Whose Wind Is It Anyway?

Sometimes we get caught in another person’s plan, which often happens because we do not take the time to make our own plans. Seneca said, “If a man knows not what harbor he seeks, any wind is the right wind.”

The very same thing applies to your financial life – without a plan, you are letting yourself be open to following another person’s plan or getting involved in financial situations you did not give any thought to making. The following example illustrates the importance of making a plan.

A friend calls you today to tell you about a great vacation deal to a lovely island for an amazing price. You did not plan on taking a trip this year and as such; do not have any money set aside for a vacation. However, this deal is too good to pass.

You know that you should definitely tell your friend “NO THIS IS NOT IN MY SPENDING PLAN” but you agree to meet her and proceed to book the vacation together. Your friend has been planning for this trip for over a year and has more than enough set aside in her vacation account.

The trip is fantastic and worth every penny paid…so you think. Now that you are back, the bills start arriving with the first one due a couple of weeks later. With no plan in place, you begin making the minimum payments. One year later and still no plan in place, you continue to make just the minimum payments on this unplanned vacation you took last year.

Your friend calls to ask whether you want to go away again since you had such a wonderful time together twelve months ago. This time you decide to ask your friend how she can afford to go away every year for a vacation. Your friend replies very nonchalantly, “Oh, I have a vacation account. I have always had one. I also have a Registered Retirement Saving Plan, as well as a Tax Free Savings account and I just opened an account to begin saving for my first home.” With that you swallow and very carefully say, “I can’t go with you this year because I am still paying off the vacation from last year.” Your friend is shocked to find out that you do not have a plan for your financial future. Embarrassed, you quickly think of an excuse to get off the phone. At that moment, a light bulb turns on in your head. You realize, for the first time, that you have allowed yourself to get caught up in other people’s plans. You have been following the gang…wherever they lead.

You decide to do the math to find out how long it will take you to pay off the remainder of your debt by continuing to make just the minimum payments.

You owed $1,200.00 at 18.50% interest and you have been paying $50.00 monthly. To your dismay you find out it will cost $281.09 in interest and 2 years and 6 months to pay it off. You vow then and there that you will never let this happen to you again. You realize that the savings you got for the deal on the vacation was much less than the interest you will be paying.

You call your friend and ask how she knew what to do and which accounts to choose. She explained that she met with a Financial Advisor at her bank but first she had to think about what she wanted and when. She said she had a plan which she took with her to the bank. Her financial advisor then helped her set the plan in action for her financial future. With this newly acquired knowledge from your friend, you decide to spend some time working on your plan. You then visit your bank to seek the proper guidance.

This is a small amount of money but it is the most common of the times that we let ourselves be caught in someone else’s plan or like Seneca said, not knowing what harbor you seek any where the winds blows will be the right place which can end up costing you so much more.

I urge anyone who is reading this and who does not have financial goals to take some time to make a plan for your financial future. Begin by asking yourself what you want and when, being careful to go over the plan several times. Your plan will require work, frequent revisions and you will need to work on it diligently and often. When you are sure this is what you want to accomplish in your financial life, then make a trip to your financial institution to make an appointment with a Financial Planner. (Remember, there will be no cost to meet with your Financial Planner at the bank.) When you arrive for the appointment, be on time and come with the financial goals you have set for your self. Take notes and ask questions, especially if you do not understand what the Financial Planner is saying. Ask them to explain or repeat themselves in ordinary terms and not use bank jargon.

Good luck and let me know how it goes!

Tessa- Marie Shillingford is the author of Controlling the Debt Monster. She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker. She is presently a Program Facilitator of Financial Literacy at JVS Toronto. Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank. During her tenure at TD Canada Trust she held various positions interacting with customers of the bank. As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com

What I taught my children about planning for their financial future.

A Five Step to Plan for Your Children’s Financially Security.
When I told you about my Mother the Entrepreneur in reply to the question, “What made you who you are?” I had no idea that it would create a flurry of interest in teaching your own children about money management, goal setting & staying focused.

So, I put the following questions out to you:

What kind of impression have you made on your children when it comes to managing money?
What are you doing to help your children set goals, work towards them and to stay focused on those goals?
I wanted the questions to make you think, tickle and titillate you…and did they ever.

Then you called, emailed and stopped me at the grocery store. You said to me, “Tell me what to do to help my children manage money successfully!” So, here is my advice to you.

The best way to help you in teaching your children is to tell you how I taught my children.

I taught my children to follow these five basics steps to financial planning using their life experiences at the time, and when they got older I told them apply these same plans. Now, I’m going to share these personal financial planning steps with you and your children.

Step one: Assess Where You Are Financially
Assess where you are financially, always know how much you own and how much you owe. Subtracting what you owe from what you own will determine your Net Worth.

Step two: Determine Where You Want To Be Financially
Set specific, measurable short term, medium term and long term goals.
 Determine what age you want to be financially independent.
 Be sure your savings are diversified. Invest in some savings, some bonds, and some mutual funds.
 Work to achieve the goals and watch your spending.

Step three: Design a Plan to Reach Your Goals
 Create a plan for emergencies.
 Keep credit at a minimum.
 Buy only what you can pay off every month.
 Start investing or continue to invest according to your risk tolerance.
 Set up a retirement plan and contribute to it monthly.
 Set up a vacation savings account.

Step four: Implement the Plan Start tracking your income and expenses using a spending form or spreadsheet.
 Talk to a Financial Advisor at your bank; choose one you feel comfortable with.

Step five: Monitor the Plan
 Use your spending plan to track your progress on your goals monthly or at least quarterly.
 Update your Net worth Statement at least quarterly, but preferably monthly.
 Make adjustments in spending as necessary if you are deviating from your plan.

The time I spent with my children talking about money and the benefits of having money to do the things in our everyday life has paid off. All my children have done exceedingly well financially and they are still continuing on the plans they set so long ago. We still discuss their plans with them once a year and make the necessary changes based on their new goals.
Teaching children about money is different in every family, as different as every child is in each family. The most important thing is not to keep family finances away from children. They need to know what the family is going through. After all, they are part of the family unit.
Academic qualifications are important and so is financial education. Without proper financial education how will our children ever gain the tools to manage their money successfully? The best time to start preparing your children is now. Financial education is not part of the curriculum in our schools, so this job is the responsibility of us, the parents.

<em>If we talk about literacy, we have to talk about how to enhance our children’s mastery over the tools needed to live intelligent, creative, and involved lives.
Danny Glover

Tessa- Marie Shillingford is the author of Controlling the Debt Monster. She is Personal Financial Planner, with a designation from the Institute of Canadian Bankers, and a Financial Counselor certified by the institute of Canadian Banker. She is presently a Program Facilitator of Financial Literacy at JVS Toronto. Tessa- Marie was employed by TD Canada Trust for twenty years in the retail section of the bank. During her tenure at TD Canada Trust she held various positions interacting with customers of the bank. As a Financial Advisor and Manager of Financial Services she led a group of Financial Advisors in helping customers of TD Canada Trust successfully manage their finances. Details of her book… Controlling the Debt Monster, can be found at http://www.controldebtmonster.com