Build a reliable cash machine.

This is not personalized financial advice, nor is it a get-rick-quick scheme. It’s a roadmap. If you follow these steps and stay consistent, then you’ll create a cash machine that can supplement and/or eventually replace your paycheque. The more money you invest on the front end, the sooner you’ll be able to support your lifestyle with dividends.

Step One

You’re going to need a brokerage account. I use BMO Investorline. (I’m not being paid for mentioning them in this post.)

Why do I use BMO Investorline? It was the only one I’d ever heard of when I started my portfolio. BMO Investorline satisfies my needs so I’ve never felt the urge to switch to another brokerage.

You can open a brokerage account online. It won’t take very long. At a minimum, you will need the following:

  • your Social Insurance Number,
  • your bank’s transit number and its institution number, and
  • your bank account number.

The brokerage account needs to be linked to a bank account so you can automatically transfer money from your bank account to your brokerage account. Similarly, this link will ensure that the dividends flow to your bank account when the time comes for you to start living on them.

Create an automatic transfer between the two accounts. It should be scheduled to happen on the day you get paid. This way, you won’t have to decide whether to send money to your brokerage account every payday. You’ll simply fund your brokerage account and be in a position to invest.

Step Two

Buy as many units in dividend-focused exchange-traded funds (ETFs) as you can. The more money you transfer, the more units you purchase. More units means more cash flow. Higher cash flow necessarily results in faster compounding. The cash machine starts as soon as you make your first purchase.

For my part, I buy units in XDV and VDY. These ETFs pay dividends on a monthly basis. Depending on the month, I earn between $0.14-$0.19 per unit. Admittedly, this isn’t a lot of money at first blush. Keep in mind that I’ve been buying units for decades. I earn a four-figure amount every month.

Different ETFs have different payment schedules. I prefer monthly payments, so I used dividend-focused ETFs for cash flow. I use equity-based ETFs for growth. They also distribute dividends every three months.

Step Three

Brokerages charge commissions to clients for the privilege of buying and selling ETFs. The commission price ranges from $6.95 to $9.95 per trade.

Questrade and Wealth Simple are exceptions. They allow for commission-free trades of ETFs. I’m not being paid for mentioning these brokerages. I don’t have accounts with them.

To compete with Questrade and Wealth Simple, many brokerages now allow clients to trade select ETFs for free. To save on commissions, you should pick a brokerage that has a list of commission-free ETFs.

I’ve stayed with BMO Investorline due to the fact that they have a very long list of commission-free ETFs. My chosen ETFs are on that list. What I’ve saved in commissions has been invested to build my cash machine.

Step Four

Compound growth works faster when you rely on a dividend re-investment plan (DRIP). Always use the DRIP feature. At the beginning, your dividend payment will be small. You can live without it, so re-invest it.

Once the DRIP is in place, your dividends will buy more units in the ETF. With the DRIP turned on, your paycheque and your portfolio will be buying more units. Your dividend payments will grow exponentially.

Step Five

Be patient. Earning enough dividends to fund your entire life won’t happen overnight. It takes years, maybe decades.

The sooner you buy more units, the sooner your cash machine replaces your paycheque. My suggestion? Increase the amount you invest each time you get a raise.

There’s an easy way to do this. Pick a fixed percentage of your income to invest. For example, pick 20%. When you earn $1,000, then $200 goes to your investment portfolio. When your income goes up to $2,000, then $400 goes towards it.

A fixed percentage ensures you’re always investing part of your raises. You’re free to contribute more if you choose.

Step Six

Please don’t ignore the rest of your financial life.

You still need an emergency fund. Getting out of debt should be a priority. You’ll need sinking funds for your hobbies, pets, travel, and whatever else brings you joy from day to day. You should also have a little something set aside in case you need to quit you job.

Investing is great, but it shouldn’t be the focus of your life. No one is promised tomorrow. Spend time with loved ones. Build strong relationships. Exercise and drink water. Get enough sleep. Laugh and look for joy. Smell the roses along the way. It’s wise to have an eye on the future, but you need to live in the present.

Ideal is the goal. Consistency is for real life.

Earlier today, I watched an reel from someone who has followed the FIRE principles to become a millionaire at 40. This person listed several rules that she followed to meet this goal. The first rule was to start saving 50% of earned income as soon as humanly possible. The math says that when you start from $0 and invest 50% of your salary in an equity-based index fund, it’s very possible to hit $1,000,000 in 17 years.

My personal experience neither verifies not refutes this statement. I’m going to take it as mathematical fact. It took me 28 years to acquire a liquid net worth of $1,000,000.

I readily admit that I never hit the venerated target of saving 50% of my salary. When I started investing in the last millennium, graphs showing the number of years it takes until you have $1,000,000 at various savings rates didn’t appear on every other FIRE blog like they do today. Instead, I simply stuck to the path of investing roughly one third of my net income and I hoped for the best. To my inexperienced DIY-mind, this seemed like a feasible amount to put towards my future, while still enjoying my day-to-day in the way that I wanted.

Here’s the thing though. As I look back, now that I’ve reached retirement, I realize that I could’ve invested 50% of my salary. In all honesty, I simply didn’t want to… despite the fact that one of my life’s goals was to retire early.

Speaking only for myself, and not for others who choose differently, I happily paid for certain expenses along the journey to early retirement. I chose to defer early retirement by a few years so that I could do the following:

  • travel to Europe several times (Italy, Spain, Ireland, and Amsterdam);
  • attend concerts & festivals with my friends;
  • go to destination weddings in Mexico & Antigua;
  • renovate my house (driveway, landscaping, eavestroughs, furnace, hot water tank, sod, exterior siding, carpet, bathrooms, basement, windows);
  • replace my vehicle (twice in 22 years; extravagant, I know!);
  • buy lots and lots of books before the novelty wore off (I’ve since become an ardent fan of my public library);
  • buy new furniture for my house.

The Ideal World vs. The Real World

In an ideal world, I could’ve saved 50% of my salary and retired earlier than 53. If the graphs are right, and I have no reason to believe they aren’t, I could’ve retired at 45 had I done everything “perfectly”. I would’ve had to invest 50% of my salary into well-diversified, equity-based ETFs. I would’ve had to continue investing through the 2008 market crash. (That financial event scared less-experienced me so badly that I actually stopped investing for 6 months until the market recovered!) Most distressingly, I would’ve had to sacrifice building cherished memories with family & friends! Same goes for taking trips and modifying my home into a space I enjoy.

If I hadn’t spent a little bit more over the years, my memory bank would be so much emptier. I wouldn’t have nearly as many good memories of times spent with loved ones as I do now. I look at photos of people I love and they bring me joy. My overseas travels were absolutely amazing! I’m still thrilled by the memories of things that I saw, food that I ate, and experiences that I got to have because I chose to delay my retirement date a little bit.

Now that I’m retired, I’m experiencing knee problems so overseas travel is off the table until those problems get rectified. How sad would I be if I’d retired and my travel plans were forever curtailed? God willing, I can improve my health situation. I look at the elders in my family and I see a future of joint replacement surgeries. Maybe I get to the end with all of my own parts, but maybe not. The bottom line is that I don’t regret travelling when I did, nor as much as I did.

Travelling to Europe 4 times was not inexpensive in any way, shape, or form but I do not regret any of those trips. Am I glad that I spent a little more money along the way instead of waiting until retirement to take those trips? Yes, I am!

Your choices only need to work for you.

It most definitely took me longer than 17 years to hit my retirement target but I can’t really complain. I enjoyed the journey along the way. Time spent with family and friends is precious. My sojourns to other countries broadened my view of the world in ways that books and movies simply could not. I don’t regret the choices I made along the way. They worked for me, but I’m not suggesting that my choices will work for you.

I’m an ardent proponent of investing a good chunk of your income today so that you have money for the Care & Feeding of Future You tomorrow. Simultaneously, I also recognize that life is meant to be lived in the present. No one is promised tomorrow. We can make all the plans we want, but all we really have is today. So while I maintain that it’s important to save & invest for the future, I’m equally convinced that it’s in your best interest to be present in the now so that every day is as good as it can possibly be. There’s a balance between living life today and investing for tomorrow. It’s different for everyone.

My top savings allotment during my working years was 36%. Yours might be more, or it might be less. Whatever percentage allows you to attain your life’s goals is the right percentage for you. You’re best-positioned to know what’s optimal for your own life. Each of us has our own unique circumstances, which necessarily influence the balance between money spent today vs. money invested for tomorrow.

So long as you’re investing something, you will have money waiting for you at retirement. The number you need to determine is how much you need to invest today to take care of Future You’s monetary needs tomorrow, while still fully living in the present & building the life you want to live.

Happiness is attainable.

I have very few regrets about how I spent my money. In fact, investing less than 50% of my money was one of the smarter choices I’ve made in my life. I’m grateful that I chose spending more during my younger years.

  • I’ve seen some of the wonders of Italy with my own eyes – the Trevi Fountain, the Vatican, and the Leaning Tower of Pisa ;
  • I’ve walked through Galway & Dublin, visited a wonderful museum in Cobh, and stood of the edge of the Cliffs of Moher;
  • I’ve created hand-made chocolate treats in Amsterdam and passed through the incredible lock system of its rivers; and
  • I’ve visited a family-owned olive farm in Spain, explored toured the magnificent Prado Museum in Madrid, and toured the incomparable Sagrada Familia in Barcelona.

I made the right choice to travel when I was healthy enough to enjoy those trips. I’m thankful that Younger Me chose to stay in the saddle a little bit longer. That decision allowed me to see/visit/taste/smell/experience a sliver of the world beyond my own backyard. For that, I’m truly grateful.

Allow me to be perfectly honest with you. I still saved & invested a nice chunk of my salary along the journey to early retirement. Consistency played a huge role in my financial journey. For every $3 I earned, I invested $1 and lived on the other $2. Though I made many investing mistakes along the way, the consistent contributions to my investment account saved me. My automatic transfers eliminated the bi-weekly task of both deciding to and remembering to invest money for my future. Instead, transfers happened without any mental effort from me.

Relying on automation meant that money was always ready to be deployed in the stock market via my ETFs. First I filled my registered accounts, i.e. my TFSA and my RRSP, then I invested in my non-registered account, aka: my brokerage account or my taxable account. Other than those six months in 2008, I invested from every paycheque for my whole working life. Earn – invest – learn – repeat. This 4-step plan allowed me to retire early while allowing me to enjoy my life along the way.

Looking back, no one would ever describe my choices as perfect or ideal. They didn’t have to be. But did they make me happy? You’d better believe they did!

Hindsight offers a happy, new perspective on success.

I started my investment journey at age 21 by making my first contribution to my RRSP. If memory serves, I’d learned about passive income through dividends and had become enthralled with with idea of living off dividends in retirement. Information about investing wasn’t as pervasive back then as it is now, so going online to learn more about dividend investing vs. growth investing didn’t occur to me. Younger Me’s goal had been to build a portfolio that generated enough dividends to cover all my annual expenses while also being able re-invest atleast 20% of that passive income. In short, I wanted to live completely off my dividends.

Fast forward several decades and I’m happy to share that I reached my goal of being able to retire early. For the same of transparency, you should also know that I made plenty of mistakes along the way. Here’s a quick snapshot of my three biggest mistakes:

  • I paid off my primary residence in my early 30s after selling two rental properties. I could’ve (should’ve?) just plowed that money into the stock market while continuing to make my regularly-scheduled mortgage payments. A six-figure sum dumped into a well-diversified, equity-based ETF likely would’ve allowed me to retire even sooner! Instead, I chose to become free of the biggest debt most people ever owe to the bank.
  • Another big mistake occurred when I temporarily suspended my automatic contributions to my stock portfolio during the 2008 stock market crash. I believed the Talking Heads of the Media, instead of following the wisdom of buying low. During a stock market crash, all prices are low so I should’ve been checking the couch cushions for loose change to buy as much as possible. It took me 6 months to re-start my automatic contributions, which means I missed investing at the very bottom.
  • My third biggest mistake related to the fact that I devoted years to investing in dividend-focused ETFs instead of growth-oriented ETFs. Young people should be investing in well-diversified, equity-based ETFs, and they should be ignoring the siren song of passive income from dividends. With decades to compound, growth ETFs are best suited for young people who want to build wealth for their later years. Time is on their side.

This sample of my biggest investing mistakes ought to reassure you that making mistakes need not stop you from retiring when you want. Hopefully, you’ll course-correct today if you see that you’re making the same mistakes I did. Ideally, you will get yourself to a fee-only financial planner as soon as you possibly can and you’ll obtain a custom-designed plan for your money.

If I’d known then what I know now, I like to think that I would’ve made smarter decisions. After decades of investing and correcting errors along the way, I retired at the end of 2025. The mistakes slowed me down but they didn’t throw me off-track. Automatic contributions, sinking funds, and using low-priced ETFs all helped me to retire earlier than planned.

Sadly, I didn’t meet my stated goal by the time I retired.

As of today, my dividends only cover 82% of my annual expenses. The other 18% are covered by my pension.

Am I successful even though I didn’t hit my dividend-goal?

I would say “YES!!!”

Hindsight offers a new perspective on success. Intellectually, I know that I could’ve kept working longer to amass more money until such time as the dividends completely covered my expenses. The mathematical answer to meeting my dividend goal was to simply generate a paycheque for a longer period of time. Automation would’ve ensured that a portion of my paycheque went to my investments. The dividend re-investment plan would’ve ensured that my dividends continued to compound without any effort from me. The engine of wealth-creation could have continued unabated had I simply chosen to stay yoked to my employer.

Dividends paying for everything would’ve been ideal, but the trade-off was not one I wanted to make. It would’ve meant more years in a job that added no joy to my life. Truthfully, I wasn’t happy at my job and that unhappiness bled into other areas of my life. I had little motivation to find another position when I had another realistically feasible option at my fingertips, i.e. retirement. I have a limited time here on Earth and I decided not to spend any more of it at work.

My decades of employment and my habit of investing a good chunk of my paycheque every two weeks granted me the option to leave the workforce of my own volition. No one forced me out before I was ready. My portfolio offered the comfort of financial security without drastic cuts to my lifestyle. For the first time in my adult life, I could put an emphasis on my own happiness without worrying about how I would pay for my continued care and feeding.

In short, I chose my happiness over additional dividends and that was the right choice for me. I wake up happy now. My time is my own to fill as I wish – whether that’s reading a book, seeing friends & family, going to the movies, tending to my garden, celebrating milestones with friends. No longer do I have an employer hijacking my precious, precious time in the furtherance of goals that are of little importance to me.

There was nothing wrong with my original dividend-goal and I might have been even happier had I achieved it, but life doesn’t always go according to plan. Younger Me thought my investing choices were bullet-proof. My ideas at the time were founded more on hubris than on experience & knowledge. It doesn’t surprise me in the least that things didn’t go exactly according to plan. Age and experience have taught me that success might not look precisely how I’d imagined, but it’s success nonetheless.

Good Riddance to the Sunday Scaries!

It’s been a minute since I’ve put fingertips to keyboard, so apologies for that. The reason for my silence was a combination of things, but they are in my rearview mirror now. I anticipate being active on this platform again, sharing my words and wisdoms, and hoping that a few of you find them useful for your own lives.

As the headline suggests, the Sunday Scaries are no longer an element of my life. I’m very pleased to announce to the world that I have fulfilled my dream of early retirement!!!

It’s been nearly three months, and I’m loving it. My time is my own. I’ve completed an RESP course. I have tried making pastry without the benefit of my mother’s tutelage. (Still need to work on perfecting it!) I have spent more time with younger members of my family so their parents can have some kid-free time. Determining the alleged “slow time” at my local Costco has still eluded me but I’m going to keep searching for it. I’ve had time to update my will, to focus on de-cluttering my home, and to plan a couple of short trips.

The novelty of not waking up at 5:30am to get ready for work has not worn off! I love waking to my own circadian rhythm! I feel rested and ready to start the day. Retirement is bliss!

All in all, this new chapter is going very much how I’d envisioned it. Do I have any regrets about pulling the plug? Absolutely none!

But this blog is about the money so I shall share a few observations I’ve made to date about the money side of retirement.

Saver to Spender

People had warned me that this would be a difficult transition. I should have…ahem… heeded their words to prepare myself for no longer receiving a bi-weekly paycheque. After nearly 25 years of seeing a nice amount of money plopped into my chequing account every 2 weeks without fail, the absence of that systematic and reliable monetary deposit is somewhat jarring.

While my rational mind knows that the money in my retirement accounts is for the purpose of funding my retirement, it’s going to take me a minute to get used to spending that money. Three decades of conditioning is not easily reversed! I have made a couple of withdrawals so far, and I’m not denying myself anything I truly want. I’m slowly getting used to seeing my retirement account’s balance drop. I remind myself that the money’s being used as intended.

But that doesn’t mean that it’s not a significant adjustment.

Turning off the DRIP

I’ve been a fan of the dividend re-investment plan for as long as I’ve been saving & investing! As an investment tool for retirement planning, the DRIP’s utility cannot be overstated. Automatically re-investing all those little dribs and drabs over the years has resulted in a situation where I’m receiving a nice 5-figure dividend payment every year.

However, I’m learning to accept that those dividends are meant to replace the cashflow I had from my employment. Has it been an easy lesson for me? No, it has not. There’s constant mental friction about whether I should continue to invest 10%-20% of the dividends earned, while allowing the remaining amount to accumulate in a dedicated bank account. Over the years, I’ve entrenched myself in the DRIP mentality to such a degree that not re-investing a little something is damn near sacrilegious!

So far, I’ve devised what I suspect might be an overly-complicated method for ensuring that the dividends from my non-registered portfolio accumulate in my brokerage account. They’re intended to be my “cash wedge” in case I need additional funds beyond what I’ve managed to accumulate in my RRSP, which I plan to liquidate to fund my life’s expenses until my pension starts.

The DRIP that’s in my TFSA will continue to run uninterrupted unless there’s some very dire emergency that requires me to use those funds. A leopard can’t change all of its spots on the same day, after all!

I’m still debating whether to re-start the DRIP once my pension kicks in. See what I mean about still thinking like a lifelong investor? Changing my mindset won’t be easy…

New Realizations

Not sure where I read the following words but they’re living rent free in my head:

The money will be spent, either by you or your heirs.

BOOM! The truth of this statement’s been rolling around in my noggin for a few weeks now. It’s completely true! If I don’t spend my money, someone else will. And the whole reason I’ve invested my money is to be able to retire early. Yet, even I realize that retiring early without any plan to spend the money beyond basic necessities is a wasted opportunity.

If the money will be spent either way, then I should be the one thinking about how to spend it. It’s a privilege that comes with having been the one to earn what should now be spent. At the end of the day, money is for spending. The trick is to figure out what it’s best to spend it on! More travel? Replacing my vehicle? Taking courses? Gardening & landscaping design? Attending more events? Additional theatre subscriptions?

By now, it should be no surprise to hear that I’ve been spending lots of my time thinking very carefully about how I want to spend what I’ve earned. Whatever’s leftover will go to my heirs in good time. Until my actual demise, every nickel belongs to me and I don’t think it’s unreasonable that I devote some energy to determining how best to use it to make my retired life as good as the one I had when I was in the accumulation phase.

A Job Well-Done!

It’s taken me a long time to get to retirement and I intend to enjoy it as fully as I can. Many mistakes litter my journey to this point, yet time and persistence have dulled their impact on my current financial situation. Do I have as much as I would’ve had if I’d never made mistakes? No, absolutely not.

It doesn’t matter though. I have enough. Not everyone gets to say that, but I’m going to pat myself on the back and say thank you to Young Blue Lobster for making the sacrifices and doing what needed to make this dream come true.

Hobbies Need Some Love Too!

If you’ve been around for any length of time, you’ll know that I’m a huge fan of sinking funds. I’ve repeated many, many, many times that money needs to be set aside for the un-glamorous expenses of life, i.e. property taxes and insurance premiums.

Today, I want to remind you that sinking funds should also be used to fund your hobbies. After all, your hobbies are those activities that bring you joy. When you’re doing them, you’re happy. There’s a certain contentment that comes with these activities. And that’s great.

However, hobbies generally cost a little bit of money. So you should have a sinking fund for them. If you haven’t already done so, open an account that’s just for your hobby-money and set up an automatic transfer to contribute money every time you’re paid.

I’ve been an amateur gardener extraordinaire for the past few years. I have a few simple rules. If it’s going in the ground, then it has to be a perennial. Getting down on my knees isn’t as easy as it used to be so I use waist-high planters and various containers for my annuals. Every year, I buy another couple of containers to add to my growing collection. And I like to try different annuals each year too. They’re not cheap. (And I’ve not yet started any seedling projects but I think I will have to put that on my to-do list at some point.)

Annuals are not inexpensive where I live! I routinely spend several hundred dollars every year, but I don’t mind. Those littel flowers bring me joy for several months! I love seeing which ones are more vigorous, which ones have the biggest blooms, which new colour combinations are most pleasing! Then I can spend the long winter months planning the following year’s floral arrangements.

I digress….

Again, buying annuals every year isn’t easy on my wallet. So I have a sinking fund for my flower gardens. Even when I get free plants from family members, I rely on the money in my sinking fund. This year, my cousin gave me many little iris plants. In turn, I bought her a bag of worm castings. Most people might not be thrilled to get a bag of worm poop but gardeners understand just how wonderful a treasure such a bag can be for the garden!

And I don’t buy every single annual from the fancy greenhouses either. Most of my stalwart plants are from the grocery store or the hardware store, where they simply section of part of their parking lots and sell plants. I do buy some stuff at the greenhouse, but only the more tender stuff or the fancier versions of what I can get in the aforementioned parking lots. Even when each plant is only $3.99, that adds up quickly. ‘

On top of the plants, I need the worm castings, the fertilizer, the root booster, and generally some compost. Every few years, I replace my gardener gloves or buy another trowel. Hoses don’t last forever either! And since I prefer container gardening, I treat myself to a couple of new containers each spring… which allows me to buy even more annuals!

Gardening isn’t inexpensive. Yet, flowers make me happy so I use a sinking fund to pay for the expenses that come with my hobby. I shop then I buy, then I withdraw money from my sinking fund to pay my credit card bill.

Whatever your hobby is, you should be doing the same.

After all, once your necessities have been paid, the next best use of your money is spending it on your hobbies. You work too hard for your paycheque to waste it on the things that don’t bring more joy into your life.

Investing time is right now!

As I write this blog post, the world is in a trade war. No one knows what’s going to happen next, nor when it will end. Certainly no one knows just how deeply the financial pain will be felt by the Not-A-Billionaires. In my very humble opinion, those who are already billionaires should be just fine. Everyone else needs to be a little more prepared for the financial pain that is headed our way.

The only thing that can be said with any kind of assurance is that this situation will not last forever and the market will recover…eventually. For you, it’s investing time.

How long that recovery will take is anyone’s guess. I urge you not to put too, too much faith into the words of the Talking Heads in the media and online. No one knows what will happen, nor precisely when the recovery will start!!!

If you haven’t started investing in broadly diversified, equity-based exchange traded funds (ETFs), then today is an exceptionally good day to start. The market is down, which means everything in the stock market is on sale. Buying while the market is down means that you’re “buying low”. This is a good thing. Open an investment account and start buying equity-based ETFs to be held for the long-term. In case it needs to be said, always keep your long-term investments separate and apart from your emergency fund. They’re two pots of money for two very different purposes, and they should not be co-mingled.

If you have started investing, then continue to do so. When you get paid, take a portion of your paycheque and invest it. The current volatility in the market need not be a reason for you to stop investing. If anything, consider increasing your investment contributions. The market is down, which means everything in the stock market is on sale. Buying while the market is down means that you’re “buying low”. This is a good thing.

Do not stop investing right now! You’ve heard me speak before about learning from other people’s mistakes, right? Well, this is your opportunity to learn from mine. Back in 2011, there was another recession. It was a small one, so not very well-known. It was nowhere near as big as the Great Recession of 2008. Here comes the part where I made my big mistake. I blame it on the fact that I was much younger and far less wiser in 2011 than I am today.

When the market started falling, I stopped contributing to my investments for 6 months!

This meant that I did not buy at the bottom. I waited until the sale was over to re-start my bi-weekly contributions. Prior to that little recession, I had been contributing a portion of my bi-weekly paycheque to my investments through a method called dollar-cost averaging. My system was automatic and I barely ever thought about it. However, when the market started dropping, I panicked and halted my automatic contributions. Doing so was one of the worst investing mistakes that I’ve ever made.

There’s no need for you to repeat my mistake in 2025.

If you’re already on an investing schedule, stick to it. So long as you still have a paycheque, continue to live below your means so there’s money to invest. The stock market is on sale right now. You’re currently living through a great time to buy equity-based ETFs and index funds. When the market recovers, as it will eventually, the value of the investments you make today will increase.

It bears repeating. Keep your investments separate and apart from your emergency fund. Your emergency fund has to be in place in case you and your paycheque part ways. You should never invest your emergency fund in the stock market. Instead, keep that fund in a high interest savings account like EQ Bank or Tangerine. Do not put your emergency fund in your Tax Free Savings Account (TFSA). The TFSA is the perfect account for your investments since they can compound over the long-term without being ravaged by taxes. You don’t want to have to withdraw money from this account during an emergency. Doing so means that you’ll be thwarting the growth of your investments.

If you’re feeling particularly nervous or panicked about the current economic volatility, then I suggest that you find ways to trim the fat from your spending. Whatever amount you find should be divided in two. Send one half to your emergency fund, and use the other half to increase your contributions to your investments. This is the best of both worlds.

The market is going to recover and volatility should be accepted as normal. Continue your contributions to your investments. Bulk up your emergency funds a little bit at a time. Turn off the news for a day or two. Control that which is in your power to control: your spending, the amount you contribute, and your choice to continue investing in your future.

Time will do the rest.

An easy way to keep money in your wallet!

When my family members moved into their new abode, they purchased a new stand-up freezer right away. They’re both avid cooks. Having a freezer meant they could take advantage of sales on meat, frozen vegetables, bread, etc… It cost them a pretty penny at the time but it seems to have paid off for them.

Even if you’re a Single, I want you to consider whether a stand-alone freezer would be wise for you.

I’ve talked before about the money-saving magic of my kitchen. Truth be told, I should have also been talking about how much I love my chest freezer. (It came with my house!) My fridge’s freezer is usually filled with my stash of emergency dessert, ice cream, coffee, and baking ingredients that last longer when frozen. My chest freezer is where I load up on things like bread and meat.

See, I’m a huge fan of Costco. However, it cannot honestly be said that Costco’s food sizes were intended for those of us who live alone. Costco designed their food’s sizes with the family in mind! For single folk like me, grocery shopping at Costco only makes sense if I use my freezer. Every three months or so, I make the trek so I can load up on my proteins. Then I come home, portion everything out into amounts that will tide me over for 2-3 days, and put those portions in my freezer.

It’s awesome! When I’m ready to do my meal prep on Sundays, I can just pull something out to thaw and then I create delicious meals that will make enough leftovers for lunch during the week. Getting myself organized and using my freezer has helped me to save money while expanding my culinary repertoire. I enjoy my own cooking far more than whatever I can buy at the food court.

You might want to consider doing this too. And if your current fridge’s freezer is too small, think about whether a portable freezer would be of use to you. One of the hassles of being an adult is cooking every single day! I really think that’s a huge reason why people love to eat out. However, we all know that eating out isn’t cheap or necessarily healthy. I found thata, after awhile, it all started to taste the same. Cooking your own food is cheaper (so long as you don’t let things spoil), much healthier, and always seasoned to your particular taste.

So many things can be frozen ahead and used later! If all goes well, my rhubarb patch will come back this year. I’ll be able to eat some of the stalks over the summer and freeze the rest to enjoy during the winter. If you’re a berry fan, then the freezer is a friend of yours. Strawberries, blueberries, black berries, raspberries, peaches, apricots, nectarines, pears! All of these wonderful fruits freeze beautifully until you’re ready to use them. The same goes for whatever vegetables tickle your fancy. Use your freezer!

Maybe you’re a fan of making your own bread? I’ve made loaves before and I have to be honest. There’s nothing quite so heavenly as fresh-baked bread! Yet, I’ll admit it was a challenge to eat the loaf before it went stale. My mom suggested that I slice the bread then thaw as many slices as I needed on a given day. Great idea! Perhaps you’re fond of homemade tortillas? They freeze beautifully. Pancakes and waffles are delicious! Make a full batch, eat what you want, and freeze the rest. There’s your breakfast throughout the week. When coffee goes on sale, I buy extra jars and store them in my freezer. I never have to pay full price and I’m not stopping at a drive-thru on the way to work every morning. Every morning, I enjoy a cup of go-juice from my very own kitchen.

When used properly, a freezer will help you save money on food. It can also cut down the amount of time you need to spend in the kitchen every day to feed yourself. Cooking and freezing leftovers ensures more opportunities for you to eat what you enjoy the most. And if you need ideas of what to cook, the internet is at your fingertips. There’s an entire subreddit about meal-prep, often with mouth-watering photos. It’s so easy to find many, many recipes that can be prepped and frozen ahead of time for cooking in a slow cooker or the Instant Pot. Personally, I love watching YouTube videos of people meal prepping all sorts of different things – like this one or this one.

Use your freezer. Cook at home and keep more of your hard-earned money. You’ll eat better and you’ll feel better too!

No One Said It Would Be Easy.

Getting what you really, really want is hardly every easy. It can be a grind. There are going to be days when you don’t want to work for it. Chances are you shed a tear or two along the way. It might take you much longer than you’d anticipated, and there are no guarantees the path will be a smooth one.

So what!

Accept the fact that the life you really want and that the dreams that you want to see come true are not going to fall into your hands like snow on a winter’s day. The reality is that you are going to have to put in some serious effort then reap the rewards later. If it’s worth having, then it’s worth fighting for. Never forget that!

Since this is a personal finance blog, I can help you with the money part of building the life you honestly and truly desire. There are some very basic guidelines that will get you 97% of the way there. If you follow these, then you’re set. The other 3% won’t make or break you either way. The more of these rules you fail to follow, the harder you’ll make it on yourself.

Choose wisely.

First things first… commit to living below your means.

There’s no way around this fact. If you spend every nickel you earn, then you will not have money leftover to put towards your dreams and the life you really want.

You need to save some of the money you earn. I used to think that 10% was enough. Now, I’ve matured and I see that 20% should be the bare minimum.

Maybe you can’t start at 20% right now. Fine – 20% is out of the question for right now. I refuse to be persuaded that you can’t work your way up to 20% over time. Start where you are right now, then increase your savings rate by 1% every single year. If you can increase your savings rate at a faster pace, then so much the better.

People get raises, start side hustles, create content, teach skills, etc… There are many ways to earn additional money. Find one that works for your life and do it. Whatever money you earn can be applied to building the life you want and to turning your dreams into your reality.

Next, work on getting out of debt.

This might take a minute. Getting into debt is usually fun, but getting out is a tedious task. Unless you come into a windfall, it’s going to take you some time to pay off your creditors. If you can, make extra payments to pay off your debt faster.

And for the love of all that you hold holy, stay out of debt. If you want something, set up a sinking fund then use cash to buy it. As a matter of fact, set up a sinking fund even if there’s nothing in particular that you want. Set up an automatic transfer in the amount all of your former debt payments and send that money to your sinking fund. You’re already accustomed to making those payments, but this time they’ll be going into your pocket instead of someone else’s.

When you finally decide what you want, the money will be there waiting for you. No debt needed!

Invest for your long-term future.

While paying down your debt, cinch your belt a little tighter and set some money aside for Future You.

Debt payments are about paying for past decisions. Investing for your future is about self-care. You’re going to need food, shelter, transportation, heat, and a few other basic necessities every single day until the day you die. This is why you absolutely must set aside some of today’s money for tomorrow’s expenses. You won’t always be physically and mentally capable of going to work. There’s also a decent chance that you simply won’t want to leave the comfort of your home to do tasks for someone else. Or maybe you’ll no longer love running your own business.

Whatever the case, you don’t want to be forced to keep working when you’d rather stop.

When that time comes, you’ll be very happy to have cashflow from investments to replace the cashflow from your salary. Start today. Invest for the long-term. Re-invest all your dividends and capital gains. Set up an automatic transfer to invest a portion of every dollar that crosses your palm. When you stop sending your body out to work, there will be a pot of gold waiting for you. Future You will be very glad that Today You made good choices.

Build your emergency fund.

Much like paying off debt, it’s going to take a minute or two to build up atleast six months’ worth of expenses. I’m not adverse to seeing people with one year’s worth of expenses set aside, but I appreciate that six months’ worth will do in a pinch. Emergencies always have a financial component, so kindly make hay while the sun shines. Believe me when I say that an emergency is never made better by the addition of debt.

The last thing you want is the burden of paying for an emergency for months, if not years, after it’s happened. To avoid this depressing situation, make sure that you’re adding to your emergency fund on a regular basis. Every time you’re paid, send some money to your emergency fund and leave it alone.

No one has ever complained about having too much money during an emergency.

And if you have to use your emergency fund at some point, make sure that you re-build it as fast as possible. There is no way of knowing when your next emergency is going to land so it’s best to be prepared as soon as possible.

Finally, stop getting in your own way.

By this, I mean do not take on financial burdens unless absolutely necessary. More monthly subscriptions won’t get your closer to your dream life unless you’re the one selling to subscribers. Any dollar that is spent on something other than what you want most is a dollar that is not bringing you closer to your dreams.

Remember that there is always someone out there who is goading you to spend your money in ways that aren’t getting you closer to the life you want. You’re the best person to know what your heart really desires. And you need not sacrifice your priorities just because the AdMan and the Creditor request that of you. They’re your dreams so it’s your responsibility to protect them, to nurture them, and to pay for them.

Again… No one said it would be easy. I’m here to tell you that it will be worth it.

Truth be told, no one aspires to poverty.

I’ve been part of the personal finance blogging world for a few years now and I’ve realized a few hard truths. One of them is that there is no one answer to the problem of poverty. In the personal finance sphere, it’s a truth barely ever acknowledged that not everyone has enough.

We bloggers love to talk about our successes and we will happily share our “pathways to success”. What we’re not so good at is realizing that those pathways don’t always exist for everyone else. The sad truth is that there is a growing subset of people who are stuck in poverty with few, if any, ways out of it. No one aspires to poverty yet that’s where many are headed.

The Globe and Mail

Every Saturday, the Globe and Mail posts a review of a household’s finance on their website. (FYI – it’s behind a paywall.) The review includes a snapshot of the household’s assets, liabilities, monthly income, and monthly expenses. An advisor provides a professional opinion of whether the household has enough to generate a desire income in retirement. Readers are free to leave comments and, more often than not, readers complain that the household being profiled is too affluent. Readers clamor for households whose profiles are more relatable, i.e. those of someone earning a $50K-$60K per year while sending children to daycare, handling credit card debt, and paying a mortgage.

I’m always very confused by those reader comments. What are readers expecting the financial advisor to say? When a person is making a five-figure salary and all of their money is going towards mortgage debt, student loans, daycare, utilities, food, and transportation, then there really isn’t any wiggle room. The average person who isn’t making six-figures and who is raising a family is always under intense financial pressure to make sure everyone eats and that all the bills get paid. A severe illness or a job loss would be tragic, if not catastrophic.

There is no financial advisor alive who can help someone to build wealth when the entire paycheque is going out the door as fast as it comes in. There has to be some money to work with in order for a financial plan to have any hope of being useful!

What I’ve learned from reading many, many reviews of household profiles is that people who have excess money are the only ones who can reasonably benefit from a financial advisor’s review and advice. Having excess money means being positioned to implement a recommended investment strategy, to consider tax shelters, and to maximize contributions to the myriad of registered accounts that are available. When there’s no excess money, none of these options are really available.

Popular advice isn’t for those in poverty.

Most of the popular advice that you see shared online is for people with excess money. It can be an extra $5 per day, or it can exceed an extra $100,000 per year. The amount of excess money is not the point. What I want you to realize is that having excess money is the cornerstone to building savings and to investing for the future. If there’s nothing extra to save, then investing is essentially out of reach.

And to be very clear, I’m not talking about people who can cut back if necessary. Many people spend every penny on both necessities and luxuries, while deluding themselves that those luxuries are truly necessary for their well-being. No one needs a $300/mth cable package for their survival. I’d be tempted to argue that cutting the cord is a great way to cut down on the marketing that encourages the needless spending in the first place. But I digress…

If you don’t have excess money, you’re essentially a human conduit between your employer and your creditors. You work very, very hard and then disperse your paycheque to everyone else. To add insult to injury, you might also have to use credit cards to pay for food or utilities or some other basic necessity. However, if you’re using credit cards to survive, then please do not delude yourself into thinking that you’re keeping the wolves from the door. They’re circling and they will eventually be on your doorstep. Debt is rarely the solution to poverty. More often than not, debt simply entrenches you in poverty because the interest owed on your debt never stops growing until the debt is paid in full.

When you’re working super hard yet have no extra money to keep for yourself, then you’re the very definition of the working poor. From what I’ve learned, the only solution to poverty is to get more money. With more money in hand, the options for growing your money become viable options for you to consider. Until then, those options are eternally out of reach and may as well not exist.

And if you’re in this situation already, then I’m not telling you anything that you don’t already know. I’m sorry. I don’t have any quick fixes for your particular circumstances if you find yourself in this situation.

Living Below Your Means

One of the fundamental tenets of personal finance is to live below your means. I know that I’ve suggested that everyone do this. The reality that I’m coming to accept is that not every one can do this. It is a privilege to be able to live below your means, because it means that you have more than enough to pay for your daily living costs and there’s still money left over. There’s disposable income that need not be spent to keep food in the fridge and a roof overhead.

People who have already cut back yet are facing increasing costs simply cannot survive without spending every penny. They don’t have the luxury of an extra $5 to squirrel away in a paycheque. Doing so means going without food for 2 or 3 days in a row. No one ever develops a taste for poverty.

There are too many people who simply don’t earn enough. That’s the bottom line. If there is way to escape poverty’s clutches without increasing your income, please share that solution with the class.

For a good number of people, hard work is no longer the solution. However hard they work, there’s never enough to pay themselves first. If they do pay themselves first, then someone doesn’t eat or an eviction is in their future or the electricity is turned off. The rational solution is to solve today’s problems today and to hope for a better future tomorrow. When there’s only enough money to pay for today or to pay for tomorrow, which choice would you make?

What’s the answer?

If I had the perfect answer to solve the poverty problem, I would shout it from the rooftops. Sadly, that level of wisdom has escaped me.

My only suggestion is this. If you’re one of the people who has enough with a bit to spare, then consider making charitable donations to homeless shelters and food banks. People will always need a place to stay and food to eat. You can still invest for Future You. I will always urge you to build the life you want for yourself while helping others along the way. It does you no harm to help someone in need.

Never take your good fortune for granted. Believe me when I say that no one who is in poverty wants to be there. I would venture to say that more than a few of those folks were one day very financially similar to you. Something happened to wipe out their financial foundation and they simply were unable to rebuild.

Again, no one aspires to poverty yet that’s where they’ve landed. Be thankful if you’ve managed not to fall into poverty’s nearly inescapable grasp.

No Good Reason to Save & Invest? Do It Anyway!

Roughly 11 months ago, someone asked me to share my best tip for success with money. It took me less than a minute to say “automatic transfers”. Honestly, I really think that automating your finances is the cornerstone of mastering your personal finances.

Automation is beautiful because it removes the decision from your hands. More importantly, an automatic transfer removes the temptation to spend the money. If you’re paid bi-weekly like I am, you don’t have to waste time every fortnight asking yourself if you should set aside money, how much money should be set aside, whether to send that money to your emergency fund, etc… Each of those questions is an opportunity for you to spend instead of save, or to save less than you should, or to neglect one of the most important tools in your personal finance arsenal.

The automatic transfer saves you from yourself. Once it’s in place, you don’t have to think about it again.

I spend a lot of time here telling you to pursue your dreams and to determine your priorities so you can make those dreams come true.

Some of you might not know what your dreams are just yet, or you’re still trying to figure out your priorities. That’s fine. As a matter of fact, that’s more than fine. It’s completely normal. Life changes, so your priorities will change too.

Those changes don’t really matter when it comes to whether or not to automate your money. See, when you do figure out what you want from your life, you’re going to be very happy that there’s already some money set aside somewhere. Set up your automatic transfer today and just let the money accumulate while you’re figuring out what you want.

If you can, start with 20% of your take-home pay. That’s a decent chunk. If it’s just being wasted on frivolities and feckidoos, then it’ll serve you better in an emergency account, a sinking fund, an investment account, or a retirement account. I would suggest dividing your chosen amount into thirds:

  • one third to your emergency fund until you have 6 months of income set aside;
  • one third to your retirement account until you’ve maxed out your TFSA and your RRSP; and
  • one third to short-term goals like a course you want to take, or some travel, or a hobby that you love.

Portion #1 – Your Emergency Fund

It’s going to take a minute or two to build up your emergency fund. That’s okay. Just start! When the emergency comes, whatever amount you have will help. Trust me when I say that no one in the history of the world has ever regretted having money set aside during an emergency.

Remember what the emergency fund is for. It’s money meant for your survival. If you lose your job, then the emergency fund has to pay for your shelter, your food, your medications, and your other necessities until you get another source of income. If you have debt, your emergency fund should also be able to cover those payments. After all, one does not need to have a vehicle repossessed nor dings to one’s credit rating while one is hunting for a job. (Some jobs care about your credit rating.)

It should be obvious but I’ll say it anyway. The fewer things that your emergency fund has to cover, the smaller it can be. Get out of debt and you won’t have to worry about how your creditors will be paid should you become temporarily parted from an income.

When money goes into your emergency fund, leave it alone. This is the money that is meant to replace your income should you lose your job. It’s not meant to pay for anything else.

While this blog is targeted at single people, I know that there’s more than a slim chance some of you will find partners and enter relationships. Relationships are another reason why everyone should have a big, juicy emergency fund. Not every relationship is meant to last. By having your own emergency fund, money will never be the reason that you stay in a relationship that is no longer good for you. Having your own money is insurance against financial abuse.

Portion #2 – The Care & Feeding of Future You

Next, you’re going to get old unless you die first. That means, there will come a point when you can’t work anymore. Before that day comes, you’ll probably reach a point where you won’t want to work anymore. You will want to have a nice, ginormous pile of retirement cash waiting for you. And if you can’t have a ginormous pile, then I’m pretty certain you’ll settle for a comfortable pile. Whatever amount you wind up with is up to you. If you save and invest $0 towards retirement, then that’s how much you’ll have at the end of your working life.

Start today. Fill your TFSA first, then your RRSP. Once those are filled, start investing in a non-registered investment account. As with your emergency fund, it’s going to take some time to maximize your contribution room unless you come into a lottery win, an insurance payout, an inheritance, or some other kind of windfall that you don’t spend on something else.

Always remember that the money in your TFSA, your RRSP, and your investment accounts must be invested for long-term growth. Yes – they’re called a Tax Free Savings Plan and a Registered Retirement Savings Plan. I get it, but I don’t care what they’re called. These accounts protect your money from being taxed, so go for growth. Invest in broadly-diversified, equity-based exchange traded funds so your money can grow exponentially through the magic of compounding.

Mutual funds are more expensive than exchange-traded funds, so try to invest in ETFs. Once you buy your ETF, don’t fiddle with it. Equity-based investments are meant to be held for a long period of time. If you think you’ll need money in the next 3 years, then set up a sinking fund to pay for whatever-it-is-you-plan-to-buy.

Portion #3 – Enjoying the Journey

Finally, you’re going to use sinking funds to pay for the things that bring you joy along your journey. Whatever extracurricular activity floats your boat probably comes with a price tag. Have a sinking fund so that you can indulge yourself. I worked with a woman who was very frugal in most areas of her life. However, she and her partner loved concerts. You better believe they had a sinking fund to pay for front row seats of their favourite performers. A young family member of mine discovered a love of travel. He just got back from his first cruise and is already saving up for his second trip to Japan. Another friend of mine attends writing retreats – money is needed for accommodation, travel, food, supplies, instructors’ fees, etc…

Life goes by very, very fast. And we spend so much of it at work, doing stuff for someone else that we probably don’t care about very much. The reality is that our society is designed to keep up endlessly stimulated. There’s very little encouragement to sit quietly and to contemplate what it is that you want, to plan for that, to save money towards making it a reality. Instead, we’re fed an endless stream of advertisements which exhort us to spend and spend and spend some more on the doodads and feckidoos that don’t exactly bring us long-lasting joy.

Part of every paycheque you earn should be spent on those things that make you happiest. Even if you don’t know what that is just yet, start saving for it. One day, you’re going to figure out what speaks to your soul and you’ll be so very happy that you have the money in place to acquire it. Maybe you want to take a culinary tour in Italy? Perhaps you like to make pottery? Maybe your sports club competes internationally and you need the funds to travel?

Whatever it is that satisfies your soul, make sure that you’re setting some money aside to do some of the things that make your life what you want it to be.

So that’s it. Even if you think that you have no reason to save and invest right now, I want you to know that you’re wrong. The fact is that you simply haven’t figure out the reason. You might not know what your priorities are, but you will one day. The fact that you haven’t fully fleshed out your dreams shouldn’t mean that you delay accumulating the money needed to make them come true. Set up your automatic transfer today then work on getting everything else sorted out.

Future You will thank you.