It’s time to roll up your sleeves and get to work in Step 3. If you’ve already gathered your financial information such as pay cheques, bank and credit card statements you’re all set. If you haven’t, now’s the time to do it.

If you’re comfortable using Excel then it will make calculations easier but I often gravitate towards pen, paper and a calculator. Whatever works for you. Essentially there are 5 categories to complete:

1. Monthly net income (after taxes and deductions)
2. Regular monthly expenses (even if they’re not exactly the same every month, things like food, transportation and utility bills are surprisingly similar each month)
3. Typical monthly spending on wants – entertainment, lifestyle and clothing
4. Large annual expenses including vacations – add them up and divide by 12
5. Savings and goals – use a monthly amount for each one

Put #1 in big numbers at the top of a page and then put the totals for 2, 3, 4 and 5 below. Starting with #1, subtract the totals for expenses and savings one by one. Is there enough monthly income to cover all of them? If not, how much do you need? 

We’ll take a look at how to use the numbers to make a plan to help you achieve your goals.

Once you’ve got your goals in mind it’s a good time to step back and review them to make sure they are in line with your values. Try to prioritize them despite that some may be longer term goals. If you’re having trouble deciding between two or more goals, take them two at a time and rank them #1 and #2, then take the next one and rank it against #2. If the third one is more important, evaluate it against the #1. 

For example: Let’s say Mary would like a 1) new car 2) a holiday 3) a new couch and 4) a start on retirement but she’s not sure how to prioritize them. Taking the first two, Mary wants the holiday more than the car. Comparing the couch to the car, Mary wants the couch more. At this point they are ranked 1) holiday 2) couch 3) car. Factoring in the retirement is a bit more challenging because not having a solid plan makes her feel anxious and she knows she should get started. Comparing it to car, then couch and then holiday she realizes that it’s time to put it first so now the ranking is 1) retirement 2) holiday 3) couch and 4) car.

By comparing only two at a time, it is often easier to decide which you want more whether it’s financial goals, meals for dinner or what to wear!

That’s Step 2 and next time it’s Step 3. In preparation for Step 3, gather your pay stub, credit card bills, bank statements or any other documentation or statements that give you information about the ins and outs of your money.

Wouldn’t it feel great to have your financial affairs sorted? The first steps are quite straightforward and relatively simple. The key is making your lifestyle and your finances fit together so they balance! This can be a little tougher but if it’s important to you, the rewards are worth it.

We’ll go through the steps one by one over the next few weeks and before you know it, you’ll be managing your money with ease and satisfaction.

The first step is defining what you want to achieve whether it is a lifestyle, a thing, no more debt or a solid start to a future goal such as a home purchase or retirement. Start with 3 goals and estimate what it will cost or what you need to do to achieve each one. For example the cost of a new vehicle or if it’s work/life balance you’re working towards (with less of the work = part time?), note what it will take to reach your goal. When do you want to be driving the new car or how long until you’d like to be retired. Measure the timeline in months  if it’s less than 2 years or years if it’s more than 2 years.

If you’ve tried this before and found challenges, barriers, hurdles or reasons that have prevented you from being successful – note them down. Your plan will work this time if you clear troublesome roadblocks at the beginning of the journey.

That’s Step #1. Step #2 next week.

The holidays are just around the corner and so is the new year! 

Get a head start on your 2014 financial plan by taking one small but very important step. Think of 3 things you would like to achieve in the following time frames:

• A short term goal – 1 Year
• A medium term goal – 2 to 3 Years
• A longer term goal – 5 Years +

They can be value or lifestyle based as long as they are important to you. This is something we do every year over the holidays and it feels great to start the new year knowing what we’re working towards.

Once 2014 begins, we’ll get started on designing a plan to make them reality.

It’s the time of year when we tend to indulge and treat ourselves, our families and friends to  special food, drink, celebrations and gifts. When the holiday bills arrive we open them with some trepidation and ‘gulp’, figure out how we’re going to cover it. Sometimes we make conscious decisions to forgo this to buy that but for others, doing without leads to very real choices. 

I think we’ve all seen the commercial where the choice is between heat, shelter or food. That brings it right back to needs. For some, the budget is so tight that they must distinguish between needs and wants on a regular basis and in some ways, the choice is easy…needs win out. 

For others, the line is a little fuzzy and they may cross it and pay a great price for longer. I’m thinking of single moms who go to money lending places in order to spend $100 on a gift for their child and $100 on food and treats to make the season special. I certainly understand the desire to make the holiday memorable but that can be a very expensive way to go about it. 

I think the toughest part of making these decisions is being brave enough to stick to the budget and go against the grain even though this can be incredibly uncomfortable and embarrassing. Who wants to put that out there and face the ‘judgement’? It would take a huge amount of courage and talk about teaching your kids a life lesson. There are many charities and support groups that are very active at this time of year and they help out a lot but for those on an extremely tight budget, these choices are a regular part of life and happen in layers….doing without luxuries, treats, high quality clothes and food. From there it can go further to cutting away more extras, clipping coupons and watching every penny. Stretching the dollar is an admirable skill and there is much pride to be had in using resourcefulness and creativity to give family and friends a memorable holiday season without breaking the budget.

Chatting to people about their holiday preparations can be interesting and I often get some really good ideas. Two people have mentioned how they don’t really like shopping and don’t consider themselves to be ‘shoppers’ but they both practice ‘strategic shopping’. I call it that because they take advantage of sales and fully stocked shelves to purchase things that aren’t typically on a holiday shopping list.

I think one reason is efficiency. They are out and about anyway and make the trip worthwhile by picking up things on other lists such as kid’s shoes and sporting equipment. Time spent now taking care of these errands saves their weekends after the season to do other things.

Buying things on Black Friday or Cyber Monday sales can be worthwhile if you know what an item is regularly priced at. Is it really a lower price or has the price been raised, lowered, raised, lowered a bit and it’s hard to know whether you’re really getting a deal?

Shopping on-line can save time as long as you don’t mind paying shipping costs and you are comfortable you will get the quality you expect. Some things are hard to buy on-line. I tend to buy a couple extra of children’s gifts so that I have extras on hand to wrap when the birthday party invitations roll in – it saves me a ton of time.

Do you practice ‘strategic shopping’?

American Thanksgiving is this week and the ads have been on for weeks. Sales, sales and more sales. Sales across the border and sales in Canada too! 

The question is: Should you buy it if it’s on sale? What if it’s a really, really good deal? 

A great discount can make it very tempting but is it worth your hard earned cash? 

I have a couple thoughts:

• Is it on your list? Is it a planned purchase or an impulse buy?
• Is it a need or a want?
• Is the quality of the good or service commensurate or better than the price you will pay?
• Do you really love it?

There are strategies you can use to make sure that you’re buying things that you won’t regret and that you’ll get good value from. Shop with a list, have an idea of the price you’re prepared to pay in mind before you shop and determine your overall budget before going to shop.

I recently saw an ad for a child’s party dress (’tis the season) for $15. It looked great on TV but I imagined one of my girls in it and thought, ‘I don’t think that would last 5 minutes without a rip, tear or seams coming apart’. After I thought about it, I didn’t think it was such good value anymore.

My mom always says that if it’s something you really like, it’s good quality and you’ll wear it often, it’s okay to spend a little more because it will last.

You probably make at least and maybe more holiday lists but do you make a budget? It’s easy to become overwhelmed by the holiday season because between gifts, cards, holiday functions and regular life….it gets busy! And that can mean that attention to details is exchanged for what’s easiest and what’s easiest is almost always more expensive. A treat for yourself or a safe ride home in a cab late at night makes is all part of the season however, indulgences can add up.

I find the best way for me to keep myself organized so that I can enjoy the holidays is to do a little holiday planning which means lists! 

• Special food and drinks
• Hostess gifts to take to parties and family gatherings
• Gift exchange items for work or other social groups
• Donations
• Christmas cards and letters
• Gifts to buy for here and to mail

I also put the activities we plan to do on the calendar. 

Once I put dollar amounts beside the items on my list I can plan my spending…this way I don’t have too many surprises on our credit card statement in January.

Rather than move into Holiday Budgets just yet, I thought I would write another post on nutritious meals that are relatively easy to prepare and won’t break the bank. They make several portions and many freeze well so will be available for meals that just need reheating – fast and easy!

• $17 – Chili and biscuits (8 adult and 4 child portions)
• $2.50 – Pancakes (2 adult and 2 child portions) and only 5 ingredients 🙂
• $15 – Spaghetti bolognese (8 adult and 4 child portions)
• $10 – Mac and Cheese (4 adult and 4 child portions)
• $12 – Chicken stew and biscuits (8 adult and 4 child portions)

The chili is loaded with protein with ground beef, kidney beans and baked beans and the biscuits are delicious fresh out of the oven.

A few extra touches such as cheese (cheddar for the chili or Parmesan for the spaghetti and mac and cheese), maple syrup and a touch of red wine for the stew take these from great to fantastic.

The secrets to the chili, bolognese sauce and chicken stew are a crock pot and lots of vegetables mixed in. Great for dinners where you may have an extra guest or two! The chili and bolognese sauce freeze really well and are great for quick meals when you’re in a rush.

On a per meal basis these fit the bill in terms of nutrition and the budget!

My husband and my birthdays fall within a week of each other, it is Remembrance Day on Monday and the holiday season is around the corner. What do all of those have in common? Gifts and giving. It got me thinking….what is the value of a gift? Is it what you pay, the effort you put in, how much the other person likes your gift or what they do with the gift? 

Take fundraising for example, we recently subscribed to the Knowledge Network because we watch many of the shows, appreciate that the programming is commercial free and believe that education is a worthwhile investment. 

My thoughts also turn to my grandfathers who both fought in World War II for our freedom. I don’t think you can place a value on the sacrifice of so many. It is the ultimate gift.

Sometimes I think I’ve found the perfect gift for someone but I can tell I’ve missed the mark and other times, I’ve known I found the right little something and it’s a hit. I think buying for children can be the most challenging. 

I’m going to have to put my thinking cap on for this holiday season because I’ve learnt long ago that’s it’s not the price tag that brings the smile.