What a Budget Can Do for You

What a Budget Can Do for You

by | Jan 2, 2024 | Divorce, Finances

What do you think when you hear the word budget? 

Do you think: “Ugh – I know I should do one, but I’m going to discover I can’t spend the way I want,” or, “Budgeting will confirm I don’t make enough money; there’s no way I can afford to live the life I want.” Or perhaps you think you don’t need one, as you’ve always managed just fine. 

What is the thought that is stopping you from budgeting? 

Very few of us proactively plan our spending – many of us spend what we have and only do a budget when we start to notice we are spending more than we bring in and are heading into a financial crisis. 

What if, instead, we proactively planned how to spend our money? 

If we proactively planned our spending, we would have much higher odds of living the life we want instead of being controlled by our money – much like a ping pong ball in a pinball machine, which is how most of the world operates. 

When starting over post-separation, having a spending plan, that is, a budget, allowed me to build the path to my dreams. 

I needed to know where I stood financially, how much money was coming in, and how much would go out. I also needed to understand how and why I spent money. 

At the time of my divorce, I was a stay-at-home mom and had been out of the workforce for five years. I also had a seven-year-old and a four-year-old that I had to care for on a shared parenting basis. In BC, where I live, having a shared parenting arrangement means that each parent must pay child support to their co-parent based on their total income for the most recently ended tax year. I didn’t have any reportable income for the past year, so I agreed that I could have an income of $30,000 imputed to me – this means that I could likely earn $30,000 for the coming year. Imputed income is not actual cash flow coming in, but it did mean that I would receive less child support from my co-parent. 

I had about $1,000 per month coming in for child support, some government benefits ($120 per month) and nothing else. I also had zero cash reserves, but I did have RRSP savings and an accounting designation. 

I also had done my budget – I needed another $1,000 monthly to cover the basics (housing and food). 

I also knew, deep down, that there was no way I was going back to the work I had been doing before I had my children. The hours didn’t work, and it had been slowly destroying my soul as it was not aligned with my values. It would have certainly solved my money problems, though. I had made quite a bit more than the imputed $30,000. 

So, while my budget seemed bleak (it proved I would have to scramble to cover everything), it created a path I could follow, and while I knew I would not be saving anything for a while, I would be living the life I wanted. I would have time to care for my children without worrying about childcare and have enough to cover the basics while creating a life that aligns with me. 

An essential part of the budget process is knowing yourself. 

Knowing yourself and your circumstances opens up an entirely new world. If you know what drives you and what you need in life, your budget will become the empowering tool it is meant to be, a tool to help you make decisions. It is not a set of instructions you have to follow for the rest of your life – just because we put that you get to spend $2000 a year on travel does not mean you can never spend a nickel more. You could take an extra job or cut back somewhere. Your budget allows you to decide where you save and spend your money, and if you know how you like doing this, then your budget combines with this knowledge to make the decisions work for you.

My strong understanding of my cash flow and financial and life circumstances allowed me to stay on my path. I dipped into my RRSP to pay for coaching and sold a few things to give me the extra cash flow I needed to keep afloat. Soon, friends who knew I needed work started giving me the odd accounting job to give me the additional cash flow I needed. At the same time, I built my business to become a collaborative professional supporting people navigating separation, and I then pivoted to become a financial coach. The first accounting gig I got was collections work – this was certainly not something I liked doing, but I knew it was a short-term term gig, and it led me to find other short-term accounting work and introduced me to people and their friends, many of whom would turn up in my life again in my new roles as a financial neutral and then a financial coach. 

Ten years post-separation, I am truly living the life I want, and I’m still budgeting to keep living the life I want. Budgeting is a process that keeps us on the path to living our dreams. 

Evolving Out of “Stuck”

by | Dec 27, 2023 | Divorce, Finances, Parenting, Tools & Tips

We do not have to wait to find happiness somewhere in the distance sometime in the future. Our old ideas about the paths to joy have evolved; we can choose happiness now. 

Do you feel stuck? Do you feel like you’re living in limbo? Do you think your destiny is to keep doing the same things repeatedly – tweaking your life as best you can to survive it? Are you at the mercy of someone else? Is your money controlling you? Are the systems you find yourself in trapping you in a life you didn’t sign up for? Do you feel sorry for yourself, unloved and alone? 

There is a path out of limbo, but it’s hard to find and often hard to stay on once you find it, as it requires the evolution of your beliefs about the path to happiness. 

The well-worn paths we can see in front of us are the ones we naturally follow and find ourselves on. The paths the world shows us are so well-trodden and easy to follow that we need to develop our minds and eyes to see the uncommon paths that will lead us to a better place. 

It can be hard to head off on a path that no one else is taking, and it often seems like we are hand-delivered right to the start of those well-worn paths. What paths does the world hold out to us? 

  1. To wait for someone to rescue us. 
  2. To “fix” our lives until they are tolerable. 
  3. To silently suffer until we do something dramatic to propel us out of limbo. 

If you choose path one, waiting for someone to come to the rescue, you will likely wait a long time because more people need to be rescued than rescuers. Path one has us grab onto anyone who provides us with a glimmer of what is missing from our lives. Whether it is someone who is “nice,” “fun,” or “exciting” or provides us with a different experience from the limbo we find ourselves in. While doing something different can give us a mental boost for a time, eventually, we find ourselves back in limbo, as stuck as we ever were, but now we have one more person or pursuit to deal with. We have compounded our unhappiness because we begin to notice that even with this new person or a new hobby, we are still, deep down, unhappy. 

Then there is path two: fixing what is wrong in our lives or a life lived in reaction. While path two relates to what will get you out of limbo, there is a fundamental flaw: you are often tweaking things to live a life someone else has suggested is the right way to live. Path two is the most soul-destroying and dangerous way to live. While path one can invite outside danger into your life, path two creates a situation where you take yourself down into a hole that can be difficult or impossible to climb. 

In path two, you usually don’t have the resources or personality to live that imagined perfect life, but that doesn’t stop you from trying. You work hard to achieve the life reflected in the world around you (especially on social media) or try to live according to what your family has told you is the right way to live. You have a vision of what a happy life looks like, and off you head in that direction, “fixing” your circumstances and yourself to get there. You become the “people pleaser” and the “master of control,” all rolled into one. But it is impossible to please others, and you cannot control the world – chaos reigns. Path two is the path many of us take – and many of us persist for years and years, working hard to get to happiness and achieving as we go. But the cruel irony of path two is when you get to your desired destination (losing pieces of yourself along the way), you realize you are not happy. With this realization that your life has been a struggle for seemingly naught, you fall into anger or depression and often despair. Path two leads to path three. 

People crash their way onto the third, often travelled path, from their combined anger and depression from having travelled path two. Path three begins by doing something dramatic. Doing something dramatic does propel us out of limbo, but we have little control over what happens next. Path three is like setting off a bomb, which, while it creates change, may lead to cleaning up the debris and fallout for years to come, making it impossible to find happiness. 

Finding our path to happiness

Discovering our path to happiness requires personal evolution. If you feel stuck, it may be because you have followed the well-worn path that the world has pointed out. It may take time to recognize that you are following the wrong path, especially if everyone else is continuing along that path. Once you gain awareness that you are lost, stand still, evaluate your surroundings, and consider your resources before moving forward. Instead of rashly choosing any direction to escape being lost, stop and get your bearings. 

With awareness, you can begin again on your journey, slowly and steadily and savouring each step. Begin enjoying the journey, reminding yourself to look for your path, one that may not look like anyone else’s. When uncertain about the next steps, pause again to get your bearings instead of succumbing to panic and remind yourself of who you are, what you dream of and what you carry with you before heading off again. You’ll gradually identify paths that align with you. Along the way, you will encounter fellow travellers with similar aspirations. Whether you continue independently or join others on the same path, you’ll begin to appreciate the fulfillment of navigating a journey aligned with you. Cultivating gratitude for your ability to rescue yourself and navigate a fulfilling path becomes a transformative journey. Carry on, and one day, you will stop, not to find your bearings, but to notice that you have finally found happiness – it is in you, and you carry it with you. Your thoughts have evolved, and you understand that happiness is not the destination – it is with you, every step along the path you take. 

Making Decisions

Making Decisions

by | Feb 6, 2018 | Finances

Recently, a client asked me what kind of car to buy.

I don’t have a standard “newly separated person buying a car” response because it depends significantly on a person’s entire life and financial situation, which is unique from everyone else’s life situation. Making easier decisions comes down to knowing yourself. 

How do you get to know yourself?

Here is a link to a values worksheet – one small step you can take to start getting to know yourself. 

Once you know what motivates and drives (pardon the pun) you, it helps you to make a decision. A hedonist will look for a different car than someone who likes conformity. Or someone who likes stimulation? Yes– they would likely not want my 2003 Toyota Corolla or, as I used to call it, “my divorcemobile.” I recently renamed my vehicle – “my trusty steed” – a car that gets good gas mileage and hasn’t cost me much to repair. You see when I first named my car, I was viewing it through the eyes of what I thought others would see, and what others think is none of my business. My business is knowing myself and living my life aligning with my values. Keeping my cash outflows less than my inflows is part of my standard operating system, and my trusty steed is one important spoke of keeping a balanced life. 

Understanding your current financial situation is the other important step necessary when making decisions. You need to know how much money you have to spend and how much you will earn and spend in the future. I have noticed that many people get stuck at this point – it’s usually when I mention the word “budget” that eyes glaze over, or the other common expression I see is “deer caught in headlights.” 

Budgets, aka spending plans or cash flow statements, are very easy to prepare from a logistical perspective.  Money coming in goes at the top, and money going out goes underneath – they look something like this: 

After-tax Salary:  $5,000

Housing: $3.500

Food: $600

Gas: $200

Clothes: $100

Fun: $1,000

Net Monthly Cash Surplus (Deficit): ($400)

The challenge in preparing budgets is that pesky human tendency to let fear rule one’s life, which carries into the budgeting process. I have noticed that most of us (me included!) only prepare budgets when we have to – often in the middle of a life transition. We also “think” we will discover that our financial situation will inhibit us from living the lives we want. “No budget is going to tell me how I live my life!” I have heard people say. Hence, they avoid doing the budget – because they will not follow it anyway.

The other reason people don’t like budgets is because they worry that the budget will confirm what they believe to be true – there is not enough money to live the life they want. Avoidance is one way to live- but talk to any counsellor, coach or mental health professional, and they will tell you that eventually, avoidance will catch up with you, and it usually leads to being more stuck than before.

I was forced to do a budget when I separated (shocking, perhaps –  I hadn’t needed to budget before my divorce because I have always kept my cash outflows less than my inflows and always had a surplus that I directed to savings – divorce wiped out that situation!). I prepared my budget, and it did confirm that I was in a deficit position. I did not have much in the way of cash inflows – child support and a small amount of savings. Newly divorced and on the job hunt, I would look at my budget and cry – how would I ever get out of a deficit position?

My budget helped me get unstuck. I slashed my spending, and I dipped a little more into my RRSP and got coaching help. My budget and understanding of my values, needs and hopes allowed me to grow into a situation where my cash inflows are again more than my outflows.  However, I think it’s time to budget again – my kids are entering their post-secondary education years – yes, the fear of the future is beginning to bubble up in me!

When I divorced, I bought an 11-year-old Toyota Corolla for $6,000. It had low miles and low street appeal. Post-divorce, I didn’t believe I would ever have any money to pay for a more expensive car. And I was right – I have spent my new earnings on things I deemed more important than a newer and fancier car. 

When you’re in the midst of a stressful life transition, you will make some very significant life decisions – do not base those decisions on what other people tell you. Base them on what works for you. You will likely want to make a quick decision to get out of the pain of being stuck in life transition limbo but don’t succumb to short-term pain by making quick, unthought-out decisions. Instead, take the time to get to know yourself and understand the decisions that will work for you.

Here is a link to a decision-helping spreadsheet.  To make a copy that can be edited, navigate to and click “make a copy” under “File” in the top menu bar. You can use this spreadsheet once you have done the values exercise and prepared a budget. 

Once you know yourself more, every decision you make will become easier.

The Perks of Being Self-Employed

The Perks of Being Self-Employed

by | Dec 20, 2017 | Finances

It’s December 19th

Today, I had planned to go Christmas shopping – it’s getting close to the wire! But it started to slush (you know what this is if you live in Vancouver), and after going for a short walk and getting soaked and cold, I decided to leave Christmas shopping until tomorrow, when it’s supposed to be sunny.

I can go shopping during the workday because I’m self-employed: one of the perks of being self-employed.

When I sat back down at my desk after deciding to skip the slushy shopping, I thought, “I can do anything I want right now,” as I had already booked the time off in my head.

What have I wanted to do but put off because of more pressing work deadlines?

My own bookkeeping

Yes, I am one of my worst clients. I throw all my receipts in the drawer next to my desk or leave them in my inbox (where most are these days). Ok – I didn’t want to do my bookkeeping if truth be told, but I needed to do this.

I started my business a few years ago, and as that tends to go, it was a slow start, and I only made a little money. I had a business loss during the first year, technically only four months of work as I had started in September.

As a sole proprietor, I hadn’t paid any taxes during the year (no employer to withhold and remit taxes on my behalf), so when it came to filing my taxes, I had to report my pitiful non-earnings, and that was it. I didn’t owe any tax because I hadn’t made any money, and I didn’t get any back because I hadn’t remitted any money. It was slightly anti-climatic.

In my second year of business, I made a profit! Again – I hadn’t remitted any taxes throughout the year as the Canada Revenue Agency only requires self-employed individuals to make tax instalments if they had a balance owing in the previous year of more than $3,000, and I hadn’t.

For the second year, I scraped together some savings to throw into an RRSP, reducing my taxable income, and in the end, I had enough in my savings to pay my tax bill. Phew!

Not quite 9-to-5

I’m in my third full year of business, which has become a full-time job. My hours aren’t nine-to-five, but at least 40 hours weekly.

I’ve been paying enough attention to my billings to know that the “savings” I have accumulated are not savings. It’s my tax bill for 2017. But I still look at the balance in my savings account and get this little happy feeling inside.

Danger…

Sometimes, I start thinking of everything I can spend my savings on, and then you know what that leads to? Yup, spending.

So today, as it is close to the end of the tax year, I decided to see how much of those savings are savings and how much are just taxes I still need to pay.

And what did I discover? Yes, it is tax (I think I’m an excellent accountant – I know intuitively what the tax rates are as I saved the perfect amount).
I saved the perfect amount for my tax bill.

Sigh.

All the little happy feelings I’d been having about my savings drifted away, and all these negative thoughts came crashing in. The main one being:

what’s the point of working harder? I’m no further ahead.”

This led to further negative thoughts about everything I had to sacrifice this year and all the hard work I had done to get me to exactly nowhere.

Yikes!

I really am my own worst client. After wallowing in self-pity for about ten minutes I turned it around.

Grateful

I spent the year precisely doing what I wanted to do.

I had a fantastic year where I saw my business grow to a point where it can support my family and me as we need it this year.

I had a fantastic year where I had time to do what I wanted when I wanted to do it.

I had a fantastic year that gave me more “proof” that I can keep living my life as I want. 

Based on experience, my business will continue to grow to support my increasing needs (two sons entering their teen years, then university years!).

Today’s exercise also gave me further evidence that the thoughts you choose to pay attention to profoundly impact your life.

So yes, pay attention to your finances, as it is essential to have clarity about your situation to help you make choices and decisions, but also to what thoughts are going on in your head.

 Are your thoughts giving you hope to help you move forward? If not, what can you do about that to change things up to get to that point? Is it time for a year-end check-in? 

And perhaps, don’t leave your bookkeeping to December. 

There’s Work (and Then There’s the Real Work)

by | Sep 14, 2017 | Divorce, Finances, Parenting

My blog post ideas usually hit me on the head when I’m struggling.

Today’s struggle was getting my kids out the door and to their school. This seems relatively straightforward in theory, and I’ve even developed a checklist for each of my kids to complete in the morning. It’s on the fridge. Here is the list:

  1. wake up – 7:30 am
  2. get dressed
  3. eat breakfast
  4. put dishes in the dishwasher
  5. brush hair
  6. brush teeth
  7. put lunch in your bag
  8. put your water bottle in your bag
  9. put coat on
  10. put shoes on – 8:30 am

I look at that list and think – “we could be out the door in twenty minutes!”

Yet this morning, despite getting up at 6 am, we were still not ready at 8:30 am. In fact, at 8:30 am, I thought, “Are the cops about to knock on the door because my neighbours have called about a potential domestic situation in our house?”

What had gone wrong? Why didn’t my list work? Why hadn’t we gotten to school with success today?

Nothing was wrong with my list. My kids had followed the list, and they are very good at following the list, but there is something major missing from my list.

Then I started thinking about the parallels between my work at home (getting up, getting ready, getting places on time) and my work with clients (which starts with my client filling out a spending plan template and listing property and debt).

My work at home and my client work seem to have very concrete, achievable outcomes, such as being at your desk at school at 9 am and completing a filling in some amounts on a template.

On the surface, both types of work seem straightforward and easy.

I’ve got the “get to school checklist” and “my spending plan template.” Both, in theory, take a set amount of time to complete.

But I am finding that this work is just not taking the amount of time I think it will.  It is taking a lot longer. Plus, there appears to be angst when getting out the door and completing spending plan templates.

Because the real work is not completing the items on the checklist or filling out my spending plan template.

What is the real work?

Well, the work involved in getting my kids to school appears to be keeping my children separate from each other so that they don’t try to kill each other. So this morning, I was thinking up strategies (kids eating in different rooms, kids wearing blindfolds with me escorting them from room to room). But no, no – again, that is not the work.

The work is figuring out what is going on underneath the surface with my kids, which is leading them to find new and ingenious ways to torture each other (both psychologically and physically).

That is the work I need to do with my kids, and I tend to avoid it. It is hard. It involves communicating with their dad and figuring out times to discuss things as a family.  It involves communication with grandparents to help them understand that the discipline that worked for their children does not seem to work for my kids. It involves research, time, and being open to new ways of doing things. It requires enormous effort, time and commitment. Why can’t we follow the checklist (oh why, oh why, oh why)?

Because the checklist does not solve the underlying emotional, relational and communication issues that my family appears to be having.

This leads me to my spending plan template.

If you are working on a spending plan, you are likely at a point of transition and need help figuring out where you are financially to make decisions.

Filling in the template will take about two to three hours. Two hours to gather information and one hour to input the information.

“Oh – that’s easy!”

And yes – it is easy.

But as my kids have thoughtfully demonstrated to me this morning, it is only easy on the surface.

If you are at a point of transition where you require my help, I will ask you something. What is going on with you that will extend the time spent on this spending plan process? And then, I will challenge you to do the work to deal with that before you get to the fun part of filling out the spending plan template.

Why?

Because I want the work I do for you to be successful, I can review your spending plan with you (it’s quick), but there is no point in doing this work if it doesn’t get rid of the angst in your life.

This leads me to my new spiel when describing how long a new job will take.

“This will take three hours if I work in a complete vacuum from the moment I get the information I requested from you.”

” But because working in a vacuum is not reality, it could take anywhere from three hours to never being finished. We will figure it out as we go along, and I will keep you updated as best as I can.”

This is Uncomfortable

This is Uncomfortable

by | Feb 3, 2017 | Finances

This is Uncomfortable

Lately, I’ve been thinking about procrastination. Why? Well, I haven’t blogged in a while, and so I’ve been thinking about why this is so. I think I love blogging, but my posting record does not bear this out. My friend and coach raises an eyebrow when I start making all these excuses about why I haven’t blogged. My latest reason is “I’m so busy.”  That is the common justification that I hear again and again from people when something doesn’t happen that was expected to happen. “Busy.” I have joined the busy club (I’m secretly a bit happy about this as I felt like I social outcast when I wasn’t “busy”, but that is another post for another day). The funny thing is, despite how busy I am, I am still powering through a lot of TV shows on Netflix.  So that busy excuse is not true – it appears I procrastinate when it comes to blogging.

So, I do have time to blog. I could do it at night instead of watching the latest episode or Rake (my current addiction). Blogging recharges me, but it is still not happening. Nope – how many weeks has it been? Afraid to look.fgvxxvxmti8-andrew-neel

Why now? I have finally reached the point of discomfort where I have to blog. Yes, being uncomfortable or forced to do something appears to be the only way I’ll do something that is not part of my regular routine or habit.

So I let myself get to the point of discomfort before doing something that I like, and I know is of benefit to me.

Are you the same as me? Do you only start doing something that is good for you when you are forced to or when you get to such a point of discomfort that it is more painful not to do it?

Where do you procrastinate? Exercise? Eating well? Taxes? (I see that last one a lot – please don’t do that to your poor accountant if you have one).

Do you procrastinate when it comes to your finances?

Or more specifically, do you procrastinate on preparing a personal budget (or spending plans as some of us financial people call them because the word “BUDGET” sends some people running in the other direction)?  Spending plan sounds hopeful, and it has the word ‘spending’ in it which some people are attracted to (often the people who don’t like the word budget).

I have been helping quite a few people with their spending plans these days and is part of the reason I’m so busy!

Is the general population suddenly realizing that their financial health is essential and getting proactive? Is that why I’m seeing more people about spending plans?

Nope, I cannot think of any client of mine that has come to me because everything is fantastic in their life and they want to be proactive about their financial health.

The people I am helping are only seeking me out because they have reached the point of discomfort in their lives where it’s harder not to start looking at their spending.

I imagine this is how personal trainers feel. I’m sure many of us finally hit the gym when we get on the scale and realize neither it nor the mirror are lying. Guilty as charged.

So I have been helping more and more people with spending plans.  What I have noticed is that everyone (ok, almost everyone) says – “well, that was pretty simple and straight forward once I started.”

The other thing they say to me is “I feel better – lighter somehow.”

After I’ve gone through a spending plan with someone, I notice that they seem calmer, more relaxed.

So with that in mind, I decided to focus on that observation when attempting to do a blog post today.

And do you know what? That heavy weight I’ve been carrying for the past few weeks is suddenly gone. I do feel lighter.

So now I’m going to challenge you to start looking at your personal finances before it gets uncomfortable and you are forced to do so.

But I realize I can’t just leave you to that with no way to start, so I’m going to tell you something else I learned from a good friend this past week. She has recently lost a lot of weight and has gotten healthy by completely cutting out sugar and dairy from her diet (yeah – that’s not going to happen for me). How did she do this? She started small and changed her eating habits gradually. She cut milk from her coffee first and has spent the past year doing one slight modification to her diet every other week.

So – if you have never done a spending plan for yourself, I’m going to ask you to start small. I want you to see how much you spend on lunch this coming two weeks.  I want you to make an envelope labelled “lunch” and keep it with you for two weeks. I want you to put all your lunch receipts in there (including grocery receipts that have lunch items on them). At the end of the two weeks, add up what you spent on lunch.

Then I want you to do dinner after you’ve finished lunch.

(I know – easy right – budgeting couldn’t be that easy could it?)

Then, you get to choose what you keep track of.

Go get that envelope right now. I challenge you.

Now I’m going to challenge myself.

Because while I was not blogging, my brain wouldn’t let me stop thinking about it and everything that crossed my path became a potential topic. This made it harder for me to start again because I couldn’t make up my mind!

Look for these exciting topics in the coming weeks:

  1. The Divorce Process sucks, why it sucks and how you can do it better.
  2. Living Apart Together (as related to finances)
  3. Agreeing to shared parenting with your Ex and why it’s an excellent choice
  4. More on procrastination because it is tax season
  5. Dating as a single parent (as related to finances – because you know, my clients are not putting it in their budgets but is that realistic? I will discuss)
  6. Being busy