Month: December 2018

It’s the holiday season again! Between Thanksgiving and Christmas, people will be bombarded with advertising encouraging them to buy as much as they possibly can to prove the depth of their love for the special ones in their lives.

Do you want your child to be happy? Buy a toy! Do you want your spouse to be happy? Buy a car! Do you want your parent to be happy? Buy them a trip! Do you want to be happy? Open your wallet and buy!

For the most part, this is a stupid method for building the bonds of love and kinship. Gifts of stuff don’t make for great relationships. Gifts of time, gifts of effort – these are the the seeds of strong and loving connections to others. Luckily, these kinds of gifts do not need to be expensive or extravagant.

In my family, there has been a debate for the past few years about how to do the gift exchange. My mother is adamantly in favour of receiving gifts, and she is quite willing to give gifts too! My brother is the complete opposite. He’s of the view that none of us needs anything else so we shouldn’t be participating in the shopping frenzy of Christmas. A compromise was reached – gifts will be exchanged but there will be a limit of $20. It’s not  a perfect solution, but we’ll see if it works for us. My sister-in-law lifted a burden from my plate recently when she asked me for a tin of cookies for her Christmas present. I was so happy because her request eliminates atleast one trip to the mall! As for the extended family who celebrates the day with us… I will be buying something for each of them that I know they will appreciate and I will be sticking to the limit of $20.

One of my joys at this time of year is baking Christmas cookies: gingersnaps, shortbread, magic cookie bars, haystacks, peanut butter blossoms, thumbprint cookies!  

These are my family’s Christmas cookies, not to be confused with my other cookies that are made throughout the year. They are special because no one else bakes cookies anymore and I only make them at Christmas-time. I generally give away 7-10 tins of baking per year, and I start baking 4 weeks before the Big Day! Making an extra tin of cookies for my family is a simple thing that will make everyone happy.

Having the shortbread that our mother used to make for us when we were small will bring back happy childhood memories for my brother. The beauty of memories is that they need not be purchased with cash, stored, maintained, dusted, or otherwise handled. They are free, but they can still be powerful and wonderful and thoroughly enjoyed. This is the effect that people are seeking to create when buying gifts at the store, isn’t it?

Cookies are a gift to my mother too. She can enjoy them, without having to do all the work that they entail. My mother isn’t as young as she once was, so marathon baking is no longer an option for her. Yet, she still loves the assortment of treats that I bake for Christmas. Enjoying a few cookies will put a smile on her face which is what I want to see on Christmas day. It’s a win-win for both of us.

The holidays need not deplete your bank account, nor flatten your wallet. Do not let the AdMan and the Creditor tell you that joy can only be bought in a store. There are ways to create wonderful memories without working your way towards bankruptcy. The holiday season is already packed with so many over-the-top expectations about how everything “should be” so give yourself a break and relieve some of the financial pressure. Figure out the two or three things that you love most, focus on those, and build the relationships you want with those whom you love best. Trust me – that is definitely a gift to yourself that cannot be bought in a store! 

You are financially vulnerable.

Don’t feel too bad. Most of us are.

A few weeks back, I watched an interview with Elizabeth White where she talks about faking normal. In short, Ms. White is very well-educated, had a network of contacts, worked for an international organization, took an entrepreneurial risk, got caught by the 2008 recession, and tumbled down the income ladder. She had significant savings and she “did everything right” but she still wound up financially vulnerable. She has since written a book documenting her experience and the experiences of many others who are in the same boat. It will be released in 2019.

After watching Ms. White’s interview, I took a hard look at my own life. I’m roughly 10 years younger than Ms. White, but I still have my employment and I’m one of the Fortunate Few who can expect to receive a pension when I retire…unless my pension is bankrupt and there won’t be any money to pay me when it’s my time to collect.  (This is one of my personal financial nightmares.) So I’m doing what I think will save me from the possibility of my promised pension disappearing – I’m setting aside a large chunk of my paycheque into dividend paying investments. I let those dividends rollover each month, in the hope that my monthly dividend cheque will be enough to pay my retirement expenses if it has to. Check out how I’m doing this, if you’re interested. And while I’m saving, I’m working damn hard to stay out of debt. I’m also developing the habit of only spending money on the things that really matter to me: time with family and friends, travel, eating good food. Expenditures on anything else need to be justified because those things aren’t my priorities. It doesn’t mean that the expenditure isn’t eventually made. It simply means that there’d better be a good justification before my money leaves my wallet.

I feel like I’m doing okay, but I still question if I’ll continue to be okay if I lose my career in my 50s.

Ageism. It’s real and it’s pervasive. Sadly, it’s rarely on anyone’s radar until such time as they’re a victim of it. Those in their 20s and 30s are busy starting their careers, or simply finding jobs that allow them to pay for their necessities. The fortunate ones who have found employment most likely aren’t thinking about whether they will be turfed for having wrinkles when they hit their 50s and 60s. Those in their 40s are building families and careers, starting new businesses, or exploring the world. They too likely aren’t considering whether it’ll be easy for them to return to the world of paid employment should they need to.

Nope. For many who are trying to find work in their 50s and 60s, the reality doesn’t sink in until they cannot – for love or money – land a position no matter how hard they try. In the meantime, they still have to survive. There are still bills to be paid, mortgages to be serviced, and, most likely, children to raise or educate. As we all know, the expenses of life don’t stop just because someone has lost their job. Without an income, most people have little to no choice other than to dip into their savings while they’re receiving unemployment insurance payments. Once those payments stop, then there is no “choice” about it – savings must fund life’s expenses until another income is found.

And this is where the vulnerability is exposed. The vast majority of us do not have sufficient savings to survive for 30 or 40 years without an income. We have been conditioned to believe that we will always have and, if necessary, will always find another source of income that will be enough to keep us afloat. This hasn’t been true for a very long time, particularly not for those in their 50s and 60s. It’s a vicious and heart-breaking reality that employers are not financially incentivized to pay for talent, experience, and wisdom even though those very things are expected of employees before they are terminated.

Do I have the solution to this problem? No, I would never make such a boast.

However, I would strenuously encourage you to minimize your vulnerability while you can. I would suggest that you get out of debt as soon as possible and that you save as much of your income as you can while still enjoying the present. Figure out what your priorities are, spend your money on those, and ignore all other exhortations to spend your precious income on things that don’t matter to you. Whatever isn’t spent on your priorities should be set aside for long-term investing, paying off your debts, and building your emergency fund. It should not have escaped your notice that saving money should definitely be one of your most important priorities.

The more money your household makes, the easier it should for you to hit savings targets of 20%-50%. I harbour no illusion that lower income households are in a position to save great swaths of their income. Those of you with a healthy disposable income need to understand that there is no guarantee that you will always have employment that so richly lines your pocket. No one knows what tomorrow will bring. All you can do is look at the money you have today and figure out a way to not spend all of it. There’s no shame in saving some of today’s money for tomorrow’s needs.

If for some reason you lose your income in your 50s or 60s, your ability to survive until the next job – or until you can start collecting CPP – is going to depend on how much money you’ve committed to spend each month. Get out of debt. Have an investment portfolio that kicks off some dividends and capital gains, which are automatically re-invested until you need to rely on them. Establish a savings program that allows you to invest a good chunk of your income until you retire. Limit your spending to things that bring you a deep sense of joy and satisfaction. If it won’t make you happy, then don’t buy it.