Tag: Priorities

Sinking Funds – Making the Most of Your Money

I’ve written about sinking funds before. They’re pools of money that are meant to be filled then emptied, as many times as you want, for as many goals as you have. You prioritize what you want to accomplish then you decide how much money goes into each one. Sinking funds are to be held separately from your emergency fund, your investment account, your retirement account, and your daily chequing account. These funds are where you hold money for your short-term goals:

  • annual premium payments & subscriptions;
  • holiday spending, birthdays & celebrations;
  • travel;
  • tuition and annual fees;
  • house down payments;
  • renovations;
  • vehicle purchases & maintenance;
  • furniture purchases;
  • annual taxes;
  • RRSP & TFSA contributions.

Sinking funds allow you to save first, then spend your money. In case you were unaware, they are highly effective at keeping you out of debt while allowing you to still earn points/cash for using your credit cards. Let’s imagine that you’re planning to take a culinary tour in 2024. Dedicate a sinking fund to that expense and start saving for that trip today. When the time comes to book it, you use your credit card, collect your points, and pay off the credit card bill in full. You can enjoy your trip without wondering how you’re going to pay for it. Sinking funds are simply fantastic!

I have to confess that it took me years to set up all of my sinking funds. The truth is that you can’t save what you don’t earn. Early on in my career, I had a lot more debt and ridding myself of loan payments was top priority. The only sinking fund I could manage to fill was the one for my annual vehicle insurance and annual property taxes.

Monthly Payments Aren’t For Me!

I’ve always hated the idea of someone being able to withdraw money from my bank account every single month. I want to be the one in charge of when money leaves my bank account. The idea of a business accidentally withdrawing a payment twice and then having to fight with that organization to get my money back makes me furious and queasy. As a result, I’ve always chosen annual payments for my insurance premiums and tax payments. My first sinking funds were for those two expenses. Any other goals were funded from my bi-weekly paycheque via automatic transfers.

Once my student loans and vehicle loan were eliminated, I re-directed those payments to other sinking funds. My next big priority was travel! Every two weeks, a chunk of money went into my travel account up to a pre-determined amount. When it was time to book a trip, the money was there. It was awesome!

Did I stop setting aside that chunk of money once it was no longer going to the travel sinking fund? No! Instead, that money was re-directed towards my next highest priority until that pre-determined amount was met. In this way, my sinking funds were funded every year and I had the money set aside to pay for what I wanted.

Homeowners Need Sinking Funds.

Eventually, I moved from my first condo to a house. Woah!!! Anyone who owns a home will agree that it’s a money-pit. There’s always something to be fixed, replaced, maintained, or updated. As soon as I moved into my house, I realized that it was definitely time for a few more sinking funds dedicated to renovations and maintenance. Since being in my house, my sinking funds helped me to do the following:

  • renovated the basement and downstairs bathroom,
  • pour a new driveway, garage floor and walking paths,
  • have trees removed,
  • have landscaping work done,
  • change my main bathroom,
  • install carpet,
  • replace windows, eavestroughs & siding,
  • pour insulation;
  • buy new furniture & electronics;
  • install a new water heater & furnace;
  • remove a shed;
  • install a sprinkler system.

Believe it or not, there are still many other things that I want to do around here. If I hadn’t created my sinking funds when I first moved in, I would be neck deep in debt and stuck on a payment treadmill. Planning out my purchases in advance allowed me to plan out my money too.

It Can Take a Few Years.

For as much as I love my sinking funds, I was never able to fill all of them at the same time. I simply didn’t have enough money. There was no way my paycheque could have paid for everything all at once when I first started. As my income grew, so did the amount that I could allocate to my sinking funds.

Some funds had to be replenished every year, so they went into a dedicated account. Insurance and property taxes come to mind. They need to be paid every 365 days so I group them together in one sinking fund. It has been filled then emptied on a regular basis for the past 30 years. Once that sinking fund is filled, my money goes towards filling my other ones.

Other sinking funds have been for one-time purchases. Trust me – it’s highly doubtful that I will be cutting down the same trees more than once. The monies for one-time purchases goes into an account where the nickname could be changed as needed. “Tree Removal” would become “New Tire Fund” or “BAC Subscription” or whatever else happened to be next on the priority list.

Finally, there are the sinking funds that were put aside due to global events. During the pandemic, I discovered a love of my own backyard. Literally! The summer of 2020 and 2021 were spent in my own yard, tending to my annuals and watering my lawn. International travel fell to the bottom of my priority list. It still kind of blows my mind that it’s been over 3.5 years since I’ve been inside an airport!!!

My point is this. You may have more priorities than money. So what? Use sinking funds to maximize the enjoyment of your money. Ensure that it’s dispersed in ways that will allow you to live your best life. Like I said before, I didn’t start out with enough money to do everything that I wanted. International travel took backseat while I fixed up my house. Fixing up my house took backseat until I was out of debt. Getting out of debt was secondary to stuffing my RRSP as best I could on my entry level salary.

The bottom line is that I had to get a few pay increases under my belt before I could increase the amount of money going to my sinking funds.

If it takes you a few years to set up all of your sinking funds, then so be it. That’s completely normal. Only the privileged can do it all at once. The rest of us have to do more strategizing. The time will pass anyway so you might as well be using your time and your money in ways that get you what you want most.

Take Action Today – Don’t Wait for New Year’s Eve!

As you may know, I’m not a fan of New Year’s resolutions. To my mind, if something is good for me, I should start doing it today if it’s in my power to do so. Waiting for some arbitrary date on which to implement something beneficial seems a little… stupid. Delaying means that I’m continuing with something not-good instead of making my life better as soon as possible.

But that’s just me. You do you as you see fit.

There are exactly 6 weeks left in 2022. You might to cast a thought or two towards the status of your money and how it’s done in the past 10.5 months. Are you happy with how you handle money? Do you think that there are areas where your habits & choices could be tweaked? If you could go back in time, would you make the same choices?

Most importantly, what have you learned about yourself from the way you use your money?

Emergency Fund

How’s your emergency fund? You really should be plumping it up. Inflation is still a bear and interest rates are going up. When the emergency lands, you’ll be grateful that your emergency fund is on the larger side. Make sure you’re adding a few dollars to your emergency fund every time you’re paid. It takes quite a while to get it to a five-figure size. Even if it’s only $5, start there and work your way up. More is usually better when it comes to having money in your emergency fund.

I have yet to hear anyone complain about having “too much money” when they’ve lost their job, or had to repair the vehicle they need for work, or had to wait for their sick leave benefits to kick in. An emergency fund is supposed to replace your income for a short-term period until you’re working again. No one really ever knows how long they’ll be out of work, so more is better when it comes to having money set aside.

And since no one ever knows when something will happen that will threaten their income, it’s best that you take action today. Do not wait for the next calamity to arrive before you start funding your emergency fund. Think of the people who lost their jobs when COVID-19 arrived in 2020. Want to bet that many of them wished they’d had an emergency fund in place to cover their bills while they were unable to earn their income?

Funding your retirement – TFSA and RRSP accounts

Maybe you’ve got a pension. Maybe you don’t. Either way, you should be saving for your own retirement. After all, a pension is simply a promise. Sadly, promises get broken. Just ask the pensioners who worked for Sears and Nortel. Those retirees did not get the money that they were promised. In short, these workers held up their end of the bargain by working for their employers for decades with the understanding that they would be paid a pension amount every month. To put it mildly, the employer did not come through on that promise.

Don’t let this happen to you! Start saving money for your own retirement, over and above whatever your employer has promised you. Every time you’re paid, shuffle a little bit of money into your personal retirement account. If you’re fortunate enough to have money for both, start with your Tax Free Savings Account and fill it up before you move on to contributing to your Registered Retirement Savings Plan. Despite their names, do not leave money in your TFSA and your RRSP in savings accounts. Invest your money in the stock market by using exchange-traded funds or index funds that are equity-based.

The sooner you invest, the sooner your money can start to grow. Take action today.

Once you’ve invested your money, leave it alone. If you’re more than 5 years away from retirement, then you’re investing for the long-term and you can safely ignore the Talking Heads of the Financial Media. The THFM are there to generate ratings for their media platform, not to give you a personalized assessment of your current financial situation. If you want that kind of attention, then hire a fee-only financial planner. You’ll pay the bill and you’ll have the assurance that her or his opinion is about your money circumstances. Again, hire a fee-only financial planner. Anyone else is probably just a salesperson who get a commission when you buy a recommended product.

Track Your Expenses

Where does your money go? How many automatic expenses go through your bank account or your credit card? How much do you spend with cash?

It’s my belief that knowledge is power. In order for you to be powerful with your money, you need to know how you spend it. Start tracking your money. Use an app. Fill out a spreadsheet. Pick up a pen and put it to paper. I don’t care what method you choose. The bottom line is that you need to know where all of your money is going.

Armed with that information, you’ll be able to figure out if your spending choices align with your life’s priorities. In other words, are you spending your money in the best way possible to get what’s most important to you?

Right now, we’re in an inflationary period. Everything is more expensive!!! The same dollar buys less today than it did last year. Given that reality, it’s vitally important that you’re satisfied that you’re spending choices reflect your goals. Unless you get a raise, it’s not like you have more money available for daily life. Winning the lottery, inheriting lots of money, and getting an insurance payout are not reliable or predictable ways to obtain more money. For most of us, we work – we get paid – we spend-and-invest our paycheques. Unless our paycheques increase, there’s precious little flexibility to get more money.

You give up time doing whatever-you’d-rather-be-doing to work and earn money. Respect your efforts enough to know where that money is going. Take action today and become intimately familiar with how, when and why you’re parting with your hard-earned money.

Slay the Debt Monster

We all know that it’s incredibly easy to get in to debt. Credit is everywhere! A few clicks on your phone, tablet, or computer and some creditor will be sending you a credit card in moments. Credit and debt are two sides of the same coin. You cannot go into debt unless someone has extended you credit. Alternatively, you can’t be in debt if you don’t use credit. See how that works?

If you have debt, then do what you can to get out. Maybe you take a second job and the paycheque from that job goes straight to your debts. Perhaps you start selling things that you don’t need or use anymore. Money from those sales goes straight to your debt. Do some batch cooking so you can cut back on eating out. There’s always the option of giving up subscriptions for a few months. Do you need all of your streaming services right now? Could you live with one of them for 2-3 months, then switch to a different one later? While they’re still only less than $20 each, if you have more than 5 streaming services then you’re spending close to $100 per month.

Take that $100 per month and throw it at your debts. Pick the smallest debt – pay it off first by adding the $100 to your minimum payment on that debt. Take that former payment and add it to the $100. Apply that payment amount to the minimum payment on the next smallest debt and pay it off. Now two debts are gone. Take those two former minimum payments and add them to the $100. Apply that amount to the minimum payment on the third smallest debt and pay it off.

This method works. You’re making minimum payments on all of your debts, except for the one that’s getting the extra money.

That’s it – that’s the post.

Hopefully, you’re doing okay. No one can predict the future, but I can promise you that tomorrow’s challenges will be easier to handle with money in the bank. Take action today and make the money moves that will help you to make your dreams come true.

We’re in the Final Quarter!

As hard as it may be to believe, there are roughly 90 days left in 2022. Does anyone else feel that life resembles a roll of toilet paper? In that the closer it gets to the end, the faster it goes? Honestly! It seems to me that we were just starting summer about 3 or 4 days ago .

Yet, here we are in the final quarter of 2022. We’re heading into Halloween, Thanksgiving, Eid, Hanukkah, Kwanza, Christmas & New Year. And for some segment of you, there are various birthdays and anniversary celebrations thrown in there too. It’s the time of year that I’ve taken to calling the Shopping Season.

You may call it something else. No matter. My only question for you is: how are you going to pay for it?

I’m hoping that your upcoming celebrations and festivities will be funded by your money pots, aka: sinking funds, rather than by your credit cards. And if you do use your credit cards, please have the money already set aside to pay the bill in full. As you know, I love my credit cards and gleefully collect points each month. However, I would shred my cards in an instant if I didn’t already have the cash on hand to pay the bill in full each and every month.

Create a plan of attack for the Money Vultures coming for your cold, hard cash … I mean, draft a strategy that allows you to enjoy the Spending Season as you want to. Retailers are still trying to make up for those sales that were lost during the pandemic’s lockdowns. They will be particularly inventive and persuasive as they try to convince you that spending is the only way to show your love. I’m not telling you that you can’t spend your money. What I’m telling you is that you should be smart about how you do so. What things are most important to you? Who are the people who deserve to stay on your gift-list? Is there anyone who should be removed from your list? Are charitable donations important to you? If so, how much do you want to donate this year?

These are the questions that you should answering as we start the final quarter of the year. If you’re paid bi-weekly, there are only 6 or 7 paycheques left in the year. Take the time to figure out how much of each will be spent on the various events that you know will be coming up before 2022 rolls into 2023.

I know people who are absolutely enthralled by Halloween and acquire the most amazing costumes every year. Other people put lots of time into decorating their homes for Christmas. There are those who have to do a significant amount of travel in order to be with their loved ones over the holidays. The Spending Season is chock-full of opportunities to spend-spend-spend on everything for everyone!

It can be a financial disaster that derails all of your other money goals. You don’t have to let that happen. Nope! You have the power to decide how you want to spend your money during the next 90 days. Do not let the AdMan and the Creditor convince you that the only way to appreciate your loved ones is to bankrupt yourself. It’s not true. The people who really and truly love you do so because of who you are, not what you buy them.

Money Mistake #1027 – Finding My Community

As I’ve mentioned a time or two, I’ve made many mistakes with my money. One of my biggest money mistakes involved how I went about finding my community. When I first started to learn about financial independence, early retirement and investing, I made two mistakes based on arrogance. First, I mistakenly assumed that everyone was as interested in it as I was. Second, I believed that I was right.

So I would talk about money with everybody and give them unsolicited advice about how they should save and invest. I cringe when I think back on how I interacted with friends and family over this topic. While I still believe my intentions were good, the truth is that I had no business giving anyone unsolicited advice. I should not have been telling anyone what to do with their money!

As hard as this may be to believe, I failed to contemplate the extremely faint possibility that other people’s priorities and dreams weren’t exactly the same as mine!!!

If you’re here reading my ramblings, then I assume that you have some interest in personal finance. After all, I’m constantly talking about using money as a tool to build the life you want. Money should be allocated in a way that allows you to obtain your heart’s truest desires, atleast the ones that can be obtained with cold, hard cash. I exhort you to only spend your hard-earned money in ways that get you closer to your highest priorities, your most important goals.

In the real world, my family and friends were not willing to talk about money with me. They viewed my discussion of the topic crass, impolite, and – probably – judgmental. Save for one or two people, they were not my money community.

It took me a long time to accept that I couldn’t discuss a topic near and dear to my heart with those I was closest to. Truthfully, I felt hurt because I thought I was offering them help. Again, arrogance played a part in my hurt feelings. I have to admit that I thought my example of how to structure money was worth emulating. After all, that was one of the main reasons why I was sharing my thoughts about money. Despite the arrogance, my hurt feelings were also rooted in the belief that I couldn’t be my true self around those I loved best. I had to hide this side of my life, this part of my personality if I wanted to be with them.

I couldn’t be real with them. That sucked.

I set about finding my community, the ones who would allow me to be authentic in this area of my life.

Time has passed, and I like to think I’m a little bit wiser. Unless specifically asked for advice, I hold my tongue when other people bring up the topic of money. One of the fastest ways to alienate others is to make them feel judged. Sadly, I admit my guilt. I did judge people’s actions with money. I had too little respect for financial viewpoints that differed from my own. Now, I keep my mouth shut unless someone asks me what I think.

And when I am asked for my thoughts, I strive to be supportive when I share. Just because I don’t share someone else’s priorities and goals doesn’t mean that they aren’t entitled to pursue them just as ardently as I pursue mine. Racing in the Indiana 500, climbing Mount Everest, or becoming the world’s best potter might not be my dream, but I will help you figure out ways to fund it if that’s what you need from me.

Thankfully, I have learned. For some people, money is to be spent on the Now because it will create joy today. For them, spontaneity demands that one be willing to spend. Other people simply view life as completely unpredictable and that tomorrow will take care of itself. Everyone brings their own history to every money decision that they have ever made. I’ve known people whose illnesses were never disclosed to me, but they have lived far longer than they’d been told they ever would. For them, planning for retirement was not in the cards because they weren’t expected to live past age 35. What would be the point of saving for a future that they would never see?

Looking back now, it is easy to see why my exhortations to save fell on deaf ears. Everyone was coming at money from their own perspective, one built on their own goals and priorities. It wasn’t for me to change their mind. However, the onus rested on me to change my own viewpoint and to find the space where I could discuss these things.

Enter the internet. I’m old enough to remember chat rooms, so that’s where I started. Then I moved on to blogs, and stumbled upon the grand-daddy of them all – Mr. Money Mustache. And down the rabbit hole I went. Though there have been many wonderful blogs over the years, I don’t remember them all but here’s a quick list of the ones that stick with me:

Finally, I had found a place where others were talking about one of my favorite topics – money. The anonymous posters of the world wide web didn’t want me to shut up when I asked questions about how they invested. I didn’t feel that they were judging me for being curious about this part of life. If anything, I felt like I’d found my tribe, such as one can on this particular platform.

So I read more and more, learning a lot about so many things related to money: CoastFI, real estate investing, the housing bubble, geoarbitrage, early retirement, investment styles, crypto, income inequality, etc… I even found blogs that spoke to high income earners and opened my eyes to how their concerns differed from mine. The blogs that really got me thinking were the ones looking at the intersection of money and social justice. Once your personal needs are met, aren’t we ethically obliged to make the world a better place instead of engaging in further consumerism?

These were things that I could never have discussed with 98.5% of the people in my real life. It felt good to have found my community, even if it was online.

If it had to do with personal finance, I probably spent a fair amount of time reading about it and figuring out if it would work for me.

Finding my community online also helped my relationships in real life. I knew there were others I could talk to about money. That meant I could talk about everything else with family and friends. There was space for me to wonder why they weren’t interested in early retirement, automatic savings plans, the management expense ratios of mutual funds vs. exchange-traded funds. I was able to unload my thoughts about money elsewhere, with people who shared my financial point of view. That meant I didn’t have to work so hard to persuade my inner circle to share it too. I listened to them instead, and learned how they wanted to approach their finances.

And you know what? It was good for me, for our relationships. Their viewpoints helped me to improve my money-choices. I loosened the reins a tiny bit. An impromptu ice cream cone at the park wasn’t going to result in an impoverished dotage. However, it would create a great memory about a summer afternoon with loved ones. Watching how my family and friends spent their money, and the joy it brought them, forced me to question my own choices. Slowly, I realized that I had to find a balance between today and tomorrow.

Finding my community has been fantastic! I need not agree with everything every person posts online, but I have found like-minded people with whom to have discussions. As I’ve gotten older, I’ve also found people in real life who share my interest in money. I no longer need to change the hearts and minds of my family and friends on the topic of money. Finding my community has allowed me to be my authentic money-self without alienating those whom I love best.

Taking Stock & Making Tweaks As Necessary

One of the ways to ensure that you meet your goals is to review your progress along the way. Doing so involves taking stock and making tweaks as necessary. No journey is perfect for all people in all circumstances. That’s simply not possible. As a matter of fact, there is no such thing as a perfect journey for anyone. There will always be challenges along the way.

That said, I’m equally convinced that there are some universal mistakes. These mistakes have the power to derail everyone’s path for a very long time if not rectified as soon as possible.

Atleast once a year, you should be assessing your progress. The gyrations of the stock market are out of your control so don’t worry about them. Continue to invest into the market through dollar-cost averaging (my personal preference) or through lump-sum investing. However, you should be taking stock of the things that are in your control and tweaking them as necessary.

  • Have you increased the amount you’re investing from your paycheque?
  • Did you set up an automatic transfer from your paycheque to your investment account?
  • Are you eliminating subscriptions that you never use so that you stop wasting money?
  • Do you track your expenses so that you know exactly where all your money is going?
  • Have you ensured that the MERs you’re paying are all under 0.5%?
  • Are you using a no-fee online bank account so that you don’t have to pay service charges?

In addition to controlling what you can, you should also assess whether you are making any of the following mistakes. And if you are making them, then take the necessary steps to stop. Eliminating these mistakes from your life will allow your money to grow faster so that you can live the life you want.

Again, this is a personal finance space so I try to stick to personal finance topics. Here we go.

Mistake #1 – Never Getting Started

It’s hard to build wealth if every nickel is spent. In order to invest, you need to live below your means and send a portion of your paycheque to your investment account. You can start low and work your way up.

When I was still living in the bosom of the family home, I was able to send $50 to my savings account every 2 weeks. My parents were paying for the big stuff, so I had a leg up on that front. Once I moved out and started working, it was far harder to save that $50 every two weeks. However, I was used to it so I kept doing it even though all of my expenses were on my shoulders at that point. The savings habit had been ingrained.

Start today, where you are. If you can only set aside $5 for investing, that’s better than $0. You’ll increase the amount as you’re able. When a debt payment is finally gone, direct 80% of it to your remaining debts and send the other 20% to your investment accounts. There will come a day when all your debts are gone. Those former debt payments are yours to invest and spend as you see fit.

Mistake #2 – Paying Higher MERs Than You Should

Should is one of those words that invokes judgment. Good. You should be ashamed of yourself for paying more then necessary for your financial products. If there’s a mutual fund that charges a 2% MER and an ETF that charges 0.35%, and they’re both invested in the same things, then use the ETF to build your investment portfolio. Paying an extra 1.65% seems unimportant but it’s a serious blow to your ability to build wealth for Future You. Higher MERs compounded over long periods of time result in the eventual loss of hundreds of thousands of dollars from your portfolio. Money that could have been left to compound over decades was instead paid to someone else via MERs.

Mistake 3# – Failing to Master Your Credit

This one is tricky. Everyone needs credit at some point, but staying out of debt is extremely important if you want to build wealth. It’s extremely hard to invest money if those same dollars have to be sent to a creditor for a past purchase. Maybe you have student loans, credit card debt, veterinary debt, car loans, personal loans to family & friends. It doesn’t matter.

You need to get rid of it. Credit is a tool. It’s also the only way to go into serious, crippling debt if it’s not used properly. Always be very, very cautious about using credit. Pay the bill in full every month. If you can’t do that, then don’t use credit. Get a promotion to increase your income. Find a second job. Start a side hustle. Sell your stuff. Eliminate the fat from your budget and only spend on needs. Do what you have to do to pay cash.

Getting into serious debt is very easy. Getting out of it is very, very hard.

Mistake #4 – Ignoring Your Priorities

Just like the rest of us, you have one precious life. How do you want to spend it? Is there something that’s very important to you? What do you want to accomplish, experience, see & do before you shuffle off this mortal coil? How do you want to spend your time?

Once you have answers to these questions, you’re better able to plan how to spend your money.

Here’s the thing. It won’t always be easy to stick to your plan due to the influence of others. You have family and friends. They love you and they want to spend time with you. So they invite you to do stuff with them – concerts, travel, sporting events, poker night, whatever. And you love your family and friends so you want to be there with them too.

I’m not suggesting that you always say no to invitations, but I am warning you that it won’t always be easy to stick to your priorities. If you’re trying to get out of debt, others in your life might not understand why that’s important to you. Maybe you’re saving to pay cash for a used car. Others might try to persuade you that “everyone” has a car loan so why are you trying to be different?

Now You Know

When you know better, you do better. If you see yourself making mistakes, stop making them. They’re only harmful or fatal to your financial goals if you allow them to continue. Once you’ve rectified them, then you’re moving closer and closer to the life you want for yourself.

You’ve got nothing to lose by spending a few minutes each year taking stock and making tweaks as necessary.

Time for a Mid-Year Check-up!

Tempus fungit. It’s a Latin phrase that means “time flies”. Truer words have never been spoken, in any language. It’s already the middle of 2022. How is your money doing? Are you on track to meet your financial goals? If you don’t know the answers to these questions, then it’s time for a mid-year check-up.

Emergency Fund

You need not share your answer with the class. However, you definitely have to be honest with yourself. Have you had to dip into your emergency fund this year?

If yes, then I hope you’re taking steps to refill it. Trust me when I say you’ll have another emergency at some point in the future. Emergencies don’t do your the courtesy of giving you fair warning. They happen unpredictably so you need to replace any monies that you’ve used from your emergency fund this year. Make it simple on yourself. Set up an automatic transfer so that you’re sending $50 or $100 (or whatever your budget will allow) to your emergency fund every time you get paid. If you already have an automatic transfer in place, increase it by $50-$100, or by whatever amount your budget will allow.

If no, then add another $1000-$3000 to your emergency fund. In case you’ve been living on another planet for the past few months, allow me to be the first to say “Welcome back! We missed you! Oh, and you should know that inflation is up 7%-8%. This means that your emergency fund needs to be a little bigger since paying for your emergency just got a little bit more expensive.”

Achieving Your Goals

Cast your mind back 5.5 months to early January. What were your financial goals for 2022? Are you on track to achieving them?

Assess your spending for the past 6 months and determine if your money choices got you closer to, or further from, meeting those goals. Congratulate yourself if you’ve met some or all of those goals already. You did the work so you deserve some recognition of your efforts.

On the other hand, maybe you haven’t been able to meet your financial goals. Do you have any idea why? To answer this question, you must assess your spending to date. The most efficient way to complete this assessment is to review your expenses.

I hope you’ve been tracking your money, whether on a spreadsheet, via an app, or with a pen & paper. Myself? I’m a spreadsheet person. The method really doesn’t matter. Tracking your expenses clarifies whether your spending habits are aligned with your priorities.

And if you haven’t been tracking your expenditures until now, then you should start. Every time a nickel leaves your wallet, record its destination. No one has ever been harmed by knowing where their money goes. Information is power. Seeing a written record of where you’ve spent your money will assist you to align your money with your most important objectives. At the very least, you’ll be able to determine if you’re sacrificing your goals by spending money on that which you’ve decided is less important to you.

You can only spend each dollar once – either it goes to your goals or it goes to your not-goals. The choice is yours.

Check your subscriptions

Summer is here. And it will be gone far too soon. Maybe you’re spending more time outside. If that’s the case, maybe you want to eliminate some of your subscriptions for the next few months. I cut the cord several years ago, but I continue to use other streaming services. Now that I’ve got my garden going, and have many little chores to attend to after work, I could probably cut those services from my budget for a few weeks. It wouldn’t hurt me. I’m very, very, very confident that the service providers will happily take my money in the fall when I move back inside.

You know yourself better than I do. Could you live without some of your subscriptions for a few weeks? No one is telling you to give them up forever. I’m simply suggesting that you live your life without them for a few weeks while you’re doing other things that don’t involve staring at a screen and scrolling endlessly for something to watch. Again, it’s your money so you get to decide how to spend it. I’m simply nudging you to consider whether it’s a waste of money to pay for those subscriptions during the summer if you’re going to be outside soaking up the nice weather while it’s here.

Cut yourself some slack.

No one is perfect. And this goes doubly so for money decisions. You’re doing the best you can with what you know. There are other things going on in your life and they’re probably taking up a lot of your time, energy, and attention. It’s not always easy to pay attention to your money, even though you know it’s important. I get it. I’ve been there too. However, I promise you this – when you know better, you do better.

This mid-year check-up is meant for you to identify any areas that might need some effort. If you’ve veered off-path, then you can course-correct sooner rather than later. Make tweaks as needed, then go back to the business of building the life that you truly want for yourself.

Spend Your Money on What You Love!

Today, I’m encouraging you to spend your money on what you love. The beauty of personal finance is that it is uniquely specific to what each individual needs and wants. There are general, overarching financial needs that everyone has – think emergency funds, retirement accounts, and just-for-fun money. Everyone who is alive needs to have these in one form or another.

However, my just-for-fun money will be spent very differently than how my family & friends spend their just-for-fun money. This is why I want you to pay very close to attention to what makes you happiest, and then I want you to spend your money on what you love.

Not so fun fact – inflation in Canada is up 6.7% from where it was last year. Boo!!!

A very fun fact – spring has sprung in my corner of the world. Yay!!!! In a few short weeks, I’ll be shopping at a number of greenhouses, picking up various annuals and containers and fertilizers and stakes and nozzles and potting soil… You get the idea. I’m an amateur gardener, and I love the anticipation that comes with the start of the gardening season. One of my favourite ways to spend my money is on flowers. As a matter of fact, I’m taking a container gardening course tomorrow at a local greenhouse.

When I’m feeling a little blue, I visit another greenhouse and tour their gardens and stroll their aisles. Of all the greenhouses I’ve visited, this is the one where I’m most like to find all of the plants I want in one place. One of my favourite greenhouses isn’t particularly large but they have the most spectacular geranium selection I have ever seen in my life. And it was the only place where I found sweet potato vine when I needed it. It is one of my happy places!

My garden is a work in progress.

For me, it is very easy to spend my money on my flowers. I’m trying my hand at planting perennials, since that’s the frugal way of doing things. Last year’s tulips are emerging and I hope to see some blooms very soon. It took some doing but I finally found some hollyhocks for the south wall along my garage. My fingers are crossed that they come back this year. Due to some landscaping work, I had to transplant several established perennials – hostas, balloon flowers, peonies – last year. I’m holding my breath that I didn’t kill them in the process!

Perennials are a frugal gardener’s friend. A one-time investment can yield years of enjoyment. There are spots in my garden where I dislike trying to plant new annuals every year. If I can get my perennials well-established in those spots, my knees and lower back will thank me…. and I’ll have something beautiful to look at instead of just dirt.

However, I’m becoming a huge fan of container gardening too. Elevated planters have been a game-changer for me. Waist-high and arm-length wide, these wonderful creations allow me to comfortably plant, fertilize and water my wee baby plants while standing. I’m in a zone 3, so I can only plant annuals in these planters but that’s okay by me. While I’m a big fan of perennials, I’m an even bigger fan of annuals – petunias, coleus, begonias, geraniums, zinnias! These are my darlings. They’re so colourful! If I don’t particularly enjoy a colour one year, then I simply don’t buy it the next year. Annuals flower for the whole season, while perennials only flower once. They’re all beautiful but there is nothing more satisfying to me than to watch my annuals bloom continuously all summer.

Indulge me for a moment…

These are my beloved ballon flowers. I started with 2 blue plants, and the white ones came up a few years later. Fingers crossed that they survived my transplanting efforts!
Tiger Lily!
Begonia… my new favorite.
Beauty without a name… maybe a peony?
Hostas!
Pink Peony Perfection!
Coleus – petunias – begonias!
Purple & Pink Petunia Profusion!
A tower of petunias!
Another begonia
Tiger lily in full bloom!

Back to spending your money on what you love

So I’ve been in my current home for 18 years… wow! That seems like a long time, but I swear I just moved in a few days ago. Anyway, ever since my first summer here, I’ve been tinkering with a few new flowers each season. Though I still don’t have a formal gardening plan, I’ve enjoyed the show each year. There are so many beautiful and varied things to try. I’m like a kid in the candy store when I visit my greenhouses!

Today, I’m at the point of seriously considering the benefits of hiring a landscape designer and a crew to build some flowerbeds for even more perennials and some raised beds for my annuals. The only drawback I see to this option is the cost. It won’t be cheap. Yet… the fact remains that I likely won’t regret spending my money on this particular want. I have a great big backyard, that’s currently just grass. Gardening is a great hobby, one I can enjoy for the next 20+ years barring any physical limitations. It’s a way for me to get outside and enjoy all the spots of my property. I’m thrilled to see things bloom, and I like the idea of helping pollinators get what they need to stay alive.

One of the reasons that I sacrificed a few experiences when I was younger was so that I could fully fund my RRSP and my TFSA. I’d also wanted to have my non-registered account well-funded long before retirement. My financial dream had been to create a cash flow that I could live on when I stopped working. Lately, I’ve been crunching my numbers with a fee-only financial planner, and various internet calculators. They’re all telling me the same thing – that I will be okay. I’m starting to believe them!

So now it’s time for me to loosen the purse strings a little bit. I’ve enjoyed the journey up to now, but it’s okay for me to enjoy it a little bit more. So kindly wish me the best as I head to the greenhouses with the hordes of other gardeners. There are wee baby plants in my future and it’s almost time for me to get my hands back in the dirt.

So this is my non-professional and completely non-binding advice to you. Do what you need to do to ruthlessly cut out all spending that doesn’t bring you joy. Get out of debt. Fund your emergency, retirement, and investment accounts to the best of your ability. Spend some fun-money along the way, but not too much! When you’ve identified what brings you the most joy, spend your money freely. Do so with a smile on your face and joy in your heart as you spend your money on what you love!

Spending Season is Back!

If my various timelines are to be believed, Black Friday is officially next week.

Retailers are running their marketing departments ragged, now that spending season is back. They want you online and in stores, wallets open! You are the prey and their inventory is the bait. They want your money and they want it bad. The question you have to ask yourself is: do you want your money more than they do?

You’ll note that there won’t be any Black Friday sales on your rent/mortgage, your transportation costs, your utilities, your credit card bills, or your other debts. Nope! Those expenses are fixed, and no one’s giving you a break on those.

However, the sales will be on the want-to-have’s, the nice-to-have’s, the things you think you need to Keep Up With the Joneses! And I’m not claiming to be a saint in this arena. For the past 2 weeks, I’ve been debating whether to buy myself a Danish dough whisk. I’d never heard of it until I saw it being used by someone on YouTube. I own a stand mixer, a hand mixer, several other whisks, and a dozen forks. On a scale of 1 to 10, my need for a Danish dough whisk falls at -2. Yet… if I get a good enough Black Friday “deal”, I just might buy myself one.

And the retailers are collectively betting that enough of us consumers will go wild next Friday because everything will be on sale, so why not?

It’s your money so you do whatever you think will make you happiest. I’m not here to stop you from spending your money. You earned it so you get to decide where it goes.

What I am going to do is ask you if you’ve really thought about why you’ll be spending money next Friday. Is it because you’ve waited all year and this is your treat to yourself? Maybe you’ve priced out everything for those one your Christmas list, the prices really will be cheaper next Friday, and you’ll save money? Or is it that shopping on Black Friday is a family-and-friends tradition that you missed out on in 2020 due to COVID-19? Could it be that you’re one of the very luck ones for whom money is no object so you’re free to spend with abandon?

In you’re inclined to start shopping, you should ask yourself if the shopping gets your closer to or further from your long-term financial goals. Will shopping next week help you make your dreams come true? You work so hard for your money that it would be a shame for you to fritter it away on stuff. Do not spend just for spending’s sake.

Way back in pre-pandemic times, the last 5 weeks of the year were a flurry of spending. There may have been travel, whether by plane, bus, car or train. Nearly always, there was entertaining – hosting parties or attending them. Delicious holiday food was everywhere! And the opportunities to shop were endless. After all, Black Friday was quickly followed by Cyber Monday – another day devoted to plucking the dollars from your wallet.

I anticipate that the last few weeks of 2021 are going to more closely resemble life before COVID-19. People want to get back to normal, and that’s understandable. This pandemic has been awful, for any number of reasons! We all want it in the rearview mirror as fast as possible. Personally, I don’t think it’s wise to revive bad spending habits that may have been curtailed in 2020.

Yet, I’m going to urge you to consider exercising a bit more restraint in respect of your spending this year. Do you really need to derail your long-term financial goals to show love to your family and friends? Might there be a way to enjoy the holidays without spending a ton of money? Will the few moments of novelty be worth the credit card bills that will inevitably arrive?

Spending season is back, but you need not be its victim. Determine how much you have to spend. Make a list of where you want to spend your money. Stick to you list. Enjoy your time with family and friends, but don’t undermine your life’s dreams to do so.

Money Goals – Are you meeting yours?

How are you doing with your money goals?

At the time of this post, two-thirds of 2021 are in the rearview mirror. We’re heading into the final quarter of the year, so you should have a good handle on your progress. Have you been able to allocate your money towards your most important goals? If not, why not? And if your plans have been derailed, what are you doing to get them back on track before 2022 gets here?

Personally, I’m a big fan of writing things down. I love putting my goals on paper, then referring to that paper throughout the year. Of course, I’m not perfect… and some of my goals don’t get accomplished. It’s not unusual for me to look at my handwritten notes 13 weeks later and say something to myself like: “That’s odd. I don’t remember wanting to do this.”

This is not a good way to accomplish my goals. I’ve learned the following insight about myself – I have the memory of a fruit fly with Alzheimer’s.

And I’m not exaggerating by much. The major money goals are met every single year:

  • contribute the max to my TFSA in January? Check!
  • pay annual insurance premiums in one lump sum? Check!
  • invest a portion of every paycheque into my exchange-traded funds? Check!

And do you want to know why the major money goals get accomplished every year? It’s mainly due to the fact that I don’t have to think about doing anything. I’ve set up automatic transfers to take care of these goals. My paycheque is deposited to my bank account – my automatic transfers whisk money into various savings & investment accounts – my goals are met without any added effort on my part! It’s a magical, wonderful process.

Getting back to those handwritten goals that are forgotten, moments after I put down my pen…

Yes – those ones deserve a bit more attention. I haven’t come up with a perfect solution for those ones, but I’m working on it.

I’m a fan of Tangerine. This bank allows me to have 5 sub-accounts under one bank number. Each sub-account has a name. Tangerine also allows me to create Money Rules, which are fantastic! This week, I took another step towards meeting my goals. Each sub-account is named after my most important priority.

Every two weeks, a part of my paycheque is transferred into Sub-Account #1. My first sub-account is a slush fund for things that occur each year, but irregularly. Think unexpected car repairs or appliance replacement. These items have to be funded, and I would prefer not to use credit to pay for them. Also, I don’t want to deplete my emergency fund for car repair or a new fridge. My emergency fund is there to replace my income should I lose my job. Anyway, I keep a few thousand dollars in Sub-Account #1. Once I’ve hit my target, the first Money Rule kicks in.

Money Rule #1 says anything over-and-above the target amount for Sub-Account #1 is to be automatically transferred to Sub-Account #2. I use this second sub-account to accumulate money for my annual RRSP contribution, annual insurance premiums, and property taxes.

Once the target amount for Sub-Account #2 is met, Money Rule #2 kicks in. Anything over-and-above the second target amount is transferred to the sub-account of my next highest priority, until all 5 sub-accounts have been fully funded.

It’s a pretty good system. Its biggest drawback is that I didn’t put it into action until last year. Ah, well… no sense crying over spilled milk. The fact remains that I’m using it now and my handwritten goals are still being funded. Tangerine allows its customers to change the names of the sub-accounts. As one goal is met, i.e. renovating the bathroom, I usually change the sub-account’s name to the next thing I want to get done. This is why one of my sub-accounts is currently named “New Blinds”. It’s not a particularly sexy name, but it effectively reminds me of how the money will eventually be spent!

Pursue your best life!

Is anything stopping you from meeting your money goals?

Maybe your memory is like mine. If so, you have my sympathy! You have goals, but you’ve forgotten what they are. It happens. Protect yourself from your faulty memory by using automatic transfers to fund your goals.

It’s also possible that other priorities popped up and derailed your goals. You know your life better than I do, so I’m not here to judge the choices that you made. I’m simply going to nudge you towards reviewing your goals and what you need to do to meet them. And if you can’t meet them this year, that’s fine too. What isn’t fine is giving up on your goals. You’ll never meet them if you quit pursuing them. That’s just how life works.

Personal finance is personal for a reason. Everyone’s circumstances are different. If unexpected events knocked your money of the path you’d set at the start of the year, then so be it. I’m simply here to give you a nudge about not abandoning your goals, even if events of this year went in a direction you hadn’t expected. No – I can’t promise that it will be easy. All I can do is encourage you to not give up on the goals you set for yourself, since I believe that they will get closer to living the life you want to live. And if they won’t bring you closer to your dream life, then ask yourself why you created them in the first place?

Your money goals should be helping you build your very best life. At the end of the day, money is a tool. When spent in a way that brings your dreams to life, that maximizes your joy & happiness, you are putting your money to its very best use. Give me one good reason why you shouldn’t be putting your money to good use.

So if your goals have gone sideways, figure out what you most important next step needs to be. Evaluate your money goals and determine if they’re still important to you. If yes, then figure out what you need to do in the next 13 weeks to get closer to achieving them. And if the money goals of early 2021 are no longer important, then define new ones and create a plan for achieving them. You’re the only person who knows your heart’s deepest desire. The responsibility lies with you to determine the most effective way to make your dreams come true. Start right now because your best life awaits!

Are you doing what you want with your money?

Two thirds of 2021 are in the rearview mirror. You should probably spend a few minutes figuring out if you’re doing what you want with your money.

In other words, is your money moving you closer to or further from your life’s goals?

Maybe dealing with your money is just one-more-thing, and you’re dealing with enough. I get it, really! The pandemic is lasting way longer than we’d expected. The climate change consequences are no longer something to worry about later. The impacts are being seen and felt right now, every single day, all over the world. There’s a lot going on and it’s not all good, so that might make it harder to focus on mastering money.

Be that as it may, there have always been lots of significant events going on in the world. Gues what? There always will be. However, while we’re striving to make the world a better place, you still need to put your money to work. The state of the world doesn’t absolve you of the responsibility you have to Future You.

There is a straight-forward way for amateur investors such as ourselves to invest. It’s our best bet to improve the odds that we’ll be able to live comfortably when we’re no longer sending our bodies and minds to work every day.

Allow me to share my secret with you, again. Put your money on auto-pilot! You’ve got enough to worry about and investing money for your future need not be on that list. Set it up once then let the magic of computers do the rest.

  1. Set up an automatic transfer of a set amount of money from your chequing account to your emergency fund.
  2. Set up a second automatic transfer to your investment account. This can also be your retirement account.
  3. Buy units in equity-based exchange traded funds or index funds with management expense ratios below 0.25%.
  4. Don’t withdraw money from your investment account.
  5. Save. Invest. Learn. Repeat.
  6. Live on whatever’s leftover after these transfers have gone through.

Doing these few things will save your bacon when the time comes. You might feel that you want to spend all of your money right now. After all, tomorrow is promised to no one and you only live once, right? There’s a certain seductive allure to that perspective. Resist! You’re going to need money for all of the tomorrow’s headed your way. You might not know how many of them you’ll get, but the odds are very good that you’re going to need money for most of them.

The bottom line is that you should be doing what you want with your money. If you’re not, figure out why and do what needs to be done to change that situation.