A Money Coach in Canada

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Our guest post today is from Pierre, who states, “Keeping up with Jones’ is for suckers!) Pierre and I work (me, part-time) at Canada’s best-kept-banking-secret, a virtual bank called http://www.citizensbank.ca, that puts ethics on the table, right on par with profits. Its parent company is Vancity Credit Union. Pierre is the bank’s IT guru.

First of all I’d like to thank Nancy for her warm invitation to post on her blog.

Nancy and I work and the same great company and I have come to really appreciate and relate to Nancy’s love of technology (I’m a techie myself!) but also for the important work she is doing with her website and blog educating people about the basics of money management.

Some of the case studies I’ve read on Nancy’s blog sound like typical stories, everyday folks trying to get by as best they can but needing a little help to get out and over the trap of living paycheck to paycheck.

Unless you are lucky enough to have learned certain fundamentals from your parents or a course in school (I didn’t have one when I was growing up however did you?) basic money management is still a mystery to most.

With the cost of housing here in Vancouver nearly doubling in the span of 5 short years and the average downtown condo going for 300K+ I can imagine that this can be incredibly daunting to most new young people graduating from college with school debt hanging over them.

I am by no means an expert but for what its worth here are some of my thoughts on the subject:

1. Keeping up with the Jones’ is for suckers. The people who have accumulated the most wealth didn’t do so by being extravagant and showy. Many ‘rich’ people I know drive 10 year old cars and live in very nicely decorated but simple homes (not mansions) even though they can probably ‘afford’ much more. This takes a bit of a heart to heart with yourself: What is the most important thing to you and how do you intend to achieve it?

Many people think that more money, bigger houses, fancier cars is the way but more often than not it leads them down a path which feels more like a trap as they find themselves slaves to the monthly payments, a job they hate and often not having time to enjoy these things they’ve been working so hard for in the end. A lot of people would say more freedom and choice is a good thing to have but most won’t see this until they retire given the current path they are on and then maybe only if they are lucky.

Everyone I’m sure would agree that there are enough things to cause yourself stress so why add money to the equation? Instead of spending time worrying about money all the time why not free yourself up to allow for more time with your family, creative pursuits or (you fill in the blank). I can’t reiterate how important this one is but also the most difficult.

Many people get caught in the rat race trap thinking they have to ‘be’ in a certain place at a certain age taking on huge mortgages and debt and living in absolute terror of how they will manage should their situation change? What if they lost their job, what if the interest rate changes? What if?! If you do your best to lower your monthly obligations to a low as possible you will start to feel that freedom.

2. So how do you start to lower your monthly obligations? I don’t even know where all the money goes each month you say! Simple. To start, do up a monthly cash flow budget! [editor’s note: if you’d like a free, easy-to-use cash flow spreadsheet, contact me, nancy, via my business website – link is just below – and I’m happy to e-mail it to you]. Most of the people I talk to that are stressed out about money have no idea where it all goes every month. You need to get a handle on your month cash flow to understand your spending habits. There are some simple techniques (Nancy has suggested some great ones at www.yourmoneybyyourdesign.com).

One of the simplest and most brilliant ideas was one I read about on Nancy’s blog here, was the separate sub-account. Once you’ve calculated your personal budget at every paycheck transfer your ‘spending money’ – in my case this is money for groceries, gas and entertainment – to a sub account and only spend money on those things from there. It will help you stick to your budget and help to prevent dipping into your savings by having two separate accounts. Certain costs are fixed and others are luxuries which add up quickly (Starbucks, eating out etc…). Once you see where the money is going you can allocate self imposed limits.

3. The harder part is trying to reduce some of your fixed costs like the mortgage. Ok, so I’ve got a hold of my monthly spending. Now what? How do I lower my monthly living costs? Stay or move, settle or co-mingle? Considering the cost of housing in Vancouver has doubled in the past 5 years (although salaries haven’t!) I think many people have thought of alternatives. I believe people will be making some tough choices.

More and more people will either resign to raising a family in a condo or you will see a more occurrences of multigenerational living arrangements where parents and children live together, the parents perhaps passing the family home to their children and the the children looking after their parents in their old age. It is also a real help to growing families who now have some help around the house and certainly makes it easier for the any young family considering children if the parents are there and willing to help with babysitting etc.

The latter is not as typical in our culture so my money is on the first scenario, but we’ll see! If neither of these choices sits well with you and you absolutely want the white picket fence dream then moving to a less expensive city or suburb should be a consideration. Locating by public transit can also reduce the need for a vehicle (this is more realistic for single people or couples living downtown who don’t have kids who need to go to piano, hockey ballet etc!!) but can also help couples potentially reduce the need for a second vehicle if communing by transit during the week in as option.
I would love to hear your comments and I also would be curious to hear what you think a bank could do (say in an online capacity) to provide basic helpful advice to help people reach their financial goals.

How can we possibly purchase a designer outfit, when there are humans without enough food? How can I buy a gorgeous persian carpet that may have been made with child labour? … or for that matter how can I buy LuLu lemon which also may have been made by children?

I have a radical streak that talks to me periodically, and this weekend I heard the voice again. I wonder if I should adopt a lifestyle of extreme simplicity. Give all I have to the poor etc. How can I sleep on my comfortable, queen-sized bed when there’s a man across the street from me on the sidewalk, sleeping against an air vent for warmth?

But. and I don’t think this is an illegitimate “but”. There is such a thing as quality, and surely that has inherent merit as well. I’ve worn designer clothes, and while it may not always be the case, the ones I’ve worn have lasted longer, looked better, and given me a lot more pleasure than the knock-offs. I’ve driven ‘flashy cars’ and while I currently opt to use public transit as my way of contributing to the environment, I reserve the hope that someday BMW will be eco-friendly enough that I can buy a gorgeous piece of auto machinery.

So far now, I’m sticking with my middle-class lifestyle, but reaffirming my intention to buy quality that contributes to a home of beauty, and absolutely not buy the crap that clutters.

Practicing what I preach.cooking together

Money and politics and values are all entwined. Here’s a wonderful opportunity to discover how your food purchase habits can radicalize towards sustainability.

The 100-mile diet is all about encouraging those of us in the lower mainland to have plates full of locally produced food. Did you know our average meal travels 2400 kms from farm to your plate?

I’m going to give this a go, myself.  Frankly, eating properly for my body, much less for the planet, is a real struggle for me.  I eat on the fly, have a lot of packaged food, and rarely shop in any organized fashion.  As mentioned in previous posts, this costs my wallet, and more, costs my sense of well-being.  I’m hoping taking this kind of challenge with others will help me be more thoughtful and orderly in this area.

Here’s an event to learn more:

100mile challenge networking event

Rhizome Café at 317 E.Broadway

Thursday, July 26 between 6-9pm

Eleanor has an income in the low 70K range from her work as an engineer. She is about 15 years away from retirement, and while she has little debt, she has no assets either. She does have a pension, but no rrsps of her own, no savings, no property. She is utterly baffled where the money goes. She does rent an $1,800/month apt in Kits (Vancouver) which she shares with her college-age son.

While successful professionally and working very long hours, Eleanor is chronically and seriously disorganized. Brilliant, yes. Competent yes. But require or suggest structure and she runs for the nearest exit.

What would you suggest to help Eleanor take control of her money so she can start building the assets she could have, with her income level?

Disclaimer: as usual, these case studies are based on real-life people and/or issues I’ve encountered, but details are altered to thoroughly disguise the identity of the individual.

One of my favourite financial sites is wisebread. It’s a terrific blend of savvy tips, fun, and outrageous … all about money.

This week they’re hosting a contest ($25 amazon gift certificate) for the wicked-est story about an attempt at frugalitygarage sale that went sideways. Way sideways. If you have your own story, head on over and jump into the foray. Your competition includes …

  • a college student who took advantage of the all-you-can-eat curry nights, only to discover a main ingredient was ….
  • a mom’s attempt at being frugal on her son’s birthday goody bags resulted in …
  • a pre-1st-date visit to the hair-salon-school resulted in …
  • an inexpensive sofa that infested the house with…
  • the dad who got his kids to dig the swimming pool hole on their summer vacation ended up …

If you need a laugh, and permission to not cheap-out this particular weekend, you know where to go.

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