing they want, one thing they need, one thing to wear, one thing to read, and one thing for the family.

9. Limit your decor: 

I have a deal with myself to not get more than the 1 bin I have for Holiday decorations (not including the tree). Now, that might be unrealistic for you, especially if you have kids. Maybe it’s 3 or 4 bins. Whatever it is, limit yourself to what fits in the space you’ve allowed. Remember, you’re paying for those items, the bin, AND the storage space they’re in – think storage lockers and extra sqft in your home. If you find a piece you LOVE, something else has to go!

10. Don’t be afraid of change: 

I’m a huge fan of traditions. Especially Holiday traditions! But if they’re not serving you anymore, consider making a change. For example, if you always open a few presents on Christmas Eve (which means you have to buy ‘enough’ for Christmas Day too), try switching it up! A family game and a movie might be even more memorable.

I hope these Holiday budget tips come in handy this season! 

Remember, when the lights are taken down, the credit card still has to be paid! It’s worth planning a little now to save yourself from money stress in the New Year.

Download Link: Your Holiday Budget Guide

P.S. Interested in ‘conscious consumerism”?  Check out this video on social responsibility. 

Would this blog have been helpful to find just a few weeks before the Holidays? Sign up for our newsletter to get helpful tools like this right when you need them!

The form you have selected does not exist.

Posted on

Preparing for a Financial Review

financial review

Preparing for a financial review can easily turn into a case of information overload. Your financial life likely has a lot of moving parts and your task is to figure out where they all are.

To make sure your meeting is as productive as possible, start a list of the information you should have.

Watch the video for a full explanation or continue reading for the summary.

When you sit down with a Financial Planner or Money Coach, their goal is to get as much information about your finances as they can.

In order to do that, they’ll need information about all of your financial commitments, your budget, and your goals.

If you think of any concerns or questions as you are getting this paperwork together, be sure to write them down so they can be discussed with your Advisor.

Use the list below to make your first meeting as productive as possible!

The 6 pieces of information you should have before a financial review:

  1. Tax Documents
  2. Investment, RRSP, and Pension
  3. Debts and Loans
  4. Insurance & Will
  5. Short & Long Term Goals
  6. Income
    • Track your expenses:
      • Rent/mortgage
      • Property taxes/strata fees (if applicable), home/contents insurance
      • Utilities (phone, internet, heat, hydro, etc.)
      • Charitable donations
      • Food (groceries + eating out)
      • Entertainment (booze, movies, coffee breaks, clubs, shows, etc.)Insurance payments (ICBC, MSP, etc.)
      • Loan payments (student loans, car loans, line of credit, etc.)
      • Clothes/make-up, dry cleaning, personal items, glasses/contact lenses, etc.
      • Gifts (birthday, baby shower, wedding)
      • Travel (vacation, holiday, ski trip, festival, etc.)
      • Pets
      • Children (RESPs, school, activities, etc.)

Knowing or having the documentation for 6 topics above should cover everything that your Advisor needs to know.

However, as everyone is different, this isn’t an exhaustive list.

Working with the right Financial Advisor can make all the difference when creating the right plan for you. 

Our Certified Financial Planner®, Alyx, and our Money Coach, Jen, would be happy to help you create a plan that works for your lifestyle and goals.

Happy planning!

Posted on

Making An Emergency Fund When You Don’t Have The Money

making an emergency fund

64% of Canadians have an emergency fund to cover three months of expenses 👏👏👏

An emergency fund is there to help when something unexpected happens – You can’t work for a period of time, get laid off, the washing machine breaks, etc.

But that means that MANY Canadians AREN’T prepared for a financial emergency.

If you fall under that 36% of people, it’s likely for one of two reasons:

  1. You didn’t realize how important they are (if that’s you, read this)
  2. You don’t have the money to make one

Most fall under the second category. And if that’s you, we have one simple change you can make to build an emergency fund when you don’t have the money.

Save once a week.

That’s the trick.

Saving once a month or taking money off of each paycheque works great when you have the money. The problem comes into play when you already KNOW things will be tight or when you’re hit with an unexpected bill.

Adding to your emergency fund will be the first thing axed because, of course, it already feels like an emergency.

If rather than saving $100 per month, we break down our savings to $25 a week, for example, it’s easier to do consistently. And, when it comes to finances, consistency is key. Most people can find $25 even on lean weeks.

Are you winging it with your finances?

how to get your finances in order

There are 2 keys to making this work:

  1. You must automate it
    Manually transferring money over gives you the option to forget and to debate whether you can this week. Do not give yourself that option.
  2. You must put the money into a separate account
    And it’s best if that’s not accessible by bank card. I chose to use a TFSA but a professional who is familiar with your situation will be able to advise best. Jen, our Money Coach, would be happy to help you with that.

Making an emergency plan when you don’t have the money can take time. So be patient with yourself. It takes time and effort to build plans like this.

But it’s worth it to know that you and your family will be taken care of.

Posted on

How Much Does A Financial Planning Professional® Spend On Her Wedding?

how much does a financial planner spend on her wedding?

Here’s the post and answer many of you have waited for – how much does a Financial Planning Professional® who encourages frugality spend on her wedding?

My husband and I have been married for 8 years now and a frugal wedding has afforded us a number of opportunities we may not have had otherwise. A beautiful home and two awesome kiddos, to start!

I’ll sheepishly say, we spent more than I thought we would. But I wouldn’t change a thing.

As you can imagine, a lot of planning went into this wedding even though it was PLANNED IN 3 WEEKS! This is what we did to stay frugal.

  1.  We had many discussions about our budget (surprise! surprise!) because we knew we didn’t want to go into debt
  2. We gave ourselves less time to plan so that we were limited in what we could do
  3. We went for NICE not extravagant 
  4. We got married during the week
  5. We kept it small – about 24 guests
  6. We picked one thing to splurge on
  7. We accepted as much help as we could get

Could we have done the wedding cheaper? Absolutely.

Especially if we didn’t know there would be some cash given to use. Would I change anything at all? Absolutely not.

Total Wedding Cost: ~$7,500

Posted on

The Value of Time & Money

time and money

“Not enough” is a phrase we use A LOT. There’s not enough time in the day or money in our bank accounts. The truth is, when it comes to time and money, it’s all about value.

The value that YOU feel you can give or receive in a situation.

Most people have the money to attend a Shania Twain concert. However, if we don’t see value in it, we’ll quickly decline the invitation and choose to spend our time and money elsewhere.

On the contrary, if this is the last tour she’s going on and our best friend is asking, you’d better believe the time and money would be found!

Nothing has changed but how we value the event.

My value for my time is that I do what I enjoy doing.

There are many things we all have to do that we don’t want to – cleaning the bathroom and filing taxes to name a few.

But, when the choice is there, OWN IT.

It’s all about priorities. When we want something, we will find a way to make it happen. Whether that’s moving a schedule around or pulling longer days to bring in extra income.

So, I’ve changed my narrative from “I don’t have enough [time or money]” to “I’ve chosen to do something else instead.”

This simple change in the way I talk to myself has helped me to manage my time and money around the things that are important to me.

By paying attention to the way we talk to ourselves, we can manage our time and money on the things that are important to us.

So, what’s important to you?

Posted on

How to Separate Your Finances After a Breakup

separate your finances after a breakup

We like to keep our topics focused on building your future and growing your finances. But sometimes things fall apart. Relationships break down and you need to figure out how to divide what you’ve built together. If you find yourself needing to separate finances after a breakup, here are some of the financial aspects you will need to get in order. Working with a professional will ensure all your bases are covered.

Who gets the house?

If you own it, you will likely be contacting a professional to split it. If you’re renting, whose name is on the lease, and can it easily be changed?

Whoever is moving will need to make sure that their address is updated. Use the Government’s website to change your address with the main regulatory agencies.

Also, update Your address with:
  •       Your bank and credit card company
  •       Investment Accounts
  •       Insurance Policies – life, health, house, car
  •       Loans or debt accounts
  •       Service accounts you hold (i.e. cellphone, hydro)
  •       Regulatory agencies you report to
  •       Your employer

How do you separate finances after a breakup?

You have a few options.

If you had a joint bank account, remove one of the names after splitting the funds. Make sure that all automatic withdrawals or deposits coming from the partner who was removed have been redirected.

Otherwise, you can each open your own chequing account and move your automatic deposits and withdrawals there. We suggest leaving your joint chequing account open for a few weeks until you’re sure you haven’t missed anything.

Now, take inventory of your new financial picture. Create your OWN budget and goals to start strong in this new chapter of life.

.

If you have investments, decide which ones need to be split (if a lawyer is involved, they will advise). Remember to change the beneficiary on your RRSPs and TFSAs.

To avoid trouble down the road, keep some form of paper trail on what you’ve decided together. If you’re working with a lawyer, they will likely do this for you. If it was a verbal agreement, consider sending an email or screenshot a text message between the two of you, of your agreement.

The only constant in life is death and taxes.

Take inventory of your bills. Change the account holder of any household bills to the person staying in the home. Separate the accounts that you’ve been sharing together – like family phone plans and gym memberships.

Be sure to update the beneficiary (unless required for a loan, children, etc.) on your individual and employee group life insurance policies. It is best to make your beneficiary an actual person, instead of your estate, unless advised otherwise by your lawyer.

If you have health coverage, either remove the ex-partner or talk with your provider about a continuation of benefit coverage or other options available.

The partner being removed, if applicable, should still submit all receipts for services incurred before the separation to get the reimbursement they are entitled to.

If you are working with a lawyer, they will guide you through the process of separating finances after a breakup. They can advise regarding beneficiary changes and agreements you need to make. This list is not exhaustive and there are many more details to work out.

Sending you strength through this difficult time ❤

Posted on

5 Steps to Stop Emotional Spending

Stop Emotional Spending

Do you find yourself in the Household section of Superstore or opening the Amazon app on crappy days? Putting things in your cart that you really don’t need, in an effort to feel rewarded for the day’s frustrations and indulge in a little retail therapy? Until you look at your bank statement and realize how quickly those purchases add up.

If that sounds familiar, you’re not alone. 63% of Canadians admit to impulsive shopping and we spend about $8.8 BILLION on it collectively, every year.

It’s easy to get stuck in a ‘stress and spend’ cycle of feeling bad for your purchases, getting stressed, then emotional spending, even more, to try and feel better. 

Stop emotional spending

We’re going to give you 5 steps to stop emotional spending.

First, forgive yourself. Beating yourself up is more likely to perpetuate emotional spending. Life can be overwhelming and finding comfort is so important. Good for you for recognizing the pattern and working towards change ❤

It’s time to stop emotional spending and replace the habit with something new. Our brains aren’t wired to listen to “stop doing that” but, they are wired for “do this instead”. That’s why replacing the habit, rather than telling yourself to “just stop”, is really important.

Here are a few things to try, to replace the habit:

  • Meditation
  • A walk
  • Cooking your favorite meal
  • Making something – knitting, painting, gardening
  • Reaching out to family or friends and admitting that you need some support today

Committing to a self-care practice may also be helpful. Check out our blog on that topic.

You’re right, it might not feel as comforting the first time. But, over time, your brain will learn to find just as much (or more) comfort in your healthier habit.

Next, remove easy access to spending.

Delete your Amazon app, remove notifications for Facebook marketplace, take credit cards out of your wallet, and delete any saved credit card information from your apps – you didn’t think we’d forget that one did you? 😉.

.

Now that you don’t have the immediate temptation, it’s important to give yourself the right tools to adjust.

The next time you’re feeling tempted to indulge in some retail therapy, ask yourself – Would I buy this item if it wasn’t on sale? or How many hours would I have to work to pay for this?

This has helped me catch myself – just because it’s 60% off, doesn’t mean it’s a smoking deal. If I saw this item, and this was the regular price, would I be snatching it up as fast? Or would I be keeping an eye out for a sale? Realizing how much it would really cost can be very sobering.

The last suggestion we have for you is to make goals and a budget.

Turning down something you really want to buy is crazy difficult. Knowing you need to choose between this item and a weeklong Caribbean vacation, however, is much easier.

Give yourself a bigger goal to work towards so that you’re not giving an item up, you’re choosing something better!

These beginner savings tips will help you get started.

Those are the five steps to stop emotional spending. They really will work if you commit to them. Retail therapy is a hard habit to break, so give yourself credit for every step that you take.

Posted on

The 123’s of Getting Your Finances in Order

how to get your finances in order

Do you feel like you have your finances in order or are you winging it? Talking about finances can be really difficult because the conversations are so emotionally charged. It’s easy to have fears, insecurities, and frustrations tied into our finances. We understand that because we’ve been there too. Rather than getting trapped in that cycle, we’ll walk you through how to get your finances in order.

Step 1: Make a Budget

Have you ever put a puzzle together without having the end picture in sight? Probably not. You know that’d make the task much more difficult than it needs to be. 

The same goes for your budget. Without seeing an accurate picture, it’s hard to understand what you need to do to reach your goal.

How to Start

Grab a piece of paper and write down how much money your household brings in each month at the top of the page. Below that, write the following headings:

  1. household
  2. transportation
  3. food
  4. entertainment
  5. clothing & gifts
  6. others

 

Then, go through your bank and credit card statements for the last month and pair each expense with a heading, and total them up.

Now you know how much you spend each month AND what you spend the most money on.

Add up all of your expenses. And subtract your income from expenses. That’s how much money you have left over each month.

If you’re spending more than you’re making, you need to go over your expenses and your income to see what changes you can make.

To finish off your budget, decide where you want that extra amount of money to go. Maybe debt repayment, a vacation, or one of the following.

Step 2: Make an Emergency Plan

There are SO many angles to look at this from, so we’re going to cover 3 main angles.

Make an Emergency Fund

This is priority numero uno. Your emergency fund should be at least enough to cover 3 months of expenses. And yes, that’s a big number. But this emergency fund is going to keep your budget on track, avoid stress in a financial crisis, get you through a job loss, and a lot of other 💩 that life can throw at you. 

Our suggestion is that you put a manageable amount of money aside each month, into an account that you don’t have access to via bank card, like a TFSA. 

What if something happened and you couldn’t work for a long period of time though?

Just because you don’t have an income, doesn’t mean the bills stop. Because saving enough to cover you (and maybe your partner) taking a long period of time off of work isn’t realistic for most people, get disability insurance. It replaces a portion of your income if you’re hurt or sick.

There are also insurance plans that would help financially if you couldn’t work because your child was sick.

Get life insurance

It’s not for you, it’s for your loved ones. It’ll help them pay off debt (including the house), afford the expenses of growing kids, and finance the changes in lifestyle they’ll need to make.

When we talk about how to get your finances in order, we also need to consider protecting them.

Make a will

Without a will, your loved ones may have to wait a long time and pay fees to get their inheritance. In order to avoid conflicts and ensure your family is taken care of, sit down with a lawyer and knock this off your task list.

.

Step 3: Make a Savings Goal

Now that you know what your financial situation looks like and you’ve made sure you’re covered if it ever took a hit, you need to make a savings goal.

Saving looks different for many people – both how you save and what you save for. It could be saving for a long-term expense like retirement, a property, vacation or large annual bills.

Whatever it is, you’ll need to refer to your budget again.

You know how much you have leftover now, so you can decide how much of that you want to put into saving. 

Make sure that you do the math on how long it’ll take to save what you need. Putting $100 aside for a new car each month might sound like a great idea until you realize it’ll take you a year just to save $1,200.

You’ve probably realized that there’s nothing glamorous about getting your finances in order.

It’s not as fancy to whip out a debit card as it is a Black Card nor is it too fun to spend your free time putting this all together. It takes discipline, a firm grasp on what you’re working towards, and boundaries.

But how good would it feel to not be phased by a surprise bill? Or to know you’d be okay if you lost your job?

These things aren’t glamorous but the freedom and security you can afford by following these steps on how to get your finances in order are much more rewarding.

Be sure to share this with your closest friends who want that same freedom!

Take control of your financial future. 

Posted on

What If I Get Hurt At My Side Hustle in Canada?

what if I get hurt at my side hustle?

Getting a side hustle is an awesome way to make a bit of extra cash. They can offer a lot of flexibility and, for some people, might even turn into a full-time gig. But what if you get hurt at your side hustle? You might not have all the comforts that you get with your 9-5.

There are all kinds of side hustles you can get! From driving for companies like Uber and Skip the Dishes, to using your handy(wo)man skills on a paid gig or becoming a tutor. What we’re talking about here are independent side jobs that you do on top of your j.o.b. – no boss or employee benefits and you don’t get a T-4.

As an employee, you’re automatically enrolled in WorkSafe BC (WCB) and Employment Insurance (E.I.).

If you’re hurt at your job and can’t work because of it, WCB can help and you’ll still have a paycheck. When you work for yourself, those benefits change.

You’ll still have your WCB coverage, but it’s only in effect while you’re at work as an employee. Once you’re on your own time – whether you’re using that time for a side gig or not – you’re not covered by WorkSafe.

For example, maybe you build decks for a living and your neighbor asks you to build a deck for them. But they want you to do it, not the company you work for. In that case, WCB wouldn’t cover you if you got hurt working at your neighbor’s house.

Employment Insurance (E.I.) on the other hand, might still help you.

As long as you’re an employee for a company, E.I. will still be an option whether you’re hurt on or off the job. They can help if you’re hurt, sick, or unemployed. However, they pay 55% of your income (as declared on your paystubs or T4 earnings) up to a maximum of $573/week and only for 15 weeks. If you decide to quit the company you were working for to do this side gig, E.I. goes away. 

For any side job you get that requires driving – deliveries, picking up supplies, meeting clients – you need to make sure your car is insured for business use. If you work with clients or could be liable in any business situation, you also need Liability Insurance.

Those aren’t the kind of insurance we work with at Iron & Pearl Financial, so we’ll leave you with DO NOT skip looking into this.

As a Canadian who pays into Canada Pension Plan (CPP), their disability program may be a last resort.

If you’re hurt at your side hustle, it’s best to not qualify for this. You must be permanently disabled and likely to die from your conditions.

What’s your Plan B if you get hurt and don’t have coverage?

Maybe you could sell something or ask family for help. Remember to consider how long it’ll take to sell your assets.

To make sure that you’re covered at all times, get disability insurance.

It’s the best way to have the peace of mind that you’re covered all the time.

Curious about how disability insurance works and what your options are? Book a free quick call with us. We’ll answer your questions and point you in the right direction. We’re focused on giving you the tools and education to build financial security in your life.

Remember, you’re in control of your financial future.

It takes time and effort to put in plans like this, but it’s worth it to know your family will be taken care of.

Posted on

How to Save Money Without Making More

Click for our blog post on saving in bite-sized chunks.

Half of Canadians live paycheque to paycheque. That’s a staggering statistic. But, with how expensive some of our main cities have become – I’m looking at you, Vancouver and Toronto – it’s not so surprising. So, how does one save money when struggling to make enough as it is? Here are a few ways you can save money without making more.

First, you absolutely need to know how much money you make and how much you spend.

This is non-negotiable. There’s no way around it – I’ve tried 😆 There are many options and apps that can help. I gave myself a month to track everything, which gave me a light at the end of the tunnel for the tedious work of data entry. Track what you make and go through every penny you spend on your debit and credit cards and keep receipts for all cash purchases.

You’re right, it’s a pain to do, but saving your receipts for a few weeks and entering information is worth it for how much this pays off!

I entered everything into a blank excel spreadsheet. Here are the categories I put each expense under:

  • Insurance
  • Food
  • Entertainment
  • Gas/Transportation (including car/bike repairs)
  • Gifts/Clothing
  • Medical expenses
  • Phones/Internet/Cable
  • Membership (Netflix, kids’ programs, Amazon Prime, etc.)
  • Work expenses (tools, dues, uniform, etc.)
  • Debt repayment
  • Savings/Investment contribution

You may have miscellaneous expenses to create categories for. The only way to do this wrong, is to not do it! I can almost guarantee you’ll have an unexpected or emergency expense. Do not toss it thinking it was a fluke. There will always be emergency expenses that need to be accounted for.

Once you know how much you bring in vs. how much you spend, you’ll have an idea of where the problems are.

.

Save the extra.

Now that you know how much you should have left over each month, you’ll know if there’s any money left to put in a savings account. I’ve been putting $25 a week into a side account (with compounding interest) for a few years now and it’s been a lifesaver.  Learn more here. Sometimes you just need to save in bite-sized chunks when you want to save money without making more.

A few years after starting our own bite-sized savings plan, I came across the “latte factor”. If you’re new to that concept, here’s a quick video.

What resources do you already have?

Many people are already working multiple jobs or have other reasons why it’s hard to make ends meet (let alone save), simply saying “you need to make more or spend less”, doesn’t work.

What resources are at your fingertips that you might not be using? Here are a few ideas to get you started:

  • Credit Card Benefits – credit cards often offer little ways to save you money. Like free travel insurance if you pay with your card, bonus dollars if you spend a certain amount,  cash back, warranty extensions/coverage, etc.
  • Employee Benefits – Do you understand your plan? These plans can cover an a lot of health expenses and might offer other benefits. Some companies also offer investments opportunities – don’t risk missing out because you didn’t want to ask a silly question. Someone in your office (probably HR) is responsible for this plan and can help you understand it.
  • Other Member Benefits – The other week, my phone company paid for me to take a friend to the movies just because I’m their customer. We get discounts at certain stores because of my Partner’s company affiliations. Some of my networking groups give me discounts at stores or free first visits. Look at the groups/organizations/companies that you’re a part of and do a dive into what they offer their members!

What’s the interest rate on your savings account?

If you leave your money in a savings account that promises to grow by 0.5% each year (your interest rate) and you leave it in there for 10 years, you’re losing money – thanks to inflation.

Inflation is 2% on average. So, if you’re savings account is only making 0.5% interest, it’s not keeping up!

You’ll hate this next idea but I’m bringing it up because IT WORKS.

Anytime I’ve been in a tight financial spot, I switch to cash. There’s no more of a determining answer on whether you can get take-out than having $1.00 to use.

I take out cash once a week and make envelopes for each category. I chose to do it every week because it’s easier to not spend money when there’s less at your fingertips.

If you prefer to avoid cash, we suggest replacing the cash system with an app that tracks your purchases and a nightly review.

Have a separate chequing account where you transfer money for your weekly expenses (like taking money out of the bank) into.

There are apps that allow you to manually input your expenses for the day or will connect to your bank account and provide a report. Like virtually checking your envelopes!

Here’s what my envelope system looks like:

Envelope 1: Food $200.00/week
Cat food, cleaning supplies, and other household items are in this budget.

Envelope 2: Entertainment $40.00/week
It’s tempting to leave out when things are really tight, but at some point, you’ll be out for an impromptu coffee or want a 6-pack and you don’t want to be tempted to put it on the credit card!

Envelope 3: Gas $60.00/week

Envelope 4: Clothing and gifts $20.00/week
This one typically sits for a little bit until an expense comes up. It feels really good to be prepared!

Envelope 5: Clothing & Gifts $20.00/week

Then, I make sure there’s enough in the account for auto with-drawls – strata fees, car insurance, etc. – and we strictly live off the cash in these envelopes. Some weeks I’m surprised to find there’s quite a bit of money left over! 

Now, I do it even when things aren’t tough because it makes me spend more consciously so I can strive towards the bigger things I want.

Remember, you’re in control of your spending. It takes time and effort to take control of your financial future and say a temporary no to things you really do want. You’ll get from this what you give to it.

Keep your focus in clear sight and I promise, you can start to save money without making a penny more.

The form you have selected does not exist.

 

Posted on

3 Easy Savings Plan Tips for Beginners

Today, we’re going to talk about savings plans for beginners!

If you struggle to save money, you’re in the right place. These 3 savings plan tips for beginners are easy to use!

I have been using these for 5 years now. It has helped us out of some really tight spots and got us on a 3-week vacation to Australia.

Look at that beach!

It’s worked so well for us, I thought I’d share it with you. Here are 3 Savings Plan tips for beginners!

The first tip is: SAVE ONCE A WEEK, NOT ONCE A MONTH.

The reason I’m suggesting so often is because bite sized chunks are a lot more manageable. Let’s use $100 as an example. What I’m suggesting is that, rather than putting aside $100 a month, put aside $25 a week. It’s a small enough amount of money that you likely won’t notice it leaving your account, but still adds up to your ultimate goal. Ideally, you’ll be putting aside a lot more than that, but $100 is a good place to start!

The second tip is: AUTOMATE IT!

Unless you’re a total Type A Superstar, you’re not going to remember to log into your banking app once a week and transfer that money over! Let’s just automate it and get the banking app to do it for you. Have that amount set to go at the same time/same day every single week.

If you know what your goal is – maybe you’re saving for a big trip that you know will cost $5,000, here’s where you’ll figure out exactly how long it’ll take you to save up enough. 

If you’re saving $100 a month, it would take you just shy of 4 years to save up for that trip. Now, set that expectation for yourself and be dedicated to putting the $25 a week aside with your automatic transfers set to go for the next 4 years. Option 2 is taking another look at your budget to see if you could bump up the amount you’re saving, even if it’s just by a bit! But it helps to know how long it’ll take up front, so you don’t get discouraged when it’s not happened as fast as you thought.

.

The third and final tip is: KEEP IT OFF YOUR CARD.

DO NOT make your savings account accessible by debit (or any other) card. It’s way too easy to see something shiny or put a couple small expenses on that account. But we’ve all been to Costco and know how quickly $20 here and there can add up! So, make it easier on yourself and don’t have easy access to the account.

We’ve found a Tax Free Savings Account (TFSA) worked best for us.

It doesn’t offer you a card to make deposits or withdrawals by and is not the type of account to use if you’re planning on putting a bit of money in and taking a bit out. It is, however, fantastic for saving for goals or emergencies! You also don’t get taxed on the interest you make by keeping your money in the account – that’s where the Tax-Free part comes into play. In a TFSA, you would earn more interest as compared to a savings account over the long term, and the tax-free nature of the TFSA earnings means you’ll keep more in your pocket. Click here to learn more about a TFSA!

It’s been a great option for us and maybe for you too. Please make sure you sit down with a Financial Planner or representative from your bank to see if a TFSA would be a good option for you and to learn about the rules that come with that type of account.

The information in this post is based off of my personal experience and opinions. It is for general information only, so do contact a professional who is able to look at and advise your specific needs before making any decisions. 

Those are the 3 tips that we’ve been using for our own savings plan! We started about 5 years ago and having an emergency plan/savings fund that wasn’t stressful to contribute to has made a big difference for us. These beginner tips have worked great for us and I really hope they work for you as well!