Give Me Back My Five Bucks

The best financial advice I’ve ever received

Note: this post was sponsored by Scotiabank for Financial Literacy Month, but the views and opinions are my own.

For Financial Literacy Month, I’ve been asked to share the best financial advice I’ve ever received. Now, if you’ve been following my blog for a while, you will know that I believe in the importance of having a financial plan, as well as making both long-term and short-term goals. I used to believe that once I had my heart set on a goal, any deviation from that path was considered a failure. But the best advice I’ve ever received was that in order to be successful in life, goals and plans have to be flexible and adaptable to whatever life may throw at you. And believe it or not, I got that advice from a children’s book.

This book was called Monty Goes South, and it was given to me by my field hockey coach when I was 17 just before I was about to “fly south” to play on a Division 1 NCAA team. It’s a story about how Monty the Canada Goose (yes, it’s a Canadian book haha) is watching all of his friends prepare to fly south for the winter. But because of his very real fear of heights, he has not learned how to fly. He considers all the different ways he could get south (like driving, sailing, or riding a skateboard), but eventually realized that he had no choice but to conquer his fear. He ends up flying south on his own terms and in his own way (backwards). :)

My takeaway from the book was that I would eventually achieve everything I wanted in life, I’d just take my own path to get there. That message stayed with me through my field hockey career, and I still think about my coaches and that message of hope today when it comes to my personal life, and my finances. I know there is not just one way, or path, to achieve financial success. It’s about learning the different investment vehicles and creating a financial plan that works for me in order to reach my end goal.

I’ve achieved a lot by turning my finances around in the last 10 years, but it hasn’t been easy and it certainly hasn’t been the life I thought I’d be living by age 34. :) But whenever I felt down about being in debt, not saving enough, or even not achieving any of the life goals that my friends were all experiencing (like marriage, owning a home, or traveling), I thought back to that book … and I reminded myself that I’ll get all of the things that I want, I’m just on my own path and need to follow my own plan. Okay yes, maybe that’s cheesy, but it has totally helped me conquer any “keeping up with the Jones” thoughts that have ever creeped into my head. When all my friends were traveling in their 20’s while I was paying down my student loans, sure I definitely had a case of FOMO, but I knew I’d get to travel in the future. And when I felt like my friends were all achieving amazing things with their careers (while mine was going nowhere)? I kept trying to learn new things, and eventually found my niche.

Maybe you’re like me and aggressively paid down your debt. Or maybe you’ve got kids, so you’re tackling your debt at a slower pace … or maybe you’re 40 and haven’t started saving for retirement yet. Wherever you are in your financial journey, just know that if you create your own UNIQUE financial plan, you’ll achieve your goals eventually – you’re just on your own journey there.

So, who gave you your best financial advice? Head over to Scotiabank’s Facebook page and tell them about the best advice you’ve received for a chance to win $1,000.

The case for un-automating your finances

So many personal finance bloggers and professionals will tell you that automating your finances is one of the best ways to manage your money. Nowadays, everything can be automated if you want it to be – your pay cheques, savings, RRSP, investment contributions, as well as all of your monthly recurring bills.

But even though you may think you’re making your life easier by automating everything, you might be doing more harm than good. Automating all of your finances can lead to bad spending habits, because you aren’t conscious of where your money is going. And, when all of the work is being done for you, you might not check up on your accounts as often as you should be.

I personally only automate my retirement savings. Everything else – such as utilities, cell phone, internet credit card bills, and short-term savings – I make manually every two weeks when I get paid. Here’s why:

My income fluctuates

Even though I have a full-time job, my income can fluctuate wildly from week to week depending on how much money I bring in from my freelancing jobs. While it’s possible to budget and automate when your income varies, I find it a lot easier (and a lot less stressful) to manually pay my bills. Especially when not every company offers monthly billing cycles that end at the end of each month. I keep track of when my payments are due in Google calendar – that way I always know that I have money in my account to pay each invoice.

I like moving my money around

This might be the personal finance nerd in me, but is extremely satisfying to click a few buttons and see bills getting paid, or my savings account growing. It’s proof that my hard work is worth something, and it reminds me that my goals are real and attainable. It’s a feeling you can’t get when the bank does all of the work for you.

Don’t forget to read the terms and conditions

Sometimes life can get busy, and by the time you get around to looking through your cell phone bill, you might have already had the payment automatically deducted from your account. I used to work in a call centre for a company whose terms and conditions stated that receiving payment is your acknowledgment and agreement to all of the charges on the invoice. So it’s important to look through your invoices in a timely manner, as well as carefully read through your terms and conditions of service with each company.

It forces me to pay attention

Since I started taking control of my finances, I’ve made it a habit to log into my online bank accounts at least three times each week. Over the years, I’ve caught three different fraudulent charges on my credit card – one was for a larger sum so it was more noticeable, but the other two were for recurring charges of under $10/month. If my credit card bills were on automation, I would be much less inclined to check my accounts as often, or as closely, so I might have missed catching and disputing those charges.

Also, companies make it so easy to automate payments. From your Netflix account to your gym membership to those domain names you’ve never used that keep auto-renewing every year – sitting down to pay your bills might take an extra hour each month, but it really forces you to see where your money is going and what expenses you can cut. It helps you have a better relationship with your finances, and you might realize that you’re paying for a lot of things that you just don’t use.

What bills do you have on automation?

Why it’s important to invest in your future

Note: this post was sponsored by Scotiabank for Financial Literacy Month, but the views and opinions are my own.

Last weekend when I was in Toronto for the Canadian Personal Finance Conference, I chatted with a few of my blogger friends about how we sometimes get caught up in our own little nerdy financial bubble. We often assume that our friends outside of the blogosphere understand the basic concepts personal finance, and so we tend to glaze over fundamental topics like paying yourself first, or even saving for retirement.

And that reminded me of a conversation I had recently with a friend about our work pension plans. Both companies we work for offer matching RRSP contributions to a maximum of 3% every year. I enrolled in my corporate plan on my first day. It’s free money – and I honestly assumed everyone did the same. So, imagine my surprise when my friend told me he had been at his job for over 3 years, and never contributed!

I asked why (since he knew he was leaving around $2,000 on the table every year), and he said that after all his monthly expenses are added up, he doesn’t have anything left over to save. I understood where he was coming from (living in Vancouver is super expensive), but I couldn’t help but think that if he looked a bit deeper into his finances, he could figure out a way to save for his future – or at the very least, get that 3% match. :)

Coincidentally, I had the chance to speak with Ahmad Dajani, VP of Retail Deposits and Investments at Scotiabank last week, and wanted to ask him some questions that could potentially help my friend get started on his path to financial independence.

Here are a few of the questions I was able to ask:

How would you suggest someone start investing when they have very little room left over in their budget after their monthly expenses?

AD: The best approach would be to Pay Yourself First. What I mean by this, is putting aside a portion of your income to save, before you begin to pay any other expenses. And, by making saving automatic using a pre-authorized contribution, saving becomes a habit. Even starting with a contribution of $25.00 will help set you up for success and you should revisit how much you contribute as your situation and goals change.

(Just as a side note – that’s exactly how I began saving for my future – with contributions of just $25/month when I was just starting out. Then as my salary increased, so did my contributions!)

When would you suggest someone start saving for retirement?

AD: As early as possible, as soon as you start your first job.  Even a small contribution can grow to a surprising amount with compound interest over time. When using tax sheltered plans, such as an RSP  or TFSA ensure you are eligible and have contribution room available as the rules are different for both. Please check with your advisor on other eligibility criteria and with CRA on your contribution room for each. There are lots of great tools online you can use to determine how much you’ll need to retire. Better yet meet with a financial advisor and they can work with you to figure out all those details.

What are the elements that make up a solid financial plan?

AD: A financial plan is dynamic and always evolving – just like you. It should take into account your current financial situation and provide you with strategies to help you stay on track to achieving your goals.  It includes both borrowing and investing elements, and more sophisticated plans can include insurance and estate planning.  Financial Planning does not have to be overly complicated however. A financial plan is available at Scotiabank at no cost and no minimum portfolio is required to ask for it.

What are the top things Canadians need to learn more about when it comes to their own finances? 

AD: Canadians may be interested in learning more about the many resources available to help them prioritize their financial goals and save more. Finances do not have to be overwhelming or intimidating and there are many programs and tools available to help you save. Remember that even small changes can make a big difference in your savings. I would encourage everyone to do their research, start conversations and sit down with a financial advisor to learn about the options and free tools available. It could make all the difference in achieving your financial goals.

So, what’s the best financial advice you’ve ever received? Share it on Scotiabank’s Facebook page for a chance to win $1,000!

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A beginner's guide for Canadians looking to get their financial life in order. Get great info on budgeting and saving, RRSP's and pensions, investing types, insurance, and where to go for additional resources.

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