Budgets, Debt Management and Financial Planning for Women

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October 2014
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  • 759
  • Thank You for Thanksgiving Weekend!
  • What is The Least You Can Live On?
  • Back to School Checklist for the CEO of the House
  • Budgeting and Saving for Our Next Big Trip!
  • Time to Add It Up – Did We Budget Enough for Our Trip?
  • Budgeting For Our First Big Trip
  • Radical Budget Cuts? Step 2: The Plan and Stakeholder Agreement
  • Radical Budget Cuts??
  • Summer Holiday Budget
  • It may seem like months away but yet it always seems to sneak up so quickly, settle in like a tornado and then depart leaving us a little heavier in body and lighter in the wallet. Here’s how to get a jump on the holiday season to make for less of a dénouement in the new year.

    3 Simple Steps:

    1. Planning (aka budgeting)
    2. Start Saving Now
    3. Check Your Progress

    They sound simple but are they?

    Planning – What do you plan to spend for gifts, travel and seasonal entertainment such as work functions, theatre, parties and get-togethers?

    Start Saving Now – Based on the total you calculate in the Planning Step, divide by the number of pay cheques between now and the end of December – can you set aside this amount each pay cheque? This is typically a slow time of year which makes it a good time of year curb regular spending in favour of the festivities of the holidays. Set aside what you can into a separate account that you’re not tempted to ‘raid’.

    Check Your Progress – Check your account balance against your target to see how you’re doing. If it’s unlikely that you will reach your target, now is the time to adjust your plan.

    The bad news is that to be successful, it still takes some self-discipline but good news is that there are two months before the holiday season is here AND if you save what you plan to spend and stick to your planned spending….you will have the money set aside to pay your post-holiday bills!

    Thank You for Thanksgiving Weekend!

    We were packed up by Thursday night and ready to go as soon as school was out. We were meeting my brother’s family (from Calgary) in the Interior for another fantastic Thanksgiving weekend. Here’s how it went…..

    I packed some peanut butter sandwiches, fruit and veg to tide us over until dinner time which was the ‘golden arches’ in Merritt ($16). A quick fill up ($60) and we were on our way again. The drive was pretty smooth and everyone arrived in time to have a drink and a catch up before bed.

    Saturday: A quick trip into Vernon to sell a pair of ski boots ($15 credit) and to search for a pair of skis for our eldest. We found a pair that will be just right ($100) and two new balaclavas to go under the kids’ ski helmets ($40). A quick stop for a snack ($5) and home for lunch. The afternoon was sunny and we went on a trip to the Pumpkin Patch. Three large, 2 medium, 1 small pumpkins, 1 butternut squash and several ornamental corns later, we paid ($16) on our way out. We finished the day with a bonfire and a family dinner.

    Sunday: Crash Up Derby Day! Family fun for ($30) at the IPE grounds. If you’ve never been to one of these, you may wrinkly your nose and think hick but I have taken many a city goer to this event and honestly, you just can’t help yourself. Before long, you’ve chosen your car, truck or minivan and are cheering along with everyone else when a car you thought was finished, revs its engine and gets back into it. It’s smelly, noisy and busy. We made it home in time for a cup of tea and then I took the kids down the road for a horseback riding lesson ($20). Thanksgiving dinner was a ‘civilized’ family affair J

    Monday: The Calgary contingent were out the door early to pay a visit to the Adams River Salmon Run and we soon followed to register and participate in The Great Pumpkin Race. The inaugural year, it’s a fundraiser for the local food bank. The entry fee ($30) and an additional donation ($10) paid, we were ready to start. The runner in the family placed 2nd behind a local and received a chocolate medal for his efforts! After lunch and a little more hanging out and we are on our way back to Vancouver. A stop for gas ($60) and dinner ($16) and we’ll be home.

    A great weekend with family and friends for $388 including a pair of skis, balaclavas and pumpkins galore or $263 without the ski gear.

    What is The Least You Can Live On?

    It gets back to the old question of needs versus wants. Layer on the ease of obtaining credit and the complexity of today’s world, and we collide with this simple question. We are often able to buy the things we want such as cars, homes and furniture on credit without saving for them first. Which means that we commit ourselves to monthly payments for a long time….

    A suggested strategy is to keep your monthly fixed obligations as low as possible leaving as large as possible discretionary spending portion of your pay cheque. Why? The higher your fixed costs are, the greater pressure there is to maintain your income level and that can sometimes be a challenge when bad things happen like losing your job or becoming seriously ill. If you are stretched to the limit and then something happens, it can be a fine line.

    A second strategy is to have a contingency fund large enough to cover your fixed expenses and needs for up to six months. No easy feat, I realize but perhaps retirement savings can serve with dual purpose until then? Just remember that if they are serving dual purpose, investment them as such in low risk and liquid plans in case you need them.

    Back to School Checklist for the CEO of the House

    For many of us back to school marks a fresh start milestone – similar to the New Year. There’s a flurry of organization in terms of new routines, registrations and shopping. I feel a bit like a squirrel with all the effort going into restocking our cupboards, fridge and freezer after a summer of coming and going. I have yet to do the clothing changeover and winter clothing and boot check but when I do, I imagine there will be some items to source. I think it has as much to do with the change in seasons as preparing for busy weeks and cold weather.

    The point is that this is a perfect time of year to review your financial plan and work through your ‘to do’ checklist. With the end of the year comes some important deadlines and a little planning now will put you in great shape for 2015.

    Here are some suggested to do’s:

    • Review your 2014 year to date actual spending to your budget.
    • Review expected income and expenses for the next couple months.
    • What’s on your 2014 financial plan? Now is a great time to do RESP and RSP contributions as the RESP contribution deadline is December 31st, you’ll avoid the RSP line ups and probably have better cash flow now compared to the holiday season. Most extra debt repayments have upper limits by calendar year – do what you can now, leaving yourself lots of room for 2015.
    • Review your benefits coverage. Have there been any changes?
    • Set a holiday budget for the upcoming season and a plan to save for it.
    • What 2014 targets are you likely to miss and what would you like to achieve in 2015?

    Budgeting and Saving for Our Next Big Trip!

    It’s a year away and going to be a big one so best we start saving our money now. How much to save? And how to save? 

     

    We are planning a trip to the UK to visit family and see the sights over 3 to 4 weeks. The biggest expenses will be transportation and accommodation. My ball park estimate is $10,000. 

     

    Now for the detailed budget - Although we may be able to stay with friends and family for part of the trip, we’ll have to budget for at least half of our stay in paid accommodation. Flights and a combination of train travel and a rental car will get us to and fro. Let’s see how it adds up:

     

     

    • $4,000 Flights (4 * $1,000)
    • $600 Rental Car 
    • $600 Other Transportation
    • $1,500 Accommodation (10 * $150)
    • $1,575 Food (21 * $75)
    • $500 Gifts
    • $500 Tourist Stuff

    For a grand total of $9,275. Quite close to my $10,000 ball park estimate.

     

     

    I think $10,000 is a good savings target and now the trick is how to save for it. I set aside $250 each month for holidays, I am paid 26 times per year but we budget on 2 pays per month which means 3 paycheques to save between now and next year and in the latter half of the year, both of us have paid our CPP and EI premiums and our cheques are a little bigger. I think these 3 opportunities will get us to our $10,000 savings goal if we’re disciplined. Now we have a plan!

    Time to Add It Up – Did We Budget Enough for Our Trip?

    Ok – here we go. Let’s look at the numbers.

     

     

    • $2,800 Flights
    • $245 Hotel
    • $344 Rental Vehicle + Gas
    • $360 Gifts
    • $100 Tourist Stuff
    • $325 Amusement Park
    • $500 Food, Drinks, Miscellaneous

     

    A Grand Total of $4,674!

     

    Ironically, my ball park estimate was the closest at $5,000 and funds saved and set aside (otherwise known as the plan or budget) was $4,000. The biggest difference between what we spent and planned was our flights. Not much we could do about those and we booked and paid for them far enough in advance that I knew our trip was likely to come in closer to $4,500.

    We were away for 10 days and fortunate to stay with family for the majority of the holiday which kept our accommodation costs low. The amusement park was an unplanned expenditure to celebrate a birthday and well worth the fun!

     

    All in all, I’d say a successfully budgeted trip. All the fun we had visiting family and friends can’t be measured by the dollars – a fantastic first family flight trip.

    Budgeting For Our First Big Trip

    We just got back from a two week to visit family in Ontario and the numbers are in! Did we do a good job budgeting and saving for our trip?

    The key is to plan well for a big vacation because once the flight has left the airport we are committed to the majority of the costs. There is very little discretionary spending and not many places to cut expenses. There were opportunities to economize but as a family of four, we don’t have a lot of flexibility in areas such as transportation and accommodation.

    Here’s what I budgeted:

    • I was hoping for $500 each flight ticket
    • $300 for 2 nights in a hotel
    • $300 for a rental car for a few days
    • $100 per day for food and incidentals

    Here’s how I budgeted:

    • A – I set a savings target of $3,000 for the big ticket items
    • B – I planned to use our regular monthly budget set aside for food, entertainment, gifts, travel and recreation for food and incidentals (approximately $1,000 for two weeks)
    • C – My ballpark trip estimate (without thinking too hard) was $5,000

    You may notice that A + B = $4,000 whereas C = $5,000. Compare these to the detailed trip budget of $3,600 ((4 * $500) + $300 + $300 + (11*$100)). The budget range was $3,600 to $5,000 which gave me a nice amount of wiggle room.

    We hit our savings target of $3,000 last year and I set aside a little each month for trips and weekends away. We bought our flight tickets in February and they were $700 each. I booked our hotel and rental car in July.

    Tune in next week to see what our vacation cost versus our budget.

    Radical Budget Cuts? Step 2: The Plan and Stakeholder Agreement

    Okay, after a small discussion and a little bit of negotiation I think we have a plan.

    We did it in 3 steps:

    1. Understand fixed expenses or savings that we can’t or don’t want to change.
    2. Review previous year expenses to understand where we’ve ignored our budget and seek out opportunities to cut spending.
    3. Set achievable targets.

    Here were the results:

    1. We are keeping our mortgage on an accelerated repayment along with our RESP and RSP savings and we can’t reduce child care, insurance expenses or utility bills.
    2. We absolutely must deal with our ‘going out for coffee and treats’ habit. It’s also time to reinstate some discipline with respect to ‘stuff’ and clothes.
    3. We’re going to stick to our budget on gifts, clothes, recreation and vacation and entertainment. No more coffees and/or treats out, nixing extravagant gifts to each other and no more ‘stuff’.

    This doesn’t mean that we won’t order in because let’s face it, we’re all tired at the end of the week and ordering in every couple weeks is a huge break. It doesn’t mean that our kids won’t play sports or go to birthday parties….they will. Some smarter grocery shopping may produce some savings too and every little bit will count.

    Now we’re on the same page!

    Radical Budget Cuts??

    My husband is proposing radical budget cuts and I do mean radical! He read an article about a couple that didn’t spend any money for 1 year other than rent, utilities and food. Their estimated spend avoidance was $36,000. A very tidy sum.

    You’d think being a financial blogger that I would happily jump on board but I haven’t. To say that I hesitate is putting it mildly…I don’t want to give up cable/internet, recreation or travel. I totally support restraint and frugality and willingly cut out treats (coffee out), adjust our menu, reduce meals out, slash the clothes and stuff spending, change our vacations to local car trip and family-stay-style but I don’t want to cancel Thanksgiving in the Okanagan with the family or miss out on playing soccer or field hockey this season (my knee has just been fixed!). We have two kids and they keep growing out of their clothes and want to play soccer.

    Rather than saying ‘no way’, I plan to look at our previous years’ spending to see where we have opportunities to ‘slash’ our budget without missing out on the things I think are important. Let’s see if I can put some game rules in play that will work for the household. We have a big trip to save for and this will be a great way to do it.

    Summer Holiday Budget

    I realize that I don’t always follow my own advice! What I budgeted for summer holidays and what we’ll spend are two different things…let’s see what the difference is.

    I budget $250 * 12 months = $3,000 which is a reasonable amount of money but it’s theoretically intended to cover the whole year. I think it’s enough to pay for a few weekend trips (including accommodation), summer holiday camping weeks and summer expenses such as child care camps, activities, special events and increased transportation/gas costs. I know I can do a better job making sure I include all the costs of summer holidays especially child care because now that they’re in school, the cost of full time care over the summer is a bit of a shock compared to before and after school care during the school year. Between camps, babysitters and special activities such as soccer camp and swim lessons, it adds up! What a fun summer though and isn’t that what it’s for?

    In reality $3,000 isn’t enough for various holidays over the year and larger trips out of province or country which require flights and hotels so my habit is to plan and save for these separately and that’s the difference between my holiday budget and our actual spending. I haven’t totally left it out…simply provided for it in a different place in my planning.




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