Budgets, Debt Management and Financial Planning for Women

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February 2015
« Jan    


Previous Posts

  • Tick Tock Goes the RSP Clock!
  • Plant Seeds to Grow Your Savings
  • What is a RESP and Why Would I Need One?
  • Turn Your 2015 Financial Plan Into Reality!
  • How to Get Your 2015 Plan Done!
  • What do You Need to Set Your 2015 Financial Plan?
  • Why Should You Figure Out Your Finances for 2015?
  • I Think The Big Christmas Bill Has Arrived :(
  • How to Stay on Budget This Holiday Season!
  • How Do I Score an ‘A’ in Financial Literacy?
  • Tick Tock Goes the RSP Clock!

    The March 2nd deadline is fast approaching – have you saved for your retirement? The March 2nd deadline only applies to those wanting to use their RSP contribution towards their 2014 tax year however it does serve to light a fire under those who procrastinate year round! If you plan to complete a 2014 RSP contribution, sooner rather than the last minute will save you time.

    As for retirement savings year round, here are some tips to make it easy on yourself:

    • Know your contribution limit (look on your most recent tax assessment)
    • Set up monthly automatic savings contributions
    • Top up your RSP with any extra savings when you can (work bonus, tax refund)
    • If you’ve withdrawn from your RSP’s under the Homebuyer’s or Lifelong Learning Plans, know what you must re-contribute to comply with the program and to avoid tax consequences

    Happy saving!

    Plant Seeds to Grow Your Savings

    The weather in Vancouver was gorgeous today and spring flowers have been popping up everywhere. You may wonder what on earth that has to do with money – in fact working on your finances might be the last thing you thought of dealing with today!

    The parallel is this – planting seeds today means beautiful flowers or yummy food in a few months and planting bulbs can mean beautiful plants each year. They may require a little tending but in the grand scheme of things, not much of your time and the benefit out-weighs the effort.   Saving your money to reach a goal can work the same way.

    Financial goals can seem large and virtually impossible to attain when day to day life demands our attention but whether it’s retirement, your children’s education or a first home you want to save for there are one thing to do – start now! It doesn’t have to be a lot but start with what you can afford each month and increase it when you get a raise or fewer expenses.


    • Make your monthly savings via an automatic contribution
    • Add to your savings with ‘found money’ such as tax refunds, gifts or overtime

    Your savings will grow each month and you won’t have to do a thing!

    What is a RESP and Why Would I Need One?

    A Registered Education Savings Plan (RESP) is a program under which you can save for your child’s education. As parents we try very hard to give our children every opportunity and one of the foundational bricks of many paths in life is education. The cost of post-secondary education increases each year and who knows what our little ones will decide upon for their future but at least there can be something saved to give them a good start.

    Why a RESP? A RESP has benefits such as tax sheltered earnings and the Canadian Education Savings Grant (CESG). Although there are rules and criteria, the general concept is that CESG grant will be deposited into the RESP each year amounting to 20% of your annual contributions to a maximum grant of $500 per year. This is a really good thing! While the funds are in the plan, earnings and grant received are not taxed until they are withdrawn from the RESP and at that time they are taxed by the beneficiary – hopefully your child as a student!

    Rather than focussing on how much education will cost and how to afford it, I find it easier to concentrate on what we can do and how to do it. In order to obtain the maximum grant, you must contribute $2,500 per year to a RESP. You may wonder how you’ll carve $200+ each month from your budget. I decided to use the $100 per month Universal Child Care Benefit (UCCB), any money I received from relatives and the rest came from our budget. I set aside the money every month via a monthly savings plan. Here are the steps:

    • Open a RESP (you’ll need a Social Insurance Number, SIN and Birth Certificate for your child)
    • Set up automatic monthly savings contributions

    It’s amazing how quickly the savings grow and although I don’t know what they’ll choose to study or if the RESP will cover the total cost of their education, it will be a really good start and a summer or part-time job never hurt anyone! In fact, it’s just the thing to get some life experience and start off their resume.


    • Check out the government site for information: Canadian Government RESP Information
    • Consider carefully where you set up your RESP – it’s best if it’s with a bank or credit union you already work with.
    • Check if there are any restrictions with respect to making changes, transferring the RESP to another institution etc. If there are penalties or fees, go elsewhere.

    Turn Your 2015 Financial Plan Into Reality!

    It’s all planning until you turn it into reality…it’s not as tricky as you might think! It helps to be organized in terms of your filing system but the organization essentials are more about minimizing the administration.

    • Credit Cards – Hold and carry 2 (put away or cancel the rest)
    • Bank Accounts – 1 Chequing & 1 Savings (+ 1 Savings account for each additional person)
    • Investment Accounts – Hold in as few places as appropriate and keep your own tracker with them all in 1 place
    • Income – Automate through Direct Deposit
    • Payments – Automate through Direct Debit
    • Savings – Automate through Monthly/Continuous Contribution Plans (direct from your account into your investments, RSP’s or RESP’s)
    • Large/Irregular Expenses – Pay monthly through direct withdrawal from your account or set up a monthly transfer to your Savings Account so the money’s there when you need it

    Some people like to use money tracker software that combines the information from accounts and credit cards or if you prefer, do it yourself. Either way, the key is to track and monitor your actual income, spending and saving to your plan so that you can take action if you’re getting off track.

    How to Get Your 2015 Plan Done!

    This is Part 1 of a 2 part process to get your plan developed and implemented because it’s one thing having a plan but it’s another to make it happen! That’s the key – put your ideas into action to make your dreams a reality.

    There are essentially 2 steps to Part 1:

    1. Understanding the cost of your goals
    2. Designing a solid budget

    1st – Take each of your goals and convert it to a monthly target to include in your budget. For example, if your top priority is to repay debt then start with knowing how much debt you have, what each debt costs you (the interest rate) and what minimum amount you must pay each month to remain in good standing. Total the total and divide by the number of months of your debt repayment target. If you have $20,000 debt and want to repay it in 3 years, then you can expect to put between $600 and $700 towards debt repayment to meet your goal. TIPS:

    • Always make the minimum required payment by the statement due date (to keep your credit rating in good standing)
    • Repay the debts with the highest interest rate first

    2nd – This is where you develop a budget based on real information, include your goals and ensure that it all adds up. Your expenses and savings and/or debt reduction (goal) plans must be covered by your income. If they don’t, you have 2 options which are to reduce expenses or increase income. Using the information you gathered that tells you what you spend on a monthly basis (on average), develop a budget. With any luck, your income covers your expenses and goals. If not, it’s time to decide how badly you want to achieve your goals and what you are going to do to make it happen. TIPS:

    • Always work with net monthly income (after taxes and deductions)
    • If you are paid bi-weekly, try to budget using 2 pay cheques per month rather than 26 pay cheques over the year and if you are paid over 10 months, either set aside enough each month so you have enough over the remaining 2 months or have another plan to bring in what you need.
    • Total up large or irregular annual expenses and divide into monthly savings instalments that you stash in a separate account so the funds are there when you need them – think property tax, vehicle insurance and vacations.

    Next week I’ll blog about Part 2 of ‘How’ – putting a system in place to support your plan.

    What do You Need to Set Your 2015 Financial Plan?

    Last week was the ‘why’ and this week is the ‘who’ and ‘what”. Who is you! Now you need the ‘what’ to put together a picture of your finances.

    • Your prioritized goals from last week.
    • A list of your assets and liabilities. Assets = Things like real estate, vehicles, savings and investments and Liabilities = Money owing on mortgages, loans, lines of credit and credit cards (don’t forget to include any money you owe the taxman).
    • Your monthly income – Before and after taxes and deductions (net).
    • Your regular monthly expenses such as housing, utilities, food, clothes, entertainment, gifts and transportation. 
    • Monthly savings
    • Large (annual amounts) expenses such as insurance (home and vehicle), property taxes, trips and travel.

    I suggest you organize the information by putting the assets and liabilities (in separate columns) on 1 page and the income and expenses (separate the large expenses) on another.

    This information is most meaningful if it’s real and an easy way to be sure you’re using the right numbers is to review your cheque book, cash withdrawals, credit card and bank statements. 

    The probability you’ll meet your goals is increased greatly if you’re working with accurate information – even if it’s not a pretty picture today :)

    Next week’s post will be about using this information to develop the plan to reach your goals.

    Why Should You Figure Out Your Finances for 2015?

    My girls are always asking ‘why?’ and much of the time I’m not able to provide a good answer. The question this morning was about the colour of planets, specifically Neptune. I was able to pin it on gases but couldn’t be any more scientific than that.

    However when they ask ‘why’ about finances, I can answer their questions and here are some reasons that may resonate with you:

    • You’ll sleep better at night
    • You can work towards achieving your goals
    • Greater financial fitness = greater options
    • You’ll be in control of your financial future

    Sure there are lots of reasons (aka excuses) to avoid or delay it but if you start slowly and do it well, you will make a huge difference to many areas of your life.

    And there is no time like the start of a new year to begin!

    The best place to start is at the beginning. What 3 goals do you have? You can certainly list more than 3 if you like! A bigger place, vehicle, reduce debt or a retirement plan? Put them in priority order but note any that a long term (5 years or greater) because even though retirement may seem a long time in the future, the advantages of starting to save now are huge.

    If you are keen and want to jump ahead, get started on the next step by gathering your financial information to document a starting point – your financial picture. Using credit card, bank, savings and debt statements note your monthly net income, monthly expenses and larger/annual expenses on one sheet and on another note the balances of any savings and debts.

    I Think The Big Christmas Bill Has Arrived :(

    Between our recent vacation, new snow tires, dental surgery and some holiday gifts the big bill has arrived early this year. I always assume that it will come after the holidays and although that one might be big too, this feels a bit of a shock.


    In one way, it’s a good thing because it means we’ll deal with it before the new year because I always forget that the new year brings smaller pay cheques with CPP and EI deductions starting afresh.


    The good news is that we planned for the tires and the dental bill. Most of the vacation was paid for in advance and although we did a little shopping, we didn’t do too much damage. The bad news is that this bill has already been reduced by our credit card loyalty dividend payment so it must have been a whopper!


    I suppose I could think that it doesn’t seem to matter how much we plan and budget, there are always surprises but I choose to keep planning and budgeting because so far it’s worked pretty well. I like the challenge of seeing if I can plan for the unexpected because that is life after all.


    How to Stay on Budget This Holiday Season!

    Not an easy task! There are so many sparkly and shiny things in the stores. I could suggest that you avoid stores and shopping altogether and advise you to make all your gifts however, unless you’re very crafty, it’s not a realistic suggestion.


    Here are some ideas:

    • Write down your holiday giving budget number
    • Note any travel or holiday activity plans
    • List the people you plan to give to this season including any parties you will go to
    • Jot down some gift ideas including any hostess gifts 
    • Estimate the costs of each item and add it up
    • Is the total within your budget?

    If it is, great! If not, time to do some Internet sleuthing to figure out alternatives and lower cost opportunities (sales and discounts). Doing this before you hit the stores will save you time and money because you won’t be tempted to impulse buy in order to get through your list. Either way, take your list with you (with your budget numbers) so you can keep on track and stick to your plan.



    Good luck!

    How Do I Score an ‘A’ in Financial Literacy?

    November is flying by but there are two weeks left to earn an ‘A’ in Financial Literacy. How do I do that you may ask? Definitions of literate include ‘to be knowledgeable’ or ‘to be well-read on a topic’. I don’t have a whole lot of time to read these days but thanks to the Internet, information is readily available readily through other channels such as the Internet, podcasts, radio and TV.

    The key is to know what knowledge you must acquire to become financially literate. I suggest that you start with these concepts:

    • Basic Definitions – Income, expenses, debts and assets
    • Net Worth – What is it and why is it important to strive towards positive net worth?
    • Personal Financial Statement – What’s does your money picture look like?
    • Cash Flow – What is it and why is it important that it’s positive?
    • Credit Rating – What is it and how do I develop and maintain a positive rating?
    • Credit and Credit Cards – How do they work? How is interest charged?

    These are the building blocks upon which you can base decisions and plans regarding your personal finances. Making smart money choices leads to great options in the future.

    Aim for an ‘A+’ next week by translating the knowledge into action!

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