My Top 5 Money Lessons
Posted by Gail | Filed under Kids & Money, Money Management
A quick reminder: Tonight is the 100th episode of Til Debt Do U$ Part on Slice @ 9:00 and the first airing of the show on CNBC in the U.S. @ 10:00 and 10:30. For new visitors joining us, welcome!
I talk about how important it is to teach our children about money a LOT. And I practice what I preach. As we were on our way to the beach one day, Alex said, “I love these drives. I learn so much about money every time we head out to the beach! Funny, I didn’t realize the drives had turned into mini-lessons. But each time we’d start out, she’d ask some question that would set me on a roll.
You can teach your children about money in all types of situations: when you’re shopping, while you’re paying the bills, or even while you just out driving. It’s best when the kids’ ask a question that opens the door. But sometimes you can say something that gives your kids an “oh, really?” which they will follow with a question, and then you’re off to the races.
You may not always have a “lesson plan” at hand for what you want to teach, but if you have a good idea of how you want your kids to feel about, and deal with, their money, you always have a framework within which to work. And whether you’re talking to a child, a young adult, or some family member or friend who has yet to see the light, having a core set of messages makes it easier to avoid being distracted by the minutia. Here are mine:
1. It’s not how much you make, it’s how much you keep. I’m a saver by nature, and I’ve tried to instill the habit of saving in my kids from a really young age. If you always spend every red cent you make, it doesn’t matter how much you make, you’ll never have anything. And if you don’t have a something set aside, you have fewer options.
While it might be easy to save when times are good, the real test of your commitment will be to tighten your belt and do without something you really want so you can keep saving even when the money is thin. And since you can count on the fact that times won’t always be good, having something set aside for the leaner months or years can save your butt.
Saving is an investment in your future. Whether you’re saving for school, for an emergency, or for retirement, having money in the bank gives you choices. And there is nothing better in life to make you feel you are in control than having choices.
2. Credit is good. Debt is bad. It’s all well and good to go out and put a $120 dinner on a credit card, but if you don’t pay that balance off in full when the bill comes in, you’re just dumb. Why? Well, you had a nice dinner right? Then you went home and pooped! Dinner is gone. But the balance you’re carrying lives on.
Credit isn’t evil. It’s a tool that must be used carefully. Know the rules, and you can use credit to your advantage. Have no self-control and credit will turn into debt and eat your future. It’s easy to buy stuff on credit that we think we must have TODAY! But if you can’t afford to pay for it in full TODAY, then you’re simply indulging yourself. Unmanaged credit has a way of haunting you for eons. Look at all the people who miss a couple of payments and then watch their interest rates skyrocket because their credit score has gone into the tank. Do yourself a favour: outside of the things that will outlast the credit you may have to use, like a car or a house, don’t step into the quagmire of debt. Instead, use credit to your advantage – to build a good history, for example – so when there are things for which you must borrow you can do it on the best terms.
3. Keep talking, Keep learning. We aren’t shy about money in our house. We talk about how to use it. We talk about the mistakes we make. We learn from our mistakes. And all the while I try to impress on my kids that everybody has their own path to walk. Figuring out what’s important is the first step. The next step is doing something to make what’s important shine.
While I may do my best to teach my children about how money works, it will be up to them to pick up the reigns of their own financial education and keep learning. There are always new things to think about: new products are offered, new investment alternatives are created. If you aren’t constantly learning new and better ways to manage your money, then you’re just proving you don’t really care about it very much. There are tons of great books to read about finance. And while they may decide that they do not want to be their own investment specialist, insurance specialist, estates specialist, they should at least learn about the choices they are making.
I hope that since it’s been okay to talk about money with me, my kids will also want to talk about money with their partners. Developing financial goals then laying out the plans for how to achieve them means you’re working together… and that’s really important if you want to stay married.
4. A good financial plan is balanced. If you prioritize home ownership over everything else – you don’t save for retirement, you don’t have enough insurance, you don’t have an emergency fund – it is only a matter of time before your plan falls apart. A sound financial plan has a firm foundation that covers all the bases. Putting all your eggs in one basket is a good way to see your plan scrambled if you stumble. (This applies just as much to your whole plan as it does to your investment portfolio.)
I know “financial freedom” is all the rage, but I’ve watch people sacrifice their present to try and achieve a financial goal without really ever understanding what they are giving up. If you’re just accumulating a crap-load of money in the bank, what’s that all about? I would much rather my children understand that balancing today’s needs and wants with tomorrow’s is the key to managing money well. Yes, they need to save so they have options. But if they prioritize more savings over having a life, then all they end up with in the end is lots of money. I’d rather have some money and some life, and I’d like to demonstrate how important that is to my children by showing them that you can save, spend sensibly, and have a great time too.
5. Be conscious about how you spend your money. I watch so many people blunder through their lives, spending money without thinking about it, and then crying about what they can’t have. If you’re operating without a plan – read “budget” – you’re at the whim of whatever you’re dealing with at the moment. Without a plan, it’s pretty tough to stay focused on the big picture. Sure you’re burnt out and would love a vacation, or you’ve been studying your nuts off and would love a night out with friends, but if you’re spending next week’s rent money, grocery money, or telephone bill money to do it, you’re going to be very sorry.
Having a budget means you’re making a conscious decision about how you really want to spend your money. It is about being aware of how much you have, and prioritizing thoughtfully so you can cover the bases on the things that are important to you. It isn’t about “doing without.” It’s about “living within” (your means).
Okay, your turn. What are your top five money lessons — the things that form the core of your financial philosophy?
November 6, 2009 at 8:32 am
Congratulations on your 100th episode! Through slice.ca I have managed to watch all prior 99 episode and look forward to tonight’s lessons.
I am an early riser and look forward to your next blog and look forward to Monday’s after the weekend to see what you have to say. I have been using the jars and the budget binder for two months now. So far so good.
One of the many lessons learned so far: Living within your means does not include using your LOC and CCs as extra income. Both LOC’s gone, two of 3 CC’s gone, Zero balance on the one that is left. I cannot believe how stupid I was. I say this because after years of making payment after payment I was not getting anywhere at all. One huge consolidation (that I hope to be able to speed up) budget in hand, committment and a good smack upside the head is what I needed. Your advice for emergency fund and savings were actually already in place, but, consistently “dip in” to supplement my wants. No more !! My binder includes a section to post debt repayment figures so I see the balance going down and savings/emergency section with the balance going up. I am a very visual person, I learn best by seeing.
I make very good money with extremely low cost of living. The banks love me, they gave me soooooo much credit and I felt it was my duty to use it all up. (Personally supporting our local economy single handedly). Darn sparkly stuff !!! I have enough “stuff”. Continue asking questions and stating the obvious Gail. It does eventually sink in, most of us are embarassed by the situation we have put ourselves in. Owning up to it, taking responsibilty and taking action makes one feel RICH.
November 6, 2009 at 8:59 am
Well you can teach instruct provide guidance to yourr childen all you want about whatever you want….in the end they do what THEY want!!!
Anybody who figures different hasn’t watched all their kids grow up (maybe they are to young yet) and set out and make their own beds.
November 6, 2009 at 9:11 am
@John, you make a good point but eventually they come around. My father would talk and talkj about the importance of tracking what you spend. When I got out of college and on my own I didn’t follow this advice. it took falling into a debt hole to wake me up as to how right my father was. Sometimes Children have to stumble and fall before they come to the realization that their parents were right.
I think those 5 money lessons are very important for children. I recently heard that in Ontario in the schools they are going to be rolling out a money management education course for children. I think this is a step in the rigft direction. Maybe they will even use some of Gail’s ideas. I think the education of the next generation to be the most important part of money management. Sure some kids will still stumble and fall like I did before learning the lesson. However I think a far greater portion will get out into the world well educated and prepared for the stresses and difficulties of managing their own money.
regards,
Jason
November 6, 2009 at 9:15 am
I think the money lessons sink in with children if they have a strong sense of self. My brother is quite a bit younger than me and for years I kept trying to hammer the value of an education into his thick skull. He worked part time at a restaurant and lived at home so he had no bills and enough disposable income to have a good time locally. Then he took a trip out west and decided he wanted more for his life. I stepped in and mentioned that after only 6 months of the 2 year program I was in, I qualified to work as an assistant at the hospital and make $16/hr. I could see the little wheels turning in his brain. Now he is making a plan and working hard to make the life he wants. He learned the most important money lesson: it may not be easy but it’s worth it.
My biggest money lessons are:
(1) I always want to have some
(2) I always want a way to be able to make some
(3) despite being able to keep a running total of our bank accounts in my brain at all times, a budget, on paper, does make it possible to find even more ways to save and be accountable
(4) you have to trust and like your financial advisor. So far it seems to be the only industry that still understands “customer service”. Mine checks in on us when she reads something in the news that might affect us (layoffs) and is nicely able to tell me when an idea I have is not very bright.
(5) having an emergency fund does allow you to tell the most miserable boss on earth to go to hell.
November 6, 2009 at 9:35 am
1. A balanced LIFE is the key to my financial health.
If there is chaos in my life it will eventually show up in my finances. The budget will be thrown out the window. Savings will be used to cover daily expenses. My mind will begin to rationalize “I’m too stressed, too tired to cook, clean etc.” Then money will be begin to leave my wallet and fatten the wallets of restaurant owners and cleaning ladies (my weaknesses). It is a constant challenge to stay within my budget and continue working my plan. The key to success for me is finding healthy ways to deal with life.
2. An investment plan has to SUIT THE INDIVIDUAL’S personality, style and comfort level.
I discovered long ago that I don’t like “Paper” Investments. Aside from my RRSP for the tax benefits, I have nothing invested in mutual funds or bonds. They don’t feel real to me. I don’t fully understand that world (does anyone?). I don’t like being at the mercy of a Financial Advisor. I find it very uncomfortable.
I’m a “Bricks and Mortar” kind of girl. I understand mortgages and how to find a good rental property. I like being able to drive by and see my “money”. If everything goes to Hell in a hand basket I’ll at least have a roof over my head. I am WILLING to accept the risks of being a property owner and landlord. I am prepared to DO THE WORK. I LIKE Real Estate. It interests me and suits my personality. In the last few years (since discovering Gail and Til Debt Do Us Part) I have eliminated my consumer debt. I’ve gone from renting to owning my home and four others. I’ve taken Gail’s advice not to overextend. There is a minimum of 25% equity in each property to help me ride out the dips in the Real Estate Cycle should I need to sell quickly. I have also beefed up my SAVINGS for emergencies so that I don’t go back into debt for regular maintenance on the homes or expenses for the months a property might be vacant. My goal was five properties. Now that I have them I can focus my enegy on other interests.
3. Have a ROLE MODEL.
Like it or not Gail, you’re one of them. You and your show keep me on track.
My son is my other role model. From an early age (around three or four) I tried to teach him the skills to handle his money well. I got into debt because I was a single mom working a part time job and going to university. There really wasn’t enough money to go around. I was determined to teach him that you can have anything in life just not everything at the same time. When he was little, like any other child, he would ask for things when we went shopping. Rather than say no and set myself up for the battle of wills I saw other mothers experience, I explained to Chris that there were “buy days” and “no buy days” because I didn’t have enough money to buy toys every time we went out . When we got into the car to go shopping he would ask me if today was a “buy day”. Hearing “no” was easily accepted because he knew there was a buy day down the road. We could then focus on just having fun. He learned that money is a limited resource. Today, he never charges a dime to his credit card that he can’t cover when the bill comes in. He always meets his financial obligations on time and is building a nest egg. He is now educating himself in how to invest. I paid attention to what Gail was saying and charge him rent for his new basement apartment. Granted the rent is very reasonable and includes meals but what can I say? I’m still a mom trying to help him get a good start in life. He’s learned his lessons well and has become an independent adult. Can I do any less with him watching? Do as I say not as I do is NOT an option.
I don’t write often but when I do I tend to be long winded. Sorry for going on and on. Take care everyone!
November 6, 2009 at 9:52 am
Great post gail. Here’s my top 5:
1. It’s ok to make a mistake. Don’t beat yourself up too bad, but learn from it. (I’m looking at you, brand new financed mustang I bought right out of school, though I must admit I got a lot more dates after I bought it). But I won’t do that again.
2. Don’t mortgage the future for the present without really thinking about it. Too many times people make a choice today that will affect the future for a long time, without thinking. This can be big things (car loan) or little things (cell phone contract). Things change.
3. It’s ok to decline, wait, or pass on opportunities if you’re not ready (ie house buying). The world will keep on ticking just fine.
4. Have some hope / faith that the world isn’t about to end. Some people convince themselves that capitalism will fail, that anarchy will prevail and mad max will be roaming the streets, so who cares about the future? Have faith.
5. If you don’t understand something about your finances, investments, spouse’s debt load, whatever, ask. If you still don’t understand it, ask again. And if you still don’t understand it, ask someone else. I’ve never understood why people are ashamed to admit they don’t know everything but aren’t embarrassed to put their heads in the sand.
and one more: To thine own self be true. What works for someone else might not work for you, and that’s ok. But hold yourself accountable for your actions and be responsible — doubly so if you have children.
November 6, 2009 at 9:54 am
(1) Save, invest, put away, stash, etc. (how ever you want to call it!)
(2) Differentiate between a NEED and a WANT, and it will make it easier to spend your hard-earned money on stuff…
(3) Set up automatic withdrawals and/or automatic bill payments (makes me ensure that the money is in my account!)
(4) Go with a bank that doesn’t charge fees for so many things (I’m completely online, have unlimited debit transactions, 24-hour access to my funds, great over-the-phone support, and no fees for withdrawing money from a banking machine – which, by the way, I ONLY do with my own bank, otherwise it seems silly to pay $1.50 to take out $20 from another bank…)
(5) Check your statement and/or balance on a regular basis (I do this at least once a day… I like to be in the know… lol)
November 6, 2009 at 11:28 am
Here are my 5 rules:
1. Your budget needs to be personal, and will change with circumstances, however if you are varying widely from the norm, be prepared to justify it carefully. For example, if you are spending more than 35% of your budget on housing, that can be okay, if it is only for the short term and if you can reduce costs in other areas. Saving 10% of income is fine – unless you’re self-employed, or a contract worker with wide variables in your income, in which case you probably ought to be saving more.
2. Never, ever compare yourself with others unless you know the minute details of their finances. Maybe the reason your friend can afford that big screen tv is because his income is twice yours, he inherited a lot of money, or he has no other debt??? Too many people get trapped into spending the same amount as their friends, because they assume they are in the same economic boat.
3. Credit exists to make money for the lender. No one gives you money because they love you. (Even your mom). The job of the bank is to give you enough rope to hang yourself. Just because the bank pre-approves you for a $400,000 mortgage doesn’t mean that you have to spend it.
4. Know how much you earn, really. I’m blown away by people who think because they earn $30,000/year, they think they can spend $30,000/year. Net and gross are not synonyms!
5. Bad things happen to good people. Everyone goes through life assuming that things will work out and nothing bad will happen. Plan to have kids soon? What will you do if you find it doesn’t happen magically and you need to pay for IVF? What would happen if your company goes bankrupt and everyone gets laid off? What if you get cancer and are too tired to work full time? You can’t always assume the sky is falling, but you need to know that your income won’t automatically go up and setbacks of one kind or another occur to all of us.
5.5 (This is a half, because it is related to the one above). Things are just things. If your husband died in a car accident tomorrow, would you really say “but at least I’ve still got my new Mercedes”? You may only be able to afford a beat up old clunker, you may not have a house as big as your brother, you may not have the most fashionable clothes. But there are a lot of people with fancy stuff who still cry themselves to sleep every night because the people they love are no longer here, or because cancer has made every step painful. Would you honestly rather be in their position?
November 6, 2009 at 12:31 pm
@Alexandra
I feel the same way about Real Estate Investing. I made my first foray into investment real estate last winter with the purchase of my first duplex. I hope to purchase 3 additional rental properties.
I hope to have one rental property for each child. My children are very young, so when they are ready to go out on their own and pursue their own dreams, they will have either; steady income (from the rent), a home to live in that is paid for, or an asset to sell to fund their dream.
We also have non-tangible assets (ETFs, shares and a small amount of fixed income) that we have been accumulating for years in and out of our RRSPs…
It doesn’t matter how you get there, it all boils down to….
SPEND LESS THAN YOU EARN!!!!!
November 6, 2009 at 12:32 pm
My top 5 (learned the hard way and after 40!):
1. Wake up, be conscious: think, plan, choose. It’s my job — nobody else’s — to be aware of where my money goes. Sometimes I get to decide, but not always; previous decisions (some good, some bad, some conscious, some REALLY not) have affected my options today. I’ve made a few bad choices since waking up, but I prefer the ones that were made consciously. And conscious or unconscious, these slips are a good opportunity to remind myself of the basics and move on.
2. Clarifying priorities makes distinguishing between wants and needs easier.
3. Being conscious and clear about priorities eventually calms what Gail calls the ‘impulse monkey’ (at least most of the time). I’ve experienced a shift in my way of looking at the world and am increasingly uncomfortable with waste and our largely ‘throwaway’ culture in North America.
4. Communication is key. My wife and I don’t always agree about money but we talk about it. All the time. To other people, too, apparently, to the extent that one of her friends has asked for help her with a budget and is stashing money with us as her savings account!
5. Lighten up, have some fun: I can turn anything, even things I enjoy, into a chore, yet one more thing on the ‘to-do’ list. But rather than stay home and crunch the numbers (with the spin-off projections) yet again, I should take the dogs for a walk. They remind me to pay attention to this beautiful world and to experience the world through my senses and not just my brain!
Final note: like many who’ve posted here, I read Gail’s blog and the comments every day. Unlike most other blogs I read, the comments here are actually contributing to a conversation. Thanks to all for helping everyone who reads this blog with the top 5 — yours, mine, and ours!
November 6, 2009 at 12:34 pm
I think the very best thing I can do for my boys is start teaching them about money now.- they are only 6 and 4 but they both have spending jars and saving jars which we put an allowance into weekly. My little one doesn’t really get it yet but try giving his brother money and not him..L0L.
It fascinates me how quickly my 6 year old has caught onto the lessons we are trying to teach him. We have season tickets for our local hockey team and last year we had a battle every game about what kind of treats they could have – it was our money so they wanted drinks,popcorn , hot dogs -you name it.. and then they would eat half of it and be done with it. This year we wised up and told them they would have to bring their own money to buy treats. After the first time of blowing all their money at one time they quickly realized how much money this stuff cost and if they blew all their $$ right off the bat all they had was an empty jar. I can see the little wheels spinning when it’s decision time and he sees the actual money disappering from the jar..
Something else I will do is talk talk talk with my kids about money.. about how much we make and how much things cost- big things like houses and cars and all that other stuff. I truly had NO idea how much a house cost or new car or what I could reasonable expect to earn when I finished university..
These are all things I will talk about with my kids all throughout their lives.. until it’s second nature to them to understand and consider the real cost of things….
November 6, 2009 at 12:40 pm
Alexandra your “buy day” and “no buy day” idea is brilliant. I will be using it with my kids once they learn to talk.
November 6, 2009 at 12:54 pm
1. No matter how “poor” you think you are you can be even “poorer” one day (my mother’s mantra) so save some money!
2 keep track of your money…fancy computer excel worksheet, or free cheq register from your local bank..whatever the method just do it…!!
3 plan ahead…Christmas and birthdays come around EVERY year…put a little away each month for these events so you can pay cash!!
4. know your limits!…if you can’t pay a 5000.00 visa balance at the end of the month and self control is an issue then don’t have a 5000.00 credit limit!!
Only 4 tips from me…but, they all work and are all effective…:)…cheers, y’all:)
November 6, 2009 at 1:02 pm
My parents passed on great money habits albeit more traditional. They were modestly successful small business owners for many years and the business still exists to this day after being sold over 2 decades ago. Three lessons Ive learned are:
1. You get out of life what you put into it (also applies managing money)
2. Doing what you can to prevent stress and chaos is easier then living in reactive mode.
3. My dad taught me to take managed risks and treat each job as if you were the owner (I did and it came back ten fold).
Im now co-owner of a growing and very successful small business which came with alot of sacrifice, and sweat equity and yes, risk and will hopefully sell one day for the legacy to continue. I applied all three lessons above and fell hard along the way but learned to work smarter. The best lesson about money my dad passed on before he passed of cancer: if there’s something you want to do, do it NOW because you dont wait. As Gail would agree, plan and be responsible but life is for the living so dont forget your dreams.
Take care all.
November 6, 2009 at 1:02 pm
My top five money lessons for myself are:
1. Track money in and money out. I know we probably all do it here but I am the only one I know out of my friends and family who does it. It really is a eye-opener.
2. Analyze your bills. Over the past couple months I have been really looking at our bills and deciding if we really need that cellphone plan or some other utilities. In August alone I reduced our monthly fixed costs over $150 a month by reducing plans, switching companies etc.
3. Having a balanced life. To me saving has always been very important and now that I have a mortgage, making extra pymts to the mortgage has become important as well. But, I still want to enjoy life and have fun while being smart. This (for me) isn’t as easy as it sounds. Deciding to spend $9,000.00 on our upcoming honeymoon to Europe in June was very hard for me. Even though the money is saved and it won’t leave us without a healthy savings account I always think about what else we can do with that money. But this has been a dream for me for a long time and I know that it will be something I always will remember and cherish for the rest of my life.
4. Like alot of you recognizing the difference between a Need and a Want is key. Sometimes this is hard but I feel that I am getting alot better at it. I tend to walk away from things I see in the store that I want and decide that if I am still thinking about it in a day or two I will come back and get it. I almost never come back for the item.
5. When making financial decisions I don’t only think of, can I afford this now? I also think can I afford this 3, 4, 5 years from now if its financed? The other month my fiance’s used car when on the fritz. Were talking about our options. Buy another used vehicle for under $10,000 or finance a new or used car worth more than $10,000. We were weighing the pros and cons of each. He has always wanted a Jeep but couldn’t find one he liked under our limit to pay cash. He asked, can we afford $350-$400 pymts on a newer used one? I already knew we could (even though I dislike financing) but then I thought but we can’t afford this in 3 years when we want to start a family. So we found a used car and paid cash that way in 3 yrs when we start a family we won’t have to worry about making that pymt.
November 6, 2009 at 1:04 pm
Sorry for typos above.
November 6, 2009 at 1:04 pm
I have a comment about the old saying “It’s not how much you make…blah, blah, blah”…..I’m sorry, but I think that’s a tiny bit of crap. What if you just don’t make that much? I’m a tradesperson, went to school to do what I do, and I make JUST enough to get by. Honest. I work 40 hours a week, and after I pay my rent I have just $1500 left to pay ALL my bills, food, clothes, gas for the car to get to work, etc. I have high credit card debt ($9000) because after my divorce, I had to put myself through school in order to survive (I left my career years ago to be a stay at home for OUR children). Now my ex is taking me to court for $1300/month in child support. How the hell am I supposed to survive, much less save for ANYTHING?
November 6, 2009 at 2:30 pm
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November 6, 2009 at 4:08 pm
1)Look around. Take a moment & take a deep breath. Try to see the good in everything. “My great aunt would tell me this every chance she had”
2)Live by your means. You don’t need what the neighbors/family/friends have. Your needs are on an individual basis. Live your life as how you want to live it and not to impress others….”another saying my great aunt had”
3)Have a budget & stick with it…..
4)Save money for a rainy day.
5)Be happy with what you have was a favorite saying of my great aunt who lived over 80 years & enjoyed life with a passion without spending $$ at every chance she had. Make the most of your situation. Words I do live by to this day & yes I am very happy… My great aunt would say to me”Name 3 things that you cannot do without”
My answer is:
1)family & friends
2)health
3)roof over my head & food on the table…
Congrats Gail on your 100th episode. Looking forward in reading your book.
November 6, 2009 at 5:38 pm
@ Chubby
I really do feel for you, you’ve been through a ringer. That said, your post is filled with such anger / resentment, that it may be clouding your judgement. $9000 credit card debt, while not good, is not that bad as long as it’s not growing and you’ve been through a divorce after all. That said, I think you have to realize that working 40 hours a week is really not that much (I’m going to catch hell for that, but hear me out.. many people work way more than 40 hours a week) and as a tradesperson, you can be self-employed which is a great help. But I think the best thing you can do is drop the self-defeatist attitude, took a conscientious look at your finances, speak with a family lawyer or legal aid office (many will consult for free at least initially, or try the ontario law referral service where a half hour costs $6). Life isn’t fair but how you look at life often helps.
November 6, 2009 at 6:14 pm
@Geoff – thanks for replying, and for your suggestions. First off, I’m a Red Seal Baker, how can I turn that into a self-employment opportunity? I have to be bed by 8pm because I need to be awake at 3am to get to work for 4am. Hard to get a evening job. I make $45000/yr before taxes, my ex makes $114,000. We have six children, which is why the child support could potentially be that much. Raising my income by getting a 2nd job only increases what I could be made to pay. I get no spousal support, even though I left him EVERYTHING in regards to our marital assets (I left it for the children, not him). I am already being represented by Legal Aid (which is another term for bottom-of-the-barrel-lazy-assed-lawyer-who-has-better-clients-to-worry-about-than-me).
I believe that I have already taken a “conscientious look” at my finances. I don’t smoke, I don’t drink, I don’t eat out, I have pitiful clothing, and my vehicle is an embarassing piece of crap. Every extra penny I have goes to trying to manage my debt and putting a small amount away into an RRSP.
November 6, 2009 at 6:18 pm
To continue from above, my original point was that I believe that there are people in bad situations who just can’t do it. “It’s not how much you make, it’s how much you spend” is stupid. Tell that to someone who gets laid off, and is getting $800/month from EI, when their rent is $1000.
November 6, 2009 at 7:07 pm
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November 6, 2009 at 9:13 pm
I wish I heard your lessons when I was young…I did not get taught anything about money and finances other than always being told…”save your money” but never why or how or what is the best option. Or how to use credit wisely. I make sure my kids watch your show…even though I get the rolling eyes…BUT they are starting to catch on. Mom is NOT an ATM – we have to earn and save before we buy. Credit is fine, if used wisely and pay cash for items but keep track of all spending. If it’s not in the budget, it doesn’t get purchased until there is enough extra to buy the item. And an EMERGENCY fund is necessary with 6 to 8 months of salary and those new shoes are not an emergency!!
November 6, 2009 at 9:14 pm
To Dana: Love your goal of having a piece of property for each child so that they can have choices in life. I used to have the same goal for my son (easier for me because I only have one) but then a strange thing happened.
As I mentioned above, he’s been good with his money. I have been teaching him what I know about Real Estate just as I was learning it myself. When I purchased a duplex last year I asked him if he wanted to go in on it with me – partners 50/50. He reminded me that I always used to say “never go into a business venture holding less than 51%”. (Yeah! He WAS listening.) He also said that he isn’t in a hurry (he’s 23). He’ll buy his own income property when he can afford to do it by and for himself. He has just started his search and will have one by the summer. So, Dana, “kids” have a way of surprising us. Everything we say to them are seeds we plant. They do bloom when the season is right. While a gift is nice, they might get more satisfaction by doing it for themselves. Besides, we can always make our gift their 2nd property after they’ve learned how to handle their own.
To Amanda: You’re absolutely right. Bad things do happen to people. I just finished my fight with Cancer (prognosis great). Having my Emergency Fund and Rental Income took the stress out of my life during the past year. It also taught me to ENJOY THE WANTS IN LIFE GUILT FREE. Some of us have turned Wants into evil things. They aren’t – as long as you’re paying cash and all other financial obligations are covered. We still have to enjoy the juice in life. If buying something for ourselves or a loved one makes us happy we should be able to go for it. We shouldn’t work through our “Bucket Lists” only when life sends us a wake up call. It’s nice to take our “mad money” and just blow it sometimes.
To AM: glad I could help with the “buy day” vs. “no buy day”. Your children will have the pleasure of the anticipation an upcoming “buy day” brings. Many a time my son had a blast just searching for the right thing to buy. Adults do it too every time they buy a lottery ticket. It’s fun to dream.
November 6, 2009 at 10:03 pm
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November 6, 2009 at 11:17 pm
@ Chubby Bunny
You could have a case of “undue hardship” that could reduce the amount of child support you have to pay. Here is a link that I hope will work and I hope will help you out.
http://www.justice.gc.ca/eng/pi/fcy-fea/lib-bib/pub/guide/step8-etap8.html
November 7, 2009 at 6:47 am
Ahhh, I just totally violated one of my 5 rules: never ever impulse buy; the malls are not going to run out of stock.
About 5mins ago I got caught up in the excitement of a “reverse auction” site while looking for an ipod nano for my daughter for christmas. I spent $12 on bid credits and by the time I got back the auction had finished.
Oh well, I guess as far as unbudgeted spending goes – it could be a lot worse than $12. And there is sure to be another ipod auctioned before Christmas.( Just have to make sure I don’t make the mistake worse by wasting the bids on things I don’t really want!)
November 7, 2009 at 10:57 am
This is an excellent summary! Geoff, I really like your rules. Mine are quite similar. I guess my philosophy can be summed up by your last statement – to thine own self be true. I just want to life a life that reflects who I truly am, what I truly want, and what I believe to be important. I want my financial decisions to reflect my values and goals, not someone else’s. And if that means doing things differently than my peers, then so be it. I completely agree with Geoff that it’s okay to make mistakes, ask questions, and it’s okay to be patient and hold off on taking advantage of opportunities when you’re not ready, even if those around you are jumping in with both feet. The key, I think, is to have enough self-awareness to know if you are ready, and what it is you really need and want. Sometimes these things are hard to figure out, but if we can pay enough attention, usually we can figure out the difference between what we need/want for ourselves, and what others think we should do.
November 7, 2009 at 4:16 pm
Rachel – I very much appreciate your taking the time to find that information for me! This leads me back to the comment that I made about Legal Aid lawyers generally being the bottom of the barrel, and that I don’t feel I’m being properly represented by him. The Undue Hardship clause is something I had to find on my own (he never even suggested it for me), and I am working it into an affidavit myself. I am quite sure that with the differences in our income, the fact that I left him all the matrimonial goods, the debt I had to incur to school myself, and the high cost of rent, etc, etc, I will qualify. Perhaps I am just “freaking out” too much, and need to trust that everything will work out in the end. My court date is in Mid Jan, so we’ll see what financial challenges I am faced with then.
November 7, 2009 at 5:58 pm
I feel sorry for chubby bunny.
You can’t work anymore because are dumb enough to more child support will be deducted.
I wouldn’t be doing that.
Looks like with your hours worked now it wouldn’t work out anyway.
You should have been paid out the proceeds of the matrimonial home if it was owned.
If your ex stays there you have to be paid out the ex has to buy your half out.
If the ex can’t come up with the buyout money then the house has to be sold for its current appraised market value.
The only way out is IF an oder could be confirmed for a preseration of the matrimonial home for the sake of the spouse and kids
This is usully used by females though.
Sometimes a time limit is put on it.
Lots today still have to buyout the other spouse in ontario anyway.
November 7, 2009 at 9:12 pm
Five Easy Money Lessons That Only Took Years to Learn:
1. All my working life I never thought I earned enough to save. That was because I was living backwards. Spending first. What you have to do is pay into your savings first no matter what. If you don’t the money has a way of getting lost in the shuffle. Determine how much you want to save per month for emergency, and retirement. Whatever is left (from your net income) is what you have for your budget. This is how much you have to live on. You have to make it fit or earn more. How much you can save depends on your debt load but the minimum you should be saving is 10%. After your debts are paid off you have complete control and flexibility to increase savings and start planned spending.
2. Pay down your debts as fast as possible, doing whatever it takes to get the job done. This will mean sacrifices but you have to take the attitude that you already either had your fun (credit card debt) or got something valuable for your money (student loan debt). Once your debts are gone set up a planned spending savings account for the things you want and only buy/do these things when you have the cash in hand. It is really amazing how paying $1000 out to our debts every month did not seem to be noticeable and yet putting $1000 into a planned savings account adds up like you wouldn’t believe. We could not believe the day we had $10,000 sitting there just waiting for us to spend it. Stood in the vestibule of the bank looking at our pass book and giggling like window licking lunatics. We were rich!!!! And the thrill of buying something with a lot of cash is way thrillier than buying something on credit. I used to get a high from buying but when I used credit just underneath the high there was guilt bringing me down.
3. Make a budget and stick to it. Gail provides a ton of tools and they all work. Personally I love the percentage chart (housing 35%, transport 15%, debts 15%, savings 10% Life 25% etc.) This makes figuring out how much you should be spending in all categories a piece of pie so it is easy to figure out where you can cut and paste.
4. Keep your eye on the ball. The hardest and most time consuming thing is to get yourself set up (budgets, payout schedules, playing catch-up etc). After that it becomes simple and routine and if you just devote a little time each week to paying attention to the details you can’t run yourself off into the ditch again because you can’t pretend, deny or ignore what you know. We quickly found that we were accumulating a lot of not-spent jar money and so we started a second set of jars so that we eventually had all the money for the next month’s jars already sitting there come the first of the new month. Over the next year or so we set up our chequing account so that it was the same (on the first of the month all the money for that month was already in the bank). We did this by funneling extra money into the account (tax refunds, overtime, garage sale, gifts etc). until we had a whole month’s worth of expenses sitting there. This makes budgeting and planning so easy it is ridiculous and makes me feel ridiculous for living pay to pay and hand to mouth for so many decades.
5. Food is a huge item in anyone’s budget. Unlike a set expense like a mortgage payment it is very, very easy to go way, way over. Plan your meals, shop with a grocery list and stock up on sale items. We even have a separate jar for a Grocery Stock Up Fund. You can save a fortune over time. We normally buy a can of beans for $.99 when on sale. Just last week I ran out of beans (2 cans short) to make my infamous pot luck chili. We had to pay full price for the beans – $2.29 per can. $1.30 more per can. This pot of chili actually left a bad taste in my mouth. Oh and the most important thing about grocery shopping is to never ever shop with a hungry man. When the kids start throwing stuff into the cart and you say no they can whine but you can still win. Not so easy with a grown man. You say no, they whine, then disappear and it is only when you get home that you realize that they just snuck the Smokey Baby Back Ribs and Black Forest Cake out through the ten items or less check out and hid them under the spare tire while you were busy chatting with your long lost neighbour in aisle seven.
November 7, 2009 at 9:25 pm
1. Live within you means – doesn’t matter if you make 30k or 100k, if you spend 40k or 120k, respectively – you’re in the debt hole.
2. Save (for a rainy day ~ emergency fund, vacation, retirement, big ticket item, etc.) so that you are not a slave to credit (the “banks”).
3. I don’t believe in ‘buy now, pay later’. If you have to finance a purchase, make sure you have the means to pay it off as quickly as possible. Otherwise, it’s just a slow leak of your financial freedom.
4. Have a balanced outlook – don’t go hog wild trying to scrimp every penny to pay off the mortgage, if it means not having any fun – such as a movie out now and again, a nice dinner in a restaurant. Invariably you’ll slip and feel deprived and end up spending more when you have a weak moment.
5. Do what is right for you. Keeping up with the Jones’ will only get you in a whole heap of debt if they are the family on the street with a new vehicle every few years, have fancy computers, cell phones, ipods, blackberries, etc. Fancy ‘stuff’ is often only an illusion of wealth as we are, after all, a society of consumers! As a previous poster mentioned, you just never know what income level someone is at, whether they received an inheritance or even possibly won the lotto to be able to afford new gadgets. Otherwise, my guess is they are really just debt slaves with stuff.
November 8, 2009 at 8:21 pm
I love your blog and how real you are. I have spent the last 3 hours just reading through your website and you deliver the truth! I love that.
After using some of your calculators on the site I realize now that things add up very quickly if you don’t think and planning is the key. Seeing it right in front of your eyes is everything to making a conscious change.
Thanks,
Chris
November 8, 2009 at 11:54 pm
[...] My Top 5 Money Lessons « gailvazoxlade.com [...]
November 10, 2009 at 10:29 pm
Congratulations on your 100th episode! We enjoy reading your blog as well!
November 14, 2009 at 4:03 am
Thanks Gail. You totally rock the world!!! I am so touched by the work that you do to transform people’s relationships with their families and money.
My Five Top Money Lessons
1. Love where I am. Be thankful and embrace what I have and where I am.
2. Love where I am not. Acknowledge where I would like to be but love that not being there gives me a destination for my next journey.
3. Plan giving. (I love donating to charity and giving gifts but need to make sure I can do so without using credit.)
4. If it ain’t broke, don’t buy it! Stop replacing things just for the sake of having something new and improved.
5. Being focused on the present and planning for the future. If I buy this, do I need it now or in the future? If I need it in the future, why not buy it then instead? If I needed this item one time 3 months ago, then I should leave it. (Especially important when faced with end of season sales.)
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August 8, 2010 at 12:35 am
Great tips. Money got his own tricks