A Money Coach in Canada

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Sarah lives in Edmonton with her 11 year old son Sam. For a number of weeks he’d been saving up his allowance to buy a pokemon game. He was $6 away.

One day, Sam had a truly tough day at school. He came home discouraged, and no amount of talking could bring him out of his mood. Sam asked his mom to lend him the $6 he needed so that he could go to the store and get the game, to help him feel better.

Sarah thought about it, and decided against it. Her reasoning was two-fold:debt piggy bank

– she didn’t want her son, at 11, to get accustomed to borrowing money to gratify a desire for a purchase item

– she didn’t want her son to look towards buying something as a means of feeling better about unrelated events.

To her surprise, most of her friends responded negatively. They thought for $6, if he could have been cheered up, Sarah should have forked over. Sam’s grandfather in fact, differed enough that he bought the game for Sam (somewhat to Sarah’s annoyance).

What do you think? How would you have handled this?

The financial consumer agency of canada did a study last fall on Canadians and their banking habits.bank

How do you compare?

60% of Canadians deal with only one bank for everything.

8% opened or tried to open a new account at a new financial institution last year

59% claimed that their total monthly service fees were less than $10

85% have a credit card; 58% had more than one credit card – 49% have one at a f.i. other than their primary f.i. ; 3.3 million got a new card last year; 45% carry a balance from month to month

46% used the internet for personal banking; 42% used only in-person traditional banking; 25% use telephone banking

6% claimed they had a serious problem with their institution last year = 1.4 million canadians

60% said they find most information about financial matters hard to understand

What are your banking habits? One institution only? How much do you pay in fees?

depressed manJack is a widower living in Victoria. Jack has a daughter, early 20s still living with him while attending college, and a son, mid 20s, living away from home. Both kids require financial help from time to time. His daughter doesn’t pay rent.

He is a professional, taking home $3400 a month.

Here is his financial picture (see if it doesn’t sound like a lot of us canadians!):
Loans-
car loan,of $330.00/mth;
computer loan-65/mth
a consolidated debt loan of $458.00/mth;
mortgage of $754./mth and

condo fee of $290./mth.

Credit-
a Visa card maxed out at $6200.00 with a minimum of 268./mth;

Utilities are :
oil heat-$170./mth
power-60/mth
water-45/mth
phone/internet/cell-200/mth
water heater bill of 460., currently paying 24/mth on this.

My son’s cable bill ( in my name)- total bill 1000., I pay 100/mth on it.

Insurance-
life-30/mth
house-12/mth

Food / Gas-
I spend about 30 a week on groceries and often don’t have it.
Gas costs me roughly 20 a week.
Dog / cat food- 50/mth
My prescription costs-10/mth
Savings-
none

Ouch. If you do the math, there is barely a couple hundred left at the end of each month.

If this were a friend of yours, what might you suggest? It’s a touch situation, no doubt about it … and one I think a lot of canadians can relate to. I’ll give my money coach suggestions next week. (ps: this image isn’t him! he doesn’t smoke!)

Note:  as always, this case study is a real-life issue by one of our present or past  clients over at Your Money by Design.  Details of the person have been heavily altered to disguise the individuals but the issue remains the same.

Wow – this is an intense one.  She’s not a client, but someone I just got to talking to.   She’s on extremely limited income (approx $18K annually) and because she owes CRA from about 10 years ago has to operate outside the banking system!  Every cheque she gets has to go through money mart, which charges $8 per cheque cashed.  When the cheque itself is only for $30, that’s virtually extortion!   My question isn’t so much about money mart ethics as this:  does anyone out there know how long CRA will come after you?  At what point could she safely come inside, so to speak, and stop this craziness?

Chris Newell, like me a 40 something, has done a lot of thinking and grappling with her relationship with money.
While not a case study per se, it’s a great example of real-life issues and real-life solutions.

My philosophy for money was shaped while I was quite young, and this has served me in many ways, but I have struggled with money issues and have been extremely stressed out about money, many times throughout my life.

Like many baby boomers, I got my first full time job and moved into my own apartment right after finishing high school. (This wasn’t so much a choice, as it was the circumstances in my life at the time). The process of survival seemed obvious to me. Get a job. Get paid. Pay the rent. Buy the food. Play with what’s left over. Because one of my jobs at that time was working in a bank, I also had a chance to learn a lot about financial management such as budgeting, credit, loans, savings and investing. This knowledge has been invaluable to me as it has helped me navigate the tumultuous financial waters of my life of changing jobs, unemployment, and health crisis, not to mention financially assisting many relationships, (I tended to be attracted to the co-dependent types).

My feelings about money have waxed and waned throughout my life, but overall I’d have to say that I’ve probably felt more angst and contempt about it than peace and joy. Today I work hard at my relationship with money, which means, like any relationship, there’s what I put into it, and what I receive from it.

I have a formula which I’ve adopted for this:
Money – Earn It; Spend It (Needs 1st, then Wants); Save It; Grow It; Share It.

As long as I adhere to this, I feel that the relationship is healthy, positive and amicable. Getting credit at 18 years of age and maintaining a good credit rating throughout my life and starting my RRSP’s at 29 years of age, have been two of my smartest financial decisions!!
Both have allowed me to survive when I was unemployed and/or in a health crisis, and both have allowed me to pay for big ticket items such as a car, vacations and my condominium. While I’m not a financial management expert, these are two things that I encourage anyone to do, ideally when they are young, but to implement as soon as possible, at any age.

Of course, getting a job that pays well can help a lot, but that wasn’t the case with me. I never made more than the average person, ($12.00 p/hour) and with changing jobs so many times, I never had a chance to build up my employment capital (pay raises, company benefits, pension plans), so the money I have and use now has not necessarily been from what I’ve earned, it’s been from what I’ve done with the money I’ve earned. Another quote inspired me to do this: “It’s not what you earn, it’s what you save.”

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