Budgets, Debt Management and Financial Planning for Women

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December 2014
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Previous Posts

  • 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?
  • Financial Literacy Month – How Did You Learn About Money?
  • Money Mummies, Boo Budgets & Worry Witches..What Gives You a Fright in the Night?
  • 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!
  • 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!

    Financial Literacy Month – How Did You Learn About Money?

    I can thank my parents for teaching me and my brother valuable first lessons when it comes to finances.

    • Save for what you want before you buy it
    • Always pay the full balance owing on your credit card by the due date
    • Save for retirement
    • Spend wisely – if it’s something you really, really like, it’s worth it (think a high quality, classic wardrobe piece or a great trip)

    I clearly remember wanting a new bike. I’d chosen it from the Shepard’s Hardware catalogue and begged my mom to buy it. I’d pay her back! But until I’d saved my money (a slow process of marking the accumulation on the fridge), the bike wasn’t mine. Saving and buying that bike gave me great pride and represented a lot of hours of babysitting!

    In Grade 2 I was lucky to be part of a small group that learned about money. We learned about the denominations, how to make change and how to add it up. Fast forward to planning for the start of university and my mom helped me make a budget. I did a fairly good job but had forgotten to put in anything for the occasional coffee or gift for friends. I also developed the budget based on the school year only which led to a scramble at the end of the year to get a summer job – good motivation!

    I grew up in an era when people still used predominantly cash to buy everyday things such as groceries and a new car was a big deal. Today’s world is totally different and I notice that my girls’ understanding of finance requires some further education. We use credit cards as our primary payment mechanism so I explain about paying the bills. We use bottle and can currency exchange to put spending on ‘wants’ into perspective. To go for coffee or a treat costs a whole big bag of returnables! And we ask questions for them to consider:

    • How much does a tank of gas cost?
    • How to spend money or gift cards they are given? On consumables or something that lasts longer?

    How did you learn about money?

    Money Mummies, Boo Budgets & Worry Witches..What Gives You a Fright in the Night?

    I think most of us enjoy the little thrill that comes from a Halloween scare. My kids like to be surprised by just the right amount of ‘boo’ or mechanical spider lunging toward their feet as they cross the threshold.

    What really frightens them though is the unknown, the uncertain and the down-right scary – like fireworks set off in the middle of the night or witnessing a car accident. As adults there may not be much that ‘scares’ us but there can be things that we worry about or are afraid of. Money worries can be one of those things. As with childhood fears, facing and addressing your financial foes is half the battle.

    Learning about the unknown and setting plans in place to reduce uncertainty are key steps to moving past any type of fear into a position of confidence and strength. In the world of your money this equals choices and options.The first step is to gather your information, review it and understand your financial position. Does your income cover your expenses? Do you have debt? Do you have Assets? If so, how much of each?

    Don’t let the Worry Witches get the best of you this Halloween!

    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!




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