Tag: Priorities

Have Money, Will Travel!

Last week, I was fortunate enough to travel to Ireland for the very first time. And I loved it! The Emerald Isle is gorgeous, from its rolling green hills to its beautiful canals to the innumerable cows & sheep & horses to be seen from the motorways. The people are warm and friendly, cheerful and welcoming. I learned so much about the history of this country and the perseverance of its people. I saw a cultural performance consisting of Irish dancing and traditional musical instruments. I ate dinner in a castle and enjoyed an evening of poetry. I visited the Cliffs of Moher, the production floor of the House of Waterford Crystal, and a genuine Irish pub.

The Claddagh Ring – an unmistakable symbol of Ireland

You know what else I loved about my first visit to Ireland?

That it was paid for in cash before I left home!

Yes – that’s right! I saved up my money first then booked my trip. I’ve been travelling for years. At first, it was just within North America but now I go further abroad, mainly to Europe. Yet, no matter the direction in which I point the plane, my motto has always been – have money, will travel!

Always Pay For Travel in Advance

So now that I’m home, it’s time to start planning my 2020 trip. Have I picked a country to visit? Nope. Do I know how much my trip is going to cost? Also, a firm “No.” Do I have any sense of whether I’ll be travelling in early, mid or late 2020? That’s a negative!

I am absolutely certain of one thing though. Whatever I wind up doing and wherever I wind up going, it’s going to cost me some money. At a minimum, I’ll need to pay for airfare. And since I’m in Western Canada, I can count on my airline ticket costing me atleast $1,000. If I book another trip with my preferred travelling company, then I’ll need a minimum of $2700 for my chosen package. Leaving Canada means that I’ll have to buy currency for my destination. And that might cost a pretty penny depending on the exchange rates in force at the time. And let’s not forget travel insurance & souvenirs.

The trick is to start saving for my next trip today so that I have the money when I need it. Even though I’ll charge the trip to my credit card, the money will be in the bank so that I can pay off the card when the bill arrives. Points – yes! Travel – yes! Debt – NO!!!

Next year’s travel is a short-term goal. I know that I spend a good deal of time telling you to save for your retirement and to build your own pension. However, the fact of the matter is that you have a right to spend some money on the things that bring you joy. In my case, that’s travel. And this is how I pay for my magnificent vacations each year…

Getting the Money Together for Travel in 2020

First, I rely on having a dedicated sub-account at Tangerine Bank, which is nicknamed “Travel.” (Originality is not really my strong suit.) The money that goes into this account is spent only on… you guessed it – traveling to wherever I want to go. It could be a weekend in the mountains – it could be a spa weekend in Vegas – it could be another overseas trip to a new-to-me part of the world!

Second, I’ve created an automatic transfer from my chequing account to my travel account to fund my voyages. This transfer seamlessly ensures that my short-term goal is partially funded every time I get paid. A portion of my paycheque is re-directed to my desire to see & visit new corners of the world. The more I can save from each paycheque, the longer I can afford to be away from work.

Third, I visit different websites and talk to other travellers so that I can figure out where to go next. This also gives me an idea of just how big my travel account has to be before I can travel again. It’s also a great incentive to keep my hands-off my travel funds! Travel is one of my priorities, but I’m only human. Just like everybody else, sometimes I’m tempted to spend my money on other things. (Right now, the 2019 Nissan Rogue is calling my name even though my current vehicle is more than sufficient to meet my needs.) Talking to other travellers and dreaming about my next destination keeps me from spending travel-money on non-travel stuff.

Fourth, I book my trip. I do this once my travel account has enough money to cover my flight, my package price, my insurance, and the cost of my foreign currency, if required. I generally book my trips atleast 6 weeks out. This gives me 2 or 3 more pay periods in which I can gather a bit more money for my trip.

Fifth, I enjoy myself wherever I go! I believe in carrying a heavy wallet on vacation since I have no guarantee that I will ever be back to that spot again. If something catches my eye or there’s an experience that I want to have, then I need to have the cash on hand so that I don’t have to deny myself. I want to get as much out of my travels as I can without going into debt to do so.

Have Money, Will <Heart’s Desire Goes Here>

You know your heart’s desires best, so I want you to set up your own dedicated funds so that you can achieve what brings you the most joy. Today, technology allows you to easily create accounts for saving towards particular goals. Open an account – set up an automatic transfer – save enough money for what you want – attain your goal by paying cash for it – repeat!

It doesn’t get any more straightforward than that!

The Time Will Pass Anyway

I really hate delivering bad news, but there’s no way around this. You’re not getting any younger. Time is marching on. You can fight it all you want, but the time will pass anyway. The important thing to do is focus your time, attention and energy on answering the following question – are you doing what’s necessary today to create the life that you really want?

Happily, you’re the person who decides which of your dreams to pursue. You’re the one who knows what truly delights your heart, what always replenishes your soul. You get to decide which path to follow in order to achieve the goals that you have set for your life. Every day is an opportunity for you to better understand yourself and the way you interact with the rest of the world.

Whatever it is that you want to achieve, there’s a financial cost to it. I don’t care if you want to travel, start your own business, buy rental properties, take a sabbatical, race in the Grand Prix, go sky-diving, or spend a week at home unplugged from the rest of the world. It’s going to cost you some money.

Start Saving Today

Start saving for your dreams now, even if they aren’t fully fleshed out. It hardly matters where you are in the stage of making your dreams come true. When the opportunity arrives, you should have some money set aside to chase those dreams. I accept that there are situations where money should not be the factor holding you back, but I would encourage you to minimize those situations as much as possible.

When I was 16 years old, I got my first part-time job in a grocery store. It wasn’t glamorous, nor was I well paid. If I remember, I was earning $4.85 per hour. I didn’t work a lot of hours either, since I was in school and living at home. I had to open a chequing account to deposit my paycheque, since this job existed before the days of online banking.

Even though I was 16 and I didn’t know beans from potatoes, I knew enough to open a savings account at the same time that I opened my chequing account. At the time, I’d never heard of automatic transfers. Every two weeks, I would receive my paycheque, then I would deposit it into my account with the bank teller. I would then walk over to the bank machine and transfer $50 from my chequing account to my savings account. I have no idea why I didn’t just ask the teller to do the transfer for me while I was at her wicket. Maybe I was trying to increase my step-count? In any event, I went through this process every two weeks until I got a job at a different bank and learned how to make the online banking system work for me.

“$50? Big deal!”

You’re right, Dear Reader. On its face, $50 is hardly enough for a grown-up to get excited about. It’s the kind of money that would delight a 3-year old at the toy store, but hardly enough to generate glee in an adult with adult-sized bills.

Habits are the Game-Changer

However, the importance of my story isn’t the $50. I’m telling you my story to impart the lesson that saving money has been the key to funding my dreams. I saved $50 every two weeks for years and years. What was most important was the habit of savings, not the amount. As I got older, I earned more money and I increased the amount that was set aside every two weeks. The habit stayed the same, even though the amount changed.

And once the habit was in place, it’s never disappeared. My “little savings habit” has allowed me to travel internationally, fund my RRSP and TFSA, buy a home, build an army of money soldiers, and generally partake in social events with family and friends.

I’ll be forever grateful to my parents who taught me about having dreams, creating habits, and saving money. My parents’ dream was for us to go to school, and they found a way to fund that dream. Part of the funding efforts went on behind the scenes as they invested all out Baby Bonus money instead of spending those cheques each month.

The other part of funding their dream was overt. When my brother and I were little, my father had created the habit of giving each of us $10 every two weeks from his paycheque. We would carefully fold that money and put it into our piggy-banks. Twice a year, we would empty our piggy-banks. My father would sit us down and make us fill out deposit slips for our bank. I still remember unfolding the money and clipping it together with the deposit slip before taking it to the bank. That money would ultimately go towards buying Canada Savings Bonds. Eventually, that money paid for our post-secondary education.

The Power is Yours

Whatever you dreams are, you have the power to create the savings habit now. Whether you start with $1 per day, $10 per paycheque or $50 per month, just start setting the money aside. The habit is more important than the amount. Once the habit is in place, you’ll increase the amount as you pay off other debts, as you eliminate expenses that don’t bring you joy, and as your income increases.

Create an automatic savings plan for yourself. Divert this money away from the funds that you rely on for your day-to-day needs. Use the savings habit to ensure that your precious and limited time is spent on the experiences that bring you the most joy. The time will pass anyway.

Spend Some, Save Some

This most excellent advice came to me from a highly trusted source – my mother.

While we were on our most recent vacation together, I asked her what she believed was the most important lesson to learn about money. In four words, she summed up the cornerstone of every personal finance blog I’ve ever come across: “Spend some, save some.”

For those of you who already peruse PF-oriented blogs, you’ll immediately recognize this alliterative wonder as the admonition to always live below your means. Living at your means, and living above you means, always ends with the result of not having any savings set aside for investing. My mother’s four little words are the bedrock upon which all wealth is built.

Please do not let her mantra mislead you. I can assure you that my mother is is not some penny-pinching old lady who resents the fact that she has to open her wallet. My mother loves fun! She enjoys her family and her friends – she entertains and she travels. My mother is the one who advises strangers at the casino to bet big money, if they can afford it, in order to score the big win. At the same time, my mother doesn’t have a mortgage on her home – she follows the stock market more diligently than seminary students study the scripture – she is always “finding” money that she didn’t know she had. And how does she accomplish this day after day, month after month, and year after year?

The woman lives by her mantra – spend some, save some. My parents were not rich people and they were not university-educated. They were regular people who didn’t earn big money. They had the same struggles as everyone else in raising their family and meeting their goals. When I was growing up, my father put my mother in charge of the household finances. Every two weeks, he got paid and he would sign his cheque over to her. (Back in the day, banks would cash signed cheques without too much fuss. For those of us who’ve known online banking our whole lives, trust me when I say it was a different world – today, no bank would ever do this for its customers!) When his company went to direct deposit, my father’s paycheque went straight into my mother’s bank account and they never fought about money. I’m not being cagey – my parents never had a joint bank account. His money went straight to her bank account, as did the money she earned from her job. It wasn’t until my first full-time job, as a bank teller, that I even realized that joint bank accounts were actually a thing!

So, every two weeks my mother got my father’s paycheque. And every month, she would write out what bills had to be paid. The money came in, the bills got paid, the groceries were purchased, the mortgage was serviced, long-term & short-term goals were funded. It worked like clockwork. Both of them had pensions, but they still ensured that they put money away in their RRSPs every year. They also wanted my brother and I to go to university, so every payday meant that $10 from my father’s paycheque went into our bank accounts so that we could buy Canada Savings Bonds each fall to finance our post-secondary education. As an aside, that $10 bi-weekly contribution grew to be substantial enough to cover 6 years of post-secondary for me and 9 years of post-secondary for my brother. We grew up in the 80s when inflation was high and Canada Savings Bonds were paying double-digit interest rates. Tuition was a lot cheaper in the 90s when we went to school, so our parents “little” investment plan allowed them to achieve one of their biggest goals for their family.

What other benefits came along with the “spend some, save some” philosophy?  If there was an emergency, the money was in the bank to pay for it. Renovations were made to the family home. Birthday parties took place every year without credit cards bills hanging around. There was always money for a movie and snacks with friends. Money was set aside for retirement accounts and investing accounts. (Investment accounts generated dividends that were invested, never spent!) An annual vacation was a given in our household. We spent many an hour in the car driving all over the place to visit family and friends, and to see this great big country of ours. Every few years, we’d even take a trip by airplane. The “spend some, save some” mantra meant that there was a balance between spending money now and spending money later. It also meant that there was always money somewhere: in a wallet, in the bank, in a retirement/investing/emergency account, in the change-jar in the corner of our kitchen.

We live in a world where the AdMan is always, always, always exhorting us to immediately cave to temptation. We’re encouraged to spend every penny we have, and even those we don’t, right away. Personally, I believe that the relentless tide of advertising is one of the many factors leading to the debt burdens of so many people. Adopting my mother’s mantra to “spend some, save some” and repeating it to myself every day is one way to fight back against the tide. It wasn’t until I was grown up that I realized just how well my parents managed their money – they had mastered the art how to live day-to-day while simultaneously saving money for both short-term and long-term goals. Thankfully, I’ve learned to do the same.

What about you? Have you made it a priority to “spend some, save some” in your life?

Priorities

Based on my own experience and decades of observation, I am convinced without a shadow of a doubt that priorities guide how we spend money. To paraphrase Paula Pant at www.affordanything.com, every spending decision you make is based on priorities because choosing to spend on one thing means that you’re not spending on something else. I think a lot of personal finance problems could be solved if people created their own priorities, but they don’t. Many people allow others to set their priorities for them, whether through marketing or peer pressure or societal expectations. People adopt the priorities of others and spend their money accordingly. Sometimes, this method works for them and sometimes it doesn’t.

Ideally, you create your own set of priorities and you’re in a position to pursue them with the support of your friends and family. I haven’t always been so lucky.

After I finished university and started my first professional job, my closest friends would give me a hard time about how I chose to spend my money. In short, they didn’t like the fact that I didn’t spend money on things that didn’t matter to me. They felt entitled to tell me that I “could afford it” – whatever “it” happened to be at the time. I heard their message loud and clear: my spending choices weren’t the “right” ones in their eyes. At the time, I had student loan debt. I had car debt. I owed money on my mortgage. I chose to allot my paycheque to various spending categories and I was very rigorous about paying down my debt while starting to save for my retirement. These were my priorities, and my closest friends at the time didn’t share or respect them.

Only one friend understood my priorities and supported me wholeheartedly. The vast majority of my closest friends did not. They were definitely more spend-y than I was but I couldn’t let their spending choices derail mine. What was my solution? Well, I didn’t get rid of those friends and I still spend time with them today. Over time, I simply stopped talking to them about my priorities and my money. In essence, I cut them out of the financial part of my life because I didn’t trust them to respect my personal goals and dreams. My goals were to establish a habit of saving for retirement, to pay off my student loans, to pay off my car loan, and to pay off my mortgage as fast as humanly possible. I only had so much money to work with and I wasn’t going to let their opinion that I “could afford it” derail me from focusing on my priorities. I was the only person who knew what my goals were and how I wanted to spend my money to achieve them.

Over the years, I read personal finance books and discovered the world of personal financial bloggers. It was in the books and the blogs that I found a niche where my priorities were the norm, where my goals were supported, and where strategies to achieve my hopes and dreams were shared by people who had already achieved similar hopes and dreams. As a result of what I learned from the books and the blogs, I was completely debt-free by age 34 and had achieved a solid six-figure net worth. By the time I was 40, I’d entered the double-comma club.

I also strengthened my relationship with that one friend who’d totally understood my desire to get out of debt and to pay cash for everything. We talked about money and shared what we learned. I remember when she confided to me that she and her husband would put off any and all purchases to the last possible moment in order to focus on paying off their mortgage. I was as excited as she was when they hit that milestone, just as she had been thrilled for me when I became debt-free at age 34.

It took me many years to craft a money system that funds my priorities with minimal decision-making on my part. Right now, I use automatic transfers to ensure that a portion of each paycheque is allocated towards each of my priorities.

– Retirement accounts? Check.

– Investment portfolio? Check.

– Emergency fund? Check.

– Utilities, property taxes, insurance premiums? Check

– Charitable donations? Check.

– Day to day spending? Check.

– Saving for next vehicle? Check.

– Saving for travel? Check.

– Saving for home renovations? Check.

These are the priorities that I have defined for myself and I have honed them over the years. I’ve learned to put very little weight on the priorities that others try to set for me. Their priorities won’t make me happy, but they will drain my wallet and get me into debt. I don’t want that for myself so I stick to what I know will get me closer to the life I want to live.

Over the years, there have been many times when I’ve had to re-order my priorities to ensure that I was doing what I really and truly wanted. Even today, I’m debating with myself about whether travel is more important than home maintenance.

I love travel, but I also need to renovate my basement bathroom and laundry room. These rooms aren’t in complete disrepair, but they will be if I don’t do something in the next 3 years. However, I realize that if I want to see, taste, touch as much of the world as possible then I have to get out there and do it. These priorities are both important to me right now and I see them in my mind’s eye as the two ends of a pendulum. I’ve been trying to figure out how to pay for both in 2019 and it’s just not going to happen unless I win the lottery or discover that a wildly-benevolent stranger has left me a sizeable bequest. I have to pick one priority over the other. In other words, one of the two is going to take a higher priority for me in 2019. I will still accomplish both goals, just not at the same time. I only have so much money and I refuse to go into debt, so something has to wait until I have the cash on hand to make the purchase. Right now, the pendulum is swinging towards the home renovation…but there’s a very good chance that it could swing back towards travel. All I am certain of right now is that one of my two priorities will be satisfied with the cash that I save up in the next year or so.

I’m not perfect, but I am definitely older and wiser now. I have to bite my tongue until it bleeds when I see others making what I view as “bad decisions” with their money. I remind myself that they’re spending their money in line with their personal priorities and that they’re under absolutely no obligation to have the same priorities that I do. Until they ask me what I think of their choices, I keep my opinions to myself. I do not want to do to my friends what was done to me because I didn’t like the feeling of knowing that I didn’t have their support. I don’t have to agree with my friends’ priorities and spending choices, but I do have to respect them.

The world isn’t ideal and you can’t always count on others to support your hopes and dreams. All you can do is figure out what you really want and go get it.