Wednesday, 29 March 2017

Financial Education & Money Lessons from my Parents

I get so frustrated talking to people who don't know basic things about handling their finances. Now don't get all defensive if you feel like you are in this situation because I'm not mad at you! What I hate is that we don't give people the tools to handle money when they are young. Really, what could be more important than ensuring children and young adults know that going into debt is bad and that starting to save early is essential? Apparently learning advanced algebra and who fought who in WWII are higher priorities. 

Just last week Ontario was making headlines because they are (finally) launching a pilot project to incorporate financial education into their schools. Their hope is to create a new course that will be implemented in the Fall of 2018. Obviously, it's still a work in progress, and we don't know what the actual curriculum will be, but it's certainly a step in the right direction. Other provinces across Canada have varying levels of financial literacy components included in high school curriculums, but I don't think there are any that couldn't use some improvements. For example, Saskatchewan has no official financial literacy component included in their schools, but BC and Manitoba have both revamped their math programs to include such topics. Here in Alberta (the only province I have experience as a high school student), they currently have a mandatory 'Career and Life Management' course. I took it, and honestly, it was kind of a joke. Everyone tried to take CALM in summer school because it was an easy two weeks of fun and games, seriously. Part of this for sure is that fact that most high school kids don't worry about money the same way they will 10 years later but it doesn't help that the course itself has such a poor reputation. The one thing I actually remember was going to a car dealership to 'learn' how to buy a new car. Cringe! 

So, what can we do? 
Obviously, I believe that high school curriculums should put greater focus on financial education and provide kids with tools that will actually help them succeed in the real world, but it doesn't end there. Parents need to take some responsibility too and pick up the slack. The problem with this is that not all parents have good money skills themselves, and sometimes bad education can be worse than no education. 

I was lucky to have parents who were positive money role models and picked up a lot from them when I was growing up. Both my parents were professionals (my Dad an engineer and my Mom a physiotherapist), and we were comfortably middle class, but that didn't mean they weren't careful with their spending. Both my parents are Scottish, and I still joke that my Mom fits the bill for the stereotypical cheap Scot. 
"Have you heard the rumour that the Grand Canyon was started by a Scotsman who lost a coin in a ditch?"

My Dad was definitely the money guy in the family, in fact, I still remember him spending every Monday night sitting at the dining room table paying bills, balancing the checkbook, working out a budget, etc. Apparently, this left a lasting impression on me, and although I don't balance a checkbook (who uses cheques anymore!), I do keep a detailed account of my budget. He was old school and used the antique pen and paper method, but with all the advances in technology, it is easier than ever to keep on top of your finances. Now you can get everything done through an app on your phone; more efficient...absolutely! But you do still need to put in a bit of time/effort to keep things updated. 

Even though I was an only child, I didn't (still don't) consider myself overly spoiled. My parents taught me that I couldn't always get what I wanted and that sometimes they just couldn't afford to spend the money. Was I scarred for life about never getting that pony I always wanted? Hardly (it's still on my Christmas list, though, hi mom). Instead, I learned that I had to work to afford the things I wanted and considering how many hours you have to work to earn 'X' amount of dollars really puts purchases in perspective. My 5-cent candy buying days were sure cut down when I had to spend my own babysitting money. I also remember a very long lecture conversation before I got my first credit card about the negative impact debt could have and the importance of always paying your credit card off in full. At the time, I was an 18-year-old high school student working a part-time job and hardly in need of a credit card, but my parents also understood the value of building credit. I think that first card had a limit of $500 (maybe even $250), but it still felt like a big deal, and I never abused it. 

Where do you start? 
Maybe you are a parent and are wondering how you can instill in your kids a sound basis of financial knowledge. Now, remember, I'm no parenting expert and am only speaking from my experiences growing up, but there are some guidelines you can use to set your kids on the right track. 

1. Educate Yourself
You're not going to have much credibility with your kids if your own finances are a mess, so step one is always to get yourself in order. Your good or bad habits will rub off on your children no matter what you do, so make it a good impression. 

2. Start Early
Obviously, children have the capability to learn different skills at different ages, and you'll have to hold off on complex subjects to later days. You can, however, incorporate money matters even at a young age. Consider role playing a supermarket transaction or playing monopoly. Anytime they have to give up money for goods will get them thinking about spending. 

3. Allowances
There's no better way to learn about your priorities in regards to money than to have to spend money you actually earned. This is where an allowance would come in. Younger kids don't have any way to make money (except maybe through Birthday or Christmas gifts), so an allowance can give them that access. I also like the idea of taking them to the bank to set up a bank account. There's no minimum age to set-up a bank account in Canada, and the requirements will depend on your bank, but most of the big banks offer accounts for kids. This way they will have a place to deposit money and watch their savings grow, you can even get them online access to help learn the ins and outs of the banking system. 

4. Encourage Working
Nobody likes laziness, so build up a good work ethic in your kids by encouraging them to take on a part-time job. I worked at my Mom's physio clinic from the time I was 14 all the way up until University. Working taught me to be more responsible, how to deal with a variety of people, and gave me an income that let me be more independent. 

How did you learn about money? Was it through school or from your parents? And, what the best money tip you ever learned? 

Tuesday, 21 March 2017

So, you Got a Tax Refund...

We're right in the swing of tax season, and I'm sure many of you who are expecting a hefty refund have already submitted your taxes there's likely a bunch of us there who owe money and are holding off to the last possible second. If you are still holding out, you still have a bit of time. The deadline for Canadians to have their personal taxes filed is April 30th.  I know when I was still a student and had all those education credits in my pocket I was getting things sent in as soon as my T4 arrived in my mailbox. Those were the days! 

Or were they...

Getting a big refund might feel like the best thing ever, but it's really not. What it actually means is that you have provided the government with an interest-free loan for the past year, and are just now getting your hard earned dollars back. On the other hand, if you actually owe money it means that interest-free loan came your way and the government was lending you money. I know it can be a tough pill to swallow to owe a chunk at tax time, but it helps a little to think of it this way. The best thing you can do is attempt to level out your taxes, so you come out neutral every year...easier said than done though. 

If you are in a position where you are getting a refund, then consider what to do with that money. Because it can often feel like found money, you might be tempted to splurge on something you couldn't normally afford or take a hot vacation to escape the endless winter. However, your tax refund isn't actually the windfall you might think, it's actually money you should have received over the past 12 months as earned income. Say you're getting $900 back from the government, that's not life-changing money, but it sure could go a long way in refreshing your wardrobe. What that actually means, though, is that your income should have been $75 higher each month. Doesn't sound like such a big deal anymore right? 

How would you have allotted that money into your monthly budget? That really depends on what your primary objectives are, but here are a few suggestions that might not be the most fun but would make the most financial sense. 

Pay Down Debt
This is always the top priority for when you have excess cash available. High-interest debt (like credit cards) are a killer when it comes to your finances, and you always want to get rid of them as soon as you can. Putting a lump sum on your most expensive debt will decrease the amount of interest you spend over time and free up additional money in your budget down the road. Eliminating those high-interest debts first is your best bet, but you're all caught up on that front you can also use your refund to make a lump sum deposit against your mortgage. 

Top-Up your Emergency Fund
Next, on the list would be ensuring you don't go back into debt when the unexpected happens, and the best way to do that is to have a fully funded emergency fund. You want this to be readily available so keep it out of the market and just in a high-interest savings account. An emergency fund will keep you on track if you get in a car accident (those deductibles though!), your furnace breaks down, or your dog needs surgery. 

Save for Retirement
There's never a bad time to increase your savings rate so why not add your tax refund to your RRSP. This has the added benefit of putting you in a better position when you retire but will also help you get another tax return next year. We all know that the earlier you start saving for retirement, the better off you'll be because of the wonder that is compounding interest, so take advantage of time and put that money to work. Instead of an RRSP, you can also invest in your TFSA, if you're unsure of which option would be best for you right now then check out this post on that very subject. 

Invest in Yourself
One thing that people don't always think of is spending money on something to improve yourself. And no...I don't mean go and get yourself some plastic surgery! Depending on what your career path is, getting more education is often a sure way to getting a raise. Is there a course you need to take or a conference you could attend to get you to the next level in your job? Increasing your income is one of the biggest factors when it comes to your finances, so having to outlay money at the start is can quickly pay itself off and then some. Pro tip, make sure your boss thinks your plan is as brilliant as you do. The last thing you want is to spend all the money and not get the raise! 

Treat Yourself
I'm all about balance, so if you have yourself all set up in each of the above categories, then I don't see anything wrong with spoiling yourself. There's no fun in always saving your money for a rainy day, but you do need to make sure that you've already got an umbrella stored away ;) Let's make a deal though and not blow your entire refund on something silly, how about half? Doing something smart with a portion of that money will make you feel better about spending the balance on something more entertaining. Maybe you already have a big purchase that you are saving for (new car, kitchen renovation?), this money could get you closer to that goal.

So tell me, have you done your taxes already this year or are you still procrastinating like me? And if you got a refund, what are you going to spend it on? 

Wednesday, 15 March 2017

7 Steps to a Better Resume

If you are currently on the job hunt in Alberta, you are likely VERY aware that the job market is really tight and there is a lot of competition for jobs. Recent reports have our unemployment rate hovering around 8.3%. This is down slightly compared to late 2016 when it peaked (hopefully!) around 9% but still very high when compared to two years ago when it sat at 4.6%.
I've been lucky to have had stable employment since I graduated University almost a decade (yikes!) ago. I'm only on my second job in that time period, and the one move I made came out of connection in my industry. I know networking isn't everyone's favourite thing (personally, I hate it), but having an in can be the exact thing you need to set yourself ahead of the crowd. 

While you're working on meeting the right person, you will also want to make sure you're resume is looking good and is actually going to get you and interview. I've had to look in my share of resumes and let me tell you, resume writing is not a skill everyone has! Particular things drive me nuts when I'm browsing through a stack of resumes and other things that will get you moved to the keep pile almost instantly, and the most frustrating thing is that it is SO easy to avoid simple mistakes. Let's talk about that, what can you do to improve your resume and what do you need to make sure you avoid at all costs. 

1. No Pictures
Nothing catches me off guard more than someone who includes a head-shot on their resume. I realize that in some places this is the norm, but here in Canada it most certainly is not. The only reason it might not be a hard pass is if you're applying for a modeling position, but if that's not the case then just don't do it...ever. 

2. Spelling and Grammar
You would be shocked how many resumes that I have read that have spelling or grammatical errors in them. Come on people! This is the easiest of easy fixes. Use the built in spell check on your computer and take advantage of free grammar programs to catch the most obvious errors (I like Grammarly). Then get someone to proofread your resume to make sure there is nothing you've missed or maybe a more efficient way to say something. Not taking simple steps like this makes you look lazy and nobody will want to hire you. It might sound harsh, but if I'm going to through a bunch of resumes, any with spelling or grammar errors will instantly be put in the 'no' pile. #sorrynotsorry

3. Short and Sweet
Keep things concise, so the person looking at your resume actually takes the time to read through it. I highly recommend keeping it all on one page if possible. You don't necessarily have to put every single position you've held on your resume. If there are jobs that don't apply to the job you're applying to then feel free to leave it off. It's more important that you show your potential employer that you have the skills they are looking for. Basically, if you are applying for a job as an architect, you don't need to include your job history as a line cook. I'm also not a fan of the 'Objective' section that is included in most resume templates. It just feels so fake and unnecessary. 

4. Reliable References
You can hold off and not put your references directly on your resume, but I don't think it's a bad idea to include them. The chances of a potential employer contacting them before you go in for an interview is slim (checking up on references sucks). Keep the number of references limited to 2-3 and make sure they are good ones. The last thing you want is to have a successful interview and then have one of your references not give you a glowing review. This is why you always, always need to check with people before you list them. If you are having trouble coming up with references, then think outside the box. It doesn't always have to be an old boss, you can use a co-worker or a family friend that can speak to your personal attributes. A good reference from a not so great source is still better than a bad reference from a more credible source. 

5. Qualifications are there for a Reason
It might seem like a good idea to apply for ALL the jobs, but it really isn't. There is nothing more frustrating than reading a resume and wondering why the heck someone applied to the job. On just about every job posting you look at there will be a list of qualifications or required skills, make sure you fit the bill. If not, sorry, but keep on searching. If you are dead set on getting a particular type of job that you consistently don't have the qualifications for then it might be worth your while to work on that. Maybe there's a course you can take or some other job you can get to build your experience. It might not be ideal, but it's better than doing nothing. Sometimes you have to spend a bit of money to better your education because getting your dream job. 

6. Employment Gaps
There's not much that scares away a hiring manager more than an unexplained hole in your work history. If you have lots of short term jobs and gaps between them all, it makes it look like you aren't able to hold down a job and that no one else wants to hire you. Be aware of this and try to cover yourself. Obviously lying on your resume is not the way to go, but leaving out a few details can help you get your foot in the door. Instead of putting down exact employment dates maybe just organize it by year, so it doesn't look like you've been off work for as long. Details like this are always easier to explain in a person so make sure your resume highlights only the positive. 

7. The Dreaded Cover Letter
I hate cover letters, I hate writing them, and I hate reading....but, you know what? Write one anyways! This goes back to the laziness factor. Taking the time to introduce yourself through your cover letter makes it look like you are more serious about getting the job. It might not even get a second glance from a prospective employer, but it's not going to hurt your chances. You'll want to follow many of the same tips we've talked about for your cover letter; proofread, keep it concise and highlight your qualifications. Make sure you personalize at least a portion of it to the company you are applying to so it doesn't look like you just have a generic letter for everyone. 

Hopefully, these resume tips will help you on the job hunt, and if you've got other tips, please feel free to post them in the comments. 

Wednesday, 8 March 2017

Healthy Amount of Stress

I was recently listening to the audiobook version of '#Girlboss' (worst title ever) by Sophie Amoruso, and there was a section in the book that talked about stress that stuck with me. The rest of the book was just ok. I liked Sophie's no-nonsense attitude, but listened to it as an audiobook and found the narrator to be a bit annoying. It was also the very first audiobook I've every listened to (I talk about that here), so maybe my lack experience was a factor. Is that a your audiobook listening skills improve with practice? The quote that got me thinking was actually from a section written by Leandra Medine (an author and fashion blogger over at Man Repeller):
"I also think you age a lot quicker if you can't keep yourself busy and under the right, healthy dose of stress. Too much of anything obviously isn't a good, but as my dad always said: Overwhelmingly busy is a much better state to be in than overwhelmingly bored."
I could not agree more with this statement. People always complain about how much stress they are under and while too much stress is definitely a thing, the right amount keeps you motivated and efficient. Have you ever had a job where there's just not much going on, and you find yourself browsing the internet to keep yourself entertained? I sure have! And I find when that happens, even the smallest of tasks feels like such a drag, and I end up pushing off everything just to do one more (four more) stupid Buzzfeed quizzes. On the other hand, when I have a job where I am consistently busy and have a (not too huge) pile of files on my desk to get through, I work harder, better and faster (your welcome for getting that Daft Punk song stuck in your head). It's way too easy to fall into a non-productive rut when you don't have a bit of stress nipping at your heels. 

Different people have varying levels of tolerance to stress; a level that might result in peak performance for one person could cause another to buckle under the pressure. You just need to figure out how much stuff you can take on to keep yourself in that target zone, without overloading yourself. How exactly are you supposed to find that sweet spot, though? Well, trial and error I guess. Think back to times where you felt like you were thriving under pressure and then compare them to times where you were under too much stress and just wanted to cry. What was the difference? It also depends on what area of your life you are dealing with, let's talk about that a bit more. 

Money Stress
Since this is a blog about finance, we're going to start there. If you are feeling overwhelmed by your finances, then there are a few things you can do to get things in order and running more smoothly. Debt tends to be the biggest money stressor but even living with high levels of debt can be bearable if you have a solid plan to pay it off. 
  • Budget, budget, budget!: The number one thing you can do to feel in control of your finances is to create a monthly budget for yourself. This does not need to be complicated (money in, money out) but knowing where your money is going and how much you can spend on what is essential. 
  • Emergency fund: An unexpected expense can often throw a financial plan off track, so it is critical to have an emergency fund to cover your butt. I like to have about 3 months of expenses saved in my emergency fund but if job security is something you are concerned about it may make sense to bump that up. I wouldn't go overboard, though. An emergency fund needs to be readily available and should not be invested, and you don't want to have too much of your assets sitting on the sidelines.
If you're living the good, no money stress life then it might be time to up the ante. As we discussed above, stress can be a motivating factor and might be the push you need to better your financial position. I don't recommend going on a spree, so you have debt to pay off but maybe set yourself a goal to save a percentage of your income.

Work Stress
This can be a tough one and more of a challenge to solve. Unless you're the boss, you don't always have control over what tasks are assigned to you and how fast they need to be completed. There are some things you can do to make sure you are working efficiently and hopefully lower your stress level. 
  • Prioritize: When I get overwhelmed at work I find that it helps to take a second, stop whatever it is you are doing and make a priority list. It might feel like everything has to be done right this second, but I promise you, it doesn't. Once you figure out an order to do things you will be able to focus on checking things off your list instead of freaking out over everything at once. 
  • Plan ahead: Most jobs have busy times and slow times, so take advantage of breaks to get a step up on the busy season. Keeping your stress level at that healthy amount consistently by staying productive even during slow periods will mean fewer freak outs when things get crazy. 
  • Ask for help: Maybe your boss doesn't think you're doing the job of two people, but if you are always feeling stressed out and overworked then it might be time to discuss this. You might just be so good at hiding your stress that no one has any idea you are suffering. It might not even be a matter of hiring a new staff member, but just re-assigning some tasks internally. 
If it's boredom you are dealing with at work, then there are also things you can do to boost your motivation. Perhaps there's a project that no one wants to do, but that would make things run more smoothly. It's never a bad idea to take on extra work, you can use it to your advantage when performance review time comes around. If there's nothing available, then consider doing something that might not be directly work related but will improve your skillset. There might be an online course you can complete or a book you can read that will make you a more productive employee.

Home Stress
I'm no expert on relationships or parenting (no kids here), but I do have a few tactics for dealing with stress when life gets in the way. 
  • Just say no!: I think everyone is guilty of agreeing to do something they don't really want to do, so stop doing that. You are allowed to say no! Taking on too much is going to result in you doing things poorly, and nobody wants that, so don't feel bad for passing on an event or refusing to take on another task. 
  • Me time: Schedule time to 'treat yo self'! And if you've never watched Parks & Recreation then you should start there, such a good show. There's plenty of ways to be kind to yourself that don't even involve spending money. Take a nice hot bath with lots of bubbles and a good book, go for a long walk with your dog or do a little at-home yoga. 

I always seem to have a hard time finding middle ground at home, I always either have way too much on the go or nothing at all. Not ideal! I'm also not the best at getting myself motivated to do things. One of my New Year's Resolutions was to build up a bit of an archive of blog posts so that I never have to scramble. Let's just say that is still a work in progress...I've been better about sticking to a schedule but am still writing most of my posts the same week they go up. I need to figure out some way of rewarding myself, that seems to work for getting me to the gym! I always see that quote that talks about not rewarding yourself with food because you're not a dog...but hey, if it works ;) 

How do you guys keep yourselves motivated during slow periods and from losing your minds when you get stressed out? 

Wednesday, 1 March 2017

The Fear of Missing Out

The last couple of weeks in Edmonton have been all Garth Brooks, all the time as he completed his epic 9 concerts at Roger's Place. Am I a Garth Brooks fan, nope? Did I almost convince myself I should buy tickets to the show just because EVERYONE else was going? Absolutely, but I was talked off the Ticketmaster ledge by my more rational minded (aka. more country music hating) friend. Is everyone currently raving about how incredibly awesome every single show was...heck yes. Am I sad I didn't get to experience it? Not so much. I find that more often than not, you aren't really that disappointed when you don't get suckered into missing out on something you didn't have much desire to do anyways. If you desperately want something, then yes, do everything you can to make it happen but if you're feeling indifferent to something that's a sure sign it doesn't deserve your hard-earned dollars. 

Fear of missing out is a thing, it has its own acronym (FOMO) and search #FOMO anywhere on social media, and you'll get inundated with results. RateHub actually completed a study just last year and discovered some pretty staggering results: 

  • 26% of Canadians have experienced FOMO (and that jumps to 48% when you focus just on millennials)
  • 70% of Canadians believe 25% of their debt is because of FOMO
  • 50% of millennials feel FOMO when on social media

But Why?
Humans are competitive, that shouldn't come as a surprise to anyone given our mild obsession with handing out awards (I'm watching the Oscars as I write this...go La La Land!) and playing (or watching) professional sports. Being the best used to be a matter of life or death (way, way back when) but those survival instincts have stuck with us even though the stakes aren't so high. Now it's almost the opposite...we push ourselves so hard to live up to the ideals set forth by people we might not even know that it affects us emotionally, physically and financially. 

The stat from the above survey results that really stands out to me is that 70% of Canadians can attribute 25% of their debt to FOMO! Going into debt just to keep up with your friends, neighbours, internet acquaintances, whoever, is not ok. Let's all make a deal right now that we're not going to do that anymore ok? Spending money that you should be saving is one thing, but charging a FOMO experience to your credit card is bad news. Not only will it cost you the upfront charge but factor in the 18%+ interest rate you pay and what you're paying is going to increase each month you can't catch up. It's not worth it, and I can promise that you're going to regret it in the long run. 

It's not just about money either, people (myself included) are hooked on social media and being up to date on all the latest news. FOMO can lead to unrealistic expectations of what your life should be. Everyone knows that no one's life is as perfect or exciting as it seems to be on Instagram and yet we still compare ourselves to all those edited posts of other people's daily lives. Just take a gander at your own posts, is it an authentic portrayal of how you live or what you do? Or is it more likely a recap of the highlights with none of the lows? I have no problem with people posting those pictures, but I just have to remind myself that everyone is in the same boat and only let you see what they want you to stop comparing! 

How to overcome FOMO
Turning off your fear of missing out and keeping your focus inwards is no easy task, but there are a few things you can do to keep yourself on track. 

Set Goals
Specific savings goals are a saviour for me when it comes to sticking to a plan. I need something to look forward to and something to put my money towards otherwise I end up spending it on random things or experiences I don't even really want (Garth Brooks tickets). If I can say to myself, no Sarah, if you spend your money on this stupid thing you won't be able to do this super awesome thing in the future, I'm way more likely to stay strong. 

Having a stable budget can also help dissuade you from spontaneous spending. If you know you have a set amount of money to spend on entertainment, clothing, food, etc. then you'll know when you can and can't afford to splurge a little. 

Take a Social Media Vacation
Being flooded with people talking about an upcoming concert or wearing an article of clothing you just HAVE to have is not going to help you convince yourself to go without. Give yourself a break and do something to distract yourself (that doesn't involve spending money). Take your dog for a walk, have a nice long bath, or read a book, binge watch a new TV show...distracting yourself is key. And turn off your phone, even if it's just for a few hours. Not seeing the notifications going off will make it easier to stay checked out. 

Read for Inspiration
Have you ever read a book on personal finance and been suddenly inspired to cut your spending and start saving for retirement? My hands up! This happens to me all the time and not even just for personal finance. I've read 'Born to Run' by Christopher McDougall and had dreams of becoming a marathon runner (ok, not entirely, but I did run way more than my norm) and 'The Life-Changing Art of Tidying Up' by Marie Kondo had me cleaning out my closet before I finished the first chapter. Sometimes a little push from a good book is all you need to change your mindset. 

Like-Minded Friends
The biggest influence on your spending habits is often your friends, and this is particularly the case for millennials. Frugal friends will almost always mean you spend less. Now I'm not suggesting you banish all your friends and attempt to make new, less spendy ones, but maybe try and come up with different things you can do together that cost less. Instead of always going out for dinner, how about hosting a girls night in? 

Do you guys find that the fear of missing out impacts what you do? Or have you figured out ways to cope with it?

Wednesday, 22 February 2017

What You Need to Know About RRSP's

We've been having some really mild weather in Edmonton recently which makes it feel like Spring is already here, but it's still February. For us Edmontonians that means we could very well be faced with another bout of winter...please no. March can be such a sketchy month, it can be beautiful and warm with hardly any snow, or it can be freezing cold and blizzarding. It's also the month of my birthday, and my mom still complains about trying to plan parties when I was a kid because of how unpredictable it was. I would have dreams of going skating or tobogganing, and it would end up pouring rain. Seasons...who needs them!? Uh, nevermind...I totally like seasons. Green Christmases are the worst. 

Anyways, February doesn't just mean surprise weather conditions, it also means that you still have time to make your annual RRSP contribution to lower your 2016 taxes. The RRSP deadline doesn't actually follow the calendar year, and to make it even more confusing, it's not always even on the same date. Usually, it lands on March 1st, but the actual rule is that you have the first 60 days of the year to contribute to your RRSP for the previous tax year. This means that every four years a leap year comes along, and the deadline gets bumped up to February 29th...just to keep us all on our toes! And all you leap year birthday babies actually get to celebrate ;) 

Automate It
One way to get around the confusion and never forget the deadline is to STOP making annual, lump-sum contributions to your RRSP. No, I don't mean skip your contribution...I mean make it an automatic monthly (or weekly, bi-weekly, semi-monthly...whatever) payment and never have to think about it again. The only thing to remember here is that pesky little 1st of the month. If you have your automatic contribution set to run on the first, every four years that March 1st payment won't count for the previous year. Maybe save yourself that headache and set it to run on the 15th or even the 5th. 

Contribution Limits
Each year you are allowed to contribute 18% of the previous years earned income, up to a maximum amount set by CRA. For 2016 that maximum was $25,370. You don't lose your RRSP room, so if you have missed contributions from past years, you can catch-up at any time. The easiest way to check your current room is by looking at your 'Notice of Assessment,' it will be listed there. There are penalties to pay if you happen to go over your RRSP contribution limit. You do have a little leeway; CRA gives you a cushion of $2,000, but if you go over that then you'll have to pay a tax of 1% per month on the excess amount. This will keep accumulating until you either withdraw the over-contribution or earn more room. Trust me, it's a pain to fix so just don't do it. 

If you contribute to a group RRSP through your employer, then those contributions also count towards your annual limit. This also applies if you are contributing to a pension plan. You will see a 'pension adjustment' listed on your NOA that lowers the amount you can contribute. 

Why an RRSP?
I've talked about the benefits to an RRSP before (find that here) but I'll give you a quick recap. You might think that the biggest advantage of an RRSP is the refund it can give you when you file your taxes, but that's not entirely true because you still have to pay tax when you withdraw the money down the road. The main benefit is that you can make a deposit to your RRSP when you are in a high tax bracket and then withdraw the funds in retirement when you are hopefully in a lower tax bracket. This is why it doesn't always make sense to contribute to an RRSP, especially if your income is low at this point of your life. You'll get the biggest advantage by contributing the most to your RRSP when you are earning at your highest level and then withdraw those funds when your income is at it's the lowest level. Make sense? The money in your RRSP is also sheltered from tax until you take it out, so you won't get any tax slips for earned interest or capital gains every year like for non-registered accounts. 

One exception to the contribute during high income and withdraw during low income is if you are planning to take advantage of the Home Buyer's Plan. This is a program that allows first-time home buyers to withdraw up to $25,000 tax-free from their RRSP to help them buy a house. I like the idea of saving your down payment (at least the $25,000 of it) in your RRSP because then you can use the tax refund to get you closer to your savings goal. You do eventually have to pay the money back into your RRSP over the next 15 years (and there's no additional refund on the repayment amounts), but I know from my own experience saving up to buy a house that every single penny counts. If you're buying your first home with someone else you can use the HBP for each person. 

How much will you get back?
The refund you will get on your RRSP contribution is based on your income and marginal tax bracket. How it works is that your income for the tax year will be reduced by the amount you contribute, therefore lowering the amount of earned money you have to pay tax on. Take a look at the table below to figure out which tax bracket you fit into (these are Alberta rates but you can find other provinces here, and you're looking for the federal/provincial combined rates).

Let's say your income is $94,000 and you want to make an RRSP contribution of $5,000. Because you are in the 36% tax bracket, you would get a refund on the contribution of $1,800 (or lower the amount of tax you owe by that much). If you want to do a quick estimate on what you may owe (or get back) on your taxes and see the impact an RRSP contribution would have, you can check out the calculator from TurboTax. 

Spousal RRSP's 
You may have heard of income splitting and making use of a Spousal RRSP for that purpose. For a Spousal RRSP plan to make sense for you, you first need to have a spouse (obviously), and then one of you needs to have a higher income than the other. Sound like you? If so then keep on reading...How it works is a Spousal RRSP will be opened in the lower income earners name, and the higher earner will make the contributions to the account. The higher earner will get to use the contribution on their taxes (hello refund), but then when the money is withdrawn in retirement, it will be in the name of the account holder (the lower income earner). This helps with income splitting by evening out the amount of money that ends up in each person's name. If all contributions were deposited into the higher income earners RRSP, they could end up with a large account and have to pay more tax because of the more significant withdrawals. Taking advantage of Spousal RRSP's and pension splitting can even out a couple's retirement income and lower the overall tax bill they will have. 

The contribution room for a Spousal RRSP comes from the spouse who is making the contributions (the higher income earner), and it's the same limit that counts for their personal RRSP. If their notice of assessment shows $16,000 it would apply to contributions into a regular old RRSP or a Spousal; they could do the full $16,000 in either or split it up between the two. 

One important rule to remember is about three-year attribution. You have to leave the money in the account for at least three years from the contribution date otherwise, the withdrawals will be charged back to the contributor's name...defeating all purpose of the Spousal RRSP. If you are getting close to retirement (and needing the funds), you might want to halt Spousal contributions and stick with your regular RRSP. 

As always, let me know if you have any questions in the comments. Happy RRSP season :)

Wednesday, 15 February 2017

Reading Books or Listening to Audio Books?

I'm a reader, I love curling up with a great book and have ever since I was a child. It's one of my favourite ways to spend a lazy Sunday afternoon, and my vision of reading has always been cracking open a new novel and diving in. Because of this, I was a late convert to the e-book craze and actual books are still my preference. I did get a Kobo as a gift a couple of years ago and like it, but mostly for more hauling heavy books along in my suitcase is a lifesaver! At home, though, I'll always choose a real book to hold and flip the pages. This could also be because I cannot for the life of me get ebooks from the library to load onto my Kobo. I don't consider myself totally inept at computers but when it comes to that process...ugh, if I have to try that again I might throw my computer out a window. And I'm definitely not quitting on the library anytime soon. My free library membership means I haven't spent a dime on books in years. Basically, if you're not a library member, then I'm not sure we can be friends anymore ;)

Are Audio Books Cheating?
This brings me to audio books and my internal debate about whether or not to count them as actual reading. I always set an annual reading challenge for myself on Goodreads, so I need to be able to keep track. I had never actually listened to an audio book before this year, and that's not because I just don't like listening to things. I constantly have headphones in listening to music or one of a bunch of podcasts I keep up on, but audio books were another story. To me, they feel like cheating. I think that one of biggest benefits of reading books is seeing the words on the page and having to interpret them with your brain. Doing so puts those words in your head, and you'll remember what they mean, how to spell them, and what proper grammar looks like. You can be reading complete garbage, but just the mere act of reading those garbage words stimulates your brain and makes you smarter. Audio books take this away from you.

However, after some rather heated debates on the subject, I've been convinced to give them a chance, and I have to admit that I don't hate it. I did make a deal with myself, though, and the only way I'm allowed to count audio books is if they teach me something. This means that I'll be listening to plenty of personal finance and business books but no fiction novels I would read for fun. So far this year I've listened to '#Girlboss' by Sophia Amoruso (just ok) and 'Flash Boys' by Michael Lewis (really enjoyed it) and am starting to get won over. The one issue I have now is that I'm falling behind on my podcasts because audio books are 10+ hours long! That's a lot of valuable listening time I'm now devoting to 'reading.' The one big issue I am having with audio books is the distraction factor. For real books, it's easy to just not flip the page if your mind has wandered but what are the chances you are really going to pull out your phone and hit rewind? For me, not good at all...I'll just catch back up at some point. And this happens to me ALL the time! I'll be at the dog park and get distracted by a super cute puppy or check a Twitter notification on my phone and go down some sort of rabbit hole. Focusing on one thing is obviously not my forte :)

What does the science say? 
Daniel Willingham is a psychology professor who has researched and written books about reading, and he tackles the very question of whether or not listening to audio books is cheating in a blog post here. He argues that reading and listening to books are 'mostly' the same thing. There are two processes involved in reading; decoding (figuring out the words) and language processing (figuring out the story). The comprehension part of books doesn't matter how you get the information as reading and listening comprehension are highly correlated (if you're good at comprehending the written word you'll be almost as equally good at understanding the spoken word), but decoding is unique to reading. Most adults who have grown up reading have already developed a high level of decoding capability, so you're not likely to make significant gains in this department anymore. That's where the 'mostly' the same comes into play...avid readers will absorb 'mostly' the same benefits with either method but if you're a developing reader then building up your 'decoding' skills is important.

I feel like this kind of proves both sides of my internal debate. On the one hand, you lose out on the decoding aspect of reading but on the other, you don't really need that as much anyways. I guess I'll settle with my previous decision to read whatever I want and only listen to 'smart' books.

What do you guys think? Are you pro audio book or loyal only to the written word?

And just because we're talking about books I thought I would share a few of my favourite reads with you, and please feel free to share your favourites in the comments...I'm always on the hunt for a new great read!

'The Art of Racing in the Rain' by Garth Stein

'I Let You Go' by Claire Mackintosh

'Pride & Prejudice' by Jane Austen

'The Language of Flowers' by Vanessa Diffenbaugh

'The Martian' by Andy Weir

'The Brother's K' by David James Duncan

Wednesday, 8 February 2017

Meal Planning for the Budgeting Win

Everyone knows that eating out is expensive and a few extra restaurant meals can really blow your monthly budget. This is something we struggle with in this house ALL the time. I like going out to eat, trying new restaurants and having someone else cook for me...kind of the best right? But do I like it more than being able to pay all my bills and hit all my savings goals at the end of the month? Nope...well, almost always nope. Sometimes a new fried chicken place opens just down the street, and you overindulge a little, whoops. Not only is eating out hard on your wallet it's also not so great for your waistline. I'm more likely to overeat when I'm at a restaurant than if I'm eating at home and make healthier choices when meals are planned in advance than when I'm staring at a menu. 

Everything in Moderation
I'm not saying you can't ever eat out, but you need to have a plan in place to make sure you're not doing it too often. For us, that means we allow ourselves to have one dinner and one lunch out per week. Sometimes that's a fancy dinner if there's a special occasion, but it's more typically a chance to hit up one of our neighbourhood favourites. Dinner out doesn't need to be expensive, but it's always going to cost you more than if you cooked for yourself at home. I actually find lunches out much harder to stick to. The bf is great at this and VERY rarely eats out at work, and when he does it's usually just Subway or something equally as inexpensive. I try really, really hard to be good most of the time but I also have co-workers who are very convincing about going out to grab lunch and sometimes it's just so hard to say no! We've made a once a week deal though and have been pretty good at sticking to it. 

Making a Plan
The one thing that dissuades me from eating out is having a fridge full of food to cook. I HATE throwing out food, it makes me crazy! So if all the ingredients for a recipe are ready to go, you can bet that meal will get made. If I have to run out to the grocery store and buy anything, though, all bets are off and we'll be way more likely to grab some take-out or head to a restaurant. This is where meal planning is a lifesaver. I don't cook; I hate cooking...a lot. The bf does like cooking though and is way better at it than me, so that's his job. My job is doing the organizing part; picking what meals we are eating for the week and putting together the grocery list. Then we have a super romantic Sunday afternoon date at the grocery store to pick up everything we need for the week. Grocery shopping sucks but going together makes it a little bit better and getting everything in one shot saves those mid-week trips that make take-out sound so tempting. 

One thing that has made grocery shopping easier has been to use a home delivery service every so often. We've been using Spud for almost a year and have been really impressed with it. It is slightly more expensive than the grocery store but the quality is excellent and having fresh produce delivered right to your door is so convenient. Most of our grocery shopping is done at Superstore, which is not known for high-quality fruits and veggies and is almost always out of something we need, so Spud has filled a gap. If you'd like to try it out, you can get $20 off your first order by using my referral code CREDM-ERALON (I'll get a credit too). Their customer service has always been fast and friendly, and they guarantee all their products; if you're disappointed in something just let them know and they'll refund you for it ASAP. 

The Eats
Pinterest is an endless resource for recipes and that is where I find probably 99.99% of the meals that we eat. I might as well just get rid of our stack of cookbooks because I never even look through them. Both of us work full time so quick dinners are essential for weeknights and slow cooker recipes are even better. There's not much better than to walk into the house after work to the delicious smell of an already cooked dinner. I also like to choose recipes that have leftovers for lunch the next day. As I said above, I hate food waste, so making sure there is enough for another meal is an easy way to stop myself from going out for lunch. 

To give you a head start on meal planning I'm going to include the recipes we've got on the calendar for the next two weeks. There are 12 meals in total, 6 dinners to make at home plus a freebie day each week. If you want even more suggestions, you can check out my 'Dinner Ideas' board on Pinterest. 
  1. Red Curry Lentils - we haven't made these yet but my mom made them for Christmas eve dinner (curry night!) and they were a hit! I love lentils and am making some progress in convincing my meat-loving boyfriend that they are a real meal. 
  2. Easy Skillet Baked Ziti With Sausage and Ricotta Recipe - this is a brand new recipe for us, but the Serious Eats food blog is a highly trusted source in our house. J. Kenji Lopez-Alt (the recipe creator) is 'the guy' when it comes to cooking. 
  3. Baked Buffalo Chicken Taquitos - cream cheese and hot sauce...what's not to love? Cooking the chicken breasts in the slow cooker means these are really quick to put together for dinner. We just serve them up with a side salad and there are always extras for lunch. 
  4. Kalua Pork Tacos - tacos have become a weekly staple because and this recipe is my favourite. The slow-cooker pork is delicious, and I love the addition of mango to the tacos. 
  5. Creamy Thai Sweet Potato Curry - even though this curry is meatless it's still super satisfying and filling. It's already packed with spinach but we usually throw a couple of handfuls of peas in too. Don't skip the peanuts, they give a nice added crunch. 
  6. 7-Ingredient Easy Zuppa Toscana (Creamy Gnocchi Soup with Kale and Sausage) - this is my all time favourite soup! I'm really fussy about meat and find that the Italian sausage from the grocery store can be a little chewy so we've been using these sausages from Spud and they are so good in this soup. 
  7. One-Pan Chicken Burrito Bowls - Another quick and easy meal for during the week. I actually omit the chicken from my portion, so this is an easy meal to make vegetarian. 
  8. Thai Coconut Curry Shrimp Noodle Bowls - I'm just now noticing that there is a curry trend going on in this meal plan, so my apologies if that's not your thing! These shrimp bowls are so delicious and packed with flavour. Do as the recipe says and keep the noodles separate until serving or they'll get mushy. This goes for packing leftovers too.
  9. Huevos Rancheros - You're right, this is a breakfast recipe but breakfast for dinner is a thing. Eggs are cheap, full of protein and delicious so why wouldn't you want to include them at dinner time. 
  10. Korean Beef and Rice - I can't even count how many times we've made this recipe. It's about as quick and easy as you can get. Usually, we'll toss in some broccoli with the saucy meat to hit the veggie quota. 
  11. Asian Pork Tenderloin with Ginger Glaze - Another slow cooker recipe that will make dinner a breeze. The glaze for this pork is amazing, and you can serve the pork over salad and it even doubles as a dressing. 
  12. Sticky Thai Peanut Orange Chicken - Speaking of delicious sauces...this sweet, citrusy, peanutty concoction is where it's at.
There you have it, two weeks of dinners that will hopefully get you off on the right meal planning foot. Are you guys avid meal planners or are you more prone to winging it? I'm also always on the lookout for new recipes, so if you have any go-to's let me know in the comments! 

Tuesday, 31 January 2017

Investing: Fake it 'til you Make it

Investing can be terrifying...seriously! I've been working in finance for a while, and the actual picking and choosing of investments has never been (and likely will never be) my thing. Need to know the ins and outs of RRSP's, TFSA's, pensions, whatever....I'm your girl but want to chat analyst reports and company fundamentals, and you can keep right on walking past my office. Here comes the but though....investing is important, and if you really want to hit your long-term saving goals then you better go and make it your best friend (or we'll settle for acquaintance). Saving up your hard earned dollars is amazing but leaving it sitting in a bank account (even a high interest one) is not going to do too much for getting you to your goals. You need to get those funds in the market and working for you. The longer your time frame, the more you can take advantage of investing and compound interest will be working in your favour.

Whether you decide to go it on your own or enlist the help of a financial advisor, it's important that you at least know the basics of investing. It's crazy to me that we go through 12 years of school and never have to take one class on managing your money, it really should be a requirement for all high school students. Investing, building credit, student loans, staying out of debt...these are essential skills for being an adult. You know what isn't? Advanced algebra, studying poetry, and knowing the date Archduke Franz Ferdinand was shot have been zero use to me since I wrote the respective high school exams. Sidebar over, back to the point. Investing - like it, love it, or hate need to know how to do it.

Where do you start? 
Probably the hardest part about investing is actually getting started. You can't just pick some random company, invest all your savings in their stock and hope for the best. Right? Nope...well not exactly. I am not telling you to actually put your money into anything before you've done your research, but there's no harm in practicing. One of the best ways to get a feel for you risk tolerance, learn about the volatility of the markets and what characteristics to look for in a stock is to build yourself a fake portfolio and watch what happens. This doesn't even have to cost you anything. There are free services available where you can build a mock portfolio and track the results. I like Google Finance but Yahoo Finance will also fit your needs, and if you want access to additional research and tracking software you can look into paying for Globe Investor Unlimited or Morningstar

To get started you'll need to set up a Google account (but really, who doesn't have Gmail at this point) and then go to Google Finance. Click on 'Portfolio' on the right-hand side of the page and you'll be able to start adding holdings to your portfolio. Stocks are an easy place to start as you can begin with adding companies you know. Maybe you're a coffee addict? Add Starbucks. Have a cell phone plan? Buy Rogers, Bell or Telus. Like to travel? Go for Westjet. You get the point. With Google Finance you also aren't limited to just adding stocks; they also have mutual funds and ETF's in their database so you can watch in real time how they compare. Here's a look at a quick fake portfolio I did up using some popular Canadian stocks: 

To get this data, I added each company to my portfolio and used the same purchase date (February 1, 2016) and bought 100 shares of each. I looked up the historical price (search for the company using the main search bar, then click on 'company' and 'historical prices' on the right-hand menu) for that particular date so that I could see a full year of performance. You can absolutely skip this step and use the current date and price to track going forward; adding the historical data just gives you instant results. There's also a graph you can look at to track performance, it's not anything special but does give you an idea of how your fake portfolio has done. Check off the S&P/TSX option so you can compare it to how the market has done over the same time period. As you can see below, my portfolio has tracked the S&P/TSX Composited Index pretty closely but is currently lagging behind. That makes sense because almost all of the companies I chose are on the index. 

Train Your Emotions
You've probably heard people talk about how investing is emotional and to really be successful you need to keep your emotions in check and not let them rule your decisions. It's not easy to watch a stock you own drop in price day after day but, as long as the company is still stable, that's the last time you want to sell. A loss isn't actually a loss (and a gain isn't actually a gain) until you push the button and sell. Same thing goes for if you've had your eye on a stock that just had a big jump in price and is trading at record high levels...probably not the best time to buy-in. By tracking a mock portfolio and watching your investments go up and down day after day, you will be training your brain to not over-react when you've got real dollars at stake. 

You'll also get some insight into how much risk you'll be willing to take. For your first mock portfolio, I suggest adding a diverse range of investments. I wrote about some of the most common types of investments here if you are just getting into investing or need a quick refresher. Pick a few big Canadian companies from different sectors (think energy, banks, communications, retail, etc), a couple of various mutual funds with different risk levels (aggressive growth, income, balanced, etc.), some ETF's (iShares, Vanguard, and BMO all have offerings), and top it off with random stock picks you think might hit the jackpot. Maybe a friend of a friend was talking about this penny stock (medical marijuana is all the rage in Canada right now) that is going to make them a millionaire, add it in and see what happens. You've got nothing to lose at this stage (except maybe your ego) so do it all. What you want to focus on is how you feel when one of your holdings loses a bunch of are NEVER going to be right on all your picks, so you need to know what it feels like to be in the red. If it makes you feel sick and like you are going to lose sleep then that sector is not for you. Figuring out what sort of volatility you can handle in your accounts is half the battle and will really narrow down your investment choices. 

Start NOW! 
The best part about building a mock portfolio is that there is no reason you can't go and do it right this second. Google Finance is free, and you won't need to use any of your own money until you are ready, so even if you're still struggling to pay down your debt and have no spare cash you can still participate. This way you'll be even better prepared when you actually do have the money to invest, and it might even help to motivate you to save faster. 

What do you guys think? Do you find mock portfolios helpful when you're just getting started with investing? 

Tuesday, 24 January 2017

Do you really have to LOVE your job?

How many times have you heard the old cliche 'love what you do'? I'm guessing too many times. I actually hate that saying! It feels like one of those unattainable ideals that we're supposed to live up to; like having a supermodel body, having a perfect relationship or never getting a zit. What if you just like your job? You don't hate it, but if you won the lottery tomorrow you'd be handing in your notice lightning fast and packing up to travel the world or do whatever it is you ACTUALLY really love. If you all of a sudden had endless amounts of cash and wouldn't change a thing about your life (you're lying!) then yes, maybe you actually do love what you do but that's not the norm...not even close. I bet there are way more people out there that hate their jobs with a passion than love them with a passion. And you know what, that's ok? Well, maybe not hating your job that much but there's nothing wrong with just being so-so about it.

For a lot of people (me included) working is a means to an end. I go to work, put in the hours, cash my pay cheque and use that money to fund the things that are important to me. I'm lucky to have a great job and work with great people, so I enjoy my hours at the office but I enjoy my hours out of the office even more. And really, what's so bad about having to put in the time to earn money and build a life for yourself? Everything can't be all champagne and chocolate all the time! Having the ability to work for yourself is a relatively new concept. Our parents didn't have the technology to become famous on Instagram or Twitter or even to make money through blogging. Sure, some people ran their own businesses, but it's been a recent phenomenon for the entrepreneur lifestyle to be so highly regarded. I'm sure many of my fellow 'Millenials' (whether they'll admit it or not) would be all to happy to bump up their number of followers and run a successful blog. I'm not judging...I totally get it! However, it's worth thinking about how your parents made their money and if that was really so awful. 

"Do what you love, and you'll never work a day in your life." 

Ever heard that one before? Let's be honest, no one actually believes that right... Even those people who have a total dream job have bad days, and I bet those bad days feel a lot like work. Think of a person who you think has the greatest job in the world. Maybe it's a big name Hollywood actor or a blogger who works for themselves and brings in six figures a month. I guarantee you even those people have to deal with crappy co-workers, online trolls or just plain old lack of motivation. Having days where you hate your job doesn't mean you're in the wrong line of work, it means you're human...just like everybody else.

There is so much hype out there about becoming your own boss and having an entrepreneurial spirit, but that also comes with a lot of added pressure. Working for yourself means that you no longer have a steady salary to fall back on and you are 100% responsible for every dollar that comes in and goes out. In some ways, that's great and might be exactly what you want, but there is a downside. People who work for themselves are rarely off the clock and are more likely to be answering emails at 10 pm, always interacting on social media or waking up in the middle of the night in a panic because they forgot to send something out.You should also consider the added group benefits that are often included when you work for a large company. Health benefits, profit sharing, pension plans, and insurance are all things you'll have to pay for out of your own pocket if you're your own boss, and those things aren't cheap. Sometimes having a day job where you can leave work at the office and your weekends are all freedom doesn't sound so bad right? 

I've got a foot in both worlds right now. I have a (mostly) full-time day job that I enjoy but never imagined myself doing, and then I'm a part-time blogger. When people used to ask me what I wanted to be when I grew up, my answer was never once a 'financial advisor.' It's something I sort of fell into and have stuck with for almost 8 years with no signs of quitting anytime soon (unless I win the lottery!) I finished University with a Bachelor of Arts degree and no real plan for what I was going to do with my life. Topping my list at that moment was to work for a bit, save money and then maybe go back for another round of university (I like school, what can I say). My previous work experience had been mainly admin jobs, so that's what I started looking for. The hunt brought me to an interview with a financial advisor to be an administrative assistant and, well, the rest is history. I started out doing pretty basic work but was reliable and was eventually given more and more responsibility. After a few years, I had to make a decision whether to stick with it and hopefully continue to grow or pack up my things and go back to school. Obviously, I went with option #1, and that brought me to writing my Canadian Securities exams and becoming an advisor. The takeaway from my employment history? Don't knock it til you try it...that bridge job might just turn into your career. 

Working a day job might not give you the same thrill or instant gratification as being an entrepreneur, but it's also a lot less risky. There's nothing wrong with being satisfied in a job you just like and it's often the most reliable way to hit your long term goals.

How do you guys feel about your current job; love it, like it, hate it? Are you willing to settle when it comes to your career or are you on the path to your dream job?