FIVE POWERFUL STEPS TO FINANCIAL SUCCESS

Interesting year we are in, 2013! Commonly, anything with the number 13 generates fear and superstition. Many people run away from this feared number. Buildings do not have a 13^th floor as it is so feared. Do we have a choice? Can we ignore the year 2013 or pretend it does not exist just because it has the number 13 in the mix? No, we can’t so we are going to include 2013 in our lives. We are going to do something different this year. We are actually going to embrace the number 13; we are going to embrace the entire year! A suggestion for our theme for 2013 is NEW HOPES, NEW DREAMS AND FINANCIAL SUCCESS!

Every year we make plans and set goals, which we refer to as RESOLUTIONS. Let us scrap that word. We are setting New Goals for a New Year with a number that will surely improve our chances. We will begin by naming “2013” the year my life changed for the better.

My first question; what do you want to ACCUMULATE and what do you want to ELIMINATE? Take a few minutes and write your answer down.

In the past few years were you a MISSILE WITHOUT A GUIDANCE SYSTEM? Were you just going about your business working, paying bills, spending and reacting to life instead of life reacting to you? It’s time to change. Give yourself a GUIDANCE SYSTEM. Where do you want to go and when?

Now what are those five powerful steps to financial success I am talking about? Well here they are, you might have heard some version of them previously, but not described to you in the way I am going to do so now!

1. SPECIFICITY

Key to meeting your goals is to know your goals. Describe your goals completely and entirely until they become something you can recite like a nursery rhyme. You want to pay off your Master Card then say I want to completely pay off my Master Card. Do not only say I want to pay off my debt. This non-specific statement does not completely describe your goal. The specific statement you want to make describes which debt and the amount. Generally, when a goal is not specific it is not attained. Ask yourself which debt, the $100.00 you owe your brother, or the $3000.00 outstanding on your Master Card? Be Specific.

2. KEEP SCORE

What steps are you taking to meet those goals? In other words, keep score of your progress towards your goals. Your statement should be as follows. I want to pay off my Bank Master card (name the bank) and I am paying $250.00 towards the card every month. So I Keep Score every month of the total I have paid towards my Bank Master Card debt, which shows me the headway that I have made.

3. PUT YOUR GOAL INTO YOUR LIFESTYLE

Now that I am paying this Bank Master Card off, I should not continue to use the card. Making payments to eliminate debt every month and simultaneously incurring more of the same debt is counter-productive. For example, one should not make efforts to pay $250.00 a month towards a Bank Master Card debt and charge $200.00 to the card just because there is available credit. Create habits that will enable you to bring your financial goals into your lifestyle and eliminate the habits that work against you. Modify your behavior.

4. PROGRAM FOR SUCCESS

Now that you know the steps you need to take in order to meet financial goals, avoid the impulses and temptations that are a hindrance to your targets. An immediate reward can produce long-term penalties. A drink after work every Friday is no longer one of your pastimes. Dinner out every weekend with your friends should be scaled back. Why not cook with your friends at home and everyone contributes to the meal. A lovely homemade Tuscan soup and some fresh buns with a bottle of wine can make a lovely winter dinner with friends at home. Try it! You’ll it!

5. TIME. WHEN DO YOU WANT TO ACCOMPLISH THIS GOAL

This is one of the most important steps in accomplishing your goal. A friend of mine always wanted to retire to Jamaica. I’ve heard the following statement for the last 15 years. “I am going back home to retire.” Now that is an incomplete plan. My friend did not complete his statement; he should have said: “My goal is to retire in 2001 at the age of 60 in Jamaica.” Now that is a complete goal! We have the where, the what and most importantly, the when! My friend is still in Canada, retired and only vacations in Jamaica. He maintains his dream of one day living in Jamaica but his goal is still incomplete. With no when, no timeframe, this is an incomplete and unattainable goal.

So there they are! Your Five Powerful Steps to Financial Success! Every three months take time to look at your progress towards meeting your financial goal. If you are not on tract, then re-evaluate and make the necessary changes to get yourself back on tract. It may not be easy, keep plugging away, do not abort the goal!

Happy New Year

Tessa-Marie

January 2 2013

WHAT DO YOU REALLY, WANT?

Whenever I facilitate a workshop on finance the very first question I ask the participants is WHAT ARE YOUR FINANCIAL WISHES? Most of the participants are stumped by this question.

In The story of Aladdin’s Lamp the Genie once released from his imprisonment in the bottle asks Aladdin. “WHAT DO YOU WISH’ I refer to this fable to illustrate a point. When Aladdin was confronted with this question he hesitated, and like most of us, he did not have a list of specific wishes. He had a vague idea of what would provide the most immediate pleasure and comfort. He did not have a working plan and he did know what he wanted. I ask, the Genie’s question a little differently. What is it you to accomplish financially? The common response is “You know I have never really thought of that.”

At the beginning of a workshop on finance I get those same reactions. So let’s see if I can help guide you to achieve your financial goals

It is Tuesday night and you are watching reality television wishing you were one of those rich people or one of those getting rich doing their show. You wished so hard that the Genie appears, “Give me a list of the ten things you want now and they all will be yours in five years. You will receive the first one in January and the second one in June and every year after this for the next five years. There is only one catch; you must name these ten things in 120 seconds.”

How many of you are able to do this now? Stop reading and get your, I phone, I Pad, purple, yellow or blackberries and begin writing taking only 120 seconds to complete the list. How was that for you, did you complete your list in 120 seconds or were you mystified, dumfounded, and exhausted, well you are not alone you are just like 90% of the population over the age of 20.

Kids know what they want; we have all seen or experienced with a child who wants a particular toy, they know the name of the toy, they know where it is sold, what colour it is, how much it cost and they also know you will move heaven and earth to get it for them.

The Genie feels sorry for you and decided to give you another chance. He tells you “I will be back in seven days and if you have those ten things listed they will be yours.”

What are you going to do, are you going to turn off the television, and get your note-book or one of those berries and begin writing or are you going to do it after this particular show is over? It is all your choice, remember. The decisions you make today determines the life you live tomorrow.

You decided you are starting now. The first list you created you set aside, NO! You say out loud as you jump out of your chair, this is not what I really, want. You start again. This time you date and time the second page and begin, using the previous list as a reference, you look at the list again and will see the things you know you need, also what you don’t want.

Here are some things you might have on that first list.

Be happy,
Have good health
Travel
Have a fancy car
Eat at superfine restaurants
Have a big House
Buy designer clothes and shoes
Want to be comfortable
Get married
Have a family

Now here is a list of the things you need and want to accomplish.

Stop borrowing money to buy things
Bring my current debt up-to-date
Pay off all my debt Buy a Home
Create a small only God knows fund
Create a Big emergency fund
Buy a house
Open a Registered Retirement Savings Plan
Save my children’s education
Have an annual vacation
Pay off the house

A very different list from the previous one. Are these better choices?

Try creating your own list using the above as a reference.

When you have these things in place, peace of mind, happiness and contentment will follow, and your Financial Advisor aka Genie will have guided you to reach your financial goals.

It requires some practice and it will definitely take much more than 120 seconds to get it right but it is worth doing.

Let me know how you felt before and after the exercise.

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.

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.
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.
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.
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.
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.
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
If you have a spouse you will have to work together to produce a spending plan that will benefit both you and your partner.
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.
After you have your spending plan as you want it, your next step is to implement the plan.
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

DISCIPLINE

Life Planning includes Financial Planning, Career Planning and then all the other things we need to plan to do or to get.

In planning our life we make choices and decisions we make these everyday and we make them without any thought. Can you remember actually brushing your teeth this morning or do you just know for sure you did? Well life planning is different much different you need to be aware of every step in the planning process in order to attain the goals you set.

Most people fail not because they plan to fail it is because they fail to plan. What are you willing to endure to attain your goals? I know that to attain ones’ goal you need to be discipline and discipline will require a certain amount of pain. The pain of discipline will grant your desires. What would happen if you choose not to be discipline which requires a certain amount of short term pain, you would have the experience of the PAIN OF REGRET which one would you prefer. The pain of Discipline will last a few months at most a year whereas the pain of regret will last a lifetime.

LET’S LOOK AT THE TWO TYPES OF PAIN:

The Pain of Discipline

What is the pain of discipline? The pain of discipline is the pain that you must endure to create the habits that will grant you your desires. Only through right habits can you succeed; it is right habits alone that grant you your desires.

Right habits come through pain. Fortunately the pain of developing right habits is a temporary pain, but the benefits of right habits will last a lifetime.

It takes about six to nine months to form a sustainable habit. I didn’t say three weeks; I said it takes about six to nine months, depending on what the habit is. You may be thinking “That’s hard,” yeah, well so is a lifetime of regret.

The pain of discipline is a small pain to endure, when you consider all that it promises. You will be able to have the money you need to live the life you want at a later date. The choice to enjoy a relax retirement, a home that is paid off and money in the bank to do what you want when you want. The pain of discipline over the next year is not as grievous as the pain of regret when you are 60 years old. The pain of discipline is temporary.

The Pain of Regret

…And then there’s the pain of regret. The pain of woulda-coulda-shoulda, the pain of next time I’ll do it, the pain that you are forced to realize because you have not yet committed to changing your habits.

When we talk about changing your habits, we’re talking about changing your roots. We’re talking about changing the kinds of fruit that you produce. Do people gather oranges from apple trees, or grapes from a pear trees, No; every tree produces from its kind.

Your life will produce results based on your kinds of habits. You can’t produce a successful life, if you don’t have successful habits.

When you don’t create the right habits, when you’re not committed, it causes regret.

Why do you have regret? Because you know on the inside of you that you are capable of achieving more. You’re not regretting the impossible, you’re regretting what you know you could achieve; what you should achieve.

Which pain will you choose?

When you’re on your deathbed, your dreams and your goals will stand by your bedside, if they have not been fulfilled, they will demand to know why. They will insist on knowing why you choose the pain of regret over the pain of discipline.

Don’t let your dreams down, don’t disappoint your goals.

Decide today to create the habits that will give you the life you desire, decide today to deal with the temporary pain of discipline. If you do, you won’t have to live with the pain of regret, you will live knowing that you did your best.

Get to your bank and make all your savings automatic it will just take one hour of your time and you will save yourself a lifetime of regrets.

PATRICK AND TINA

Proper Preparation Prevents Poor Performance. This sentence is the absolute best way to describe how Patrick and Tina were able to achieve their dream of buying their first home.

Someone made a comment that Patrick and Tina seemed so calm during their home purchase. Patrick and Tina’s purchase was effortless because they worked with a Financial Planner and they followed their plan and stayed on course. Purchasing a home is the single biggest investment you will make in your life therefore it should not cause any stress, confusion or doubts. Work with a Planner you trust who will listen and have your best interest.

Patrick and Tina’s journey started four years ago. Patrick’s mother Corinne called and asked if I could work with Patrick to help him meet his financial goals and manage his money more effectively. Patrick called me a few days later and asked to meet with me. He came to see me; we talked about his goals, and discussed his income and expenses. During the discussion about his expenses Patrick discovered that he didn’t know exactly where his money went. Most people do not know how and on what they spend their money from pay day to pay day.

Patrick had to go over his list and return with a plan of what he wanted to accomplish. I was introduced to Tina a few weeks later and was told that she was also part of the plan. Together, we worked out a course of action that included Tina’s and Patrick’s goals for their future.

When the plan was in place they had to make some changes in the way they managed their finances.

Here are list of the savings accounts they put in place to enable them to manage their money more efficiently:

Registered Retirement Savings account
Vacation savings
Emergency savings
House account
Christmas and Birthday account

This may seem like many accounts but when you are planning for a secured financial future everything needs its own place. With the various accounts in order you are able to manage and keep track of how much money you have at any time for the various goals you have set.

Financial Planning is not a one size fits all, each individual or couple’s Financial Plan is different. This is where the Financial Planner is able to take a look at what the goals and plans of each individual are and then put a plan in place to meet their financial goals.

Patrick and Tina stayed on course. Some modifications had to be made, for example when the amount in their Registered Retirement Savings account reached $25,000 their bi-weekly automatic deposit was then redirected to their House Account. The funds in their RRSP enabled them to take advantage of the First Time Home Buyers RRSP withdrawal of $ 25,000 without incurring a tax liability.

They had visited their bank a few months prior to buying their home and got their pre-approval in writing which they gave to the Real Estate Agent who then knew exactly what price they could afford. Once they chose the mortgage they wanted they found themselves a lawyer. When the right house in the right price range and the perfect neighbourhood came on the market they were ready to clinch the deal, which they did. The vendor wanted a short closing and since all their ducks were in a row they were able to do the short closing and move into their home sooner than they expected.

Patrick and Tina worked as a team during the years of planning and made some difficult choices which gave them the opportunity to take advantage of a great deal when it came along. A friend told me that Patrick and Tina were very LUCKY but their success had nothing to do with luck. I believe the definition of LUCK IS = PROPER PREPARATION MEETING OPPORTUNITY. They were on a journey, stayed on plan, handled the detours with some advice and got to the finish line.

The planning stage is not complete for Patrick and Tina. We will be meeting in a couple of months to change and set some new goals for their future.

Everyone should meet with their Financial Planner annually to review and re-evaluate.

ALEX AND SOFIA

Alex and Sofia

Alex and his wife Sofia are clients I have been working with for a number of years on their financial plans. When I came home today I had a voice message from Alex asking me whether I had read the article in the Toronto Star by Sunny Freeman of the Canadian Press:

CANADIANS ADDING DEBT FASTER THAN AMERICANS

I had read the article but I wanted to find out why that particular article had propelled Alex into making the call asking me if I had read it. My first thought was, I hope these guys are not back in a financial mess. We are due to meet in four months for their annual financial check up.

When I returned the call Sofia answered and she told me they were just talking about the article and that they both wanted to talk to me about it.

Alex and Sofia wanted to ask me to write this blog hoping that it might help others.

The article states that, “Household debt is now rising faster in Canada than in the United States and will continue to grow as low-interest rates encourage consumers to spend beyond their means.”

These are frightening, ominous words. They spell a time when rates will climb and what will happen to consumers with huge balances on Home Equity Lines of Credit and Credit Cards or unsecured lines of credit.

As consumers, we fail to learn from others. We are affected by our employers decisions to cut back when the market for their goods and services are not in high demand. They lay us off. They ask us to take early retirement. They stop hiring and in some cases the businesses might shut down entirely.

We, the consumers, pay no heed to all this action happening to us or to friends and family.

Our economy is not growing as expected. July to September it grew by 1.6 per cent which is down from 2 per cent in the second quarter and it’s a far cry from the growth of 5.8 per cent gained in the first quarter.

The message to us the consumer is to tighten our belts and not buy on credit. Although interest rates are low and it is very tempting to buy and buy on credit it is time that we go back to the old ways and only buy what we can afford with the cash we have available to us instead of using the almighty plastic.

Someone told me that if we don’t spend the economy will come to grinding halt. No, it won’t come to a halt and certainly not grinding. We can spend and yes we should spend, but purchasing endlessly on credit is not wise spending. Furthermore, even if rates are low the rates on the credit cards do not change they are still at 18 to 29 or even 32 per cent and they never go down, unless the financial institution wants you as a new customer. They will then offer you an introductory rate for a short time. Then watch the rates go up to the same old rate. But by that time, you are hooked and their hands are deeper in your pockets. How can you move? Where do you go from there, to another introductory offer? Before you know it you have four to six cards that were all introductory offers.

My recommendation to you is to learn from the large companies out there. Look at General Motors; they were in deep trouble, they closed plants, laid their people off and now they are showing a profit.

As a consumer make some changes in your management of your finances. Cut back on going out to dinner every week. Just because it is in this season that does not mean you and your family needs to have it. Think of things you can do as a family. Take a look at that gym membership. When did you last go to the gym? Having it is costing you money. Run your family finances like a business when it is slow. Stop and take a look at your bottom line. Will you be able to meet the financial goals you set if you continue to spend and buy on credit as you are presently doing.

Make some changes today. Pay a little more on your mortgages increase, your payment on your credit cards, cut the cards up or freeze them like my sister did.

How would you feel when rates are high again and everyone is complaining while you are sitting back enjoying your planned success?

Make some changes now!

LIVE LIKE NO ONE ELSE TODAY SO YOU CAN LIVE LIKE NO ONE ELSE TOMORROW.

HAVE YOU BEGUN PLANNING YOUR CHILDREN’S POST SECONDARY EDUCATION?

On Tuesday your little, Emma, Kaden, Joshua and Sarah went to school for the first time and they your child might be one of those attending all day kindergarten. If you were like me when my children started school, you cried and felt deserted; ”Where did my baby go?” I had the same feelings with each of my three children. The time flies so fast, so before you know it Sarah will be out of high school and ready to attend university. All of this will be in thirteen years from Tuesday. Remember when you were ready to go to university? It was not that long ago, was it?

This is the time I would like to see you think, take the time to really think. What have you done for Kaden’s university fund? “What fund?” you replied. ” What is that woman talking about? Does she know that we are in a recession? I need every penny to help pay the bills. I can barely make ends meet as it is.” All these thoughts will most definitely cross your mind, but that child has to go on to university whether you think about it or not.

I know how difficult it is to think of saving for your children’s university education at the moment and you are not able to see what you can do, even if you feel it was something you should do.

I spoke to you about a Registered Education Savings Plan for your child or children in my last blog. It is never too early to start and never too late to start, so you need to start now.
September 1^st is the new “New Year” when you have children beginning their educational journey. Think about it; the big banks have a fiscal year that starts on November 1^st, so your fiscal year starts September 1. It’s ok to have a non-January new year. If the banks can do it, why not you?

Take a look at your spending plan. What can you change this year? What can you do better? Where would you like to see an improvement? Start working on your spending plan (aka budget). Make some room for your child’s education savings plan. Remember if you did not start Joshua’s Registered Education Savings Plan the year he was born you have to start now.

Things you will need to open an RESP:

A Social Insurance Number in the name of the child, one for each child
For Identification: A Birth Certificate or a Permanent Resident Card in the name of the child

What you should know when opening an RESP

Choose an RESP provider that best suits your needs, which could be your bank or credit unions.
Anyone can open an RESP for a child – parents, guardian, grandparents, other relatives or friends.
The maximum contribution in each RESP is $50,000.
The Government will contribute 20% each year on the first $2,500.00 deposit in the plan from the Canada Education Savings Grant.
The Government will deposit $500.00 as soon as the plan is opened and then $100.00 annually until the child reaches the age of 15.
The Canada Education Savings grant will be paid to the age of 17.

Talk to your financial institution or check out the Canada Education Savings Grant Brochure.

Call 1 800 O-Canada (1 800 622 6232) to order a free copy.

The most important thing to remember is that if you do not have an RESP opened for your child or children you are leaving money on the table which could and will benefit your children and, in turn, your family.

The cost of post secondary education keeps climbing each year, so with this in mind it is very important to prepare for your children’s education and the time to begin is now. Thirteen years is not that far away.

Spend some time this week, or on the weekend, looking over your spending plan. Visit your financial institution and make an appointment to meet with an INVESTMENT SPECIALIST. Please note I wrote investment specialist in capitals so you will realize it is important and use that title when making your appointment. This person is trained to provide advice on investments.

Take a note-book with you, date it and write the person’s name and phone number on the first page. What you want is to create a relationship with that person. If you do not like the vibe or you feel you are not connecting with them or they are more interested in getting their numbers, let them know that you want someone who can give you the time, great customer service and one who cares about your investment as much as you do. You are looking to get someone who will take you seriously and work with you to attain yours and your family’s goal.
Keep in touch and let me know how you are doing.

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!

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

On The Bus

I had to take the bus home the other day from work. After waiting for a few minutes, the bus came and I got on and I found a seat. A few minutes later, a young couple boarded the bus and sat in front of me. It was hard to not listen to their conversation, especially since it had to do with money. I wasn’t taking notes, but here is my recollection of the conversation. Since I don’t know their names, I’ll just refer to them as “Him” and Her”.

Her: “I bought a really nice pair of boots on sale today.”

Him: “You need to stop spending money like we have it in a bottomless pit.”

Her: “I don’t want to talk about money right now.”

Him: “When would you like to talk about money? You constantly say you will discuss it latter, but you never do.”

Her: “Why should I talk about money when you talk about money for the two of us and then for the rest of the world? It’s always about money and more money with you.”

Him: “Someone needs to talk about money in this family because it will never be you and we are just falling deeper and deeper into debt. Do you know how much you charged last month?”

Her: “No, I have no idea. I need something and I buy it. I have a job. I make good money. Why should I live like I am a person on Government subsidy?”

Him: “Because of our future. We need to sit with a Financial Advisor and work out a plan for our future.”

Her: “That’s living on a budget and I will never be on a budget. I can’t stand the idea of being restricted.”

Him: “You will not be restricted on a financial plan. Everything is taken into consideration, like all our plans for our future and all our goals, like owning our home, saving for our retirement, saving for life emergencies, saving for a vacation, and being debt free. While creating a Financial Plan we tell the Financial Planner what we want, when we want it and he devises a plan to suit our goals. It is not a budget but a plan just for us. It would not be a plan that would suit our friends – theirs would be different.”

Her: “How do you know so much about this stuff anyway?”

Him: “I went to my bank and while I was there I read something about Personal Financial Planning. I have it right here would you like to take a look at it.”

Her: “No, but tell me a little more about this Financial Plan. You said we can plan a vacation but you don’t want to spend money. How can we go on vacation and you don’t want to spend any money?”

Him: “That is not what I have told you. What I said was, I do not want to go on a vacation and then come home to a credit card bill waiting for me. With a Financial Plan we would designate the amount we want for our vacation. We would decide a year from now, so in our case since we get paid every two weeks, we would divide the amount by 26 which represents how many pay periods we have in a year, and that amount would be place from our cheques on payday automatically into our vacation account. At the end of the year, we would have the amount we allocated for the vacation. Just think that we could have the vacation of our choice and have no debt when we are back. How does that make you feel?”

Her: “Do you really mean we could have a vacation at this time next year if we did this financial plan now?”

Him: “We can have that and lots more like a home of our own in, say, 3 years, pay off all our credit card debt, regular saving and retirement savings.”

Her: “What do we have to do to get this plan in action?”

Him: ”We need to make an appointment at our bank and talk to the Financial Advisor. I believe we would have to see him a few times to get everything set up.”

Her: “What about money for food and entertainment, clothes, and pocket money?”

Him: “This is all discussed and is considered in the plan. After it is set up, we will have a road map of our financial journey detailing what we want and when we will arrive at the end of our journey. We meet with the planner once a year to revise our plan and make changes if our goals change. We also make the changes in our plan; for example, when we get a salary increase the new plan would be revised to plan for that money. If there are any other life-changes during the year we also meet with the Planner to make the changes.”

Her: “I’m beginning to understand this financial planning better. When can we make the appointment? I am fed up with all this credit card debt and would like to have our finances in order. It would be nice not to have you so angry at me all the time.”

At this point, the bus arrived at my stop and I had to leave.

That was so amazing, can you imagine how I felt being able to hear a conversation like that? I was so proud of that young man. As a Financial Advisor I was glad to see a young couple facing a possible lifetime of being caught in the Debt Spiral and one person realizing what could happen if they let themselves be dropped into a financial abyss.

I really admired his tact and the way he drew her in, to understand how important financial planning can be and that it is very different from a budget.

Sometimes is it very important in a relationship to do your homework in order to encourage the other person to see what the change in behaviour can make.

CONTROLLING THE DEBT MONSTER

WHOSE MONEY IS IT ANYWAY?………YOURS, KEEPIT

Tag: Banking Relationship