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Tag: budget

Combat Inflation with 5 Easy Steps
Inflation. The new but not so pretty buzz word. You’ve likely heard it millions of times over the last several months and you’ve definitely experienced it, within your bank account. The price of everything has gone up. And it’s not just high-ticket items; it’s groceries, it’s gas, it’s everyday items that fuel your household and your lifestyle. Feeling broke lately? You’re not alone.

Due to a number of factors, including supply chain issues following global Covid-19 pandemic lockdowns and the Russian-Ukrainian conflict, inflation is making all kinds of goods — from groceries to gas — much more expensive than they were even a few months ago. In June, inflation hit 8.1%, the highest year-over-year increase seen since the 1980’s.

Even when it’s not at a high-point, inflation is an unavoidable reality for all Canadians. No matter the economic conditions, the price of goods eventually rises over time and your money will buy less than it once did. The amount that increase occurs (expressed as a percentage) is the rate of inflation.

Where inflation really starts to impact the average Canadian is when the increase in the price of goods outpaces the increase in wages, compromising your purchasing power. When inflation hit that 8.1% mark in June, hourly wages rose just 5.2%.

How to Hedge Against Inflation
So, what can the average Canadian do about these rising costs? Fortunately, you don’t need to earn a finance degree or enlist a financial advisor to deal with inflationary woes. In fact, advisors recommend using the same sensible money-saving tactics they share during boom times, such as tracking expenses, tackling debt, and avoiding risky investments.
1. Track Your Spending Closely
  Budgeting is the mainstay advice of personal finance advisors everywhere but keeping to a rigid plan is more difficult than ever. How do you keep to a predetermined limit when the price of everything from milk to Mercedes’ are rising every month? While you may be able to hold off on buying a Benz, the price of essentials, like groceries and gas, have increased, too.Eating is an expensive habit, and it’s not something we can cut from our budget — we’ve got to eat. When we hit up the grocery store, inflation is hitting us back.While you can’t simply buy less food, going to the grocery store armed with a list and your calculator app can help you save. By considering unit pricing, this is the cost per measurement, usually by 100 grams at grocery chains like Food Basics or Metro, you can get more of your favourite foods for less.
  
  The results of a little math are often surprising. Family deals can be more expensive than smaller purchases and sometimes that’s on purpose. Shrinkflation, where brands shrink the size of a product but keep the price the same, can bite.
2. Tackle Debt as Fast as Possible
  Canadians owe a lot of money. In fact, StatsCan estimates the average consumer owes $1.73 in consumer credit and mortgage liabilities for every dollar of their income. This high debt-to-income ratio isn’t new, but the Bank of Canada’s current overnight rate of 2.5% (which is 10 times higher than it was at the end of 2021) is making interest rates on loans higher, meaning those debts are even more expensive to pay off.And, of course, inflation means there’s less spare cash to pay off your loans. If you are spending more money on food, rent and gas for your car, that leaves less money to service your debt. The first tip to surviving inflation, unsurprisingly, is to tackle consumer debt as fast as possible to avoid the snowball effect of interest rates overwhelming your finances.
  
  If you have multiple debts, you should tackle the one with the highest interest rate first. This means a payday loan repayment, which could have the equivalent of a 500% interest rate, should take priority over a credit card with a standard 19.99% rate.
  
  Once you’re free of your largest debt, turn your attention to the one with the next highest interest rate. But what happens if you can’t pay everything back? If reducing your expenses or getting a side hustle isn’t enough to destroy your debt, asking your bank for a balance transfer offer may help.
  
  The premise is straightforward: if you transfer a balance to your credit card up to its limit, you can keep it on the credit card at 0% interest for anywhere from six to 12 months. Taking advantage of something like that during this climate is amazing, this is a way to still pay down your debts, and pay them down faster, without the crazy interest rates.
3. Use Cash Back Credit Cards or Bank Accounts
  Earning cash back on essential expenses like gas and groceries can be a simple way to put money back in your pocket. It’s a way to make sure that every dollar you spend is coming back to you in some way. Typical cash back credit cards will give about 1% to 2% back — not a whole lot, but certainly better than nothing. However, some cards can give up to 5% back on groceries, for instance, and others have welcome offers offering 10% back in your first few months.
  
  If you go the credit-card route, keep all of your everyday expenses on it to reap the maximum rewards possible. However, make sure to do your research and avoid overspending. Your cash back won’t really be a win if you end up paying interest charges or a hefty annual fee.
4. Learn to Love Coupons
  You probably need all the help you can get with your grocery bill at the moment. Fortunately, major chains like Metro, Loblaws, and Walmart still offer flyers—perhaps you know, the ones your parents or grandparents read religiously for the latest deals—but you don’t have to grab a paper copy every week just to see where you can save the most. Coupon apps allow anyone to save on food, even food that’s close to its expiry date, but still edible. Some of these apps double as grocery lists. Unfortunately, there are downsides to coupon apps, handy as they may seem. Oftentimes, it encourages you to buy things that you wouldn’t otherwise buy, ultimately, it’s up to the individual to make sure they’re sticking to their grocery list and ideally, having some sort of a meal plan.
5. Avoid Volatile Investments
  Despite 2021’s relatively brisk performance, inflation is souring in world markets. Tech giants like Shopify and cryptocurrencies like Ethereum have lost billions of dollars in valuation over the past year, while central banks are warning of impending recession. But that doesn’t mean the stock market is a complete write-off.Investors should look very carefully at companies with a lot of debt. Interest payments are rising, of course, and a company that owes money is paying it back at a much higher rate than they did a year ago. Pick companies with solid financial performance, you want to buy stocks in companies that are likely—and I use that word ‘likely’ very carefully—to perform better than other companies in a rising rate environment. A utility might be more attractive to an investor right now than a tech company or a bank if the latter is holding a lot of debt. Investors aren’t likely to see much in the way of returns if a company’s CEO is forced to spend a lot of their revenue just shoring up existing debt.
  
  If you’re looking to build a diverse investment portfolio that preserves capital, GICs are also an option. At EQ Bank for example, customers can lock in a 1-year GIC at 4.35%. Since a GIC guarantees repayment of the deposit plus interest, it can be a great way to ensure some cash down the road. Plus, the current interest rate situation is actually a boon for them right now.
  
  But one of the most important pieces of advice — can be summed up simply: stay the course. The markets don’t just move up in a straight line, you’re going to get a lot of bumps along the way. And this is just another bump.
Following Financial Common Sense
With a recession likely on the horizon, it is easy to panic and assume you need to find a brilliant hack to survive these inflationary times with your finances intact. But tried-and-true financial wisdom will do just fine.

In fact, even if inflation conditions improve by the time, you read this article, you should consider adopting the suggestions above to keep you on track.

If we implement these things as part of our lifestyle, then when we see the economy shift — when we see inflation shift — we’re already equipped, and we don’t have to try to scramble to change things.
December 5, 2022
Fixed Rate vs Variable Rate Mortgages: Which Should You Choose?

One of the biggest decisions you’ll face when getting a mortgage is whether to choose a fixed or variable rate mortgage. At the moment, it’s hard to go wrong with either one. After all, mortgage rates in Canada are at historic lows. But the type of mortgage rate you choose is something you should spend some time considering, as the best choice depends as much on your individual circumstances as it does on any economist’s interest rate outlook.

What is a Variable Rate Mortgage?
A variable-rate mortgage is a mortgage linked to the Bank of Canada Prime Lending Rate and fluctuates during the mortgage term. You can obtain an open or closed variable rate mortgage, but the most common term is a 5-year variable closed.

For example, at the time of this writing, the Bank of Canada Prime rate is 2.45%. If a variable mortgage were priced at Prime -.90%, your interest rate would be 1.55%. If Prime were to increase by 0.25% to 2.70%, then your mortgage interest rate would rise accordingly to 1.80%. Even though variable mortgage rates fluctuate during the term, the monthly payment remains the same.

What is a Fixed Mortgage Rate?
A fixed mortgage rate stays fixed for the length of the mortgage term. It’s available in terms ranging from 6 months to 10 years, although the most popular term is a 5-year fixed rate. Unlike variable rates, which move with the Prime Lending Rate, fixed mortgage rates follow Canadian bond yields.

Fixed rates are usually higher than variable rates, with the higher rate trade-off being cost certainty. Fixed-rate borrowers are willing to pay a premium to lock in their rate for a specific time period. Banks price fixed rates higher than variable rates because they present more risk to the mortgage lender due to the rate commitment made to the borrower.

A History of Fixed vs. Variable Mortgage Rates
If you look back at the past 20 years or so, variable mortgage rates have been consistently lower than fixed rates with only a couple of exceptions. This might make it seem like choosing a variable rate would be a no-brainer, but it’s not so clear-cut. At the moment, both types of mortgage rates are at historic lows, and the gap between them is very narrow. So, there are fewer savings to be had by going with a variable rate mortgage, while the risk of rising interest rates remains.

Reasons to Choose a Fixed Mortgage Rate
Here are three reasons why you might want to choose a fixed-rate mortgage:

1. You expect interest rates to rise.
While no one knows when the prime rate will rise and fall or by how much, the economy can provide signals that rates may be headed upwards or downwards. If you anticipate that mortgage rates may be on the way up and you can secure an attractive fixed-rate, all things being equal, it might be your best choice.

2. You have limited budget flexibility.
Perhaps you’re buying your first home, or your affordability has been stretched with the mortgage you’re taking on. If you lack the flexibility in your budget to handle a sudden increase in your mortgage payment, your best option is to choose the certainty of a fixed-rate mortgage.

3. You are a risk-averse by nature.
Regardless of your financial position, if you are risk-averse by nature and having a variable interest rate will cause you sleepless nights, it’s not worth the hassle. Go with the fixed-rate mortgage.

Reasons to Choose a Variable Mortgage Rate
Sometimes a fixed rate is the way to go. But here are four reasons why a variable mortgage might be the right choice:

1. You expect interest rates to fall or remain flat.
A variable-rate mortgage could be the best choice in a period of a stable or falling prime rate, even if it’s only slightly lower than the going fixed rate because the terms of a variable mortgage are generally more flexible than those of a fixed mortgage. (see #4)

2. You have plenty of budget flexibility.
The numbers don’t lie. Over the long term, you’ll be ahead of the game by choosing a variable rate. But there’s some risk involved. If your cash flow situation is good and you can withstand the potential of a sudden increase in your mortgage interest costs, a variable rate could be worth the risk.

3. You are risk-tolerant by nature.
If you are a person who can handle a fair amount of risk, then you probably have the fortitude to handle the potential ups and downs of a variable mortgage, all things being equal.

4. You Plan to Sell Your House
One of the biggest drawbacks of a fixed-term mortgage is the potential for astronomical penalties, should you decide or be forced to move in the middle of your mortgage term.

Fixed-mortgages can be subject to something called an Interest Rate Differential charge or IRD. Variable mortgages are usually only subject to a more predictable 3-month interest penalty if the borrower breaks the mortgage early. So, if you think that you might move before the end of your mortgage term, the variable rate is probably a safer bet. You could opt for an open mortgage to avoid the penalty, but the interest rates will be far higher.

How to Reduce Variable Rate Mortgage Risk
If you opt for a variable rate, you are assuming some risk if interest rates rise suddenly in the middle of your term. Yes, there is the option of converting to a fixed rate, but that forces you to try and time the market, and that’s not likely to end in your favour.

You can reduce the risk of a variable mortgage by increasing your monthly mortgage payment amount to match what you would be paying with a higher fixed rate. For example, let’s say you have a choice between a variable rate mortgage at 1.75% with a monthly payment of $1600 and a fixed-rate mortgage at 2.25% with a monthly payment of $1685.00.

You could opt for the lower interest rate but increase your monthly payment to match the fixed-rate payment of $1685.00. This will increase the amount of money going towards your principal, increasing your interest savings, and providing you with a buffer should interest rates rise.

The Bottom Line on Fixed vs. Variable Mortgage Rates
There is no shortage of prognosticators ready to tell you that a fixed or variable rate is the best choice. They always seem to know what’s going to happen in the future. However, the truth is that no one knows exactly where interest rates are headed. There are far too many unknown variables that can alter the course of the economy. For example, how many rate forecasters saw COVID-19 coming at the outset of 2020.

The bottom line is that choosing a fixed or variable rate has as much to do with your individual circumstances, such as your long-term plans, budget flexibility, and your personal risk tolerance level as it does with the cold hard numbers.

January 17, 2022
5 Good Financial Habits to Bring Into the New Year

When the New Year bells ring, finances are typically at the top of the resolutions list. It can be exciting and empowering to want to achieve your financial goals once and for all. However, what most people fail to realize is that you must strengthen those financial muscles first. It’s just like setting a fitness goal: you don’t set out to run a marathon without also changing your eating habits, sleeping habits, and workout habits. It’s the shift in these small habits that gets you prepared and moving towards your goal. The same is true for finances. If you intend to pay off your debts or save for that home in the coming year, you need to ensure that you are making changes to your everyday financial habits as well.

1. Create a Budget
It might be hard to hear this, but creating a budget is one of the best financial habits that you can have. Managing your money starts with knowing where your money is going, and without having a proper budget it can be quite easy to lose track of your monthly spending. How many times have you asked yourself, ‘Where did my money go?’ Creating a budget provides the clarity and control you need to stay on top of your finances.

Keeping a budget ‘in your head’ is not wise. We can hardly remember what we did last week, so how do you expect to remember all the places where your money has gone? Create a well-formed budget by pulling together at least the last 6 months of all banking transactions. Use that data as a basis for how you would like to spend your money going forward. Be sure to include your savings goals and debt repayment goals within your budget as well. A budget is meant to capture your entire financial picture and should show how all your monthly income is being allocated.

2. Check in With Your Money
Having a budget is one thing, but using it is another. Most people fall into the trap of only looking at their finances at the end of the month, which makes it difficult to adjust spending before it’s too late. As with any major plan or project, there are check-in points. The same is true for your finances. Setting up weekly money meetings is important to ensure you stick to your budget and achieve your financial goals. Set up a time each week to track your spending and review it against your budget. Have you ordered delivery meals one too many times this week? Did you order another thing online that was not planned? Put a plan in place for the upcoming week of the changes that need to be made to avoid running over your budget.

Having a pulse on your finances also allows you to be financially proactive instead of reactive. By knowing how your money is allocated, you can easily adjust and adapt in the event of any unexpected circumstance. This is how you remain in financial control.

3. Say No
This might be one of the hardest habits to develop, but it’s the most powerful. If you have gotten into the habit of saying yes to you, your kids, and your family, it might be time to release that habit now. Achieving your financial dreams starts with being financially responsible and that means sticking to your plan, living within your means, and saying ‘No’ to anything that is outside of your plan.

Don’t go on this journey alone. Make sure you have communicated your new financial focus to your family. Have a family meeting to discuss your financial goals and priorities, share your budget and let your family know upfront that spending will be different this year. Tell a trusted friend about your commitment and ask them to keep you accountable. And, when you find yourself tempted to give in, remember why you started on this journey to begin with.

4. Build Your Emergency Fund
If there is anything that is certain, it’s that life is uncertain. You never know when life might send you on an unexpected path, so you must always ensure you are financially ready and prepared. This is where having an adequate emergency fund can help you to maintain financial security. Whether it’s losing a job, the car breaks down or the furnace needs to be prepared, life always seems to happen. In these circumstances, most people use their credit cards or line of credit to make it through but having an emergency fund ensures you avoid this debt spiral.

The goal should be to have 6 to 12 months of your income saved in an emergency fund. Calculate how much that would be for you and your family and then develop the habit of savings towards this goal each month. You can create your own financial security if you prioritize this one important financial habit.

5. Stop Celebrating the Minimums
Paying the minimums on your credit cards is no reason to celebrate. If you are serious about getting out of debt, you will need to create the habit of paying more than what is due. If becoming debt-free is a meaningful goal for you, then you must take it a step further and create a debt repayment plan. A goal without a plan is only a wish, and wishing your debts away is not going to cut it. Look at your budget and see how much excess cash you have after all your expenses. Reduce or eliminate any unnecessary expenses. Determine how much money you can put towards your debts each month and then create a plan to do just that. To ensure you stick to the plan, set up automatic monthly debt payments so that the money is actually paid to your debts before you can spend it.

And while we are on the topic, also make sure you pay all your debts on time. This can greatly impact your credit score which needs to remain intact should you ever wish to leverage credit for significant purchases such as a home or a car.

Implementing these habits will create a more stable and secure financial future for you and your family.

January 4, 2022
All Bills & No Fun Makes a Very Dull Budget

The term ‘fun money’ means different things to different people. You might think of it as money for entertainment or eating out. It could be your growing vacation fund or the cash you spend on a painting class or round of golf could fall into this category. Essentially, fun money is what you spend to enjoy yourself.

Working just to pay bills — and budgeting only to stay on top of financial obligations — gets old fast. Instead of depriving yourself of what brings you joy, including some fun money in your budget will give you a more balanced financial life.

The Importance of Adding Fun Money to Your Budget
Restrictive budgets can work for a very short term but aren’t sustainable in the long run. When there is a lot of pent-up spending desire, the flood gates can burst, and rebound spending often happens. To avoid binge shopping, allocate some of your monthly earnings to spending that brings you joy. Having fun money to spend however you like will motivate you to stick to your financial plan. Who wants to stay involved with a plan that is all work and no play? Perhaps you treat yourself to the movies whenever you add another $500 to your emergency fund or celebrate with a spa visit.

How to Budget for Fun
While you want to make sure to pay all your monthly obligations — like rent, utilities, and your car loan — you don’t have to treat your fun money as an afterthought. Set up automatic deposits to save up for fun expenses. How much you put aside will depend on your individual financial situation. If you follow the 50/30/20 budgeting method, you’d earmark 30% of your income for discretionary spending, which includes what you spend for your enjoyment. Separating your fun money from your main checking account and other savings allows you to spend from that stash guilt free. Another smart budgeting approach is to think of your fun money in terms of what you value most and want to prioritize.

Realistically, you will not be able to fully accomplish all your want-based goals. However, knowing what you value and prioritize over other things will allow you to shift your mindset from what you can’t do to what you can do. Sometimes this will include making trade-offs or sacrifices. Eating soup all week and sticking to a low grocery budget frees up funds to go out with friends on the weekends if that’s a big priority. You have to consider the trade-off of now versus later.

Fun Money Doesn’t Have to Break the Bank
When you’re spending money for enjoyment, identifying the reason why you’re making that particular choice could lead you to discover that you can spend less to fulfill the same need. Going out with friends may be linked to a need for connecting with others or belonging. But you don’t have to run up an expensive bar tab. Maybe you and your friends take turns hosting a weekly potluck dinner. Or perhaps you join a book club or running group.

After identifying what you value, investigate cheaper ways to pursue it. If you enjoy switching up your wardrobe, participate in a clothing swap or visit thrift stores. If you love traveling, consider a road trip instead of flying.

October 1, 2021
Where Does Your Paycheque Go?
10 Budgeting Tips to Help You Stay on Track

A monthly budget is like Google Maps for your finances: you follow it because you don’t know where you’re going without it. If you’re new to budgeting, don’t be discouraged by a few — or many — wrong turns and closed roads along the way. The longer you stick with it, the better you get. With a few simple budgeting tips, you can be well on your way before you know it.

1. Set Your Goals Before You Make Your Budget
Without a goal, a budget is just a spreadsheet that tells you to have less fun. Think about what you want in the next 5 to 10 years and figure out what financial situation you need to get there. Whatever your goals are, know that any sound financial foundation starts with an emergency fund. You might then want to pay off debt, save for a down payment on a home, or increase your savings.

Decide where you want to be financially next year and the year after. Knowing what you want to do with your money will guide you as you figure out how to budget, and it will greatly increase the likelihood that you’ll stick to it.

2. There’s No One Size-Fits-All Budget — Find a Plan That Works for You
There are so many budgeting methods out there, and every guru says theirs is the best. But ultimately you have to choose the one that works for you.

If you’ve got an ambitious goal, we recommend trying a zero-based budget first. To make a zero-based budget, start by prioritizing your expenses from essential to nonessential. Then, assign every dollar in your paycheck a “job” on the list until you run out. The most important things — housing, food, minimum debt payments — get taken care of first, and you can disburse the remaining money for your goals and fun in their order of importance to you. Zero-based budgeting is great for ‘Type A’ planners.

If you prefer to be a little more loosey-goosey, a 50/20/30 budget is a great option. With this approach, you don’t have to think too much about your expenses. You just allocate 50% of your income to your needs, 20% to savings and 30% to wants.

3. Use a Budget App or Envelope System to Track Your Spending
It’s hard to lug around your laptop or binder to keep up with each budget category, so a budgeting app is a great tool for updating your budget on the go. There are many out there, whether you like to enter each transaction manually or see everything updated automatically.

If your goal is to take an intense look at your spending, manually tracking your transactions is going to work best. Once you’ve been budgeting for a while and you’ve got a grasp on your spending, syncing transactions automatically works fine. If you still can’t stick to your budget, the envelope system can help you succeed without so much emphasis on constant tracking.

After you decide how much money goes toward each of your expenses, put the money you’ll spend for each expense in a given week into separate envelopes and carry them with you. Once an envelope is empty, you’re done spending in that category. You can keep receipts in the envelope and examine your purchases later.

Envelopes are best for categories you’re prone to overspending on. You probably don’t need envelopes for things like gas and utilities because you’re not likely to go on a gas-buying spree. Popular categories for envelopes are restaurants, groceries, clothes, and entertainment.

4. Use the Past to Predict Your Future Income & Expenses
Whether you choose a zero-based budget, 50/20/30 budget, or some other method, you’re going to have to calculate your income and the amount of money you want to put toward every category or individual expense.

Salaried employees will get off easy when they calculate their incomes. If you have a variable income or side hustles, you’ll need to do some digging. Look back at your income from the past six months, or as far back as you can if you’ve been at your current job for less time. Then find your average monthly income and the average amount of each paycheck.

Expenses like utilities can also be unpredictable. Check your online statements to see which months were higher versus which were lower so you can make future budgets. You may not be able to take that impromptu weekend getaway the month your electric bill will be $300, but it might be totally feasible during a month it’s going to be $75.

5. Don’t Confuse Infrequent Expenses with Emergencies
These aren’t the unexpected expenses that you’d cover with your miscellaneous or emergency categories. Infrequent expenses are the charges that come up once or twice a year — but we always seem to forget will happen. Like when it’s December 23 and you’re still not done with your holiday shopping. Who could’ve predicted Christmas would be on December 25 again?!

Keep a chart that includes your semi-annual and annual expenses to determine what you need to save every month to cover them. Open a separate checking account or savings account where you put money every month to cover these expenses.

6. Remember the Obvious: You Need to Spend Less
Count this among the budgeting tips no one wants to hear. Once the planning is done, it’s time for the hardest part: sticking to your plan. If you’re in the habit of spending more than you make, your first priority is to find ways to save money. We don’t mean you need to find better sales and clip more coupons. The most important thing you can do is buy and spend less.

Some of good tips to cut spending are:
- Make a meal plan and stick to your grocery list
- Prep meals on Sundays so you’re less likely to eat out during the week
- Treat yourself to a coffee once a week instead of daily or cut them out completely
- Opt for free events in your area instead of pricy activities or bars
- Try running and body-weight workouts instead of paying for a gym membership
There are countless ways to save money. Do everything you can to resist the temptation to make impulse purchases or spend beyond your budget. An easy way to do this: Leave your credit card at home and use cash envelopes or a debit card.

7. Use the 30-Day Rule to Stop Impulse Shopping
If you still need to curb impulse shopping, follow the 30-day rule: When you want to buy something that’s not in your budget, make note of the item in question for next month’s budget and revisit it in 30 days. If you still want it, you can consider buying it if you can afford it.

8. Negotiate Your Bills to Save Money
People often take for granted that what they’re paying for their phone, internet and insurance is what they have to pay. By contacting your providers to negotiate your bills, you could lower your bills once or twice every year.

9. Remember That Things Will Go Wrong
Student loans and credit cards aren’t paid off overnight. And the perfect budget isn’t made in a day. Things will change and go wrong. Impulse purchases will be made, and budgets will get obliterated by life’s little surprises. The most important tip for budgeting is to not give up. When things go wrong, alter your budget to compensate. Move money from one category to another, put less in savings, or try a side hustle to add some wiggle room. And know that sometimes you’ll find yourself ripping up the entire budget and starting again from scratch in the middle of the month. Eventually, you’ll get this whole budgeting thing down. But it’s going to start with some bumps in the road.

10. Have an Income-Sinking Fund for When Your Income is Lower
Living off tips, sales commissions or freelance work can make for a flexible lifestyle, but it also makes it hard to budget. When you have an inconsistent income, you can follow all the budgeting tips above, but having this additional category may help.

When you calculate your income and get your monthly average, compare it with your income each month throughout the year. In months you expect to make more than average, take the difference, and transfer it to your income-sinking fund. It’s a separate account where you put money you plan to take out in the near future for a specific purpose, such as supplementing your income on low-earning months. During months when you expect to make less, you can withdraw up to your monthly average to help with expenses.

The key to any good budget is consistency!
May 3, 2021
How to Set Up Your Holiday Spending Budget
Did you know Canadians spent $25 billion last holiday season? And retailers expect shoppers to spend even more this year, despite the pandemic. That’s a lot of photo cards, candy canes, CD’s, and sparkly ornaments. But unless you plan on skipping Christmas this year, you’ll find yourself a part of that $25 billion machine. To enjoy the gift-giving season without any guilt-ridden overspending, set up your Christmas budget now—and then stick to it like sap on a fir tree.

First things first: It’s time to do some digging into your Christmas budget. That means you need to ask yourself the following questions to see where you stand now so you can know how much to spend on presents later.

How much do you have saved? Before you know what you can spend, see what you’ve got to work with. Hopefully, you started saving early. If not, we’ll talk about how to get extra money, so you don’t end up just doling out coal this year.

What budget lines can you tweak? Even if you started saving early, you might still need more cash to cover all the Christmas costs. Look through your normal budget and figure out what budget lines can get trimmed down to free up gift money for your Christmas budget.

Don’t know where to start? Here are a few nonessential budget lines you can probably cut back: restaurants, clothing, personal spending, entertainment, and gourmet coffee.

How can you boost your income? If you’re able, boost your income for a couple weeks as a way to up your spending power. You could sell some things, take on extra hours at work, or start a side hustle. Get creative: Babysit so parents can go Christmas shopping alone, shovel driveways and sidewalks, offer gift-wrapping services… you get the idea!

What Christmas traditions can you skip? You can save money this year by cutting some expenses—and that includes traditions that don’t really matter (like the annual office ornament swap). Be open and honest with your budget and your loved ones.

Do you have a shopping list? If not, make one! You need to list out every person you’ll need to buy for and start brainstorming present ideas.

How can you save on gifts? Shop sales. Use coupons. DIY and make homemade gifts. Skip random gift exchanges. These are just some of the ways you can save serious cash this Christmas on presents.

How to Set Up Your Christmas Spending Budget
1. Plan how much you’ll spend this year.
  Last year, the average Canadian was expected to spend $1,593 on holiday spending. And remember, retailers expect even more this year! First of all, you should never feel pressured to spend that much. You should spend what you’re comfortable with based on what you make, what you’ve saved, and what you can move around in your budget to get the job done. So, crunch some numbers and see how much you’ve got to play around with this year.
1. Add the names of everyone who need a present.
  Once you’ve set up your budget, make a list of each person you have to buy for. Now, go ahead and assign spending limits to each person.
1. Track your spending as you go.
  Want to know how you don’t overspend? You track. You track hard. You track often. Keep up with all that spending as you go.
1. Move amounts around when needed.
  Oh no. You overspent on Mom by $5. What will you do? It has to come from somewhere. You can lower Dad’s line (sorry, Dad!) by $5 and use it to up Mom’s line. Move that money around until your budget balances again.
1. Budget early for next Christmas.
  Here’s a quick shout-out to planning early—do it! Put a sinking fund in your budget as soon as January to start stashing away cash for next year’s Christmas. If you do it little by little, month by month, coming up with Christmas money won’t hit you like the reindeer that ran over grandma in that song that’s now stuck in your head!
November 1, 2020
Start an Emergency Fund

We never know what the future holds for us, so it’s always best to be prepared. Having an emergency fund is extremely important so you’re always prepared to deal with what life brings—good or bad. It’s a good idea to make an emergency fund one of your highest savings priorities. Put $20 a week in an emergency fund and your account will grow to over $1,000 in just one year. That’s often enough to cover a repair bill or emergency travel. An emergency fund can also shield you from the high cost of borrowing and keep you from sinking into debt. Follow these five tips to help you set goals and take steps toward starting an emergency fund:

Chart your monthly income & expenses. Grab a piece of paper and write down how much money your earn and how much you spend for each month. Be sure to include recurring expenses such as your rent or mortgage, utility bills, childcare, and estimates of other out-of-pocket expenses for things you might buy such as movie tickets, dinner out and clothing.

Set your emergency savings goal. An emergency fund should cover three to six months’ worth of realistic living expenses. If you feel your income is stable or have access to home equity or other forms of credit to use if needed, then you may be able to plan for the lower figure. If your credit is near its limit and your income outlook is less secure, you might want to save more.

Develop a plan to start saving. Setting a goal and developing a plan to achieve those goals go hand-in-hand. Part of your plan may include specific and measurable targets to work toward. For example, one specific goal may be to save an extra $300 over the next six months to put into an emergency fund.

Put your emergency fund in an accessible place. The best place for your emergency fund is in a liquid account (accounts where your cash is easily accessible). A liquid account might be a regular savings account at a bank or credit union that provides some return on your deposit and from which your funds can be withdrawn at any time without penalty. If you consider other options, like a certificate of deposit, money market fund or mutual fund, be sure to figure out how accessible your money will be in an emergency.

Stick to your plan. Once you’ve created your plan, make sure you stick to it. This can sometimes be the hardest part of saving for an emergency fund or any financial goal in general. If your goals are realistic and attainable, sticking to the plan will be much easier. A good way to stay on track is to save automatically. Set up a systematic transfer from your regular checking or savings account at your bank. Be sure to keep your rainy-day funds separate from your other accounts, and label it “for emergency use only.” Just writing down an account’s purpose can keep you from spending the money for any other reason.

Starting an emergency fund is a necessary building block for long term financial stability. Anyone can do it; you just need the right plan.

June 1, 2020
New Year, New Financial Goals

[vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]The start of a new year is the perfect time to reflect on what you want to improve in your life and to create plans to make it happen. There is a good chance that you’re already thinking about resolutions like going to the gym more, eating healthier and volunteering with local organizations.

But what about financial resolutions? The beginning of the year offers the opportunity to focus on what’s going on with your money. With the right plan in place, you can stick to your financial resolutions and end the coming year in a better place than you started it.[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none” shape_type=””][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][nectar_icon_list animate=”true” color=”default” direction=”vertical” icon_size=”small” icon_style=”border”][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774653-5″ tab_id=”1579034774654-4″ header=”Save More Money” text=”Not surprisingly, the top financial resolution is to save more money. There are nearly countless ways to go about this — you can increase your RRSP contributions, set up automatic transfers to a high-yield savings account and cut back on unnecessary spending. You can also use a credit card to your advantage. Many of the best credit cards offer competitive rewards and statement credits that can earn you cash back, points or miles that can be used to offset purchases.”] [/nectar_icon_list_item][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774701-7″ tab_id=”1579034774702-2″ header=”Improve Your Credit Score” text=”If you have a less than stellar credit (scores below 650), make it a priority to raise this year. You can improve your credit score in several ways, including paying your bills on time and in full (which may include setting up autopay), paying off debt, limiting how many new accounts you open and cutting back on spending. It’s important to regularly check your credit report so you can spot fraud early and ensure the correct information is reported to the credit bureaus (Experian, Equifax and TransUnion).”] [/nectar_icon_list_item][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774729-8″ tab_id=”1579034774730-5″ header=”Create a Personal Budget” text=”For some, a budget can feel constricting, but tracking your spending can be a useful tool to help you understand where your money goes each month. A clear budget can help you set guidelines for what you can afford to spend and help you identify areas where you could cut back. Start by writing down all your fixed expenses, such as rent/mortgage, cell phone, groceries and savings. Then you can see how much money you have leftover for flexible expenses, such as restaurants, clothing and entertainment costs. Looking at your credit card statement can be an easy way to see all your purchases in one place.”][/nectar_icon_list_item][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774759-5″ tab_id=”1579034774760-9″ header=”Pay Off Credit Card Debt” text=”If you’re struggling with credit card debt, you’re not alone. In fact, about 61% of Canadians have a credit card and cardholders carry an average balance of $6,194, according to Experian. So, it’s not surprising that so many people are looking to pay off credit card debt in the new year. If you have credit card debt, consider consolidating it on a balance transfer credit card, which offer no interest for up to 21 months. Consumers who can pay down debt on their own ought to consider payoff methods like paying off your highest debt first (called the debt avalanche method) or paying off your smallest amount of debt first (debt snowball method).”][/nectar_icon_list_item][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774781-9″ tab_id=”1579034774781-5″ header=”Start an Emergency Savings Fund” text=”Nearly four in ten Canadian adults have no emergency savings. If you’re one of those people, now is a good time to set a goal to build your emergency fund. With an emergency fund available, you will reduce the risk of going into debt trying to cover unforeseen expenses, like a flat tire or medical bill. Consider setting up automatic transfers to a savings account. With this strategy, the money is ‘out of sight, out of mind’, reducing the chance that you will be tempted to spend it. Even having as little as $500 to $1,000 saved can keep a family from falling on hard times, according to an Urban Institute study. So, don’t feel like you need to have three-to-six months’ worth of expenses saved immediately. Start small and keep adding to your emergency fund throughout the year.”][/nectar_icon_list_item][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774811-8″ tab_id=”1579034774812-4″ header=”Boost Your Retirement Savings” text=”Saving for retirement is one of the most important aspects of preparing for a sound future. Many Canadians worry that they may never retire, so it makes sense to consider your own retirement prospects in the coming year. Consider opening an RRSP account and make automatic weekly or monthly contributions. Much like starting an emergency savings fund, you may not notice a small amount missing from your weekly pay cheque, but it will add up over time and provide you with some peace of mind in the future.”][/nectar_icon_list_item][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774842-9″ tab_id=”1579034774842-6″ header=”Cook More at Home” text=”You might be surprised at how much you spend on eating out each week. Once you add that expense up, you might decide that it makes more sense to cook at home. Cooking at home is cheaper, healthier and it builds a useful skill that everyone should have. Consider putting those savings toward paying down debt or building up your emergency savings fund.”][/nectar_icon_list_item][nectar_icon_list_item icon_type=”numerical” title=”List Item” id=”1579034774862-10″ tab_id=”1579034774863-5″ header=”Boost Your Income” text=”Sometimes, it’s less about savings and cutting back and more about increasing your income. There’s no substitute for making more money. Consider looking for ways to start a side hustle, get a promotion, or even look for a better job. You might need to update a certification to qualify for a higher pay or advancement, but that could be worth the cost if it comes with a pay hike. Find different ways to increase your revenue streams so you aren’t entirely dependent on one income source. Not only can that strategy help you make more money, increase your savings and reach your goals, it can also provide some protection if you lose your primary job.”][/nectar_icon_list_item][/nectar_icon_list][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″ shape_divider_position=”bottom” bg_image_animation=”none”][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ column_link_target=”_self” column_shadow=”none” column_border_radius=”none” width=”1/1″ tablet_width_inherit=”default” tablet_text_alignment=”default” phone_text_alignment=”default” column_border_width=”none” column_border_style=”solid” bg_image_animation=”none”][vc_column_text]Bottom line: think about what you want from life in the coming year (and in the future) and set resolutions that can help you make the most of your financial resources. Remember that these goals are designed to help you live your life better, however, don’t forget to spend some time enjoying the here and now as well.[/vc_column_text][/vc_column][/vc_row]

January 13, 2020
The 10 Best Ways to Save Money on Holiday Shopping
Christmas is right around the corner, and you had better be prepared. Making sure that you have what you need for everyone on your list can be a challenge — and it can also be expensive. If you want to avoid breaking the bank this holiday season, here are 10 tips to help you save money on Christmas shopping:
1. Stick to a Budget
  First off, set a budget and stick to it. Figure out how much you have to spend on your Christmas shopping. Then, make a list of those you need to buy for. If you have a list of what you want to get each person, it will save you time and keep your spending on track.
1. Buy Inexpensive Stocking Stuffers
  Don’t go overboard on stocking stuffers. It’s tempting to buy every little gadget available, but you need to watch out. You might not be keeping track of the little things you buy, and they can add up. This is a great chance to be frugal by shopping for little gifts at the dollar store and including some candies, nuts and mandarin oranges.
1. Set Up a Gift Exchange
  You can cut down on shopping for extended family by setting up a gift exchange. As your siblings grow up, get married and have children, your Christmas shopping list gets longer. It can get out of hand unless you change the way you do things. Draw names and each person will only buy for the one person whose name they drew. Everyone gets a gift and you all save possibly hundreds of dollars. It’s a winning situation and can be a lot of fun.
1. Shop the Early Sales
  One of the best things you can do when it comes to the way you save money on Christmas shopping is to look for sales. Shop early if a decent sale comes along. Not only will this save you money, but it can save you the hassle of crowds as Christmas gets closer.
1. Shop Online
  Once December gets advanced enough, the traffic and the crowds become unbearable. Another way to avoid crowds and save money is to shop online. You can often find products cheaper than you do in the store, and you don’t have to battle with others. However, you do need to keep an eye on shipping costs to ensure you really are getting a deal. Check for promo codes and sites that offer free shipping on holiday purchases.
1. Save on Shipping by Ordering Early
  To save money on shipping, shop soon to give you time to use many sites’ free shipping options. The closer to Christmas, the more you’ll need to pay for priority or express shipping. This is also the case when you are sending presents to friends and family. If you must pay for express or overnight shipping to get your gifts on time, you’ll pay so much more money.
1. Stay Away from Extended Warranties
  During the holiday shopping frenzy, it’s hard to make decisions, and easy to say yes to whatever someone suggests. However, you need to be on your toes at check-out if you want to save money. Avoid extended warranties on your purchases. If an item is defective, it’s likely to have issues within the standard warranty’s time frame. Don’t spend extra money for coverage you probably won’t need.
1. Buy Discounted Gift Cards
  There are plenty of places to buy discounted gift cards. If you aren’t sure what to get, look for an experience. Discounted gift cards can provide you with a face value that exceeds what you actually pay. This can be a way to look like a hero and save money.
1. Consider a Bonus Gift Card from a Restaurant
  Want to save money on your own dining experience? Some restaurants have been enticing people to buy gift cards by including a bonus gift card. You might not save money on your immediate Christmas purchase, but you can save money on a future meal. That can be worthwhile. Additionally, you might be able to use the bonus card as a white elephant gift or a stocking stuffer. While this can be a great deal, check out the bonus card as it may have an expiry date.
1. Keep the Gift Receipts
  Finally, make sure that you keep all your receipts in a safe place since items may be broken or clothes might not fit. While some stores will accept returns without a receipt, it will be at whatever their lowest price has been on that item, so you might not get full value for it. You will also need your receipt if you want to make a claim using your credit card. Many credit cards offer extended warranties and protection against theft or returns. If the store won’t take it back, you might be able to get money through your credit card perks — but you’ll need the receipt.
With the right planning and a little savvy, you can save money on Christmas shopping every year and get the right gift for each person on your list.
November 15, 2019
Millennial’s Guide to Home Buying
The transition from rent to home ownership has many obstacles for millennials. We’ve put together this guide to help young people make home ownership work for them. Buying your first home is one of the biggest financial decisions you’ll ever make. For millennials struggling with lower income and savings, the dream of home ownership can appear out of reach in today’s market.

All hope is not lost. Low mortgage rates and a gradually improving job market are empowering millennials to invest in property rather than rent. By taking a few practical steps, you can be well on your way to buying your first home. Investing in your first home requires careful planning, effective judgement and setting reasonable expectations. Below is a six-step process for making that happen.
1. Shop within your means.
If you’re a millennial first-time buyer, the selection of homes you can afford is likely much smaller than established buyers. After all, you don’t have any equity yet, and will be relying purely on savings to invest in your first down payment. An important part of setting reasonable expectations is shopping within your means. Even if you qualify for a large mortgage, there’s no rule that says you must use it all. As a first-time home-buyer, your goal should be to finally start building equity. If you want a property but can’t afford it, you shouldn’t buy it. It’s as simple as that!
1. Make sure you have enough for a sizeable down payment.
In Canada, most professionals will advise you to make at least a 20% down payment on your property to avoid paying homeowner insurance. While this is recommended, it might not always be possible, especially if you don’t want to delay your first real estate investment. Even if you can’t pay at least 20%, you should still be prepared to make a decent down payment to minimize the total loan amount. In Canada, 5% is the absolute minimum you must put down.
1. Sort out your finances.
Home ownership carries significant expenses that extend beyond your down payment and monthly mortgage payment. Property tax, insurance, closing costs and utilities must all be factored into your decision both at the time of closing and after you’ve moved in. When deciding to enter the market, be sure you have enough money to cover the down payment and all the ancillary costs associated with closing your home. You’ll also want to budget carefully to make sure you can afford to pay your mortgage and living expenses after you’ve moved in.
1. Compare neighbourhoods and regions.
Most home-buyers are limited by geography in shopping around for property. For millennials living in the big city, this can make affordability a greater challenge. That’s why it’s essential to compare neighbourhoods and property types. It’s equally important to consider location and whether you are willing to commute to work each day. Proximity to your job may be convenient, but will likely be more expensive, especially if you live in a big city. Working with a real estate agent can help you develop a better view of property values based on location and property type.
1. Use a Mortgage Broker.
Financing a home can be a complicated process. That’s why more and more Canadians are turning to mortgage brokers to steer them in the right direction. It used to be the case that most people went straight to their bank to finance their mortgage. Now, many people visit a mortgage broker first. That’s because a broker is tasked with one job: finding you the best deal possible. They work with the big banks as well as non-traditional lenders to match you with the best interest rate and lending terms on the market.
1. Maximize your benefits.
The government has made it a little easier for first-time home-buyers to enter the market. If you’re a first-time buyer, you can use your RRSP account to finance your down payment tax-free up to a maximum of $25,000. This means you can take up to $20,000 from your RRSP account and put it toward a down payment with no tax penalty. The First-Time Home-buyer Credit can also help you reduce the amount of taxes you owe. Various provinces, such as Ontario, also have a land transfer tax refund that will greatly reduce the amount of land transfer tax you owe.

As a millennial, shopping around for your first home can be both rewarding and challenging. This six-step process will help you make the most out of your experience.
December 5, 2018