I HAVE BEEN THERE – PART TWO

I noticed that the attitudes shifted and the body language changed, some of them were staring at me as though I had two heads and one eye. I asked them to put away their blackberries, their red berries and their yellow berries, which made them laugh. Finally, everyone settled down.

“Today, your topic is saving on a low income. I have changed the name, just for you, to SAVING INSPITE OF A LOW INCOME.” You see, although I have changed the name I am still not able to change the destination of your choice”, I said.

“I would like everyone to tell me what they would like to learn about saving money today, write your answer out and then you can read it out loud one by one”, I said.

There were eleven women; they read out their responses, which fell in two categories:

1. How much should we save each month?
2. How do we stop from dipping into our savings account?

I wrote those questions on the board and asked if this was what the group wanted to learn and whether there were any additional questions.

Everyone agreed.

1. How much is the correct amount or percentage to save each month?

“The answer to question #1 is = There is no fixed amount or percentage that will work for everyone.   Each person or family has a number that is unique to him or her and what works for me or for your sister or cousin cannot work for you. Your circumstances and needs are entirely yours and yours alone.  The one thing that matters the most is to put your savings before, RENT, FOOD, CLOTHES and any other expenses you might have. Your savings must be first and the amount does not have to be hundreds of dollars, you can save one dollar a week or ten dollars a month, what is important is to do it regularly and automatically.”

“The bank would never take a $1.00 a week from my pay cheque and save, that amount it is too small.”   One of the women volunteered.

1. How much should you save each month?

There is no fixed amount or percentage that will work for everyone. Each person or family has a number that is unique to him or her and what works for me or for your sister or cousin may not work for you. Your circumstances and needs are entirely yours and yours alone.  The one thing that matters the most is to put your savings before, RENT, FOOD, CLOTHES and any other expenses you might have. Your savings must be first and the amount does not have to be hundreds of dollars, you can save one dollar a week or ten dollars a month, what is important is to do this regularly and automatically.”

“The bank would never take a dollar a week from my pay cheque and put it into my savings account, that amount is too small,” volunteered one of the women.

“Yes, they will. All of our dollars are important to the bank and they want it. You see, this is how it works: the bank promises to pay us .25% on our money every month and they then take it and invest it in your brother’s mortgage at 3% which he pays every month. They give us the .25% on our money and the rest belongs to the bank. So yes, our money is very important to the bank.”

“My message to you is to begin small and have the bank make an automatic transfer from your chequing account to your savings account for the amount you want and on the date you want.  This method is called the automatic millionaire and with consistency you may actually become a millionaire one day.”

2. How to stop dipping into your saving account:

Give your savings account a name and have a purpose for saving the money.  Throughout our lives, every one of us in this room has heard our parents say, “SAVE YOUR MONEY.” They were only able to teach us what they were taught.  They passed the same information to us and we are doing the same thing they did, we save today and we use it tomorrow. Now if we begin to name our savings account and have a purpose it, it has been proven that we will not touch the money, because we have a reason for saving that money.  The Government of Canada is an awesome teacher. They have a name for every type of savings account they recommend:

1. REGISTERED RETIRMENT SAVINGS ACCOUNT
2. REGISTERED EDUCATION SAVINGS ACCOUNT
3. TAX FREE SAVINGS ACCOUNT

Savings accounts have no particular identity and can be used for different purposes by giving them a name we give them an identity.

You see, they all have a name and we know what we are saving for. We would be hard-pressed to take the money out, not because we can’t but since the purpose for the money is staring us in the face, our memory for saving the money will contribute to us leaving it alone.  Name your accounts, all the banks allow you to give your accounts a name that helps you identify the purpose of the money. Use that method and see whether it works for you.

The ladies were pleased with the workshop. The woman who first spoke stood and told everyone this was the best workshop they have ever had. They received tips they could try knowing that I too had to do it the way they now have to.

Sometimes, you have to do what you have to do to take your message across rough seas.

Tessa-Marie

MY MOST DIFFICULT WORKSHOP

Someone asked me few days ago, what is the most difficult workshop I have ever done?  I did not have to think before replying, “SAVINGS,” the look on their faces when I said, “SAVINGS” was incredulous, “Savings I cannot believe it would be savings, I really thought that it would be on managing debt and staying out of debt.”  She said. I smiled and said “when I facilitate a workshop on debt control or staying out of debt, everyone attending the workshop is ready to change or planning how to manage debt better than a family member a friend or someone at work.”

With savings I get attitude and comments such as the followingg:

• I have no money to save,
• I am living pay cheque to pay cheque,
• I can barely make ends meet with what I get paid.

The body language and expressions say the following:

• I am defeated and my situation is hopeless,
• The looks on their faces say, what can you do when I could not do a thing about saving money myself.
• Bring it on; I have trials and failures to tell you about.
• You think you know how to get me to save, well I have tried and I failed
• I am living proof that savings does not work it is for the rich and powerful.

These are just a few of the reason why a saving workshop is much more difficult to facilitate.

I now have a special way of facilitating a SAVINGS workshop.  This is how I began, I walk to the white board and write.

$3.50 Bi weekly

Invariably someone would ask “what does that mean” Can anyone guess  I reply?  Every head in that classroom will shake in the negative.   This! I reply was my very first savings, this was the amount I could save.     I was married at 22 so that was  the combined amount for both my husband and myself.

“You put the decimal in the wrong spot” someone shouted.  “No it is in the correct spot, the total we saved in those days was exactly that $3.50” The usual NO’s could be heard.

So here is the plan  we had.

1. We could only save $3.50 every two weeks that we already knew from keeping track of our income and expenses.
2. This was done automatically for us at my financial institution free of charge.
3. Every time I got a raise we  saved it, usually the raises were after taxes $3.50 every two weeks so we increased our saving by that $3.50 which meant we were now saving $7.00 every two weeks.  My husband’s raises went towards the increase in the cost of living.

We  kept increasing that amount and by the age of 29 that amount had grown to $80.00 every two weeks to a total of $7,500.00 in the bank.  Not a huge amount of money, but it was all ours.

To this day we both know and remember that our foundation or the beginning of our financial journey was that $3.50.  It was not easy at first but we had a plan and stuck to it, increasing it at every opportunity we got.

Everything we do the beginning is the hardest and it is no different with money or building the CN Tower, preparing the foundation is the most difficult; the glory is seeing the results,  like the morning you wake up with no bills or mortgage payment to make and money in the bank.

Savings need to have a purpose;  it is not the same any more we have so many distractions waiting to grab our money.  Can you remember when our parents told us those famous three words “SAVE YOUR MONEY.”  Today just saving, just for saving sake  is not good enough; savings without a reason is like emptying a huge bag of feathers in the middle of Dundas Square and coming back a month later expecting that they are still there, you would be lucky to find one soggy dirty feather.  Remember to always have a reason for saving, ask yourself this question.  WHY and WHAT am I saving for?  If you do not have a purpose for the money it will be used for whatever.

We are fortunate in Canada to be able to have as many savings accounts as we want.  I have a savings account for all the important things in my life.  Gardening, Vacationing, Holidays and Birthdays and the list can go on.  Having one savings account for everything is like an Irish stew, there are many ingredients but no distinct flavour.

Savings has its challenges but you can do it. Try it you will love the taste.

Tessa-Marie

SOME MORE SAVING FOR FAMILIES

 

 

In this section we are discussing Canada Education Savings Grant and Canada Learning Grant.

 

• Canada Education Savings Grant (CESG)
  The Canada Education Savings Grant (CESG) program provides grants to Registered Education Savings Plan (RESP) contributors until the beneficiaries reach the age of 17.

 

• Canada Learning Bond
  The Canada Learning Bond (CLB) program provides a $500 bond for children born to families who receive the National Child Benefit Supplement under the Canada Revenue Agency’s Canada Child Tax Benefit program.

 

Canada Education Savings Grant (CESG)

The Canada Education Savings Grant (CESG) is money that the Government of Canada will add to your child’s savings in a Registered Education Savings Plan (RESP).

The grant has two parts:

1. Basic Canada Education Savings Grant

The Basic Canada Education Savings Grant will give you 20% on every dollar of the first $2,500 you save in your child’s RESP each year.

Depending on your net family income, you could receive an extra 10% or 20% on every dollar of the first $500 you save in your child’s RESP each year.

 

Eligibility Information

Who can get the grant?

• All children under age 18 are eligible, as long as they are Canadian residents and an RESP has been opened for them.

1. Special rules apply if your child is between the ages of 15 and 17. See Special Rules for Children Aged 15 to 17 Additional Canada Education Savings Grant

Canada Learning Bond

The Canada Learning Bond (CLB) is $500 offered by the Government of Canada to help start saving now for your child’s education after high school.

Plus, you child could get $100 every year until he or she turns 15 years old to a maximum of $2,000!

 

Eligibility Information

• The child’s family must receive the National Child Benefit Supplement.

Children must meet the following criteria:

• have been born after December 31, 2003
• have a birth certificate
• have a Social Insurance Number (SIN)
• be a beneficiary under an RESP
• reside in Canada

Financial Information

• The children qualify for $100 Bond installments until age 15 for each year their family is entitled to the Supplement.
• The Bond is paid into an RESP established by the family.
• The first Canada Learning Bond payment includes an additional $25 to help cover the cost of opening the RESP account.

Application Information

• Visit the CanLearn Web site at Service Canada to get more details on CESG.
• Information on RESPs and CLB application procedures is available from banks, mutual fund and brokerage companies, insurance and trust companies, companies and foundations that specialize in education savings plans, and other financial institutions.

It is important and very simple to do.   Visit your financial institution and talk to a Financial Advisor, they will be happy to help you. Please take advantage of this opportunity to make your children’s education much easier.

 

Tessa-Marie

 

Related articles

• Tax-effective ways to get funds out of  RESPs (business.financialpost.com)
• Savings Plan – for Families and Children (controllingthedebtmonster.wordpress.com)

 

SAVINGS PLAN – FOR FAMILIES AND CHILDREN

While facilitating workshops throughout the city I am surprised at the number of  families, who do not take advantage of savings available for their children.   The Government of Canada continually sends out communications telling parents of the amount of money that is available for their children’s education.

This is done to encourage families with children to open Registered Education Savings Plan for their children’s education.

Today we will discuss Registered Education Savings Plan.

REGISTERED EDUCATION SAVINGS PLAN

Registered Education Savings Plan (RESP)
The Registered Education Savings Plan (RESP) allows savings for education to grow tax free in a special savings plan registered by the Government of Canada until a child named in the RESP enrolls in a post-secondary education program.

Eligibility Information

Applicants must meet the following criteria:

• have a Social Insurance Number (SIN)
• have a SIN for anyone named in the RESP as a beneficiary

 Application Information

• Information on the RESP application procedure is also available through financial institutions, such as a bank or credit union.  There are also other providers.  These institutions, planners and dealers are known as “RESP providers.”

It’s a good idea to ask some questions before choosing a Registered Education Provider.

Here are a few questions you should ask when talking with a RESP provider.

• Once I have opened an RESP, will I have to pay any fees?  If so, what are they for and how much will I have to pay?
• Do I have to put a minimum amount of money into an RESP?
• Do I have to make regular payments?
• What are my investment choices?  What are the benefits of each choice? Can the value of my investment go down?
• Can I withdraw money if I need it?  Are there any fees or penalties for withdrawing money early?
• Can I transfer the RESP to another person, or to another RESP provider?   What is the cost to transfer?
• What will happen to my savings in the RESP if my child does not continue his or her education after high school?
• Does the RESP provider limit the types of qualified educational programs that I can use my RESP for?
• What happens if I close my RESP early?
• What if my child decides to go to school part-time?
• Does the RESP provider offer all education savings incentives including the additional Canada Education Savings Grant and Canada Learning Bond?

Next week we will discuss all the other Savings available for families including the Canadian Learning Bond and the Canada Education Savings Grant.

Tessa-Marie

 

 

TEN STEPS FOR CREATING A SPENDING PLAN

                                                                                                                                      

Creating a SPENDING PLAN may not sound like the most exciting thing in the world to do, but it is vital in keeping your financial house in order.

Before you begin to create your SPENDING PLAN it is important to realize that in order to be successful you have to include all your financial details, no spending is too small to be listed.  It is imperative all spending is listed.

Ultimately, the end result will show where your money is coming from, how much it is where it is all going.

1.  First, at the top of the page write down the date and amount you bring home each week, bi-weekly or monthly.    By that I mean the amount you receive in your account which is your net pay,  this is the amount you have to live on.
2. Write down EVERYTHING you spend each day.   Most people remember their mortgage or rent payment,  but often forget the impulsive things they buy,   like a chocolate bar, the lottery tickets they buy on their way to work each morning.    I recommend that you carry a small notepad with you and write down everything you spend money on,  including lunch, magazines, and your morning coffee.    By keeping track of everything you spend money on, you will have a complete list of all your expenses, which will make it easier to create your Spending Plan.
3. Savings:  Your savings must be included in your list of expenses?  Remember to pay yourself first;  consider it a debt you owe to you.    Have your bank do your savings automatically for you.
4.  Your weekly,  bi-weekly or monthly income should equal the same as your expenses.   If your expenses are greater than your income, you will need to revamp your spending plan.
5. Once you have created your spending plan your job is to make it work for you.   What are you willing to give up, to make your spending plan work?    I do not recommend stopping or modifying your savings,  if you do you are again putting yourself last. Look at the amount you spend on groceries,  cable TV, eating out.    Groceries are usually the bigger culprit; make a list of what you already have and shop accordingly, not because it is on sale.
6. If you choose not to decrease your spending, are you prepared to take on a part-time job?    To spend more than you are making is to dig a hole while standing in the same spot,  eventually you will not be able to toss the dirt over your head and out.   You will need to go over your spending plan several times, before you get it right. Keep at it,  it is worth the effort
7.  If you have a spouse you will have to work together to produce a spending plan that will benefit both you and your partner.
8. Even if one person manages the day-to-day of the spending plan the partner should be aware of what is going on in that plan.
9. After you have your spending plan as you want it,  your next step is to implement the plan.   
10.  Set up weekly, bi-weekly or monthly meeting where you and your partner go over the plan,  you will need to visit the plan often in e beginning.    Then you can go over it at least once a month to make sure you are on tract.

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

CONSTANCE

CONSTANCE

I was out shopping the other day and when I got to the cash register the sales clerk took my purchases and then asked me the following three questions.

• Would you like to purchase these lovely gloves they are on sale?
• Would that be on your store credit card?
• Would you like to purchase a shopping bag?

To all three questions my answer was NO, after saying NO I felt someone tugging at my coat.  I looked back into the smiling face of a lady who said,

“Good for you, I can never say no”.  I smiled back and said, “I have trained myself to only purchase what I plan to purchase that day”. She replied, “I wish I could be like you”.  

I was just about to say bye to her when she said, “You are just the person I want to talk too”. She decided to forego her shopping and walked out of the department store with me.   She said, “I hope I’m not taking up too much of your time”.  I replied, “No” and thought to myself you are using NO an awful lot today.   

She introduced herself as Constance and told me she needs the help of someone who can advise her where to get an installment loan.  I explained that her best choices would be her local bank, trust company or a credit union. 

Constance then said, “I have such bad credit, I can’t get a loan from any one of these places, you see I have a payday loan and it is just killing me inside out”.   I paused looked at her with all the empathy I could muster and said, “NO” to that she said, “Yes my dear what can I do?”  I replied, “In order to help you, I would like to know more about your finances is that okay with you?”  “Let’s find somewhere to sit” I said, and then she began her story.

Constance’s’ story went this way:

“I am 70 years old and live on a fixed income of $1,133.00 monthly, my source of income is from Canada Pension, Old Age Pension and a Guaranty Income supplement.  For the past thirty years I have never held a job past probation, therefore, I do not have a company pension”.  So I said to Constance, “Can you tell me what your expenses are?”

Here are the numbers Constance gave me:

1. Rent                                                                                  $ 413.00
2. Telephone and cable        ABOUT                              160.00
3. Bay Card                                                                               50.00
4. Bus Fare                                ABOUT                              100.00
5. Grocery                                 ABOUT                              200.00

                                                               TOTAL                               923.00

I realized quickly that is was $923.00 in monthly expenses.  Although whenever someone tells me an amount of an expenditure or income prefaced with words such as, “PRETTY CLOSE, NEARLY, ABOUT, LET ME SEE and I BELIEVE”, I know right there and then that person is not managing their money properly; which means they are usually in debt, and don’t know how much they owe and how they spend their money.

I asked Constance if that was all her expenses, and if it was she still had $210.00 left.  I wanted to know what she spent the remaining on.  

Constance replies, “Oh I forgot, I’m paying a Credit Proposal of $150.00 for the next five years”. 

“Well that still leaves you with $60.00 I said, where does that go?”

“You know” she replied, some of those prefaces again I thought.  

“You mentioned a payday loan, how and when are you supposed to pay this?” I asked. 

She replied, “That’s the problem” as she held on to her head.  “You see, I borrowed $500 and I have to pay back $600.  When I pay back the $600, I do not have sufficient money left to pay my expenses and so the cycle continues, I take another payday loan for the next month and so on and so on.   If I had an installment loan, I would be able to pay a small amount every month until it is paid off”. 

I asked her “When you received the credit proposal, were you advised not to incur anymore debt?” 

To that she said “Yes but I did not have any money and started using my credit cards again”. 

 Do you have any family or friends that could lend you the $600 to pay the payday loan off and then pay that family member $55 a month over one year that would give them a small amount of interest?” 

She replied “No I can’t.  I’ve received help from both my son and my sister and right now they are unable to help me.”  Constance continued with sadness, it was my carelessness and lack of knowledge over the past thirty years which paved this road I am on.  I never thought it was necessary to save for old age; no one told me that I shouldn’t retire with credit card debt.  I believed that my Canada Pension and Old Age Pension would be enough to pay all of my expenses and I would have some left.  Do you know until I became eligible to receive my pensions I thought the amount was in the thousands?  I moved from the Maritimes to Ontario at the age of forty for a better life, now I’m not able to purchase a train ticket home to visit my family.    

The situation that Constance is in is not uncommon, I am meeting more and more people who are finding themselves in this position.   We are planning to meet again to see if together we could come up with a solution to solve her problem.

It always comes back to those five simple words:  proper preparation prevents poor performance.

It is never too early to begin to plan for your retirement, better to start sooner than later. Everyone should pay off all debt in full before retirement; retirement income is MUCH, MUCH lower than employment income.

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

My First Telephone Scam

I had just got in the door after a long day at work when the phone rang. When I answered it, the caller asked to speak with Mrs. Herd.   As soon as I said I was Mrs. Heard, the caller declared that she was calling from my bank.   ”MY BANK,” I exclaimed and she said, “Yes.”   I immediately thought about a discussion I recently had with my friend at the bank and I was concerned that something was wrong.   But, having been a banker for twenty years,  I quickly recognized this telephone scam from my previous clients’ experiences.   So I asked the caller, “How can I help you?”  I started to laugh when the caller said, “I am phoning to help you.”

All I could think about was what a coincidence this was since the next day I planned to present a short workshop to a group of seniors about telephone scams.

 I looked at the phone and saw that the caller ID was blank.  “What can you help me with?”  I said. All my tiredness had vanished and I immediately became alert as I answered.

“Mrs. Herd,  we are calling to verify some of your personal information.”

“What would you like to know?” I said.

“Well, we need to verify your date of birth,  your social insurance number,  your account number and bank address.”

“Great,” I said, “Do you need my access card number and pin number too?”

“Yes,” she said, “That would be handy as most people are reluctant to give these numbers over the phone.”

“I am a bit puzzled,” I said to her. “I do not understand why my bank would need that information?”

“Mrs. Herd,” she said, “It is just for verification.  We need to do this now and then to be sure that the information we have on file for our clients are up-to-date especially since clients do not come to the bank as often as before.”  

“What great customer service,” I said. “I am so happy that I am banking with a Financial Institution who takes the time to call to make sure they have up-to-date information on their clients.”

“What is your name?” I asked, “I did not get it when I first answered the phone?”

In the meantime,  my husband was standing next to me mouthing and flapping his arms telling me to hang up the phone.   I gave him the death stare and the large-eye look meaning for him to go away. 

The young lady said her name was Diane.   I said, “Well Diane,  I do not have the information right now and I just got home from work .  Can I call you back in say ten minutes and I will be happy to give you the information?”

She then said, “What if I give you a call in, say, 15 minutes.  Will that give you some time to get settled?”

Then I said, “You know something Diane, I find it very peculiar that my bank needs all this information especially since I am a retired employee of the bank.”

 All I heard was A LOUD DIAL TONE.

Can you imagine how a Senior Citizen would react to such a request from their trusted bank?   I know how they got my phone number.  It is listed under my husband’s name in the phone book; a good place for someone to go searching for information to commit their nasty crimes.

I am sure this woman will put my phone number on the SDNCL, Scammers Do No Call List. I am one person  they will not call again.

Please be careful. If anyone calls you saying they are calling from you bank,  just HANG UP.   Your bank has all your information and they always tell you not to tell them or anyone your Personal Identification Number.  Your bank has no need to verify your personal information and to update your information. They have it all.  

REMEMBER!  If you receive this type of call, the best thing to do tell them you are going to call the POLICE and HANG UP

Hope this helps prevent someone from being scammed.

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

REGISTERED RETIREMENT SAVINGS PLAN

This is the one investment every Canadian who qualifies should take full advantage of.

I am passionate about managing your money and controlling debt, but I am extremely enthusiastic in encouraging everyone to take full advantage of opening a Registered Retirement Savings account.

Last week I was invited to speak to a group of ladies about RRSP. They wanted to know more about it, some of them already had one but did not know much more than the upfront tax sheltered benefits.

It’s the time of the year when information about RRSP is all over the place; on Bill Boards, Radio, TV and when you turn on computer. Everyone tells you that you have till March 1^st to contribute to your RRSP to take full advantage of the tax sheltered component.

Here are two more reasons why everyone should have RRSP especially young adults just entering the workforce.

1.       FIRST TIME HOME BUYERS PLAN

 The plan works like this; if you have contributed to your RRSP for the past number of years and you have decided to purchase you FIRST HOME the Government allows you to take a maximum of $25,000 from your RRSP and put it towards purchasing your first home.

 If you have a partner, the partner is also allowed to put up to $25,000 towards the purchase of the home with fifteen years to put the funds back.   

These funds can be used during the purchase period to put towards your down payment, to buy furniture, pay your lawyer’s fees or pizza for your friends who have helped you move.  After you have been in your home for two years you will receive a notice with your income tax forms to reinvest one fifteenth of the amount you withdrew from the RRSP. 

 If you withdrew $25,000 the amount you would need to reinvest would be $1,666.67 annually but if you did it every pay day and you are paid bi-weekly the total would be $64.10 a pay.    That is a very affordable and doable plan.

It’s a big win for you. You have just given yourself an interest-free small mortgage that will be paid off  in 15 years.

 

 

  2.   RETIREMENT

 Once you have decided to stop working and you are now depending on a reduce income, you may begin withdrawing from your RRSP to enable you to maintain a comfortable life style. Because you are now retired your tax rate will be significantly lower than when you were working.

I am sure you have all heard of someone one who is quite upset that they are now paying tax every time they withdraw from their RRSP.  Let me tell you about Violet.  I met Violet a number of years ago when I worked downtown.  Violet got on the bus a few stops after me every day on our home from work. She was older than me (she told me she was 69 years old at that time) so I would give my seat to her.  One day Violet and I were riding on the Bay bus and there was a sign about RRSP and how it was the time to do it.  There was also a table that showed that if you started investing at the age 20, stopped investing at the age of 30 but leaving the investment in place and someone else started at the age of 30 and continued investing until 65 that the person who started investing at the age of 20 would have more money than the person who started at 30 and stayed invest to the age of 65.

 I remembered so well, when Violet looked at the ad and smiled, then she looked up at me and said…

 “My dear I hope you are taking advantage of the great privilege the Government of Canada have given us to save for our retirement. You see I did not open a RRSP.  I never thought of being older and that is why today I am working at 69 years old just to make ends meet. My Canada Pension and Old Age Pension is not enough to meet all my financial needs. If only I had made that decision I would have the choice of taking a vacation during the winter or staying home and just relaxing. Please do not make the same mistake as I did.” 

I had already opened my RRSP and was happy to tell her that I had.

So now when you see and hear the ads about investing for your future and you think, “Well, I have all the time in the world” remember the old saying that TIME AND TIDES WAITS FOR NO ONE. Or better still, look at the older person sitting next to you and remember Violet.  Do you want to be the next Violet?

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

Financial Planning for 2011 and Beyond

In my previous posting, I promised that I would continue this series of blogs on Financial Planning for the Novice.

With this in mind, and based on the numerous comments I received, I would like to talk to you about planning for your financial future.

When making a financial plan you need to know that although it has the big word FINANCIAL it also covers other areas of your life which is non-financial in nature but they do affect you financially one way or the other.

Financial Planning is like planning a trip.  If you are planning a trip you would know:

1.      Your destination.

2.      How you plan to get there

3.      The cost of the trip.

4.      When you want to go.

5.      The purpose of the trip.

6.      What do you plan to do when you get there?

 

How can we take this from going on a trip to taking the trip of your financial life?

We begin by taking some time to diligently follow the SMART goal concept.

• SPECIFIC: what it is you want? In as much detail as possible, be very clear.

 

•  MEASURABLE: what are you doing to acquire this goal?  E.g. you write, “I am saving in a RRSP and also non- RRSP account”.

 

• ATTAINABLE: how am I doing towards attaining this goal?  In this area you write and check on your progress.  E.g. is my savings on track? Has my bank pre-qualify me for a mortgage?

 

• REALISTIC: your goal is probably realistic if you truly believe that it can be accomplished. e.g.  What conditions would have to exist to accomplish this goal?

 

• TIMELY; when do you want to accomplish this goal? In this area you write down the date to acquire the goal. E.g. December 2012 I will own my home.



 

Goals that are written down concisely are met. Goals that you pay attention to are met. Goals that you are focused on are met.  When you set a goal you need to do daily checks; look at what you have done today towards meeting the goal.

Writing your goal down in a note-book is one of the most important things you can do.

You begin by writing the date and your name. I also write down the time of day.

This is the beginning and you can go over your goal until you are perfectly clear this is exactly what you want without a doubt. Go over the description of the goal, write and rewrite always dating the day you are making the changes.   I usually keep this very private my discussion is only with the WHO ELSE IS INVOLVE in attaining the goal

 .

If you happen to discuss your goal with someone and they are filling your mind with doubts, stop the discussion and move on. You want someone to be supportive not negative.

Next, decide when you want to reach this goal.  Be careful to be realistic; you do not want to set too short a time frame to attain this goal. This is where honesty to you comes in. Do not set a time to attain this goal that you know is not realistic. Remember this can be revisited and you can change the time frame and keep your goal.

Now ask yourself some questions again making sure to write them in your note-book.

These questions can be the following:

1.      What can I do towards reaching this goal?

2.      Can I do this all alone or do I need outside help?

3.      Do I need the help of a professional?

4.      How will attaining this goal affect my future?

5.      How do I feel when I think of attaining this goal?

6.      Am I tracking to reach this goal on time?

These questions can change at any time by the circumstances and conditions in your life.  Do not fret; think of it as if you going on a trip and coming across a road closure where you have to make a detour.  You know you will get back on track later down the road.  At that time you need to stay focus and see the goal being attain while working and enjoying the journey to get there.

Making a Financial Plan requires you to spend quite a bit of time working on your plan. When working with a Financial Planner he or she would schedule several meetings with you to go over the goals you have set.  This is no different except you are working on your own. Once your plan is in place you do not have to spend every day going over it you would first look at it weekly and then monthly until you are where you want to be.

Do not be surprise that while completing this plan you begin to see other goals you can begin to work on.  Stop and write them down, the river of goal setting is flowing freely within you, take advantage of it.

Remember that goal setting can be fun but you must remain passionate about what you want and when you want it.

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

HAPPY NEW YEAR

Happy New Year! I hope your holidays were fantastic.

My friend called on December 21^st and asked me if I would consider writing a blog to help people get on a financial plan for the year 2011 and onwards.

That seems like a tall order, so I asked my friend what made her decide to ask me to blog about preparing a financial plan.

Here are her answers:

1. I was just not prepared for the holidays as I should.
2. I believe there must be a better way to get prepared for the holidays.
3. I have no idea where to begin planning for big occasions such as the holidays or wedding.
4. I end up without any money for myself for entertainment during that time.
5. How can I avoid making costly New Year resolutions?
6. I end up using money from my household expenses to pay for gifts during the holidays.
7. In January, I am very unhappy and lost when looking at my big credit card bills.
8. During the months of January and February I need to borrow just to make ends meet.
9. For the first four months of the year I go from pay cheque to pay cheque.
10.  How can I stick to my gift list?

 

We all know that the Holidays are in December and the dates are pretty much the same, so why are so many of us not ready for the holidays? Why is it that we seem to be so surprised when it’s that time of year again? My favourite quote is, “I can’t believe it is already December.” Well, it does follow November and it’s the same every year.

Getting prepared for the holidays should start at the beginning of the New Year, using the information you have from the end of the previous year.

Here’s what I mean:

• You have all your receipts from all your purchases.
• You have a list of the people to whom you gave gifts.
• You also should have a list to your donation to the various charities you donate too at this time.
• You should also remember to add up the extra money you spent on groceries or alcohol ( it is not every month you purchase a turkey or that special liqueur)
• Remember the cost for the new party dress and shoes for the holidays.

 

So, the very best time to begin preparing for the holidays is actually in early January.

Take your time and add up all those bills. Be careful and go over them again and again. Take a break when pulling your numbers together. You might forget something so by taking a break you will give yourself some time to really get it right.

Once you are sure you have the exact amount you spent, or you are pretty close, add 10% to 15% more to make up for price increases and your new people on your list.  Personally I add 20%.

Here is an example of what I mean:

• Suppose your total expanses total $1,546.72 and add 15% = $232.01, then add that to $1,546.72 = $1,778.73. So now you know that you need to save this much for the holidays.
• This number $1,778.73 should be divided by the pay periods you have in one calendar year.
• Most people are paid bi-weekly or they have 26 pay periods in one year.
• Divided $1,778.73 divided by 26 = $64.41 every pay-day.  You can do the same if you are paid weekly, semi-monthly or monthly.
• Visit your financial institution and open a savings account. These accounts allow you one or two free transactions a month. Anything over that will cost you $5.00 or more.
• Make a list of each person you plan to buy a gift for and decided the amount you plan to spend on each person next to their name. Stay focused and do not go over. If you spend less that’s much better.
• Carry the list with you always.
• Take advantage of sale opportunities. You can start purchasing early if you have your list and money in your account to do so.
• In December when you are ready to shop, you should transfer the money into your checking account and begin your shopping.
• Please keep track of your totals and stick to your list because if you stray you will be in a mess.

 

This is the very first thing you should do to have a better financial experience in December 2011.

New Year New Financial Rules!

 I will follow with a series of blogs to help you stay on track and address the other points.

 

 

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