Savers versus spenders – the great divide

Five tips to help couples bridge the gap on their financial attitudes

We’re all different when it comes to our perspectives on spending. Some people have no problem saving all their extra pennies, and some people spend what they have without thinking about the future. While differences make the world go round, conflicting thoughts on money matters can lead to tension in relationships. If you and your partner find yourselves at opposite ends of the saving versus spending spectrum, these tips can help you meet in the middle.

1. Understand each other’s differences

You’re buying a new car together. The spender wants all the upgrades, while the saver is just fine with the base model. When emotions run high, it can be difficult to see where your partner is coming from. The truth is, our Budgeting with Partnerattitudes about money are deeply rooted. Perhaps you or your partner is stingier with spending because there was less to go around growing up. Perhaps the person who is free with money gets an emotional reward from spending. Try to take a step back and discuss the reasoning behind your behaviour. It’s always easier to negotiate when you try to validate each other’s feelings, instead of assigning blame.

2. Set goals you can agree on

As a saver, it can seem irritating if your partner is constantly making purchases you deem frivolous. Creating a spending plan as a couple – with shared goals in mind – can help bring you together around common values. For example, say you agree that taking a trip overseas or buying a home is your biggest priority. You may want to consider how much you’ll need for that expense and factor how long it will take you to save that amount. With that savings goal in mind, it will probably be a whole lot easier to pass up unnecessary indulgences.

It is possible for partners with different spending styles to find a middle ground.

3. Establish a system for bill payment

When your bills roll in each month, avoid the last-minute scramble by setting parameters on who will pay each bill if you manage your finances using separate accounts. Perhaps you each cover half of your mortgage or rent, one of you pays the auto insurance and the other covers hydro. Since these expenses are generally fixed, setting up a system for handling bills up-front gives you one less thing to worry (fight) about.

4. Set a threshold for joint purchases

Every couple has a different way of structuring their finances, and sometimes, it takes a bit of trial and error. Some people keep separate accounts and split everything down the middle, while others pool all their resources. Other couples have four accounts between them: one joint for savings, one joint for everyday expenses and two individual accounts for whatever’s left (fun money). Whichever system you decide is best for you, you may want to consider setting a limit on the amount you can spend on a joint purchase without consulting each other. Discussing big-ticket purchases with your partner before you take the plunge is an easy way to avoid a disagreement.

5. Call for backup

Sometimes, reaching out to an impartial third party is the best way to solve financial disputes. I can help by talking to you about your goals and determining the best way to structure your finances to suit your needs. With a customized financial plan in tow, you’ll have a solid foundation for the decisions you make about your money.

With a common vision for your future and the right financial action plan, it’s possible for partners with different spending styles to find a middle ground.

Four things to consider before accepting your first job

As a new graduate, navigating the job market can be a challenge. After the often lengthy search and application process, you might feel accepting your first offer is the only choice. While taking the first position you’re offered may be the right option for you, there are several factors worth considering when evaluating a job offer.

Workload and work-life balance

Throughout the interview process, it’s important to ask questions that will help you evaluate the day-to-day responsibilities of the position. You’ll also want to determine the company’s policies on work-life balance.

Four things to consider before accepting your first job

Four things to consider before accepting your first job

Is this a position that requires you to be connected 24/7 and available at a moment’s notice? Will the stress-level and hours of work be compatible will your lifestyle and personal commitments? What’s the company’s position on flexible working hours? While there may be an element of ‘paying your dues’ associated with your first job, make sure the workload and corporate philosophy on work-life balance is right for you.

Culture and fit

Workplace culture is a key consideration for many millennials who want to feel their work is meaningful and not just a nine-to-five destination. If you fit that profile, it’s a good idea to inquire about things like teamwork, philanthropy and social events.

Does the organization encourage collaboration or will you be working on your own? Does the company participate in charitable giving or give back to the community in other ways? Will there be organized events to socialize with your colleagues to encourage engagement? Remember that determining the right fit is a two-way street. If you don’t gel with your prospective boss or team members, it might be worth continuing your job search.

Establishing good financial habits early in your professional career can help you stay on track for years to come.

Development and progression

While it’s generally accepted that millenials will change jobs more often than previous generations, considering progression opportunities within an organization is an important factor that can impact your future success. You’ll likely also want to consider the organization’s stance on personal and professional development.

It shows initiative to ask about your potential growth trajectory within the company during the interview process. If you see yourself in a leadership role in the future, for example, ask about the potential for in-house leadership workshops, mentorship opportunities or tuition reimbursement to help you get there.

Compensation and benefits

While salary and benefits are top of mind for most job seekers, there may be a gap in reality vs. expectations for recent graduates. In most cases, entry-level salaries aren’t very negotiable and reflect limited experience. If you know you can provide some advanced level of expertise, you may want to consider negotiating for a better offer.

If you feel you’re in a position to negotiate, make sure you can present a strong case as to what you’ll bring to the company. Non-financial compensation including vacation, benefits or bonuses are other elements that can, in some cases, be more flexible than salary. In any negotiation, make your genuine interest in the job known when asking for an increase in salary or benefits. If the offer is firm, consider asking about the frequency of performance appraisals and salary reviews.

Entering the workforce after graduation can be challenging and exciting, both emotionally and financially. When beginning your first professional job, it’s a great time to develop a financial plan that can adapt as your needs change. It’s important to consider how you’ll afford your everyday expenses while setting enough aside for the future. I can help you plan for your financial future and offer you valuable tips about topics like budgeting, saving, investing and the power of compound interest. Establishing good financial habits early in your professional career can help you stay on track for years to come.

Five important money matters to discuss with your partner

When it comes to choosing a partner, everyone has a list of qualities they just can’t live without. A recent poll, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and Discuss Finances with Partnerbaby boomer (92 per cent) survey participants.

Despite the desire for financial compatibility in relationships, money can be a source of friction for both new and established couples. While it’s best to understand your partner’s financial picture before joining accounts, engaging in regular conversation about your finances is always beneficial.

Open communication and setting clear goals for your future can help you avoid conflict on the topic, but it can be overwhelming to start the conversation if you’re not sure where to begin. Here are five fundamental money matters you may want to address with your partner.

A recent poll, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and baby boomer (92 per cent) survey participants.

1. Discuss your assets

Having a grasp on your total combined assets (including salary, savings, investments, insurance and property) is important to making financial decisions as a couple. This simple discussion is an essential starting point in making a realistic plan for savings, spending and future goals.

2. Understand your debts

Managing debt effectively is a key aspect of wealth building. It’s important to know the total amount of your partner’s debt (such as credit card, line of credit, mortgage and student loan debt), discuss whether the debt will become a joint responsibility, and determine how it will affect your budget. It’s also a good idea to discuss your partner’s credit score, as it will affect your ability to get credit as a couple.

3. Set a spending plan

Creating a joint spending plan may shine a light on any differences between spending styles – perhaps you’re a saver, but your partner opens their wallet a bit more freely. Taking account of your individual and combined monthly expenses can start a realistic discussion about how to allocate any surplus – even if it involves some compromise.

4. Strategize your savings

Defining your individual and joint savings priorities is another essential part of building your budget, and ensuring that you’re well positioned to meet your goals. It’s also important to discuss which type of savings vehicle will best suit your needs; consider factors such as your tolerance for fluctuations in the value of your investments, and the amount of time you have to invest.

5. Plan for your future

Is travel a priority for you and your partner? Perhaps you’re dreaming of buying that cottage you always wanted, or you just want to make sure you can retire comfortably. If you don’t discuss your goals for the future then it’s hard to make them happen. While your dreams may differ, starting a dialogue can help you compromise so you can set your plans in motion.

Get a second opinion

As you consider these factors with your partner, I can provide a professional opinion on the best approach to help you achieve your financial goals. I can provide a holistic assessment of your joint financial picture, and offer a variety of planning services including cash-flow planning and investment analysis.

Helping you recover from a critical illness with a plan

Coverage when it counts

You have a bright future ahead and big plans for what you want to achieve, but unexpected events can throw you off track. One of those challenges could be a severe illness. Advances in medicine mean more people survive illnesses like cancer and stroke than ever before, but recovery can be stressful.

Having a plan in place is important so if you’re faced with a severe illness you don’t have to worry as much about your finances and can focus on your recovery.

One in 2.2 men in Canada will develop cancer in their lifetime*

One in 2.5 women in Canada will develop cancer in their lifetime*

The good news is that more people are surviving illnesses than ever before.

Coverage For Uncovered Expenses

A critical illness diagnosis is stressful. It affects not only your health but the costs of a critical illness may be Critical Illness Coveragefelt financially as well. With the public medical coverage offered in Canada, you might think an illness won’t affect you financially. However, there are a number of costs that may not be covered, such as: Travel costs to get to a treatment facility gas, hotel, meals Existing expenses home and car payments, food Costs for a prolonged illness housekeeper, home care, prescriptions, renovations or residence in a long-term care facility Understanding these costs can make you better prepared for a critical illness.

Freedom to focus on recovery

A critical illness doesn’t have to change your financial plans and goals. Critical illness insurance provides a one-time payment you can use however you want. This gives you flexibility to help keep your finances on track so you can focus on recovery.

A few ways you might use the money include:

  • Supplement lost wages due to time away from work (for you or your spouse)
  • Keep up on everyday costs (mortgage, savings, food, vehicle costs)
  • Access private or out-of-country medical treatment
  • Maintain your children’s activities and pay for childcare
  • Cover operating expenses of your business

Offers coverage that may provide you with a lump-sum benefit if you’re diagnosed with one of the following critical conditions:

• Heart-attack • Stroke • Life-threatening cancer • Alzheimer’s disease • Aortic surgery • Aplastic anemia • Bacterial meningitis • Benign brain tumour • Blindness • Coma • Coronary artery bypass surgery • Deafness • Heart valve replacement or repair • Kidney failure • Loss of independent existence • Loss of limbs • Loss of speech • Major organ failure on waiting list • Major organ transplant • Motor neuron disease • Multiple Sclerosis • Occupational HIV infection • Paralysis • Parkinson’s Disease • Severe burns

Beyond financial support

A critical illness diagnosis can affect many areas of your life. You’ll likely need more than just financial support, which is why we offer access to medical support provided by Best Doctors, and emotional support through Shepell. These services can help reduce the stress of an illness so you can focus on recovery.

Best Doctors

This service provides you access to Best Doctors’ network of 53,000 physicians to help you get an expert medical opinion to find the right diagnosis and treatment information. Best Doctors can also help you find specialists both locally and internationally and ensure that your medical questions are being answered by the top specialists in that condition.

Shepell

The stress of a critical illness can be a lot to handle. Shepell offers professional counseling, family support services, registered dietitians, and more, to help you deal with the emotional impact of your condition.***

Let’s keep your plans on track

We can help you stay on track financially even if the unexpected happens. If you become ill, worrying about your finances is a stress you don’t need. Oasis, the critical illness insurance from Great-West Life, can provide financial support through a lump-sum payment, and the freedom to use that money however you’d like. You can focus on your recovery and on becoming mentally and physically well again.

For more information, call me today. 519-860-4223 

Two Incomes One Financial Household

Instead of letting money become a source of tension, couples can work together to manage household finances. Their relationship will benefit, as will their financial future.

By sharing the role, both spouses can better grasp the financial components of managing and maintaining a household. This understanding and transparency can help show the importance of avoiding ill-considered splurges.

Working together can also help couples reach their goals faster and more equitably.

The incentives

Building a budget and financial security plan and sticking to it isn’t always easy. By definition, saving means not consuming, and for many people, that doesn’t sound like as much fun. We all need goals to keep us motivated.

For younger couples, this is a fantastic opportunity to understand each other’s aspirations. It can also be a great Couple Financesequalizer. Even if one spouse makes considerably more money, decisions should be unanimous.

Cash flow – the ins and outs

Think of your household as a company, except with co-bosses. Earnings come in and bill payments go out. Whatever is left each month is profit, or in this case, savings.

Managing household expenses together in the early days of your relationship sets the foundation for lifelong financial security planning success.

Online tools make it easy to build a budget document of monthly income and expenses.

Utility bills, insurance payments, property taxes, car expenses, student loans and rent or mortgage payments will make up the biggest chunk of monthly expenses. Other household costs include groceries, keeping vehicles fuelled and insured, eating out and entertainment.

Instead of breaking down individual personal expenses, such as clothing, gym memberships and pocket money, you can set a monthly amount for each of you.

Income is the easy part. You know how much you each take home and when deposits are made. If either of you contributes to a pension plan or registered retirement savings plan (RRSP) through work, that money should be included as savings.

Joint venture

A joint bank account may be an ideal way to manage day-to-day expenses, even if one spouse looks after bill payment using the joint account.

Reoccurring bills can be paid automatically from this account. You can also set up automatic transfers to one or more shared high interest savings accounts for big ticket items like a new car or down payment for a house. Like exercising, saving money is easier when you have someone with whom to do it.

All this transparency also provides checks and balances to help prevent one partner from making a rash spending decision or putting money into an ill-advised investment.

Sharing credit

Credit cards with the highest rewards and other benefits have annual fees of $100 or more. But typically, they don’t charge extra for adding someone to the account. You’ll save on fees and your combined spending means you’re accumulating rewards faster.

You may also wish to consider having separate no-fee, low-limit credit cards. These cards can serve as a backup if one of your main credit cards is lost or stolen. Plus, it may be difficult to surprise your partner with a birthday gift if he/she has already seen the charge on a credit card statement.

Having your own credit card can also help build your credit rating score.

Sharing debt

Paying off debt offers better returns than most investments, especially high-interest debt such as outstanding credit card balances. As a family, it doesn’t matter whose name is on the debt. Paying it off should be a shared priority.

Practice makes perfect

Managing household expenses together in the early days of your relationship sets the foundation for lifelong financial security planning success. Expenses and spending are easier to track. Once kids come along, the budget will expand but the system is already in place.

Early success saving together for something special such as an exotic trip sets the stage for bigger and more important objectives – an automobile, home, kids and retirement. Understanding finances and working as a unit are essential ingredients for making money work for you to help attain financial independence.

Five Financial Steps for New Parents

While personal finances may not be on your mind (likely getting enough sleep is), here are five important steps for new parents to consider when bringing your bundle of joy home for the first time.

1. A social insurance number (SIN)

To claim children as dependants or set up savings accounts in their name, they must have a social insurance number. Most provinces offer a Newborn Registration Service that allows you to apply for a SIN. In British Columbia and Ontario, you can apply for their birth certificate at the same time.

New Parents Financial Planning

2. Baby comes first – but don’t forget about your other financial goals

Children can be costly: food, childcare and education costs are just some of the expenses you will need to add to your budget. New parents often prioritize those costs over their own financial goals, such as saving for a home, vehicle or vacation. Remember to pay yourself first and benefit from the power of compounding interest (making interest on your already-earned interest) to increase your savings.

  • Congratulations! Becoming a parent is filled with new joys, new challenges, and yes, new financial goals.

3. Start saving for post-secondary education

With the average full-time Canadian undergraduate student paying annual tuition fees of nearly $6,000+, post-secondary education can be an overwhelming expense. A registered education savings plan (RESP) can help get you closer to that goal. Not only does the money grow tax-free within the plan, but the government chips in with substantial grants.

4. Plan to protect your family’s financial security if the unexpected happens

It’s not easy to think about. But you need to help ensure your family will be taken care of financially if you or your partner died unexpectedly. Once you’ve calculated how much you’ll need to pay off your mortgage, help put your child through post-secondary school, and replace your lost income, you can approximate how much life insurance you may need.

Also, consider these basic estate planning steps for new parents:

  • Create an inventory of assets and debts and store it in a safe place that only a trusted person can access.
  • Review your insurance policies and update beneficiaries if any changes are needed.
  • Prepare a will and identify the person you would request to be the child’s guardian.

5. Budgeting for baby

When infants first come home, the financial resources you require to take care of their needs may be basic. But as they grow, previously unconsidered expenses – such as increased health insurance premiums – can surprise parents. That’s why it’s important to start your budget now. Setting up a category just for your child and logging all childcare expenses under it makes it easy to see how much you’re spending.

Getting your finances in order is a great way to manage the challenges of being a new parent. And hey, as they grow up, your child may even pick up a few tips!

Five Common Money Mistakes Students Make

With the cost of post-secondary education rising, many students are feeling the pressure to maintain good grades and a part-time job. With students facing such busy schedules, they may lose sight of the importance of financial security planning.

Here are five common money mistakes many students make:

1. Overusing credit cards

They’re a familiar sight at college and university orientation events across the country – representatives from major credit card companies offering free event tickets or merchandise if you sign up with them. While young people are often excited to get their first credit card, credit card companies know many students won’t be able to make their payments on time.

Prove them wrong by paying off your balance each month before it accrues interest. This can also help build a good credit rating, which will come in handy when it’s time to borrow money for a car or a home later on. Also, keep an eye out for a credit card that offers a low interest rate. Many student cards do.

Common Student Money Mistakes

2. Abusing student loans

Remember that, while student loans offer low interest rates and interest-free terms, they’re designed to help pay for your education, not shopping sprees. If you dip into your student loan too often, you may need to get a part-time job, which could distract you from your studies.

  • Our 20s is a tumultuous time.

3. Not thinking about career plans

Sometimes taking a degree, diploma or certification in what you love means you’ll struggle to find a job once you’re finished school. Unfortunately, an education alone may not be enough to guarantee you a job after graduation.

Talk to people who’ve graduated with the same education. How long did it take them to find a job? What did they wish they’d done differently? LinkedIn was built for this, so use it to your advantage. Boost your resume now by signing up for supplemental courses, internships, a club, or volunteer opportunities. It’s important to recognize that, while all employers will look at your education, they’re also interested in your interpersonal and leadership skills.

4. Giving out financial information

Nearly one-third of all identity thefts happen to people between the ages of 18 and 29. Only use secure networks when sharing personal or financial information. Look for “https” at the beginning of the web address to ensure it’s a secure site.

It’s also important to avoid sharing credit cards and co-signing loans with friends. They may be a friend now but they could be a financial foe tomorrow, potentially leaving you with their debt.

5. Forgoing a spending or financial security plan

Many students spend first and ask questions later – a formula for landing in financial hot water. Budgeting is an invaluable tool for helping you stay on top of your finances. It’s important to cover your fixed expenses (rent, tuition, groceries) before you allocate your variable expenses (going to the movies, dining out, etc.). Budgeting websites can really help with this by categorizing your money automatically, meaning you have one less thing to worry about. These sites can even send weekly updates on your financial situation, keeping you in the loop.

Even at this stage in your life it’s important to identify your financial goals. With my help, you can create a plan that includes saving for all the things you want to do once you graduate.

Going into debt in your 20s isn’t the end of the world; sometimes, it’s a necessity. Although financial security planning is rarely taught in school, if you have the foresight to stay on top of your finances, you’ll have a leg up on many of your peers.

Protect Your Family’s or Business Well-Being

Life is full of risks, and most we simply have to accept. But some we can do something about. Life insurance is an essential tool in protecting a family’s economic well-being if a partner or parent dies.

Life insurance is designed to pay loved ones a tax-free lump sum death benefit if you die. The benefit should be large enough to allow them to have the lifestyle and choices that your financial security plan set out to achieve.

  • Personal insurance policies represent an important part of prudent financial security planning.

The money from the death benefit can be used as needed. Some examples may be to help pay off debts, help ensure loved ones can afford to remain in the family home or pay for the children’s education. The benefit can also be used to help ensure the well-being of a sibling with special needs, or aging parents who lack adequate retirement savings.

Protect Your Family

Good business

Life insurance could also play an indispensable role in protecting a business. If you and a business partner start a company, you should each have a life insurance policy. The reasons make pure business sense.

The death of one business partner may have a significant impact on the company’s operations and life insurance can help the surviving partner manage through the resulting challenges. Life insurance can provide funds to allow the surviving partner to buy out the deceased partner’s share in the company without having to sell assets. Moreover, the deceased partner’s family receives the full amount they deserve from selling their share of the company.

Research tools

There are many online resources and calculators to help you learn about the different life insurance options and coverage needs. The large variety of options allows you to customize a policy to fit your needs, and that may include the flexibility to increase coverage as needed.

Professional counsel

Once you have done some primary research, you can consult me. Life insurance may play a starring role in your financial security planning.

Monthly Savings vs Paying the Bills

Have you ever noticed that your wallet manages to empty out no matter how much you put in there? Sometimes it feels like $80 lasts no longer than $40.

It may explain why that emergency $20 is hidden in one of your shoes. You just can’t trust your wallet.

Okay, you’re the one actually emptying your wallet, but the point remains: we tend to spend whatever is in our pockets. This offers an important lesson for the way we handle all of our finances.

Perhaps the most well-known mantra in financial security planning is “paying yourself first.” It endures because it usually works. Another well-known guiding principle is that paying down debt trumps all. But this one isn’t quite so indisputable.

Monthly Savings

The value of creating a clear spending plan

People living paycheque to paycheque are bound to feel shackled by their financial responsibilities. Even some people making a decent living think they’ll never get ahead. They need a formal process that will slow things down and allow them to put money away.

Creating a simple budget or spending plan is the first step. Make sure to pay your bills on time – especially those that keep the lights on and the water running. Preauthorized payments are a great solution. You also need to pay the rent, buy groceries, get to work and cover other day-to-day expenses.

If you have debt, you’ll need to devise a realistic schedule to repay it. But make sure you leave money aside for savings, even if it takes longer to repay your debts.

  • Putting money aside every month establishes a useful routine for efficiently managing your money.

The importance of creating sensible spending habits

Putting money aside every month establishes a useful routine for efficiently managing your money. First, it creates an emergency fund for a rainy day. Second, treating your savings as a priority allows you to start a financial security plan, the key to getting money to work for you.

Carrying non-mortgage debt is not a good thing. But even more alarming is holding that debt while not having any savings. The debt may cost you more in interest charges than your savings account is generating, but that cash gives you much-needed options.

Why setting money aside is a no-brainer

Setting aside a share of your monthly income needs to become routine. The best way to achieve this is by setting up automatic transfers to build monthly savings. If your pay is deposited into a bank account, arrange to have a set amount transferred right away to a separate place – perhaps a high-interest savings account. Once you have an ample emergency reserve, transfer some to a longer-term investment.

Your workplace may also offer a seamless way to save. Some employers will put a fixed percentage of your gross pay into a group registered retirement savings plan (RRSP). You can also tell them to deduct a certain amount of your pay. These programs may even provide a bonus amount if your contributions hit a certain threshold.

Growing your savings with automatic transfers

When your net pay increases, automatically boost the amount you transfer into savings. If you’re prudent, you may hit a point where your earnings allow you to increase your overall savings rate. The sooner you reach it, the faster your wealth can grow.

Flying under the radar

Building savings isn’t easy – after all, there are plenty of fun things to spend your money on. But watching your savings grow can be motivating. And as long as the process is automatic, your wallet won’t notice the money is missing.