Sometimes we need to remember to put that glass down!

I read this online today and thought it was very important to share....Just remember that sometimes we need to put the glass down!!!

 

 

 

 

A psychologist walked around a room while teaching stress management to an audience. As she raised a glass of water, everyone expected they'd be asked the "half empty or half full" question. Instead, with a smile on her face, she inquired: "How heavy is this glass of water?"

Answers called out ranged from 8 oz. to 20 oz.

She replied, "The absolute weight doesn't matter. It depends on how long I ...hold it. If I hold it for a minute, it's not a problem. If I hold it for an hour, I'll have an ache in my arm. If I hold it for a day, my arm will feel numb and paralyzed. In each case, the weight of the glass doesn't change, but the longer I hold it, the heavier it becomes."

She continued, "The stresses and worries in life are like that glass of water. Think about them for a while and nothing happens. Think about them a bit longer and they begin to hurt. And if you think about them all day long, you will feel paralyzed – incapable of doing anything."

Remember to put the glass down.

Who Wants To Be A Millionaire?

Becoming a millionaire is not extremely difficult. It does however take time, money, and lots of discipline. Here are the basic principles you need to follow if you would like to be a millionaire.

Earn Money

Some people are lucky enough to be born into a rich family.  Others plan to inherit a lot of money and some people actually believe they will strike it rich by winning the lottery.  For the rest of us, the secret to becoming a millionaire is to earn money.  Yes, that’s it - earn money.  In fact you don’t even need to earn lots of money to become wealthy.  The most important factor in becoming wealthy is what you do with the money you earn.

My wife and I earn a decent living, but along the way we made several lifestyle choices which reduced our income.  For example, a number of years ago I decided to leave my full-time employment with the bank to become self employed.  It was hard at first but eventually I was able to replace my full-time salary.  Another decision we’ve made is for my wife to be a stay at home mom. Even in a one income household, I believe we are on the right path because we do a number of things that move us in the right direction. 

Spend Less Than You Earn

When we first met, my wife was a saver and, well, I wasn’t.  After we decided to get married we agreed that, once we had children, she would stay home.  With this in mind we knew we would eventually be living on my income, so we started off doing just that – we lived off my income (and we saved hers).  Oh sure, it was tough at first, but eventually it became normal and life went on.  A few years later when we had our first child and my wife stopped working, there was no change in our spending (other than the expenses of having your first child of course), and we were still able to save money each year.  In fact, some of the best savers I know are one income families.

Take some time to look at your expenses and ask yourself if each particular expense is a Need or a Want.  We all have lots of both categories, but too many of us spend way too much on what we want.  Focus first on your needs and then limit your wants.  This will help you live within your means, which is a key to financial success.

Invest The Rest

You should be saving at least 10% of your take home pay.  This is the minimum amount you should be allocating to long term financial success at all times.  Be sure to use tax advantaged accounts such as a Registered Retirement Savings Plans (RRSP) or Tax Free Savings Accounts (TFSA). Compound interest has been called the strongest force in the universe, and you want that force working for you.

There are many ways to invest, and you can be successful as long as you make wise investment decisions and let time and compound interest work for you.

Repeat As Necessary

Earn money, spend less than you earn, save and invest, repeat the process. After that it’s just a matter of time. Even if it takes years or decades, the process really is that simple.

It may not seem easy, but it really is. Remember, this is not an overnight get rich quick scheme. It takes time, planning, and some dedication along the way.

What are you waiting for? If you want to become a millionaire, you need to decide to do it and get started. If you are not able to save money right now because of debt or other financial obligations, you should work on those issues first. Then you can move forward on your journey to financial success.

Teach your kids about money

Teaching kids about the value of money, saving and financial responsibility is your job as a parent.  If children are given opportunities to learn money management skills, we empower them to discover what money means to them.

Kids today think that money comes out of a machine – the wonderful, magic machine known as the ATM.  They have never had the opportunity to develop an understanding of how hard it is to earn money, how quickly it is spent and just what the cost of living really is.

Chances are that your children are going to have to work for a living. And if not properly prepared, our kids will likely spend themselves into deep trouble as soon as they are able to qualify for their first credit card.

Here are some things you should do (or not do) the give your children a head start to financial literacy.

Get your child a piggy bank.  Deposit coins when you want to reward them. They won’t understand the value of money at such a young age but it does help them develop a sense of ownership, pride and accomplishment as it fills. Let them make their own choices as to when and how to spend the coins inside. Our children have two piggy banks – one for saving and one for spending.  Each time them have money to deposit, it must be divided equally between the two.  We are trying to teach them the difference between saving to spend AND saving to save.

Have your child open a savings account. Many banks offer a special account for young children which include bankbooks that let the child see their money grow.  Each month your child will see that having money in their account will earn them more money. 

Do your banking with the kids. Tell them what you are doing, what bills you are paying and why.  Explain what you are saving for and why you can’t just go out and buy it right now.  Teaching them about budgeting and savings will do a lot to show them that how the financial world really works.

Provide your child with an allowance when you start to expect them to pick up and put away their toys, help with the dishes or fold laundry.  Be clear about your expectations.  They need to know what tasks they must do in order to receive a certain amount every week -- to save and/or spend.

Let your kids earn extra money.   This doesn’t mean you have to pay them clean their room.  Allow them the opportunity to do additional tasks around the house like washing windows, trimming the hedges, vacuuming out the car.  I’m sure you don’t really like doing these tasks either so they should be worth at least a couple dollars.

Encourage older kids to look for additional work and other means of generating income outside the home: Babysitting, cutting grass, shoveling snow, delivering papers etc. Let them feel the satisfaction of being entrepreneurial at a young age.  You’ll be surprised how it makes them feel.

Teach responsibility. If your child can't be bothered to put their toys away and they get stolen, don't feel the need to replace them. Make them save their money to buy another. It's hard for the parent, but it is great lesson for your child to learn.  They need to realize that things cost money and that it often takes time and hard work to get the things we want in life.

Enhance their entrepreneurial skills.  Perhaps you can help them with a car wash or lemonade stand.  Teach them that nothing really comes for free and explain that they must pay for the supplies from any earnings that they make

Don't give in to everything.  Kids ask for things all the time.  You shouldn’t feel guilty about say no. It's a very important lesson for your children learn the difference between want and need.  We as adults need to focus on this more often as well.  Now, as a parent we do your best to provide the things our children need like food, clothing etc.  However, they don’t need the newest toys or electronics.  This is a very hard lesson for all of us to learn and some people never really get it, so be sure to teach your children at an early age.

Let them make mistakes.  It’s important that we allow our children to make mistakes.  After all, we learn more from our mistakes that we do our victories.  Let your children find out that there is smart spending and silly spending.  Try not to micromanage their money.  It’s better for your children to make mistakes now than later when they are dealing with higher ticket items.

As parents, we can’t rely on the school system to teach our children about proper finances.  We must take the responsibility upon ourselves if we want our children to succeed.  If you have a hard time with it yourself, perhaps you may need to call on the services of a Financial Planner to help you learn as well.  Many Financial Planners would be happy to help.

Money Saving Monday - Couples Finance

When I got married, my wife and I both worked full-time.  We agreed that, when we had children, she would stay at home.  With this in mind we both knew that we would eventually be a one income family so we decided to combine our finances from the beginning.  We moved to joint bank account and haven’t looked back. It has worked for us but, for many of my clients, this becomes a very delicate subject. 

Here are three options to consider.

Maintain Separate Accounts

Couples maintain their separate finances, and split joint expenses as they come in. This may work well for couples who value their financial independence, but can be difficult in other ways.

Sorting out how to divide every expense takes some effort from each partner and can cause confusion.  Also, budgeting as a couple can be complicated when you both maintain separate accounts.

How you decide to arrange your finances as a couple can affect your individual credit reports.  If you have a credit card together, only the primary card holder will develop a credit history by paying it off on time.

If you are thinking about expenses using a joint line of credit or a joint credit card, don’t forget to consider your responsibilities as a joint borrower before making your decision.  If you co-sign a loan, you become equally responsible for repaying the loan.

The Combination of Separate Accounts and One Joint Account 

With this approach, couples use their personal chequing accounts for individual expenses, but open a joint account to use for shared expenses like groceries, rent or mortgage payments, and utility bills.

Couples that choose this option can split their shared expenses easily.  Because individual purchases are separate, though, budgeting as a couple can be more difficult.

If you choose this method, you need to decide which expenses will be paid for jointly, and how much each of you will contribute to shared expenses.  Will you split them 50/50 or contribute a percentage based on your incomes?

In some cases, having separate spending accounts can avoid problems. I’m talking about problems that face many people when they need a few bucks to go out with the girls (or guys) or want to buy something on a whim.  In this situation all income goes into the joint account and the couple’s determine how much spending money goes into their individual accounts (kind of alike an allowance) and at what intervals.  This can be the same amount of money for each person (recommended) OR a percentage of income.  Just remember that if you decide to go with the percentage of income because it means YOU get more spending money, things change, people lose jobs, get better jobs or get raises and you could find yourself on the opposite side at some point in the future.  Also, one very important thing to know is that no one has to justify where their spending money goes!  Whether you decide to save up for something or just spend it the same day you get it – that’s up to you and you alone.  If you spend it, you don’t get more until the next time.

One Joint Account

With this approach, couples combine their incomes and pay all expenses—both joint and individual—from their shared account. This makes tracking expenses very simple and helps build an open and transparent relationship. However, this arrangement can be hard for people who enjoy their financial independence.

If you choose this method, consider whether there will be some exceptional expenses you handle individually, such as paying off debt that you had before you entered the relationship. 

There are many things for couples to consider when deciding how to arrange their finances.  I suggest seeking the advice of a Financial Advisor as their expertise in this area may avoid potential conflict down road.

Building financial security for Canadians with disabilities

Registered Disability Savings Plans

Why RDSPs are the best way to save

1. Anyone can contribute to an RDSP with the written consent of the account holder

2. The total lifetime contribution for each beneficiary is $200,000, with no annual contribution limits

3. Contributions can be matched, based on family income, with up to $3,500 a year in Canada Disability Savings Grants and up to $1,000 a year in Canada Disability Savings Bonds

4. The money you contribute grows tax free

5. Savings and withdrawals do not affect federal and provincial income-tested benefits

Who qualifies for an RDSP?

You qualify to be an RDSP beneficiary if you are eligible for the Disability Tax Credit, a resident of Canada, less than age 60 and have a valid Social Insurance Number.

How to open an RDSP account

• If you haven’t already, apply for the Disability Tax Credit (see www.cra-arc.gc.ca/disability)

• See your financial advisor to open an RDSP

Take advantage of Government help

• Canada Disability Savings Grant - Through the CDSG, the Government deposits money into your RDSP to help you save, providing matching grants of 300%, 200% or 100%, depending on the amount contributed and the beneficiary’s family net income. The maximum is $3,500 each year, with a lifetime limit of $70,000.

• Canada Disability Savings Bond - Through the CDSB, the Government deposits

money into the RDSPs of low-income and modest-income Canadians. If you qualify for the

bond, you could receive up to $1,000 a year, with a lifetime limit of $20,000.

Withdrawing your money

RDSP withdrawals must begin by the end of the year you turn age 60. You may withdraw funds earlier, but be sure to note that once a withdrawal of any amount is made, all federal grants and bonds paid into the RDSP in the previous 10 years have to be repaid.  Withdrawals will consist of non-taxable contributions, taxable Government monies and taxable growth.

How your money can grow: an example

Jack, whose family income is less than $21,287 a year, opens an RDSP at age 19 and contributes $1,500 a year until he is age 49, investing the money in a balanced mutual fund that returns 5.5% annually. Even though his annual contributions only total $46,500 ($1,500 x 31 years), when those contributions are combined with Canada Disability Savings Grants and Canada Disability Savings Bonds, by age 50 Jack will have accumulated $398,891.

• Your annual contribution of $1,500 = $46,500 total

• CDSB of $1,000 a year to a maximum lifetime amount of $20,000

• CDSG of $3,500 a year to a maximum lifetime amount of $70,000

• Results in $398,891 plan total

Top 3 tips to maximize savings

1. Start saving early. Make it automatic by enrolling in a pre-authorized chequing program.

2. Contribute every year to get the maximum annual Canada Disability Savings Grant and Canada Disability Savings Bond, if applicable.

3. Plan your withdrawals to avoid federal grant and bond repayments.

To open an RDSP, please talk to your financial advisor.  If you know of someone who could qualify, be sure to send them this article.

The New Pooled Registered Pension Plan

The pooled registered pension plan, or PRPP, is a new savings vehicle being introduced by the Canadian government. Here's what it might mean for you.

On November 17, 2011, the Canadian government introduced legislation that will give Canadians yet another way to save for retirement. The pooled registered pension plan (PRPP) will be targeted to people whose workplace doesn't offer pension plan options -- mostly small to medium-size businesses and the self-employed. While the details are still being worked out and may change, here are five things you should know about this new savings vehicle.

Why introduce the PRPP?
Many Canadians -- an estimated 3.5 million, mostly people who work for smaller companies that don't offer any employee retirement savings options -- don't have any sort of pension plan. The government wants to offer us yet another way to save for retirement.

How will the PRPP work?
If small to medium-size businesses use a PRPP, they'll automatically deduct an amount from employees' paycheques to put into this savings account. However, businesses won't have to top up funds through the PRPP program, and employees can opt out of participating, which leads some experts to question the value of the program as opposed to a simple RRSP.

Where does the PRPP money go?
PRPPs will be offered to small businesses by the usual financial suspects: banks, insurance operations, fund companies and, likely, anyone else who offers financial products. Money would be put into an account and then the institutions would invest that dough in the hopes that it will grow. Because it's the financial institutions doing the investing, some people say this will make PRPPs cheap and easy to set up. But that remains to be seen.

What will be the investment strategy?
That's still unclear, but since its retirement savings we're talking about, it's highly likely that plan administrators will invest the cash in balanced funds -- funds that typically hold 60 per cent equities and 40 per cent bonds. That lets people grow some of their money (via the stock portion) and protect against downturns (with bonds). Usually, financial institutions offer plan members (the company) and its employees an array of options related to risk tolerance.

What are the drawbacks to the PRPP?
Many experts say this is nothing more than a glorified RRSP and that if people don't have a registered account now -- and many don't -- then they won't suddenly start using a PRPP. Another option for the government to look at was increasing employee contributions to the Canadian Pension Plan, which people can't opt out of, but they chose instead to give business owners the option to help their staff save via top-ups.

It's still too early to say exactly what the PRPP will look like, or if anyone will buy in, but having more savings options is never a bad thing. Depending on the uptake, smaller companies could offer this as an extra incentive to prospective employees. At the very least, those who do use it will, hopefully, have a larger nest egg come retirement time.

New Years Resolution

Christmas Bonus

Christmas comes twice a year for some Canadians - or so they think.

The three-paycheque month is viewed across this country as some type of well-earned bonus that comes through the sleight of hand of being paid every two weeks as opposed to twice a month.

Instead of 24 paycheques a year, you get 26. When you get that "lucky" month depends on when your two-week pay period is calculated. For whatever reason, perhaps because people budget on a monthly basis, those two extra paycheques are considered gravy by many workers.

Most people budget on a monthly basis. We know people have their monthly mortgage payments and certainly other expenses are probably monthly too but in most cases your paycheque is coming on a biweekly basis

Approximately 59% of Canadians get paid on a biweekly basis, opening up the possibility of the three-paycheque month.  The good news is that 89% of people go for direct deposit - something that probably goes a long way to eliminating that feeling of money burning a whole in your pocket.

The problem with being paid on a biweekly basis is that many people feel they have extra money to burn.  After all  you had already allocated your regular two paycheques towards your mortgage and other bills. So, bonus – right?

If your thinking is that you've got some sort of free month, then it likely means you are not doing a good job of coordinating your income with your bills.  The problem is that this is a major mistake, and at the end of the day that third paycheque should probably be thought of more as an opportunity.

 The other time people think money is free is RRSP time when they get their taxes [or refund] back from the government.

If you're complaining about not having enough money, use these opportunities to liberate what is yours. These are the times you should be dealing with your debt, if you are like many Canadians, topping up your savings or some combination of the two.

When you think about all the unpaid credit-card balances, leftover RRSP room, unopened registered education savings plans and underfunded tax-free savings accounts, there are plenty of places to put those extra paycheques.

In some ways, that extra paycheque is almost a bit of forced savings. It's yours. Do what you want with it, but why not make it go a lot further by investing it?

Of course, it is December. So if this is your three-paycheque month, Merry Christmas.

Can I stay home with the kids?

One of the big questions many new parents are faced with has to do with deciding whether or not one of the parents should stay home with the child. Obviously, if you’re accustomed to living on dual incomes, the thought of giving up an income may sound like a daunting task. Even so, if you sit down and crunch the numbers, you may find that it might be more doable than you thought.

The True Cost of Working

When you think about it, your job not only provides income, but it likely creates some expenses as well. If you were to decide to continue working with the child, you’ll probably create additional expenses in caring for the child. On the other hand, if you were to stay home, you would also eliminate many work-related expenses. Some of the expenses you may have if you decided to continue working with a child:

·                        Child care: Depending on the level of care you require, you’re looking at anywhere between $400 and $700 per month per child. It isn’t uncommon to spend upwards of $8,000 -$10,000 each year on full child care during the child’s early years.

·                        Food and Beverage: While you can save money by taking your own lunch and drinks to work, most people end up grabbing a coffee or a lunch on the go while working. Even just $5 a day on lunch adds up to about $1,300 each year.

·                        Transportation: This varies greatly depending on how far you have to commute and whether or not you have public transportation, but even if you spend just $25 each week for transportation costs (gasoline, bus, subway, etc) you might be spending another $1,300 each year just to get to and from your job.

·                        Odds and Ends: If you’re in a profession that requires certain attire, you may need to spend money on clothes or dry cleaning. This can add another few hundred dollars a year. Your job may also require certain licenses, professional fees, or continuing education courses that could tack on additional expenses annually.

As you can see, there is more to that second income than meets the eye. Most people will think of the paycheque that comes with the job and assume that’s the bottom line, but there are many other factors to consider. While giving up that job may result in a loss of income, if you consider the expenses you will also give up, the end result may not be as painful as you had suspected.

The Non-Monetary Benefits

While all of this discussion about money is good, you have to think about the other benefits tied to staying home with your child. Money can’t replace the time spent with your children, and if the bonding aspect of parenting is important to you, this can factor in greatly when determining whether or not you can give up an income. Everyone is different and your priorities may lead towards one direction over the other, but don’t overlook the non-monetary issues when making this important decision.

The Bottom Line

There’s no right or wrong answer, and as you can see, it isn’t as straightforward as deciding whether or not you can live with one less paycheque in your pocket. Depending on the type of job you have, how many hours worked, and how much money you make, you may reach the conclusion that it’s impossible to be able to provide for your family if you give up this income. On the other hand, you may find that after factoring in the expenses related to working and the other benefits of staying home, you’re giving up a lot less than initially thought.

So, take your time and go over your options carefully. The decisions you make will significantly impact your family, so it’s important to take everything into consideration. And if you do find that you can afford to stay at home, you can find plenty of assistance at Stay-at-Home Parents site.

Investing begins with Savings

How do you start investing money?  The key to investing is savings. An effective savings strategy coupled with a smart investing strategy will help you to meet your financial goals.

Every dollar saved now helps you to control your current consumption by which the size of the income that you think will be required for retirement is lowered. Also, through the power of annual compounding, it increases the size of the nest egg you’ll have for retirement.

   

SAVING AND INVESTING STRATEGY

Discipline

To achieve any goal in life, one needs to be disciplined. Similarly, saving and investing too requires discipline. A disciplined approach helps you to remain focused on your financial goals. Formulate a plan and review it periodically to ensure that you are on the right track.

  

The 10% rule

Your goal should be to save at least 10% of your total before tax earnings. This should be the minimum. Most millionaires live far below their means as they are disciplined and highly focused on their financial goals from the beginning. They are millionaires because they have decided to be so.

 Review your current consumption patterns

Conduct a careful study of your consumption patterns. Identify items of expenditures that you can do without or explore opportunities to reduce your costs without unduly sacrificing the item. Review such items as your cable bill, telephone bill, entertainment expenditure, insurance, brokerage services, utilities, cars. Divert these cash savings automatically to an investment account.

Budgeting Plan

Budgeting is vital to any savings strategy. It helps you to identify where your money is going. Wasteful consumption patterns can be controlled through successful budgeting. Often a simple spreadsheet in Excel would suffice. In fact, you can use the budget template that is already available when you buy the Home edition of Windows XP.

Plan to make saving automatic

Find out from your employer whether you can direct your paycheque to different accounts. If you don't have such a service, you can set up an account that will take the money automatically out of your chequing account each month. Let the amount be directed to an investment account. This is re-enforced savings which implies you save first and spend the rest from your paycheque.

Tips for Financial Health

Money, that fickle mistress, is very hard to keep. It seems like the more you get, the more you need. Most of us have said something along the lines of, “If I only had $X more per month, then I’d be fine,” at some point in our lives. However, it rarely works out that way. Money can be a difficult, painful, frustrating subject for anyone. It doesn’t have to be, though. With the right tips and techniques, you can start creating better financial health in your life. Here are ten of the best ways to start.

1. Slash Your Debt

Slashing your debt might seem like an easy thing to do, until you look at all that credit card debt, that is. While you might “know” how deep in debt you are, it often requires a very hard look to actually understand how bad your situation really is. The first thing you need to do is list all of your debts from smallest to largest. Start repaying them now, starting with the smallest and working your way up

2. Plan, Plan, Plan

Before you can enjoy better financial health, you have to know where you’re going. What IS financial health to you? A good financial situation is different things for different people, and how you get there is up to you. The best way to start building better financial health is to make a plan. Write down your goals (for the week, the month, the year, the decade, what have you). Having a plan will give you something to fall back on, to look at and say, “I’m here and need to be there, and this is how I’ll do it.”

3. Prepare for Hardship

This is one of the hardest things to accomplish, but you need to build a financial buffer. You need to have money in your account so that if you lost your job, or some other emergency occurred, you would have the cash to cover it. You need the security that only having good savings can offer. Moreover, this should be separate from your investments – it needs to be readily accessible.

4. Budget Your Pants Off

Any good financial situation is founded on a solid budget, even the rich have to budget some things. Make a budget before you do anything else (and it’ll help you with building that cash cushion, as well). Identify areas where you can cut back spending (stop buying $5 cups of coffee, for instance), and then DO IT. Creating a budget can be tough, but it has to be done. You can use online budgeting and financial tools to help if you’re more comfortable using these services than going it alone.

5. Build for the Future

While tough times have made the investment market a murky, frightening place, you need to keep going. Choose the safest investments out there and keep putting your money away. Sound financial health means having the money that you need when the “golden years” finally sneak up on you. Find a good financial planner or advisor who understands that slow and steady really is the best option and follow his or her advice. Keep investing, but do it with an eye for constant, steady growth, rather than making a fast buck.

6. Evaluate Your Job

While the current economy has forced slowed down hiring, it is slowly beginning to pick up steam once more. If your career is not what you want, or not enough to give you financial security, then now is the time to get where you want to go. Where do you want to be in five years? How will you get there? Make your plan, change your job (or apply for a higher-up position) and embark on your journey. Now is the time.

7. Rent or Own?

This is a question I hear quite often. Investing in real estate now might not be the best idea for you right now (based on your current situation) and you may need to rent. If your rent is low enough, this can be fine. However, if you want to OWN a home and have the credit to get a loan approved (criteria is tighter these days), then now may be a good time. You’ll enjoy lower interest and will be growing equity.  Just be sure to factor in all those additional expenses associated with home ownership like taxes, repairs and maintenance costs.

8. Slash Your Expenses

Your spending is yours to control – no one else can do it for you. You need to identify where you can cut costs and then follow through on it. For instance, if downsizing your car will save you money, and you can make it work, then do it! There’s no need to pay for more car than you need. The same principle can be applied throughout your life.

9. Communicate

Your partner needs to be kept in the loop. Communication is the cornerstone of any good relationship, and you need to make sure that you keep a two-way flow of communication with your partner at all times. Discuss your financial goals, and possible ways to achieve them.

10. Free Investment Money

Yes, there is free money out there for many folks. If your employer offers a pension or matching RRSP contribution, then take them up on it! That’s more money for you, that you don’t have to work for – free money.

Manage Money by Setting Goals

The best way to avoid financial problems is to establish financial goals and a household budget to help achieve them. Your financial goals should be specific, realistic, time based, and flexible. As you put together your financial plan, place each goal into one of three categories:

• Short-term goals: These are goals that you believe you can accomplish within the next six months to two years, such as putting a certain amount of money in your savings, paying off a loan, outfitting your kids for the start of school, or having enough money to join a health club.

• Medium-term goals: These are goals that you feel you can achieve within the next three to six years, such as having enough money for a down payment on a home, paying off a car loan, or putting a certain amount of money in your retirement account.

• Long-term goals: These are goals that you project will take you longer than seven years to achieve. They may include sending your kids to college, having enough money to retire, taking your dream vacation, and so on.

Be realistic about your goals and about how long it will take you to achieve each one. If you are not, you’ll be setting yourself up for frustration and disappointment.

Unless you are lucky enough to come into a financial windfall, you probably can’t afford to work toward all your goals at the same time. If you try to do so, you may spread yourself so thin financially that you don’t achieve any of them. Instead, prioritize your goals so you know which goals to focus on first.

Most likely you will begin working toward short-term goals first because they are probably the most pressing, but you may be able to work on some of your medium- and long-term goals at the same time. For example, maybe you want to pay off your car loan over the next six months, and you also want to start stashing money away for a down payment on a home with the goal of having the money you need in two years.

After you decide which goals to work toward first, decide how you’ll achieve each goal and set a realistic time frame for doing what you’ve set out to do. For example, you may decide to get a second job and put all the money you earn from it toward a certain goal. You may decide to finance another goal through a combination of cash and credit.

Either way you do you it just be sure to revise your budget as necessary.

Money Saving Monday - 5 Money Lessons from The Wealthy Barber Returns

Dave Chilton, author of classic personal-finance book The Wealthy Barber, has returned with a sequel. Here's what he wants you to know about money, debt and investing.

Dave Chilton, author of The Wealthy Barber always swore he'd never write a sequel to the book that sold more than two million copies nationwide.

But 22 years later, the sequel has arrived -- The Wealthy Barber Returns. In his new book, Chilton tackles society's addiction to debt, and touches upon many important and well-known personal finance lessons -- lessons he says have become lost in today's world of plummeting savings rates, skyrocketing debt and disappointing investment returns. Here are five things he wants you to learn about personal finance.

1. You have to remove temptation triggers
Chilton explains that our brains have become so wired by the emotional excitement created by temptation that it can overwhelm our common sense.

By limiting our access to the triggers that drive our temptation, we will be less likely to give in. For example, if your weakness is clothing or purses, stop going to the mall or reading fashion blogs; if you have a habit of spending your cash on lattes, stay away from ATM machines and stop carrying cash with you -- or take a different route to work in the morning that doesn't go past the coffee shop.

2. Banks are a business

Contrary to what many of us would like to believe, bankers are not looking out for the customers' best interests. Banks are a business, and their goal is to drive more money into the pockets of their shareholders -- not yours.

3. Credit cards are evil, even if you don't carry a balance
Aside from the absurdly high interest rates on unpaid balances, credit cards encourage us to become less sensitive to the true cost of what we are buying. When a clerk swipes our credit card, it's a lot easier to miss -- or ignore -- how much we are spending.

Not only that, but people who don't carry a balance on their credit cards are not immune to the credit card trap. They might be able to pay off their credit card bills every month, but using the card could still lead to overspending.

4. You can't have everything you want
Even millionaires can't afford everything. Chilton believes that making small cuts in our spending habits can lead to dramatic results -- without sacrificing our quality of life. The key is to indulge in the areas that are important to us -- whether it's travel, a particular sport or fine wine -- and cut our spending everywhere else.

5. Save when the saving's good

"It's crucial to understand that wealth flows from savings, not from income,” says Chilton. So when you get an unexpected windfall or a raise at work, or you take on a part-time job to generate more income, it's important to put away at least 10 to 15 per cent of your income. Life happens, and money might not come as easily down the road. A divorce, a bad investment return, a job loss or an illness can leave you financially crippled if you haven't planned ahead.

The Wealthy Barber Returns is a must-read for all Canadians. Chilton's easy-to-understand financial tips and humorous approach to teaching us about money makes this book appealing to people of all ages.

Money Saving Monday - Emergency Money

Keeping a budget is not enough.  Life always hands us surprises and we often end up with expenses we did not plan for.  Because of this there should be another aspect of your financial picture.  That other aspect is called emergency money.  I like to refer to this your 'OH S#!T' fund.

Emergency money is money that you put away not as an investment and not as savings, but for emergencies.  And these do happen.   It is best to put away about two months worth of income for this purpose.  Some experts say it should be three months.  The actual amount is debatable.   Whatever you decide on make sure it is enough to adequately handle whatever comes up.   The original basis for the three-month rule was the fact that most short-term debilitating illnesses require three months for healing and recovery.

How much should you save for emergencies? Calculating the amount needed should be fairly easy.   What you want is enough money to pay all of your bills and cover the normal expenses you have budgeted for a typical month.   For example, if your net budget and spending income for a month is $3000 then you should put away $9000 for emergency money.   This is not money for investments or for retirement.  Those two categories should be allocated separately.

Emergency money is used for expenses such as accidents, healthcare expenses not covered by insurance, and death and disability or other instances where you did not have a budget made for a particular expense.   Insurance is a separate issue and should be a separate part of your financial plan.   If you do have disability insurance then this will serve in some ways to protect you in the event of short-term disability.   Thus, you should determine what the benefit would be and then reduce the amount needed for emergency expenses by that number.   The bottom line is to make sure that any applicable insurance actually covers all the contingencies without any problems.  You can ensure that is the case by checking the policy or talking with your agent or financial advisor.

Where should this type of money be invested? Ideally it should be in a very liquid investment that is very easy to get to and can be accessed quickly.   Money market funds are the most popular option.  These are short term, liquid investments that most mutual funds and some banks provide for easy access and cash type liquidity.  They usually pay a nominal rate of return somewhere just above the average savings account rate of the typical bank.  The risk involved in these types of investments is nominal but should not be discounted.  The best recommendation is to read the prospectus and verify for yourself that the manager is investing in dependable and safe short-term investments.

Other possible options for emergency money is the savings account, cash or some other asset that can be easily liquidated without taking a loss.  Many CD's would qualify under this category and should be looked at as an option.  Of course when investing your emergency money you should be seeking to get the maximum return possible without compromising on safety.

Money Saving Monday - Principles of Investing

Begin Investing Now Do not procrastinate. Begin now because an early start can make all the difference. An early start provides a long time horizon for compounding to show its true benefit for the investor. Know Yourself Current situation: What is your current net worth, monthly income and expenses? Where can you reduce your expenses? How much debt are you carrying? At what rate of interest? How much are you saving? How are you investing it? What are your returns? Your Financial Goals: What are they? How much will you need to achieve them? Are you on the right track? Risk Tolerance level: How much risk are you willing and able to accept? Risk tolerance is determined by your personality, age, job security, health, net worth, emergency fund, and the length of your investing horizon. Sort Out your Finances Before you even think about investing, know where your money goes each month. Track your spending habits. If you're carrying debt at a high rate of interest, especially credit card debt, you should unburden yourself before you begin investing. Amass enough to cover three to six months of expenses for emergencies. Never invest in anything you don't understand. Invest Long Term Invest for the long term. Do not be influenced by short-term fluctuations. These are inevitable as all economies as well as businesses experience the boom and bust cycle. Don't try to time the market. Get in and stay in. Review your plan periodically, and whenever your needs or circumstances change. If you are not confident that your plan makes sense, talk to an investment advisor or someone you trust. Investing in Stocks and Mutual Funds A long term view helps you to safely invest in 'riskier' investments, such as stocks, which the market rewards in general. This requires patience and discipline, but it increases returns. This approach reduces your choices to two: stocks and stock mutual funds. In the long run, they're the winners. The additional risk is worth it due to the power of compounding. 10% a year for 20 years is 570%, but 7% a year for 20 years is only 280%. Arm yourself with knowledge. Always do your homework. Knowledge is power. Understand personal finance matters that could affect you. Understand your current investments and the risks associated with them. Be cautious when evaluating the advice of anyone with a vested interest. If you're going to invest in stocks, research companies until you understand them. Consider joining an investment club. Examine historical data or participate in a stock market simulation. If you don't have the time, consider mutual funds, especially index funds. Get Help If You Need It The do-it-yourself approach may not be suitable for everyone. If you try it and it's not working, or you're afraid to try it at all, or you don't have the time or desire, then you should seek professional assistance. If you want others to handle your financial affairs for you, remain involved to some degree, to make sure your money is being spent wisely.

Money Saving Monday - Save and Build Wealth

Start Investing and Building Wealth

There are some people who are gifted with the ability to save money and there are some that are not.  Unfortunately, most people are of the later type.  Saving money is something that requires an inordinate amount of effort for most people and only with effort can they accumulate any substantial amount.   If this profile fits you then the only way to save money is to use a system and discipline.  There are different forms of wealth, however I’m only going to focus on financial wealth.

Saving money is one of the necessary requirements of building financial wealth.  No matter how much you make, your income must exceed your expenses if you are ever to build wealth.  And the only way this figure can be adjusted is by increasing income or decreasing expenses.  Therefore, if you are unable to save money now then you have no choice but to decrease expenses.

The most obvious question to ask yourself for every expense that you incur is the question, Do you really need this right now at this point in time?  There are actually very few things that are necessary for our immediate existence.  However, as human beings we have a way of rationalizing even the most obscure purchases for the sake of necessity.  Break yourself of this habit.  Realize exactly what things are needed and what things are not needed.

The next thing to do is to create and stick to your budget.  A budget will allocate a certain amount to frivolous expenses (i.e. anything non-necessary) that should not be adjusted.  Whatever amount you decide to allocate toward frivolous expenses stick to it.  Whatever amount left over is devoted to your savings.  It is this that you must continue to build to accumulate wealth.

A good rule of thumb is to take 10% off any income you receive and set that aside for savings.  And I do mean to physically take it out.  That means you actually cash the cheque and get the 10% in cash and then do something with it like put it into a savings account or an investment account or even a retirement account.  Whatever the case, the bottom line is that the money is being placed somewhere that you can get to only with some difficulty.  This will discourage you from using that money when you have the desire to make an impulse purchase.

Once this savings account has accumulated a sufficient amount, you should then take that money and purchase an investment with it.  This is much more efficient than simply leaving it in a savings account where it will receive a minimal amount of interest.   So in a nutshell the steps are as follows:

1. Take 10% off the top of your income.
2. Place that money in a savings account or something similar.
3. Let that money accumulate until it is a sufficient sum for purchasing a better investment.
4. Repeat the process.

If you follow these steps month in and month out then you will begin to build a savings account that will make you more financially secure and much closer to your long-term financial goals.

Money Saving Monday - Dining Out

Look for Kid’s Night Deals - Many families are going back to the more traditional one income situation, so Kid’s Night deals are critical to being able to take the kids for an evening out. Most restaurants have a special kid’s night where kids under a certain age (usually 12) eat free or at a reduced cost.  Look for the places near you and make a list on your calendar so you know which restaurants have deals on any given night.

Share entrees - Entrees are growing (along with our waistlines) and so are the cheques at the end of the night. To decrease all of the above, share an entre with a friend or family member. This will ensure both of you receive your fill, pay less, and walk out a little lighter than you might have if you had tried to eat the entire portion.

Plan your budget - Many people spend too much money on eating out because they eat out too frequently and don’t plan it into their week. Pick a specific night every other week or so to go out but decide in advance which restaurant you want to go to.  Pick up a menu in advance of that night to help you plan how much you will spend as well as choosing your food in advance!

Appetizers and Desserts – These were designed with one idea in mind, to get you to order more food than you would ever eat if you cooked it, thus spending more money than you may have planned. In advance of your restaurant visit, determine whether or not you are going to order the appetizer as your meal (provided it is large enough) along with a small salad, or not at all. In doing so, you will save money and room in your stomach for after-dinner coffee. Having coffee at the end of the meal will also help you avoid the $7 desserts with the $2 portions. You will be full and won’t want dessert, thus saving you even more money and inches to the waistline.

 Sides - Many restaurants now offer sides as ala carte items. Choosing 2 or 3 sides, such as a salad, a baked potato, or a side of steamed veggies will help you choose less expensive and potentially more healthy options.

 Eating out is fun and it should remain that way. It can be done in such a way that everyone’s budget should be able to afford it on a regular, planned basis.

Enjoy!

Money Saving Monday - Pay yourself first!

I know you’ve probably heard it before but I’m surprised by the number of people who fail to do this.  I come across lots of people who are really good at paying their bills, but not so good at saving money. 

So make it automatic and soon you’ll think of it as just another bill.   Have the money come from your account monthly basis and direct it to a savings account or Tax free savings account (TFSA) if you don’t already have one.  This may be the only thing you need to do to reduce the spending on the stuff that adds no value to your life.

With this in mind, you may also try giving yourself a pocket money allowance.  Your spending on ‘stuff’ should never exceed your allowance.  Once the money is gone – it’s gone until next week, month or whatever time frame you wish to use.

Money Saving Monday - A couple bucks at a time

In our hectic day to day work lives, we often settle for the quick fix, when in fact, a little pre-planning can save you BIG bucks.

- Bag your lunch. At $6.00 each work day you are spending more than $1,500 annually on greasy food that expands your waist line and adds nothing to your bank balance.

- Brew coffee at home. On average a cup of coffee costs $1.75. Throw in a pastry and you could be looking at more than $3.00.

- Skip the mid-morning vending machine stop. Instead, pack a snack.

The Energy of Money

Have you ever asked yourself - "What is money?"

As soon as you understand this fundamental question the closer you are to being able to control it and accumulate it.  In it's simplest form, money is a method of exchange.  Instead of bartering goods we exchange money for them.  If you can remember this and recognize that money is nothing but a form of energy, all we need to do is to have a better understanding of energy, to know how to work with money.

Energy attracts more of itself.  Thus if you have debt then you will likely accumulate more of it.  Whereas, if you have money you will attract more of it.  The key then is to begin accumulating money.  Once you do this then it begins a chain reaction that will continue until you have accumulated more of it.  This is why starting a fundamental savings account is essential to building wealth.   It gives the money somewhere to go.  And it is very important that money has somewhere to go.  This is why simply keeping extra money in your checking account never works.

Energy follows the path of least resistance.  What does this mean? It means that money will flow to the areas that are needed first.  Because it is you who in fact defines your needs, it is you who can determine where this money goes.  The more needs you have defined, the more money will flow to those basic needs.   Now you may be wondering why it is important to understand this aspect of finances.  It is important for the simple fact that wealth is only accumulated when inflow exceeds outflow.   What you define as your needs make up the primary outflow for your income.  And most importantly, those who accumulate wealth are usually those who have fewer needs defined than their peers.

Everybody has different needs.  But why is it that some people require very little in order to be happy? These people also tend to accumulate wealth.  We have all heard of the little old school teacher who dies and then leaves some unfathomable sum to the local library or university.  How was she able to do this? Simple.  She had very few needs.  Thus that freed up more money to go into accumulation and over time this has power.

Energy also requires exchange.  To receive something, something must be given.  This is a fundamental law that we will be coming back to again and again.  You cannot expect to get something for nothing.  People who expect this find themselves losing money to lottery tickets and slot machines and invariably they end up broke.  Don't be one of these people.  Yes it does happen but the fact is that those who do win the lottery or win at the casino usually end up losing it all back anyway.   They do this because they have not understood the simple principles of money that are acquired by building it yourself through savvy investments and intelligent management.  It is simply not worth it to try to accumulate wealth by chance.  Thus, we come back to the law that energy requires exchange.

What are you giving in exchange for your money? The more you give, the more you will receive.   If you are just giving your body then you will receive less than if you are giving your body and mind in a job.  If you are giving your body and mind and years of experience then again that increases what you get in return.  This is why educated professionals are paid more than laborers.  It is a fundamental effect of what they are giving to their job.   Give more and you will receive more.

Thus you now have an elementary understanding of some of the ways money behaves.  Use this to analyze your current situation and gain a better understanding of your current financial situation.