Tag: Priorities

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.

Financial Independence – Make It Your Goal!

Over the past few months, I’ve been seeing many articles about the death of FIRE. For those that don’t know, FIRE is an acronym for Financial Independence, Retire Early. Its popularity as an idea really took off before March 2020. Since the return of inflation, not as many people have been preaching about it.

For my part, I’ve always wanted to retire early – ideally in my 30s and 40s. Believe me when I say that ship has sailed! To be fair, I’ll retire before the traditional age of 65, but I definitely won’t be considered a super-early retiree. And if we’re being honest with each other, I’ll admit that I’m a bit sad that I can’t retire right now. So while I’ve always been a big fan of FIRE, the second half of the acronym was intriguing but I was never able to be fully wedded to it.

The first part of the acronym is a completely different story. Financial independence? Yes, please!

Achieving financial independence is one of my foundational beliefs about the purpose of having money. In my opinion, everyone should be striving for financial independence. Nobody should be financially dependent on someone else their entire life. As a single person, I’ve always known that I didn’t have the luxury of another person’s paycheque coming into my household. I’m the only one responsible for ensuring that there’s enough money to pay for the life I want to live. To that end, I’ve made financial independence one of my life’s goals because I know that one day, I won’t be able to work anymore. When that day comes, I need to ensure that I have enough money to pay for my life’s expenses when my employer and I part ways.

I have always been enamored with the idea of having sufficient passive income to live comfortably without having to go to work. This was my Holy Grail. And the best way I knew how to achieve this was to invest a portion of every single paycheque into the stock market. What do I mean by a portion? I’d describe it as a decent chunk – maybe not half but certainly more than a measly 10%.

A long time ago, I decided to invest and that decision has paid off handsomely. I started slowly, with $50 bi-weekly. As my income grew, so did my bi-weekly contribution amount. The habit of investing was made much easier by the power of automation. I didn’t have to decide to invest every 2 weeks. The automatic transfer whisked the money out of my chequing account and into my investment account without my participation. Today, I’m very happy that my stock portfolio kicks off an ever-increasing amount of passive income every single year.

So how did I get to this point with my money? And is it something others can do too?

When I was 21 years old, I knew nothing about investing. I started anyway.

My parents’ accountant told me I wasn’t making the wisest choice by contributing to my RRSP. I ignored him and put money into my RRSP. He had suggested that I save for my first house. Looking back, I can appreciate his advice and, with the benefit of hindsight, I’ll admit that it made the most sense. I was a 21 year old student, therefore in the lowest tax bracket, so contributing to an RRSP might not have been ideal for my circumstances. That said, the fact remains that I was headstrong and so I did what I wanted. After all, I knew what an RRSP was and I’d been influenced by the Freedom 55 commercials that were popular at the time.

So for a few years, all I did was invest money into mutual funds within my RRSP. Remember, I knew next to nothing about investing. I didn’t let my lack of knowledge stop me. I consumed books about personal finance. When the internet allowed, I started to consume websites and blogposts about money, investing, and personal finance. Eventually, I graduated and got my first adult job, so I set up that life-changing automatic transfer from my paycheque to my investment accounts.

I moved out of my parents’ house and really had to pay attention to where my money was going. At some point, I started an emergency fund. It took a very, very long time but eventually my emergency fund grew to where it is today. I can easily cover 6 months’ of expenses, if I have to.

In 2009, the TFSA came into existence. I decided to stuff my TFSA to the max every January. When I learned that ETFs were cheaper than mutual funds, even though they do the exact same thing, I switched the securities inside my RRSP and TFSA from mutual funds to ETFs. That was the second smartest money move I’ve ever made.

Again, it took a very long time but eventually my RRSP and TFSA were both maxed out. I still wanted to invest a portion of my paycheque, but where? And that’s when I remembered my brokerage account. (My parents had bought me a few bank shares when I was a baby, so I’d been holding them in my brokerage account.) By this point, I knew that money earned in the form of dividends and capital gains would be taxed less harshly than money earned from my job.

And while the RRSP and TFSA had contribution limits, my personal brokerage account allowed for unlimited contributions. In theory, I could invest so much money that income from dividends and capital gains would be enough to pay for all of my life’s expensive. Stated in a different way, I could live on passive income and pay less taxes at the same time! Once I’d had that realization, I was hooked. Every time I got a raise at work, I increased the contributions to my brokerage account.

By now, I’d heard of FIRE. I thanked Younger Me for putting me on the path to financial independence. Of course, Younger Me made some very big mistakes. For example, I was investing in dividend-paying ETFs instead of equity-focused ETFs for way too long. As a result, I didn’t benefit as much as I should have from the stock market bull-run between 2009-2020. Had I invested in equity-based ETFs from Day 1, I would probably be retired right now and my portfolio would probably be twice as large. No sense crying about it. I’ve since corrected my investment strategy and my portfolio is doing much better.

Financial independence was my goal, and I’m well on my way to meeting achieving it.

And the longer I strive for it, the more I believe that everyone owes it to themselves to be financially independent too. I’ve watched colleagues get trapped into jobs they hate by their debts. So many people live off their credit cards and lines of credit, which makes them slaves to their creditors. Living in debt equals sacrificing your financial future. It also means that your employer has more control over you life’s choices than you would otherwise want to give them.

Can you imagine the options you would have if you had a portfolio that covered your basic needs?

Such a portfolio would give you the power to walk away from any employer at any time. You wouldn’t need the paycheque! Your portfolio would be paying for your food, shelter, clothing, transportation, and communication needs. You could live without a job. How awesome would that be? No more Sunday-scaries!

Alternatively, if there was a job you loved and it paid peanuts, you could happily take that job and still not worry about how to pay for your life’s expenses. Think about it! The money from the love-job would be your fun money. Passive income would ensure your survival and you could join that exalted group of People-Who-Love-What-They-Do-For-A-Living! Those are truly some of the luckiest people in the world.

This is why I believe that everyone should be striving for the first part of FIRE – financial independence. And if you want to retire early, then go for it. Not everyone wants to retire ASAP and that’s fine. When to retire should be your choice. If you want to keep working after having accumulated a nice, fat cash cushion of investments, then you can do so… with the added comfort of knowing that it’s truly a choice, rather than a necessity.

So, is the idea of FIRE really dead? No. I think it’s still alive and well for many people. What I think has changed is the sentiment that it’s okay to talk about FIRE in the current economic climate. Many, many, many people are suffering due to the impacts of the high inflation we experienced in 2022-2023. Prices skyrocketed while wages and salaries remained the same. Many people were squeezed and continue to feel the pinch of their money not going as far as it used to.

Talking about FIRE would be crass. People who are struggling financially, yet also want FIRE, do not need to be reminded that it will be harder for them to become financially independent and that retirement is further away. Instead, the pursuit of FIRE has returned to the shadow and those of us who are still pursuing it are simply doing so very quietly and very discreetly.

What are Your Money Goals for 2024?

At the time of his point, there are 26 days left in 2023. Hard to believe that this year will be done in little over 3 weeks, but that’s the reality we’re living in. Maybe you should take a few minutes to think about 2024 and your money goals for the upcoming year.

If you don’t have any, that’s okay. I’ll lend you one of mine. It’s simple and straighforward:

My money goal for 2024 is to live below my means and invest a nice chunk of my take-home pay.

Now, this isn’t my only money goal. And this one needs a bit of polish because it’s a bit vague. After all, what does “a nice chuck mean”?

For me, it means investing $1 out of every $3 that I bring home. You can choose a different percentage if you want. Maybe you’re hardcore and you want to invest atleast 50%. That’s fine. Or perhaps you’re just starting out and you want to go small, with something like 5% or 10%. It’s not ideal, but it’s definitely a way better than investing 0% of your take-home pay.

The next area that needs fleshing out is the part about investing. After all, money sitting in a bank account is not invested. It’s an emergency account, or maybe even a sinking fund. However, it is most definitely not invested for growth. And I want my money grown big and strong!

For me, investing my money means filling my TFSA and my RRSP with equity-based exchange traded funds. Equity-based ETFs allow me to buy small pieces of a great many companies that are listed on the stock-exchange. As these companies grow, so do my investments in them. At some point, those companies will pay out dividends and capital gains. In a nutshell, this is passive income that is taxed much more lightly than my paycheque. For the record, I love earning dividends and capital gains!

Living below my means is a simple shorthand phrase that means I won’t spend every penny I make. Oh, I’ll definitely spend some of my take-home pay. I just won’t spend all of it. After all, if I spend it all then I’ll have nothing left to invest. Without anything to invest, I’ll have no way of ensuring that my dividends and capital gains grow large enough to replace my paycheque. And that would be a shame.

What about you?

Think about your life. Determine whether you want something different. Either way, carefully consider if the money you have is being used to make your life just the way you want it to be.

And be ruthlessly honest with yourself. Are you spending to impress others? Do you have things just because other people have them?

For myself, I cancelled one of my streaming services today. It wasn’t that I couldn’t afford it. Rather, my motivation for cancelling was that I simply didn’t want to pay for it anymore because it wasn’t making my life better. It doesn’t matter that others have that service. That’s their choice and, hopefully, it brings them great joy. For me, this expense won’t be missed. The money can go towards something else.

Do you have expenses like that in your life? Are you still paying for something even though it no longer brings you happiness? If yes, then what’s stopping you from cancelling that service?

Never forget that you should always be the one in control of your money. You’re a Single Person, which means that you don’t have to consult anyone else about how to spend your money. This is one of the superpowers of being single. Every penny you earn is yours to do with as you please.

Don’t give away your superpower!

Next Steps on the Path

Perhaps you’ve already set up your sinking funds, your DRIPs, and your automatic savings plans. You’ve already done everything to make sure that your money is working hard and churning out those sweet, sweet dividends and capital gain. Congratulations!

What is the next step? Well, I would have to say that your next step is figuring out how to best spend your the rest of your money.

While I’m a huge proponent of savings and investing, I also know that we have to live in the present too. There’s no sense getting to dotage and not having anything to reflect back on. Also, no one is promised tomorrow. That’s why it’s so vitally important to live in the present once you’ve set up systems to have your money automatically invested.

Is there a class you want to take in 2024? If yes, then put it on your list. Are you interested in travelling beyond your city, province, country? If so, then jot that down too. What about moving? Replacing a vehicle? Taking another job? Joining an amateur sports league? Starting a garden?

Whatever it is, write it down. That’s the first step. And then, you prioritize which goals absolutely have to be done in 2024 and which ones can roll over a little bit longer. For example, let’s say you want a new car but your current vehicle works just fine. That’s okay. You can still want another vehicle. All you need to do is take advantage of the fact that your current one is running just fine. Start a sinking fund and throw a “car payment” in there very month. Assuming all goes well, your current vehicle will run until you have enough money to buy the next one.

See how that works? You wrote down a money goal and you came up with a plan to get what you want. By creating a sinking fund and using an automatic transfer plan, you won’t have to go into debt. Maybe it will take a few years to save up for this big of a purchase but so what? If something bad happens to your current vehicle, the money will be there as a down payment on the next one and your car payments – shudder!!! – will go to your financing company instead of your sinking fund.

Let’s go back to the example of you taking a course. Maybe you’ve always wanted to take a culinary tour in Italy. Food and travel combined – what could be better? Write it down. Is this very, very important to you? If yes, then start a sinking fund today for this trip so that you need not rely on debt to achieve this goal. Once your automatic savings plan is in place, the next step is to visit Google and get a list of websites for companies that offer these kinds of tours. While you’re building the stash you need to move this money goal from your Want-To-Do list to your One-of-the-Best-Things-I’ve-Ever-Done list, you’ll be learning about what it takes to get the most out of this kind of trip.

Living the Life You Want Is Achievable

So long as you control how your money is spent, you can achieve all of your money goals. The first step is defining what your money goals. The second step is sticking to your plan. The final step is living the dream life that you’ve created for yourself.

Don’t delay anymore. Decide what you want then go and get it!

Making the Best Moves to Get Your Dream Life

Before you get too far into the craziness of the Spending Season, take a few minutes to reflect back on the past year.

The next 6 weeks will be filled with the AdMan’s best efforts to get you to part with your hard-earned money. His one and only goal is to make you spend. Cash or credit – either one will do so long as you’re opening your wallet as often and as fast as you possibly can.

Here’s a little tip from me to you. Don’t spend money on things that don’t matter to you. Seriously. It’s okay to say “No” and to keep your money in your wallet.

And this is why now is such a good time to assess if you’re moving closer towards your dream life and your heart’s desires. Only you know what your dream life looks like. And your best shot of getting it is to be laser-focused on the choices you make with your time, energy, and money.

My blog is about personal finance so I’ll focus on the money-stuff. There’s are a lot of other inputs and factors that go into our money choices. I realize this. The truth is that I can only speak about my personal experiences and my own observations of the world. I don’t claim to be an expert in psychology. What I do know is that the first step to getting what you want is knowing what it is that you really want. Without that information, you’re kind of flailing in the wind.

If not now, when?

This question should be the one you ask yourself every time you think about going after what you really want. Tomorrow is promised to no one. There are no guarantees about the future. An amazing opportunity might come around again…or it might not. You have to be prepared to pursue your dreams every single day. And that starts by knowing exactly what they are.

The next step is to start saving & investing for your dream life. Maybe you want to run a cafe in Paris one day. If that’s what you want, then that’s what you’ll start working towards. First things first, you open a dedicated bank account for that dream. And you set up an automatic transfer to start filling that bank account. It might take you a few years to save up a sizeable sum, but so what?

The time will pass anyway.

Read that again. The time will pass anyway.

So start your automatic transfer today, and stick with it. While you’re working and saving and investing, you’re also going to start researching the steps you’ll need to take to make your dream come true. You’ll go online and search “How to own a business in Paris”. Maybe you’ll plan a trip to Paris and see it with your own eyes for a week or two. You’ll take French lessons or figure out if there’s an ex-pat community where they speak your language already.

And while you’re fleshing out your dreams, your money will quietly and consistently accumulating. It will be working for you 24/7. Keep adding to the pot. Don’t make withdrawals – just leave it alone. When the time comes for you to bring your dream to life, the money will be waiting for you.

Make smart choices in the interim.

I’m not telling you to save every nickel. What I am telling you is to stop spending money on things that don’t matter to you. Is eating out for lunch every day more important that your dreams? Would you rather buy your 27th sweater or take a course that gets you closer to the life you really want? Is it better to impress family, friends, and strangers today instead of being proud of and satisfied with the accomplishments of Future You?

You’re the only one who can answer these questions for yourself. After all, you’re the one who is going to live with the consequences of your choices.

As I said earlier, we’re heading into the full court press of Spending Season. You will be subject to advertisements on every single platform and they will all be exhorting you to your spend money. The unspoken promise is that spending all of your money is the secret sauce to having a “perfect life”. Believe me when I tell you, there’s no such thing as a “perfect life”. And even if such a thing existed, I highly doubt that it could be purchased at the mall. Oodles of gifts ensconced in reams of wrapping paper beneath a beautifully-decorated tree make for a lovely advertisement. The harsh trust is that they don’t give you what you really want, which is more than likely connection and community with the people whom you love best. Strong relationships built on trust, love, respect, and admiration aren’t bought with cash or credit.

Keep that in mind as the Spending Season moves into full swing. Don’t let the endless encouragement to spend detract from pursuing your dream life.

Back to my original point… It’s time to figure out whether you’re any closer to the dream life that you really and truly want for yourself. If the answer is not to your liking, then figure out what you need to change to get what you really want. Then go make it happen.

Simple Ways to Save Money

I have learned that there are 3 foolproof and simple ways to save money. These methods work for me. I’m going to share them with you. If you want to use them, great. If they work for you, also great! And if you think that they don’t work for you, then so be it.

  1. Stay at home.
  2. Stay off the internet
  3. Use the word “No”… a lot.

Stay At Home

When I’m at home, there are precious few ways for me to spend my money. At home, I have many free things to do. I can read books. My garden and yard always need attention – watering, fertilizing, trimming, picking up litter, weeding, transplanting. Being outside in my yard offers the triple benefit of fresh air, free exercise, and no opportunity to spend money.

As soon as I leave my home, it’s a completely different story. Sit back and let me spin you a tale…

I needed gas for my vehicle, so I went to Costco. My goal was to spend no more than $40. (To preserve my sanity from the exceedingly high price of gas, I fill up when my vehicle is down to half a tank. The price is less palatable, even though I might be going more often. We do what we need to in order to protect our mental health, right?)

While standing at the pump, I remembered that I needed to buy some bread. Costco sells the bread I like in a 3-pack, which means I can stash a couple of loaves in the freezer until I need them. So I went inside the Costco store. And on my way to bread section, I remembered that I was running low on fish and that I’d been hankering for some fish. So I stopped at the meat section. I grabbed my chicken – a package each of thighs and breasts – then grabbed one package of salmon. My planned spend of $40 turned into $119 in the blink of an eye.

How did it happen so fast?

Easy! I left my house. And while I was ought spending as planned, I remembered other things that I needed. Since I was already there, didn’t it make sense to spend my money right then and there on the things that I needed instead of making a second trip another day? Did it really matter that I hadn’t planned to spend an extra $79 that?

When I want to save money, I just stay home on most days of the week. This way, I know in advance that I’m going to be spending money on those days that I do leave the house and I can plan for it.

Stay Off the Internet

At home and outside is a highly effective situation in which I don’t spend money. Indoors, there’s a lot more advertising coming at me. I gave up cable in 2015 and switched to streaming services. Cutting the cord eased the pressure on my wallet, and streaming services deliver the same quality of TV as cable. Sometimes it’s even better. I’m always a year behind on Grey’s Anatomy, but that’s okay. It’s just TV – it won’t go bad if it’s not consumed right away. As a result of my choice to cut the cord, the only advertising I see comes in the form of embedded marketing. Heaven help me if I go anywhere else online!

Nearly every website has some kind of advertising! This shocks absolutely no one. However, what I’m finding is that the advertising is getting to me. I used to be able to block it out, but now… not so much. Thanks to the ads on multiple pages that I visit, I’ve come to discover that my life simply won’t be complete until I have a pergola & composite deck installed at my house and buy some brand-new patio furniture. Can you believe that I’ve lived this long without these things?

I’d thought my sense of apprehension about the future was due to climate change, severe income inequality, and deeply embedded social problems. Turns out, those slight yet ever-present bad feelings in my tummy were due to the fact that I don’t have a backyard worthy of a magazine cover on Home and Garden. If I just spend some money to make my backyard look great, then I will be happy.

Thank Deity-of-Your-Choice for the advertisers who planted this idea in my head! <sarcasm off!>

If I want to save money, it’s best if I just stay off in the internet and avoid the ads.

Use the word “no”… a lot!

I’ve spoken before about the importance of prioritizing what you want from your life. This way, hopefully, you spend your money on the things that matter most to you. After all, you work hard for your money. When you spend it, that money should be working hard for you too.

The only reason that I haven’t run out and bought myself an even prettier backyard is because I know that there are more important things for my money to do. I still plan to travel. That’s a little luxury that’s going to cost me more than it did pre-pandemic. Flights, hotels, food, souvenirs – I want these things more than I want a pretty place to sit while mosquitoes eat me alive.

The word “no” is tiny but tough. It’s a powerful little thing! I say it to myself when I want to stop at the drive-through instead of eating the food in my own fridge. That little trip to Costco I mentioned before? It could’ve been a $200 wallop to the wallet, instead of only $119. My store still has some lovely gardening planters that I’ve had my eyes on for a little while. And there were so many lovely, delicious things in the bakery. I told myself “No!” instead of filling up my cart.

Keeping focused on my priorities makes it a lot easier to say “no” when it’s required.

Looking back over my life, there is only one time that I regret that I said “no” to myself. My second cousin had invited me to her wedding in Paris. I didn’t know her very well and accepting the invitation would’ve meant travelling to Europe twice in the span of 4 months. My budget simply couldn’t swing that kind of travel, so I had to decline the invitation. After seeing the wedding photos and how stunningly beautiful everything was… <big sigh goes here>… Well, everyone has a regret or two, right?

For the most part, I use the word “no” a lot when I want to save money.

So that’s it. Those are my simple ways to save money. Take what you need from this post, leave the rest. The choice is always yours. If these rules don’t work for you, that’s okay. I’m sharing my bits of wisdom in the hopes that they help. You may just need to come up with your own rules, habits, mantras, incantations, spells, whatever in order to save your money.

Just Start Today

This is going to be a short post. I want you to start funding your dreams today.

Yes. Today. Start today. Don’t wait until tomorrow. If you’re reading this post on your computer or your phone or your tablet, then you’re capable of going to your bank and opening an account. Or you can go to a different bank and open an account. It truly doesn’t matter.

Open the new account. Set up an automatic transfer to fund the new account. Start with a $1 per day. That’s a weekly transfer of $7, or a bi-weekly transfer of $14. If $1/day seems ridiculous, then start with $5/day. Again, that would be $35 per week or $70 every two weeks. Again, the choice of how much to transfer every day is yours but you have to start today.

If you’ve been here for any length of time, you know that I like to preach that you should identify your priorities first. I’m starting to waver on that. Priorities are extremely important, but many people have a lot of trouble identifying what they hold most dear. If you’re a person who doesn’t know what they want, then you should still be saving and investing your money. It might take you 5 years to figure out what you really want, and that’s okay. Waiting 5 years to start saving and investing is not okay. That’s 5 years of time that you will never get back. It’s better that you’re saving and investing while also trying to figure out what you want.

Start today… even if you don’t know everything. You’ll learn along the way. Personal finance isn’t too hard for to you learn. You can learn as much as you want and at your own pace. Once the automatic transfer is in place, you’ll be setting aside money on a regular basis. As you learn more, you’ll make more informed choices for your money. You’ll grow confident in your ability to make wise decisions with your cash. Don’t wait until you feel that you’ve “learned it all” before you start saving and investing. Speaking from personal experience, I can assure you that you will never feel that you’ve learned everything there is to know.

The better route is to start today, never stop learning, and put what you learn into practice. As you know better, you’ll do better.

No one has ever regretted having a little money set aside. Life will throw challenges your way. Having money in the bank means that you can deal with the financial side of those challenges with a certain amount of ease. The time to build the ark is before it starts to rain. So just start today. Open the account – set up the transfer – keep learning about yourself and what you want your money to do for you. That’s it. Everything else is details.

Money – How to be Both Ruthless and Indulgent

First off, you should know that I’m a huge fan Ramit Sethi. He’s the author of I Will Teach You To Be Rich. One of the things he preaches is that everyone should be pursuing their rich life. According to Ramit, this involves being both ruthless and indulgent when it comes to your money. This means that you should be ruthless about cutting expenses that don’t mean anything to you. By the same token, you should indulge in those purchases that allow you to live your rich life.

I love this philosophy! It so very much aligns with my belief that you should prioritize your money in a way that brings your dreams to life. You work hard for your money. In turn, you should be spending your money in ways that satisfy your heart’s truest desires. You are the only person who knows what those desires are. Nobody else can accurately fill in the details of what you want with as much precision as you can. You should be answering the following questions every week, and taking the baby steps necessary to get to the end result that you want.

  • What brings you the most joy?
  • When were you the happiest in your life?
  • Are there things you want to see-do-explore-taste-experience during your limited time on this little blue ball we all call home?
  • How are you going to make those things a reality?
  • Do you need money to make your dreams come true? If yes, how much?

Spend Money Where It Matters Most

I’ll use myself as an example. Pre-pandemic, I loved to travel to new places. Each year, I would spend thousands on overseas trips and I did not hesitate to try new things/excursions. I had no idea if I would ever be in that part of the world again, so I indulged myself and said “Yes!” to whatever was on offer.

Saying yes to an indulgent whim was how I was able to be one of the very first visitors to a magnificent, family-owned olive farm when I was in Spain. Chocolate ice cream drizzled with extra virgin olive oil would never have touched my palate otherwise… and I am ever so glad that it did! While in Ireland, I indulged myself after casually strolling into the most wonderfully smelling leather good store in Galway and buying a beautiful wallet that I use to this day. And Italy…ah, Italia! A beautiful, glorious country where I left no carb undiscovered and drank atleast two glasses of wine each day. I said “Yes!” to everything while I was there.

How did I do that? I did it by saving money before heading to the airport. Flights, accommodation, food, and souvenirs were all paid for in advance. The spending money I took with me could be spent freely on whatever happened to catch my eye. Travel is one of those areas where I indulge with abandon because it’s important to me. A nice chunk of every paycheque goes into an account designated for travel. That way, I have money waiting for me when I get itchy feet. Travel is part of my rich life, as Ramit Sethi would say.

Stop Spending on Stuff That Doesn’t Increase Happiness

I’ll be very honest. It became a lot easier to save for my heart’s truest desires after I took a switchblade to my budget. I cut out spending on stuff that didn’t make me particularly happy. The first thing to go was cable TV.

I’m a cord-cutter of long-standing. Truth be told, I haven’t much missed channel-after-channel of nothing to watch. Nearly a decade ago, I realized that cable TV is terrible. The shows on streaming services aren’t much better, but they are definitely way cheaper. For the same quality, a whole lot less money, and slightly less variety, I could still watch TV in my spare time. I had to ask myself why I was paying so much every month for cable TV, something that I didn’t particularly enjoy? Since I’m not a huge sports fan, there was really no reason for me to pay for cable every month. So I stopped paying for it.

The second thing to go was breakfast from the coffee shop. Way back in the day, I would buy a coffee and a muffin on my way into the office. It was my breakfast, and it was only $6/day. That was $30 per week, which was $1500 per year. I planned to work for 25 years, so that’s $37,500… Wow!!! After doing the math, I realized that I didn’t want to spend that much of my life’s energy on coffee and muffins. Investing $1500 per year at 6% for 25 years yields $82,296.77. Hmmm….coffee or satisfying my deep and abiding desire to have a very comfortable retirement? Decisions, decisions!

It should come as no surprise that I choose to wake up a little bit earlier so that I could eat breakfast at home. Guess what? I’m perfectly capable of baking my own muffins and making my own coffee. Now that I’ve started doing more meal prep each week, I’ve even started making pancakes and eating a couple in the morning before I leave my house. If I can buy frozen, processed pancakes from the grocery store, there’s no reason why I can’t make and freeze my own. Who doesn’t like a warm breakfast in the morning?

Getting to my office is atleast 30 minutes in one direction. Parking that started out at $5/day years ago is now up to $25/day, depending on the location. Each year, the cost of parking goes by $1-$3. Was $5 or $6 per day really such a hardship? When I was younger, the answer was “No”… but I had to admit that spending $12/day – parking and breakfast – was $60 per week! On top of parking, I had to fill my tank more often and I had more wear & tear on my vehicle. It was very, very easy to switch over to taking transit. Believe me when I say that $108.50 for a monthly bus pass is much, much cheaper than $250 or more for monthly parking. My gas costs are much lower and traffic problems are someone else’s to manage.

In order to find the money for one of my deepest desires, I ruthlessly cut my spending in these three areas. I don’t regret my choice one little bit! Missing season after season of Survivor has not diminished my life in any way, shape, or form. (Honestly, how is that show still on the air?) As for sports, sometimes my local sports team wins and sometimes they lose. Either way, I hear all about it during the morning-after chitchat on the radio and at the water-cooler. And should my local sports team be so lucky as to make it to the final game, the one for all the marbles and a year’s worth of glory that comes with winning The Big Game, I usually watch that game at the home of a friend for the low, low price of bringing snacks and dessert.

Are You Willing To Be Ruthless And Indulgent?

You’re the only one who can honestly answer that question for yourself. Whatever you decide is up to you, since you’re the one who has to live with the answers. I’m not here to tell you how to amend your current spending. Rather, I’m suggesting that you consciously decide how to spend your money so that you can maximize its use to acquire as much of what you really, really want as possible.

If you’re already satisfied with your spending, bravo!

However, if you think your money is going to something that doesn’t get you any closer to living the life you want, then be ruthless. Cut out whatever spending that doesn’t make you happy. It’s worth experimenting with cutting such expenditure(s) from your life for a little while to see how it feels. After all, the purveyor of the whatever-it-is that you trimmed from your budget will always happily take you back as a customer. And if you find that you can live without the aforementioned whatever-it-is, then you can redirect that money towards indulging on the things that bring you the most joy.

Figure out what it is that you want most and start arranging your money so that you can get it. Being both ruthless and indulgent with your money is a very effective way to ensure that your heart’s desires become your lived reality.

When Will You Stop Grinding for More?

Personal finance is personal. Read that again. For most folks, it’s hard for them to believe that there isn’t one perfect path out there, and that they will get everything they want if they find and follow it.

Hear me now. The only universal, iron-clad rules that applies to everyone is that you must live below your means in order to have money to invest. This rule is an immutable as the sun rising in the east and setting in the west. Everything else is details.

  • When to start saving?
  • How much to save and for how long?
  • Short term goals? Medium term goals? Long-term goals?
  • Pay down down debt or invest? One before the other, or both simultaneously?
  • Spend the dollar today or spend the dollar tomorrow?

Every other decision about your personal finance is a detail that you can adjust to fit your personal circumstances.

Your Priorities are Your Choice

You get to the identify your dreams and prioritize them as you see fit. Concert tickets before down payments? Charitable donations before travel? Clothes before adopting a pet? It’s your money, so you get to decide which expenditures are most important to you. Your dreams for how you want to live your life will guide how you spend your money as you move through the world. Read that last sentence again and continue doing so until you’ve embedded it into your subconscious. Once again, for the people at the back: You are the person who gets to decide which expenditures are most important to you.

The vast majority of us do not have enough money to buy everything we want as soon as we want it. Using credit to do so is unwise.

Why is credit bad, Blue Lobster?

Well, dear One, it is bad because credit isn’t free. When a credit card bill isn’t paid off in full when the balance is due, you pay interest. Interest payments to the bank do not benefit you…unless you hold shares in the bank. Still, even if you’re a shareholder in the bank, dividend yields are less than half the interest you pay on your outstanding balance. Moral of this little side-story: don’t pay interest and buy bank shares.

Back to Priorities & Choices

You get to set the timelines for your dreams. Some dreams can be made real sooner than others. These would be classified as short-term goals, and they can be achieved within 12 months or less. Long-term goals would cover the dreams that will take more than 5 years to achieve. Anything taking more than than a year but less than 5 would be a medium-term goal. Your dreams aren’t going to be the same as mine, so your timelines will also be different.

Next, you get to create the budget for your dream. This is where you put pen to paper and determine how you’re going to pay for it. Salary? Side-hustle money? Dividends and capital gains? Royalty payments? Inheritance? Insurance settlement? Lottery win? So many options! Admittedly, some are less dependable than others but I want you to consider all of your options.

You also get to determine how much research you’ll do to achieve your dreams. This might mean talking to others who’ve already done what you’ve done and asking lots of questions. It might mean taking a few courses, or watching some videos on line, or borrowing some books from the library. If your dream is important to you, then you’ll do what it takes to make it come true.

Never Forget – You’re the Dream-Weaver!

And as the dream-weaver in your life, you get to decide when you’ve fulfilled your dreams or when they’ve changed. Yes… sometimes, dreams change. When I was in high school, I was going to buy myself a Jaguar sedan for my 40th birthday. Let’s just say that this particular dream changed – and not because I didn’t have the money to do so by my 40th. As I matured and thought about what I really wanted for my life, the Jaguar XF would not have gotten me closer to what I really wanted. If what you want no longer accommodates yesterday’s dreams, then feel free to eliminate them from your priority list.

In short, you get to decide when you’ll stop grinding towards your dreams. Life isn’t about working 24/7 until you die, particularly if you’re doing so to fulfill dreams that you no longer hold dear. Only your money should be sent out to work that hard, so that you, the dream-weaver, can take the time to relax and to enjoy and to laugh and to just be…

So, Dream-Weaver, ask yourself when you will stop grinding for more?

The Grind

Go back to what I first said at the start of this post. Personal finance is personal. If you want to continue grinding for more, then there’s no reason for you to stop. Again, it’s your life, your time, your choice.

By the same token, if you want to stop, then do so.

However, if you feel like you can’t stop, then ask yourself why. There’s no one right answer for everyone but you owed it to yourself to understand your choice and your actions. There will come a point where your investment portfolio will support all of your dreams. (This assumes that you invest the difference between what you earned and what you spent, while you are living below your means.) At that point, you can ease off the gas pedal and enjoy the fruit of your efforts. This is a fancy way of saying that you can live out the dream-life that you so painstakingly built for yourself.

If at that point, you still want to grind as hard as you did when you first started, then you owed it to yourself to understand why. Knowledge is power; self-knowledge is no less so.

One Week Closer to Your Dreams

Well, the first week of 2023 is in the bag. Either you’re one week closer to your dreams or you’re not. No need to share your response with the class, but which one is it?

Personally, I don’t do New Year’s resolutions. Any day of the year is a great time to make beneficial changes to one’s life. January 1 doesn’t hold any special power when it comes to setting priorities for how you want to live the rest of your life. That said, I do use the sentiment of season as incentive set and re-assess the goals for my life. (Since this is a personal finance blog, I’ll only discuss my personal finance goals.)

Some of my financial goals are long-term, i.e. retiring ASAP, while others are in my near future, i.e. maximizing my RRSP contribution in May or June. I find that January of each year is a good time to figure out what goals are most important to me. This way, I can focus my spending in ways that get me closer to the life I want to live.

So far, and in no particular order, my goals for 2023 include:

  • paying cash for Christmas 2023 (no credit card hangover in January for me!)
  • contributing to my TFSA and RRSP
  • taking myself to the spa for my birthday in August
  • upgrading my iPhone
  • increasing my dividend cashflow by 10%
  • using my newly-creating slush fund (shout out to Bridget Casey of Money After Grad)
  • taking lunch to work more often than not
  • doing more meal prep so there’s less motivation to choose for fast food
  • maintaining my contributions to my non-registered account
  • beef up my emergency fund to account for inflation

These are the financial concerns that are currently most important to me. And since it’s my list, I’m the only one who gets to add, amend, or remove items. By the same token, I’m the person who has to fund them too.

How I Meet My Goals

Unsurprisingly, I’ll be using sinking funds for many of my goals. As I get paid, various chunks of money will be saved in various sinking funds until it’s time to spend the money. Most banks allow you to create nicknames for your various accounts. I love this feature! Nicknames are the perfect reminder of which priorities are being funded with my money. Should I ever need to withdraw money, then I know exactly which priority is being sacrificed for some other purpose.

Let’s use Christmas 2023 as an example. I get paid bi-weekly so I have 26 paycheques coming to me this year. My sinking fund will see contributions of $50 bi-weekly, which will give me $1300 to spend on Christmas in 12-months time. Now, if I think Christmas is going to cost more than that, then I can bump the amount up to $75 ($1950) or $100 ($2600) to cover my anticipated expenses. Thankfully, my family is nearby so I don’t have to cover huge transportation costs. We’re also not too big on gifts and prefer to focus on the food, playing with the kids, and playing board games. The lower amount of $1300 should be more than sufficient to cover the anticipated costs.

By starting to save for Christmas 2023 now, I won’t be scrambling for $1300 in 11 months time. I’ll have been saving throughout the year in small chunks. When the time comes, I can spend on gifts, food, and decorations without wondering where the money will come from to pay for everything. The money will have been tucked away just for this purpose. Easy-peasy-lemon-squeasy!

Automatic transfers take a good many money-decisions off my plate every year. They allow me to fund my priorities with the least amount of stress. I achieve my goals and get what I want by following this simple 3-step formula:

  1. My employer deposits money into my account on payday.
  2. Automatic transfers whisk a good chunk of it away to fund the things that are most important to me.
  3. Whatever’s leftover is spent on the day-to-day expenses of living: shelter, groceries, utility bills, entertainment, and other little nice-to-haves.

I never have to ask myself if I’m going to transfer money from my chequing account to my various savings and investment accounts. Thanks to the power of automation, the money is siphoned away before I have a chance to spend it.

51 Weeks Left

The first week of 2023 is in the history books. Hope it was a good one for you and that you’re one step closer to living your dreams. And if you didn’t get any closer to your dreams, then take a few minutes to figure out why. Ask yourself the following questions:

  • How are you going to spend your money over the 51 weeks left in 2023?
  • Are there any financial obstacles that are preventing you from getting what you want?
  • If yes, what would it take to remove them?
  • Are you willing to bear the consequences of removing money impediments from your life?

I get it. Change is hard, and I’m not terribly fond of it either. Still, life has taught me that sometimes changes have to be made in order to get what I want. Other people will always have opinions about how I’ve chosen, or not chosen, to spend my money. Guess what? They’ll sleep just fine with their opinions, but I’m the one who has to live with my choices. I’ll consider their opinions, before I do what I think is best for me.

You’re in the same boat. My opinions on this blog are mine. You know your financial situation way better than I do so you have to make choices based on the facts of your life. After all, you’re the one who is going to be saddled with the consequences of every choice you make. Life is a series of choices, after all.

When it comes to your money, I’m suggesting that you be the one to choose what happens with it. Don’t let anyone else spend it for you. Never let anyone else put you into debt! No one else knows what is most important to you. At the end of the day, your choices with money will affect every aspect of your life. This is why you should put in the effort to articulate what you want most then craft a spending plan to achieve it.

This is the very best way for you to move closer to your dreams, and to seeing them come true.