by Renee leNobel | Oct 29, 2015 | Finances
I recently went to the Economic Update that CPABC (that’s Chartered Professional Accountants of BC) puts on every year. I go every year as it is free professional development (well, almost free as it consumes my time) and I always think that I might learn something. This year I learned that the Economic Update works like a creativity hour for me.
This year the speaker went through his various charts on GDP, inflation and bank rates and gave his predictions. I am perhaps a bit of a cynic but are these economists ever able to predict anything? As he was going through his various charts he focused on the winter of 2014 where everything took a tumble due to bad weather, yet weather does not seem to be one of the factors when he made predictions for the upcoming years. Instead his predictions were based on all the old culprits: the state of the various world economies and the demand for the raw materials that Canada ships out.
After a while I tuned out. There were at least 100 slides of different charts predicting various things. After hearing that the Bank of Canada rate would likely remain unchanged, I sat back and began to daydream. After all, most of us middle class citizens are mainly concerned with knowing if our mortgage, line of credit or cost of doing business is going to change. As the economist predicted the Bank of Canada rate will not change for a year, we can all get back to paying off those mortgages and loans while building our lives and businesses.
As my mind drifted, I started thinking about our new Liberal government. I hadn’t followed much of the Liberal election campaign, but I did want to see change in Ottawa so I was happy to see that change. After the election I started hearing and reading about the Liberal’s election platform and in particular, I heard that Justin Trudeau is going to help Canada spend its way out of its economic doldrums by spending more money than is coming into the National Coffers. He is going to create a spending plan deficit for Canada… but just for a few years, because with that overspending, Canada is going to figure things out and build a new economy that is not just based on exporting natural resources. Canada is going to turn itself around and become a country whose economy is built on innovation and creativity.
I do agree that sometimes you have to spend money to create positive change.
I also know that sometimes spending your way out of a problem is just not an option. If Canada were like Greece, Canada could not improve its economy by spending more money to fix it. There would be no money to spend.
I think of individuals who find themselves in a job that just isn’t working for them or have been recently let go from a job that they have held for a long time. If that person has the opportunity and flexibility to take time and train and financial reserves to allow that to happen then that person could find something far more sustainable and financially rewarding than the traditional job they recently held.
I recently taught the time value of money to a class of grade 4 children. I told them that if they started investing $200 per year today, they’d have a nice tidy of sum of money to finance their mid-life crisis. Now that got me dreaming – wouldn’t that be fantastic if everyone did this?
But this is not the case for many individuals these days. Many people have no cushion.
People who have dug themselves into a financial hole with no savings, emergency funds and who are living paycheque to paycheque, simply cannot afford to take risks to get themselves into a better situation.
I also think about the person that is stuck in an unhappy marriage or relationship. If that person has a financial cushion, they are much more likely to take steps to improve that relationship by spending money on counselling or by spending money on a divorce. Sad to say, but many people stay in an unhappy marriage because they cannot afford to fix it or to get a divorce.
So what can a financially stuck person (or country) do in the situation where they cannot spend their way out of the problem?
Well, in Greece they enforced austerity measures. That doesn’t seem to be working either. Why not?
I think the key word in the above sentence is “enforced.”
Before someone makes the decision to start looking at options to cut personal spending, that person needs to know what future benefit the current pain is going to generate. It is hard to live with austerity, but what helps is knowing that it is for a defined period of time and it is to build a hopeful future. A clear path and plan for the future is necessary so you are not just living on the cheap forever. There must be a link between the current suffering you are going through and the future benefit so you are willing to continue that suffering.
Just like there has to be a clear path and plan for the spending that Canada will be doing. I would hope there is some sort of link between what the money is being spent on and how that will continue to benefit Canada in the long run. Where will that bridge we will be spending money on to build lead us to? Hopefully to a place that most of us want to go.
by Renee leNobel | Sep 23, 2015 | Finances
I hate spending money. My Scottish-Dutch genetic makeup combined with my upbringing in a Depression impacted family has turned me into a person that gets anxious any time I head to the cash register. You know how some people call shopping “retail therapy”? Well, shopping has never been that for me. The act of spending money starts an internal debate going in my head about if I need to spend that money or not. A few things I’ve noted about internal chatter: it slows down my decision making, it tends (under-exaggeration) towards the negative and it keeps me up at night.
Then I changed because I got tired of feeling guilty and anxious all the time. Spending money happens on an almost daily basis. I was beating myself up everyday! It was mentally exhausting and I couldn’t keep doing it.
How did I stop the guilt and anxiety I had around money? I didn’t do much; all I did was make a decision. What I decided to do was to start believing in my spending plan.
I’ve always been a bit of a spending plan fanatic. Each month, I add up everything I spent during the month and I add it to my money tracking spreadsheet which I have had going for the past five years. Then a couple of times a year, I look over what I’ve spent and I update my spending plan for the upcoming year. My monthly tracking is not as onerous as it sounds, it takes me about two hours a month.
Even though I’ve always tracked my spending and I’ve created spending plans for years, I never really bought into the process. For one thing, I never went back to a prior year spending plan to to see if it bore any relation to my actual spending. Plus, I never critically looked at my plan to see if I was spending in areas that I wanted to spend in. I think I also never came close to spending what was in my plan. My spending plan was just a process I was doing that I thought I should do as an financially responsible person. I still agonized over every dime I spent and spending still made me feel horrible and guilty. All my spending plan was doing for me was consuming my time in creating it. I had this spending plan – but I was ignoring it and choosing to continue to feel bad when I spent money.
So I recognized that I no longer wanted to feel guilty and I also wanted my spending plan to be of use to me so I decided to start believing in it. How did I do this? I decided to analyze my spending plan and this is what I discovered.
My spending plan was based on my life and choices that I have been making for years. It was a financial reflection of my beliefs and values. After all, I do not spend money easily, so if it was spent and ended up in my tracking spreadsheet, I must have believed in it at least a little. My spending plan is therefore based on what I think is important to spend money on. I noticed that my spending stays fairly consistent year over year and also that I had built a cushion into my spending plan for unexpected expenses. Oh and another important part of my spending plan? I had enough money coming in to cover my spending going out.
So then I realized that if an expense is in my spending plan, it is ok to spend money on that expense. I’m even allowed to spend on the unexpected because there is a cushion in my spending plan. All this spending is allowed without the guilt!
This change to believing in my spending plan is taking time and I’m not completely cured of my money guilt. I still don’t like spending money but that doesn’t hold me back in my decision making anymore or lead to days of anxiety (well mostly). For example, September is a fairly brutal month for expenses for me. It is when all my large business expenses come due and when children related expenses like after-school activities, hot lunches and school fees kick in. Before believing in my spending plan, I would have been in paroxysms over this spending. I would have felt horrible for days on end and would have questioned my decision to go into business for myself. I might even have decided to pull the plug on my business. I would have been more focussed on stopping the money bleeding than on driving my business and life forward.
This year when things came due, I felt a little icky and I know I still complained about the high cost of doing business as a sole proprietor, but then I told myself, this is in my spending plan and therefore it is ok to spend. I am not going to make myself feel bad for buying professional liability insurance!
Do you have money anxiety and fears? The best cure is to start tracking your spending and to build a spending plan. If you don’t have a plan, then every time you spend money you might be questioning it and causing yourself anxiety. With a plan, you too can move forward with your life with clarity and decisiveness.
by Renee leNobel | Sep 15, 2015 | Divorce, Finances, Parenting
When I was growing up, I was always told that I was responsible for paying for my own university education. My parents wanted me to go to university, but they also wanted me to start learning how to be financially independent. Actually, I’m not sure if it was a conscious decision on their part to make me financially independent or just how they did things. Both my parents had to pay for their own postsecondary education (and my dad had to sell his beloved 57 Chevrolet Belair to finance his education). There could have been a touch of martyrdom – “I had to sacrifice certain things – i.e. my beloved car, so so do you.”
I lived at home with my parents when I went to the local university and I paid my tuition out of the summer jobs I held. My parents did help me out. They paid for half a car and the related car insurance every year I went to school and of course I saved considerably by living at home.
So when I tend to think about my kids going to university, I don’t feel like it is my obligation to pay for them. That said, things are considerably more expensive these days. My tuition was $2,000 per year at the local university and these days it is $10,000 per year. I know that the minimum wage that my 17 year old self earned during the summer has not kept pace with this increase in tuition. Also, I always felt like I missed out on some valuable life experience by living at home. So I’m wavering on the idea of making my kids fund their own education and have started to think I would try to support my kids if I could. However, I did think it was my choice to support them at the postsecondary level.
Imagine my surprise when I found out that a friend was still paying child support for a stepdaughter who was 28 years old. I was amazed to learn that parents are financially responsible for children that are pursuing their first university degree and are unmarried – regardless of how old they are!
This information got reinforced when I was going through my own divorce and my lawyer explained that the obligation to pay child support ceases in respect of a child who:
(a) marries,
(b) becomes self-supporting, or
(c) becomes 19 years old, unless the child remains a “child of the marriage” within the meaning of the Divorce Act because of inability to become self-supporting due to illness, disability, the pursuit of education, or other cause.
I find this interesting. By divorcing your partner, you in fact have a greater financial obligation to your children than if you stayed married. If your child decides he or she is going to university, then both parents are obliged to pay under the Child Support Provisions of the Divorce Act.
If parents stay together, they can simply band together to tell their child: “sorry – you’re an adult, fend for yourself.” This is no longer a choice if parents are divorced.
I can see why this law is in place. I have a friend who has two university aged children. Her ex-spouse encouraged her children to go to a university far from their home town and then he refused to pay for it. She has financed her daughter’s (who is in her final year at university) entire education and the only financial help my friend received is help from her daughter. She has been working with the justice system that is in place since her daughter first embarked on her university degree three years ago and so far despite getting decisions in her favour (the judge has repeatedly stated that her children’s father must help fund the children’s education), my friend has not received any money. She is hopeful that by the time her son is ready to graduate university (in three more years), she will get some money from their father.
So despite the fact that the law states both parents are on the hook to support their children during their postsecondary years, it is often a battle to implement this and it has taken considerable work and time on my friend’s part. She is extremely frustrated with the entire process.
To prevent getting into this type of situation, I recommend communication. Communication with your spouse, with your children and with yourself. Discuss what you envision with your spouse regarding your children’s future education. If you are getting divorced, then ensure that there are clear guidelines about financing your children’s postsecondary education in your separation agreement. Ensure the wording is clear and the arrangement for determining amounts to be financed are clear. Much of the time and energy my friend has spent has been in determining what amounts are to be split by the parents and how to track and account for those amounts. If there is nothing regarding postsecondary education in your separation agreement, start thinking about how you can bring this topic up with your ex before your children have their hearts set on going to a university far from home.
If it seems like your co-parent is not on board with sharing costs of a postsecondary education then you need to have a good long talk with yourself about whether you can fund it on your own or whether you need to start helping your children adjust their expectations about what postsecondary education is going to look like for them.
If you decide you are going to fund your children’s education because it is important to you, then you need to look at your financial situation to see if this is a possibility and if it is not, how you can make it one.
by Renee leNobel | Aug 6, 2015 | Finances
Step 1 – Identify Your Financial Personality and Spending Habits
What is the dream you have that money will serve?
Answering this question for yourself will go a long way to self-awareness about your values and beliefs around money.
Everyone is unique and has different values and beliefs concerning money. In addition, we are all brought up with different levels of financial literacy. The interaction between personality and the environment we are brought up in leads to specific financial personalities. It is important to know yourself and understand what issues around money you bring to the relationship.
Our personal beliefs and values drive our spending. To understand your spending habits, you therefore need to know your values. There are a number of free online personality tests out there that can help us get to know ourselves. Meditation also leads to a greater level of self-awareness.
To gain an understanding of your spending habits, you will need to start tracking your spending. This is where a number of people get stuck. You can first try yourself to do this but if you continue to put it off, then it might be a good idea to find someone to help you with this. There are a number of free websites and phone apps that will help you track your spending. Note that tracking your spending is not a quick project. To get a good understanding of what you spend your money, it is good to track your spending for at least six months. With time you come to understand the link between your spending habits and your personal values.
Step 2 – Talk with Your Partner
Once you have self-awareness around your financial personality and spending habits, you will want to talk about it with your partner. It is important that you both go into the meeting truly believing that neither one of you is controlling the agenda. Therefore, when you schedule the meeting, you will need to give your partner an idea of what you want to talk about and you will want to keep the topic as neutral sounding as possible. Better yet, your partner will already know because they have been tracking their own spending as you have.
If this is something you’ve taken on on your own, then here is a potential conversation starter:
“I would like to talk to you about household finances. I want to find out what is important to you and share what is important for me so our relationship can move forward successfully.”
Now don’t expect this to go over completely smoothly with your partner. We are trained from infant-hood and are biologically wired to see danger and conflict in even the most innocent sounding statements. Reassure your partner that you truly want the conversation to be collaborative and neutral.
You want to share what you are like with your partner and you want them to be open and share as well. This needs to be a non-judgmental process. If you are already knee deep in relationship woes because you are a different financial personality from your partner, you can still rescue your relationship by taking this step and it is really important that this discussion takes place on neutral ground at a an agreed upon time that is booked in advance. If this discussion at any point starts to get heated, then stop and make an appointment for another day. I also suggest you limit your talk to 45 minutes. Sometimes if you go too long you can go off track. If you don’t finish discussing everything within 45 minutes, schedule another meeting. In fact, it is a good idea to have regularly scheduled meetings. You can decide together the frequency of meetings that works best for your relationship.
Topics to talk about:
What you spend money on
What you absolutely must spend money on in order to feel life is worthwhile
How much money you need in the bank to feel safe
What you are willing to forgo spending money on to keep your relationship positive.
Do not state what you think is dumb to spend money on – this is not being non-judgmental and will shut down communication in about two seconds flat.
That should about cover it. Now you can see how easy it is to discuss and plan as opposed to having a relationship meltdown because you didn’t take these easy steps!
by Renee leNobel | Nov 6, 2014 | Finances
You are not alone and not surprisingly this is one of the leading causes of breakups and divorce. Many partnerships are comprised of these two opposing personalities which makes sense as opposites attract and when they get together each gets to see how the other half lives. Living with a spender can be fantastic fun for the normally conservative saver. At the same time, the spender might like the practicality and planning ability of the saver and will feel taken care of and supported.
Saver and Spender are as opposite on the financial personality spectrum as it gets. Saver thinks about the cost and the future before deciding to do anything and Spender is all about living in the now and seizing the day. This couple can make a powerful twosome. Spender opens Saver’s eyes about having some fun in life and letting go of worry and Saver helps Spender see that fun can still happen with planning. If there is discussion and openness about each other’s financial personality then this relationship can work with some pro-active planning and discussion.
Difficulties arise when Saver and Spender do not plan. Saver and Spender can drift into a long term relationship without ever laying down the financial ground rules. Once Saver and Spender get married, have a child or even just move in together, things will get rocky and eventually implode if discussion and planning hasn’t taken place.
With no planning, Saver and Spender each think that the other person has bought into their way of doing things. Saver is thinking “Spender wants to live with me and my rules. Spender has realised my way is best.” What’s Spender thinking? The exact opposite. Saver and Spender are headed for relationship disaster.
Why? Spender keeps spending and Saver is doing all the saving for the household. If this pattern continues, Saver will become resentful of Spender and when resentment kicks in, other behaviours are not far behind. Saver is likely to start nagging Spender, specifically, Saver will ramp up his/her efforts to prove to Spender that their household finances are a sinking ship and spends more time thinking and worrying about finances. All this worry on Saver’s part will cause Saver to nag Spender even more and now Spender is getting grumpy too! Saver is constantly talking about money and trying to control Spender!
Spender and Saver live miserably ever after… until they can’t take it anymore and break up in a soul-destroying conflict laden implosion. If they don’t break up, then in all likelihood Spender will die first and Saver will discover that Spender spent all the savings. I bet you’ve heard that story before.
And this could all have been avoided with….
Financial Strategies for the Spender/Saver Relationship.
by Renee leNobel | Nov 6, 2014 | Finances
You are stuck in some area of your life. You’re in debt, you’re in conflict, something has just happened to you and you are operating on autopilot just to get through the day. If this sounds familiar, I’m asking you to stop, take a break and get clarity on your personal values.
I can imagine you have similar thoughts to what I had in a similar situation: “That’s crazy! I don’t have time to stop, I’ve got things to take care of and if I stop to take time for myself, everything is going to fall apart around me!”
So you keep going. You will force yourself to get through a life you subconsciously do not buy into.
You might be able to do this for a long time, I did and then I hit my wall. Divorce. The reason I got to that point was because I wasn’t clear on my personal values, my ex wasn’t clear on his and thus it follows neither of us was clear with each other. We were both living in a situation we didn’t like, neither of us understood it and we took it out on each other. it’s not hard to see how we ended up where we did.
Eventually the impact of not living according to your values will surface. I think many of us are on a similar path in life and hit the that zone in their 40s. Mid-life crisis anyone? My ex and I were together for 10 years before we got married and we managed fine during that time. There was nothing big at stake. Then we got married and started having to make some big decisions. Getting married should have been the first one, but we thought that it couldn’t be that hard as we had been together so long without many bumps. We bought a house, we had kids, we moved countries. we moved back and we got divorced.
I am now grateful for my divorce as it forced me to search for my values. I finally made the mental connection that putting myself aside was leading to my unhappiness. I spent months resisting discovering my values and now I am spending time retraining myself to operate from my values. I still have a hard time with this, but I know I have to do this to move forward.
I can hear the excuses you are making not to do this, I can hear them because I make excuses every day to give up on this way of doing things and settling back into my old ways. But I can’t ignore the connection I have discovered between putting myself aside and my unhappiness and I cannot underestimate the joy I feel when my new life works because I am living my values.
It takes time to develop a new habit and it is easy to settle back into your old ways of doing things. Consider this one more message to help prod you in the direction of redesigning your life according to your values. And if I can’t convince you, perhaps Oprah and Deepak can.
