5 Rules for After the Holidays

I’m always a little surprised when I say something is a rule and people say, “Wow! I’ve never thought of it that way.” As I wrote Money Rules, it was with an eye to all those things that seem like “common sense” to me but for many people seem like revelations. Take Rule #48: It’s Not Your Money until It’s in The Bank. People break this rule all the time, spending money they think they will be getting – be it a bonus, commission or a cheque that’s yet to clear – only to end up disappointed.

The holiday season is all about breaking the rules we consider to be common sense: we eat more than we should, we party harder than is good for us, and we indulge ourselves with a view to setting our ships back to rights when the new year rolls in.

Well, here we are: It’s 2014 and here are 5 rules that are must-dos for your post-holiday financial health.

Rule #1: Start a Spending Journal. If you’ve been loosey-goosey about how you manage your money, if you found last year that you often got to the end of the money before you got to the end of the month, it’s time to get into the driver’s seat. Buy yourself a notebook and start recording every penny you spend. Take that information and use it to see if your budget is really working for you. You do have a budget, don’t you?

Rule #2: Make a Budget. If you have no plan for how you’re going to spend your money, you shouldn’t be surprised when you don’t achieve those goals you set for yourself each year. Your budget is a road map for how you’ll use your money. No budget means you’ll likely end up in a ditch.

Rule #3: Increase Your Savings. Not participating in your company pension plan? Sign up this year. Don’t have an auto-deduct from your account to an RRSP, TFSA or other retirement savings plan? Quit procrastinating. Saving a little today means you’re not going to end up old and poor.

Rule #4: Open up a High Interest Savings Account. If you’re squirreling away money for a vacation, to pay for next year’s holiday gift giving, to cover your butt in the event of an emergency, shouldn’t your money be working as hard as you do? If your savings account pays anything less than 1% you’ve got the wrong account. Go online and find an account (Google “high interest savings account”). Close that stupid account paying you next to nothing and make your money work harder.

Rule #5: Make a Will. If you have no assets and no dependents you don’t need a will. For everyone else, a Will is all that stops the government from disposing of your assets as it sees fit. Really? You’re willing to let the government make that decision for you and your family? Get thee to a lawyer!

Will you join me in helping to raise Canada’s Money IQ? If you need a road map you can find it at www.mymoneymychoices.com. If you’ve got your money together, I encourage you to create a Tribe and share your knowledge and experience. Whether you do so within your family, your circle of friends or at work, where you worship, where you learn or where you share your love of books, I’m counting on you to help spread the word.

19 Responses to “5 Rules for After the Holidays”

  1. Yellow lily Says:
    January 21, 2014 at 6:34 am

    Happy to say NO HOLIDAY debt in this house and manage to make the credit cards work for us! We are also going on a Jamaican holiday! Paid for from taking bank accounts that were at odds number and making them even.( 49.47 and making the working account $45.00) putting $4.47 into a separate account. Voila a vacation is paid for!

    FEELS GREAT!
    Still have debt that we are throwing everything else at and living life to! We are in a good place and working toward a better one all the time!
    Thanks Gail!
    Can you write about the RDSP program that is out there. So many still no nothing about it..

  2. I have the whole tracking/budget thing locked down, but the new year is the time I revisit my process and tweak anything that can be improved upon.

    The will thing has to be done though!

  3. Our daughter (who is in the 5th grade) has taken an interest in my interest in personal finances after watching several episodes of TDDUP with me. She noticed your books that I have and asked if she could read one of them. I warned her it might be a little boring to someone her age but she said she wanted to, so why would I discourage that? I gave her Money Rules because of the format and content. To make it easier on her, the last few nights at bedtime my husband and I sit with her and let her read us one rule and then we have a conversation about it to help her understand and put it in perspective. It’s turned into quality family time and I am loving that my husband is actually listening along and talking about money!

  4. @Aimee – that is awesome!

  5. Can’t find a high interest savings account, most are paying 1.4%. Nothing near 5%. It’s like putting money in a shoe box. But lots of credit, use credit. bail you out if you to much credit, low rates to borrow, ect… this is not the time to save.

  6. @Yellow Lily

    I did that for a few years, and yes its amazing how much those little bits add up.

  7. My husband and I made a ‘budget date’ in early January and spent an evening having a beer and reviewing our budget – it was great! Definitely not something I would have done 10 years ago before I started watching Til Debt and following the Teachings of Gail :)

    I just reviewed our ‘high interest’ account and the interest rate has been steadily declining over the years. Down to 1.05% now and it was 2.25% when we opened it! Looks like it’s time to shop around.

  8. @freepursue Says:
    January 21, 2014 at 1:19 pm

    I agree with most of the rules, except for the need for a budget. If you pay yourself first (savings) and address your debt repayment (if you have any) per your agreed to schedule, then work with what you have remaining without going negative. There are many tools to keep track of your status throughout the month (using cash only, an app such as “Money” by entering all your receipt or a credit card – this last one is OK ONLY if you ALWAYS pay the balance down to zero every month).

    I find budgets can be a message to “spend this much” per category, as opposed to “you have this much if you choose to spend it”.

    Bottom line is that we all have to work with the tools and concepts that work best for us.

    Happy saving!

  9. @ Aimee: I started doing my parents’ taxes and accounting (including my dad’s business as an artist) by the time I was 12. I loved it! My passion for numbers, finance and insurance from an early age has ensured success in my professional life. Encourage your daughter’s clear passion! Not every kid’s passion is dance, singing or sports.

  10. As important as it is to find a high(er) interest savings account, is to also have an account with low/no monthly fees. Having an account that pays me $12/month interest, is defeated by the account I have that charges me $14.95/month in fees. Need to rid ourselves of that ASAP.

  11. Jan Moore Says:
    January 21, 2014 at 3:45 pm

    I must be the eternal optimist … trying to make 2014 a better income year, then I can pay myself … in order to pay the bills, then pay myself again via savings. It’s been a lifelong dream to have no debts, pay all living expenses on time and in full, and gosh, a savings plan too! I’m 57 this year, and despite an advanced university education … struggled with minimum wages, part-time/full-time (sort of) unsecured jobs, have kept spending journals, made budgets, tried and tried … now self-employed with 2 businesses and still no hope on the horizon … I read and believe in everything recommended, but feeling pretty damned discouraged and out of energy. I’m doing the 52 week savings starting with $1 … savings plan … let’s hope I can make it all the way through.

  12. Gosh, Jan, Where has your money been going? But atlas not all of us have the means to save money. Sometimes we don’t even have the means to get into debt. A good reminder that some people have to ask for help be it family, government, churches, ect….it’s not all about hard work & good looks (hehe)- bad and good luck and dash of fate come in there too.

  13. Glad old font and layout of blog is back.

  14. “Google ‘high interest savings account’ “. Did that. Nothing where I live. And overseas banks/online banks only serve residents of the country in which they are based. Oh well, back to the 0.01% available here.

  15. We could not find a high interest savings acct either. Instead we choose to keep over the minimum balance in our chequing acct in order not to pay fees. We went from a low interest savings acct that was paying us next to nothing per month to having the same amount in our chequing acct and not paying 16.59 in fees every month. We just put the extra 20 in our normal savings acct every month and call it interest. May not be a great method but we pay our credit cards in full every month and by carrying the min balance in our bank account, the bank is not making anything from us. These are interest and carrying charges we can avoid

  16. The only way to get good rates is to actually invest your money, not let it sit in a bank account. Look into fixed income investments like preferred shares, which are reasonably stable and pay 5%. REITS these days pay 7-10%. Balance with blue chip dividend stocks and then you have a balanced portfolio paying you decent interest. Otherwise you’re looking at just over 1% or so for letting your money sit in cash. I usually keep a little cash, but keep most of my savings invested.

    Inflation is 2-3% so by letting your money sit in a cash account, you’re actually losing money!

  17. ING has higher interest savings accounts; still not great, but compared to standard FI’s, it’s more money in my pocket. I’ll happily give anyone my orange key to use that will give you (and me) an extra $25 in each if our pockets. :) Over the past two years, I’ve received about $175 in interest. Not bad. Scotia might have given us $10 and a pile of fees.

  18. Thanks J about the stock info-

  19. Implicity Financial (online Credit Union) has a 1.9% interest rate for their savings account. As long as interest rates stay relatively low, you’re breaking even…better than a shoe box.

    Visit implicity.ca

    Regards,
    Jo

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