We’ve all had to have awkward money conversations at some point in our lives. I will admit that I’ve gotten more confident in having them, but as an awkward, introverted person by nature (I’m the person who takes the stairs in order to avoid conversation in the elevator), it’s never easy.
Here are examples of 6 recent awkward money conversations I’ve had over the last year:
1. Having the money talk with RD
When you start to get serious with your significant other, the money talk will inevitably come up. RD had mentioned beforehand that he was debt-free, and I could tell by his spending habits that they were similar to mine. But I wanted to know all the juicy details: salary, retirement, savings, and future financial goals. I think it’s really good in any relationship to get all of that information out in the open so that you can be sure your current lifestyle and future goals will align properly. But even though I knew we had to talk about it at some point, I actively started and stopped the conversation a few times before I got the courage to ask.
2. Answering why I’m renting instead of owning
I don’t know many people who have owned a home and gone back to renting. So it was interesting to see how people reacted when they found out I wasn’t buying another place. My default answer is “the commute was horrible, and it also just made more financial sense to rent,” which most people seem to take as me saying I couldn’t afford to buy.
What seemed to always impress people was that I was a homeowner. Since I was able to borrow a quarter of a million dollars from the bank, I somehow had my life put together … because the natural assumption is that people who are renting are only doing so because they cannot afford to buy.
And that’s just not true. I could have bought an overpriced condo on my own in Vancouver. But why would I want to? The topic of real estate is already a touchy subject in Vancouver, so in order to avoid any awkwardness, I usually just let them think what they want to think about my finances. If they really are interested, I’ll answer truthfully.
3. Negotiating my starting salary at my new job
Salary negotiations can be stressful. I had such anxiety about it when I first entered the work force, and since then I’ve been called everything from greedy and bossy, to confident and assertive. But asking for fair compensation does not make you greedy or bitchy or aggressive – it makes you smart because you’re asking for what you rightfully deserve. Salary negotiation is a game you’re expected to play, and if you don’t, you’re potentially leaving thousands of dollars on the table.
I have never taken a job offer without negotiating first, and I’ve never been turned down. Sometimes I have it written in my contract to get an automatic raise after a certain period of time, a year-end bonus, or even an extra week of vacation. A few thousand dollars may not seem like much now, but in the long run, it can add up. Your raises, bonuses, and future earning power are dictated by how you negotiate your starting salary with a company. And that few thousand dollar gap has the possibility of becoming bigger in the future – leaving you farther away from how much you’re truly worth.
When I got a job offer last month, the compensation was at the lower end of the salary range I gave them. I thought about it for a day, exchanged a couple of emails with HR (asking about overtime policy, bonus structure, etc.), and after much consideration to the overall package being offered, I countered at the highest end of the salary range I gave them (about 6% more than they offered) – which they accepted. Had I not done that, I would have ended up thousands of dollars behind.
4. Being honest about my compensation during my exit interview.
At my old position, my salary was fair for the work that I was doing, but I felt underpaid given the marketing skillset I brought to the company. Salary didn’t play a big factor into my decision to leave, but it was something I felt needed to be brought up. And finding a new job that offered more opportunity for growth ultimately resulted in a salary increase.
5. Billing a freelance client who failed to utilize my services.
This was a tough one for me, because I dreaded a potential awkward conversation with them. I signed an exclusive one-month contract with a client to work up to 20 hours for them. But nearing the end of the contract, they had used me for no more than 5 hours of billable time. I thought that perhaps I should pro-rate my contract amount, but after speaking with people in the industry who are much smarter than me, I ended up billing them for the full amount of the contract – and they paid my invoice without batting an eyelash.
6. Asking someone to lower their rates.
About a year ago I wanted to hire someone who billed $180/hour. It was about average, but was way too much for my budget – so I asked if she was able to lower her rates if I guaranteed her X amount of hours billed. I asked politely and made sure to emphasize that I totally understood if she couldn’t. She ended up agreeing, and lowered her rates by $30/hour.
Have you had any awkward money conversations lately?
Hi! I want to show you what I’ve been busy working on over the past couple of weeks. First of all, things are really moving along nicely with the Canadian Personal Finance Conference. Yep, we now have a website. It’s like this conference is an official event now or something! :) I can confirm the weekend of October 17-18, and we have secured a very, very important person for our keynote. I won’t say anything here, you’ll have to check out the #CPFC15 website for more information. We are still seeking corporate sponsorships, and tickets will be going on sale shortly, so be sure to join the mailing list to be the first to know!
Also, last week I fulfilled one of my life goals, which was to appear on CBC’s The Exchange with Amanda Lang. It was always one of those far off goals that I never thought would be achieved. I was nervous, but mostly excited, and hopefully I did a good enough job to be asked back again soon. :) Here’s the interview below if you want to check it out!
It’s important to understand how to take advantage of tax benefits at every stage of your life, and it shouldn’t just happen every April as you scramble to file your taxes. Being fully aware of what benefits are available to you at any given time during the year ensures that you will receive the refund you’re entitled to. As a request from a recently married friend and from my sister, I’m going to blog about common tax benefits for married or common-law partners. :)
Here are some of the most common tax benefits I can think of for married or common-law partners:
- Spousal RRSP contributions. This makes sense if one spouse makes significantly more income than the other. The higher income spouse contributes money in the lower income spouse’s RRSP, and can then claim the tax deduction. But most importantly, during retirement, both spouses will have a more balanced income, which means less income tax paid.
- The Home Buyers’ Plan (HBP). With the HBP, you are allowed to withdraw up to $25k from your RRSP to buy your build your first home. if you are buying a home with your spouse, you can each withdraw up to $25k, for a combined $50k towards your new home.
- The Lifelong Learning Plan (LLP). Similar to the HBP, under the LLP, you can withdraw up to $20k from your RRSP to pay for training or education. But the best part is, you can take it out for your spouse or common-law partner as well.
- Tax break for students. This is great if either you or your partner is eligible to claim tuition. The original claim must be made by the student, but if you’re a low income-student, you may not need to use the entire tax credit if you don’t owe taxes. This means any unused amounts up to a maximum of $5k can be transferred to the student’s spouse to help reduce their taxes. And as an added bonus, TurboTax offers a free version of their tax software specifically created for students!
- Medical expenses. Any qualifying medical expenses for either spouse should be combined and claimed on one person’s tax return – generally the partner with the lower taxable income.
The great thing about online tax filing software like TurboTax is that they will ask questions and help guide couples through the tax-filing process – making sure you don’t miss any relevant tax savings opportunities! :)
What other tax benefits can married or common-law partners take advantage of?
Note: this post is sponsored by TurboTax Canada, but was written and edited by me.