Having a Family Conversation about Money

By: Family Service PEI & Credit Counselling Canada

Do any of these sound familiar?

• The holidays are coming up and your adult children will be coming to visit.  You know that you should talk to them about money and your decisions for the future.  You are worried about having enough for retirement.
• Your children are young and you know you should be teaching them about money.  Where do you start and how much should they know about your family finances?
• Your kids are growing and talking about ‘what they want to be’ after high school.  How do you introduce the idea of saving for post-secondary education and what you might be able to provide?
• You’ve just become engaged and you want to have the money conversation since you are concerned that your fiancée may be in debt and you need to have a plan going forward.

If so, it’s time to have the family conversation about money.

These conversations are always better held sooner than later.  Even in the case of an engaged couple, the money conversation should happen earlier in their relationship so that the two partners could determine their financial path forward.   Couples in longer term relationships need to talk regularly about handling debt, savings for emergencies, retirement and health care.

Let’s start with seniors and their adult children.  This is an important conversation to have as early as possible.  This is also one of the talks that you don’t want to have at holiday time.  Leave this topic for another visit and enjoy the holidays together without discussions that could be stressful.

Here are some additional tips to consider:

• Have a talk with your spouse first and plan ahead before talking to your adult children.  Make a list of what topics you do and do not want to talk about.  The best way to prevent financial challenges is to plan ahead when you are physically healthy and still living in your home.
• Take it slow, this may be an awkward and difficult conversation for them so be considerate of your adult children’s feelings.  It can be a tough conversation when talking about last wishes for burial/cremation, sources of cash flow, investments, assets and liabilities, insurance coverage, powers of attorney and wills.
• Know that you will always have the final decision; after all it is your money and your life.
• Ensure that you have follow up conversations particularly since they likely won’t have all the information in one sitting and they need time to assimilate and make decisions.

At the end of the day, what is really at stake is the opportunity for you to communicate your financial wishes, and get help to make those wishes come true. By communicating your wishes early on, you are:

–          Making it easier for your friends and family to help you with financial issues in the future.

–          Making sure everyone understands your wishes and desires, eliminating confusion.

–          Creating a support network with whom you can talk to about concerns, ask questions, or get advice from.

Everyone needs to have money conversations no matter the stage or age of your family members.  Sharing examples of things that you have undertaken may provide encouragement for them to do something similar.  For instance, having made a power of attorney for finances and personal care makes you feel more comfortable about any future situations.  This may ease the way for them to take this step.

Remember that money is a personal matter.  Everyone has boundaries around personal information and you should ease into these discussions with patience and empathy.

By: Household Management 101

When you think of Christmas on a budget perhaps you think of doing without, and everyone sitting around an empty Christmas tree looking sad. However having a Christmas budget doesn’t mean you are limiting your fun. Instead, it shows you are taking responsibility for your financial life and are taking steps to have a stress free holiday season.

After all, nothing screams stress like a credit card bill in January that you can’t pay!

Creating a holiday budget is something everyone should do, whether you are tight on cash this year, or are Uncle Scrooge rolling around in your money bin.

Each of us should be mindful of our spending, because Christmas, and the holiday season in general, is not about who can spend the most, but instead about love, family, friends, and faith. Money is not needed for any of those things.

How Much Do You Plan To Spend For Your Christmas On A Budget?

That being said, people enjoy giving gifts, entertaining, and traveling during the holidays. Those things cost money. Do you know how much you plan to spend on your Christmas budget this year?

In a Gallup poll Americans reported that they planned to spend $743 on Christmas, on average. When you are talking about spending that much cash, for any reason, you should have a written and thought out plan to make sure you can afford that much, and that you really need to be spending that much even if you can afford it.

You have heard and probably thought lots about the commercialization of Christmas, and the “give me” attitude of our children at this time of year. Celebrating Christmas on a budget can help you curb some of these more vice like characteristics of the holiday, and get us back to the core values we most cherish.

Create A Written Holiday Budget

I urge each of you to create a written budget for your Christmas purchases this year, not just one in your head.

The reason to write it down is that it is then more concrete, and you are more likely to take the exercise seriously and really think about the amounts in each category.

In addition, a written Christmas budget holds you more accountable because you can project the expenses now, but you can also write down how much you actually spent later, as the season progresses.

The first year you create your Christmas on a budget is the hardest, because you have to start from scratch with your numbers and form. However, save your budget form you create this year in your household notebook, and next year use it as a jumping off spot to make the budgeting process easier.

Christmas On A Budget – Categories To Consider

The most obvious part of a holiday budget revolves around how much you want to spend on gifts to give your family and friends. However, that is just one of many categories that truly reflect all that you will spend on the holidays this year.

The complete list of categories includes:

• Gifts you will purchase (use this printable Christmas gift list to help you stay on budget for this category)
• Supplies for gifts you will make
• Wrapping supplies, such as paper, bows, gift bags, etc.
• Decorations you want to purchase this year (and if you have a spectacular light display the increase in electricity that will cost, for example)
• Christmas cards
• Shipping, such as for boxes to be mailed to family far away, and stamps for your Christmas cards
• Food, for parties, your own holiday celebrations, to give away as gifts, etc.
• Any other entertaining expenses for those holiday parties you are giving or attending
• Traveling expenses, such as gas, hotel rooms, etc.
• Charitable giving this holiday season

I know this article is about Christmas on a budget, but I would suggest adding your planned expenses for Thanksgiving and New Years in there too, because this will more accurately reflect your spending for the whole holiday season, to make sure you can still afford everything you are planning.

Can I Still Afford This Christmas On A Budget Plan?

Once you see all the numbers laid out you may gasp, and try to grapple with the question of whether you can truly afford the amounts you have put down.

Frankly, that is a good thing. It is much better to make that realization on paper than after the spending has already occurred.

A good rule of thumb is never to spend more money for the holidays than you take home in your paycheck for one week. If you are in debt, or cash strapped, your budget may realistically need to be even less.

Keep trimming those numbers until they reach a total you can truly afford. This exercise will help you examine your priorities and values, which is always a good exercise around the Christmas season anyway.

The Most Important Step For Your Christmas On A Budget – Stick To It!

Don’t just fiddle with your numbers on paper until they look pretty, and then go off and spend whatever you want at the store. Actually commit to your Christmas budget, and don’t spend more than you have allotted.

If you have trouble with this, try using only real cash and the envelope method to pay for purchases. Make an envelope for each category and put in it the amount of money you have allotted for that category. Then, spend from that envelope and stop when you run out. This concept is very simple, but truly works wonders!

For even more tips on making your holiday budget check out this Christmas budget how to’s and video tips page, which provides more tips for making your family’s holiday budget, and tracking your spending to make sure you stick to that budget.

Merry Christmas, and may you truly enjoy your Christmas on a budget and stress free New Year!

*To access the tools that go with this article, go to the following source.

Source: http://www.household-management-101.com/christmas-on-a-budget.html

By: Family Service PEI

On Tuesday October 14th we launched our new financial literacy toolkit for seniors- It’s Your Right- Protecting Yourself Financially As You Age. This project has been made possible through the Government of Canada New Horizons for Seniors Project.

Special guests that attended the launch of our new toolkit were: Hon. Lieutenant Governor Lewis, Hon. Minister Wong Minister of State (Seniors), Hon. Valerie Docherty Provincial Minister of Community Services & Seniors, MLA Mr. Aylward Opposition House Leader.  We greatly appreciated the attendance of all our special guests and all who participated in the launch.

Financial difficulties can happen to anyone.  This toolkit was developed based on the input of PEI seniors, and is designed to educate and empower the senior themselves, encouraging them to utilize available resources to take a pro-active approach to protecting themselves financially as they age.  Even though it was developed by seniors for seniors it is a great toolkit for anyone.  Increasing financial literacy at any age will decrease a persons’ vulnerability, and subsequently help prevent financial abuse.

The toolkit, It’s Your Right-Protecting Yourself Financially As You Age, has eight main topics.  These include:

• Who Can You Trust?
• Lending, Giving, and Donating
• Talking About Money
• Scams & Frauds
• Tips & Safeguards
• Planning For Your Future
• Financial Abuse
• Getting Help

The content of this toolkit has been derived from local, regional and national resources, including the Financial Consumer Agency of Canada, the Canadian Bankers Association, Canadian Anti-Fraud Centre and many more.

The toolkit can be found at www.ItsYourRight.ca.We would encourage seniors to take advantage of the hands on training session, which will teach the ins and outs of the toolkit and increase financial literacy. The training dates and locations can be found on the website or by calling 902-436-9171.

Knowing that not everyone has access to the internet, we have developed a print version of this toolkit. We are working hard to make this toolkit available to all PEI seniors through local libraries, seniors clubs and banks.

By: Ellan Dickieson, Family Service PEI

As a young professional who harps on others about being financially responsible, I figured it was time to start practicing what I preach. With the credit card debt paid off and the student loans on the way down, it was time to stop relying on the credit card for emergencies, and actually start an emergency fund. An emergency fund for what, I asked myself. I don’t own a house, or have kids; I have a full time job…what could possibly go wrong?

Oh yes- I do still have those wisdom teeth, and the car that, knock on wood, has been really good to me, but has travelled +250k kilometres, and I did take a job in the not-for profit sector.

Frankly, everyone has multiple reasons to start an emergency fund. The first step to starting is understanding what an emergency fund actually is: An emergency fund is cash that you’ve saved up for the sole purpose of helping you maintain a normal life through the emergencies that life hands you.  Most of the time an emergency fund just sits there earning a bit of interest, until you actually need it.

Some people may view this as a cruel sort of punishment. Here you have money sitting in the bank just staring at you waiting to be spent. Life is short; you should be using that money now, living life to the fullest, right?

Actually, it is quite the opposite. Having an emergency fund means you have peace of mind. You don’t have to live life holding your breath, hoping that nothing bad happens. You are armed, prepared, and ready to tackle whatever comes your way!

Getting Started:

Set a realistic goal of how much money you want to have in an emergency fund.  Start with a small amount, such as $250 or $500. This is a goal that you should be able to reach in a realistic time frame.

Next break that goal down into smaller pieces. How much can you afford to contribute per pay period? Perhaps it is $10, $20, or $50. Regardless of the amount remember, any savings is always good savings!

There are numerous options for finding that extra money every month; you may simply have to get creative. Could you make more money by getting another job, working more hours, or turning a hobby into income? Or perhaps spend less money, by packing your lunch, carpooling, writing a grocery list, or bottling your own wine…?

Make It Automatic:

The easiest way for me to save money is to not have to be responsible for taking it out of one account and putting it in another.  With online banking I was able to set up a second online savings account, separate from the one I normally do business with. This way, the money is automatically swept from one account to the other, and accumulates interest at a better rate.

The other benefit of my online savings account is that the money is not easily accessible. I can’t just run to the ATM and grab the cash, there are a certain amount of transactions I can make before I am charged, and there are limitations and rules. These limitations give me enough time to think carefully before I act.

Please note that different banking institutions offer different products, and therefore I would encourage you to shop around for something that suits your needs.

Continue to Set Targets:

With the money automatically being transferred, before you know it you are going to open up your online banking and see that $500 sitting there. And what a glorious feeling it is! Your account will have enough money in it that you will start earning a bit of interest and you will start to feel in control of your financial situation.

So, when you have something good going, keep on rolling with it! Set another goal of $1000, then maybe 1 month’s worth of living expenses, 2 month’s worth etc. If something unexpected comes up along the way don’t be afraid to tap into that fund, that’s what it is there for. Remember that paying to fix the car using the credit card means paying interest, and paying with your cold hard cash doesn’t!

The Challenge:

This all sounds lovely, does it not? But in the real world there are challenges. The first challenge I faced was not finding the money to save, but not touching the money I had saved. What can I say, we live in a society that focuses on the now, and when friends are heading to Vegas NOW, well I want the money NOW! Given my desire to travel and see the world, I have started a separate travel fund. For others this may be a “splurge fund”. Point being, do what you have to do to not touch the emergency fund.

Remember, life can throw us curve balls, and although we cannot always control what comes our way, we can prepare ourselves. Don’t forget, luck favours the prepared!

Canada Student Loans are available for students who need assistance with the costs of post-secondary education. Here’s what you need to know to keep your debt at a minimum.

By Renee Sylvestre-Williams from Canadian Living

Post-secondary education is expensive, whether it’s being paid for by your parents or through a combination of loans, bursaries, grants and a part-time job (or two). Here’s what you need to know about minimizing your debt after graduation.

What is a student loan?
Human Resources and Skills Development Canada offers financial assistance to Canadian students through both grants and loans. The latter — the Canada Student Loans program — is what we’re focusing on in this article. While banks will often offer financial assistance to students in the form of loans, they function like any other debt, whereas Canada Student Loans have their own set of rules and obligations.

Student loans are a blessing when you need help paying for tuition, books, rent and other costs of being in school. But you do have to pay them back. This means that even before you graduate and get a job, you’ve already got debt.

You have to start paying the loans back six months after graduation or if you’ve discontinued classes. Your loan goes to the National Student Loans Service Centre (NSLSC). There, your loan is consolidated so you’re only making one payment per month, even if you’ve received money from both the federal and provincial governments. The average loan is set to discharge in 9.5 years, and monthly minimum payments will be set based on that schedule. What to do when you’re still in school
So how can you minimize your student debt and pay it off? Honestly, it begins even before you start school.

• Don’t party it away

We’re not saying not to enjoy your post-secondary years, but do remember that every dollar you spend now will have to be paid back with interest later. You are allowed to earn a certain amount over your total loan via part-time work, so consider using that as your spending money. In other words, this is a good time to learn how to budget. Ask your parents for help, or see if your school has counsellors who can offer guidance.

• Apply for bursaries and grants

There are bursaries and grants available for students with all kinds of stipulations that might apply to you. For example, the Scarborough Campus of the University of Toronto has a bursary available for students enrolled in the co-op program in international development. Yes, some are that detailed. Do a little research and see if you qualify for any of the bursaries or grants — and don’t miss the application deadline.

• Look for loan forgiveness

If you’re carrying a lot of student loan debt, you may not have to pay it all off — there are loan forgiveness programs available across the country. What they do is help students reduce their annual loans so they end up paying less.

You don’t have to apply for consideration — you’re automatically considered when you submit your student loan application. There are some conditions tied to number of semesters, study period and amount negotiated for the loan. For example, in Ontario, if your study period was 21 to 40 weeks or two terms, you can limit your annual repayable debt to $7,300.

What to do after you’ve graduated

So now you’ve graduated and gotten your first job. It’s six months later and your student loan bills have started arriving in the mail. What should you do?

• Live like you’re still in school
Look, we’ve all been there — you get your first job and you want to buy a car, a home and drinks for your friends. But instead of splurging, why not continue your student life a little longer and use that income to pay off your loans faster? It will take you a bit longer to get the car, the nice home and those designer shoes, but at least you won’t have a student loan hanging over your head.

• Don’t forget the tax credit

Did you know you get a tax credit for the interest paid on your loans? The government will send you a document annually telling you how much you’ve paid. Keep it and use it.

• Pay more than the minimum
As soon as you can afford it, pay more than the minimum. For instance, if you get a raise that means an extra $400 a month coming into your bank account, call up the Student Loan Centre and increase your automatic monthly loan payment, too.

What to do if you can’t make your payments
If you’re unable to make your loan payments — for instance, if you’ve lost your job — then you can request a Revision of Terms, which will allow you to reduce your monthly payments and extend the life of your loan.
If you default on paying your loan — if an automatic deduction can’t go through because there’s no money in your account, for instance — you can risk your credit rating. That means you might have trouble getting loans for bigger items like a car or house. Is going into debt for education worth it? Well, no degree guarantees a job, but people with post-secondary degrees do earn more on average than those without. Just be sure to take those earnings and wipe out that debt as soon as possible.

Sourced From: http://www.canadianliving.com/life/money/what_you_need_to_know_about_student_loans.php

By: Gail Vaz Oxlade

A lot of the language around money is incredibly confusing to most people. It’s no wonder our savings rate is in the dumper. People are confused.

I’m not just talking about things acronyms like TIPS and TIGRS, I’m talking about words as straight-forward as “saving” and “investing”.

Let’s look at the word “saving.” If you go shopping and something usually costs $50, but you pay only $25, you’ve just saved 50% or $25. Really, that’s what you saved (the verb). Except you actually don’t have anything to show for it, because what you did was Not Spend $25. Now, if you took the $25 you did not spent and put it away to grow on your behalf, THAT would be “savings” (the noun.)

In fact, if you put that $25 you “saved” into a High Interest Account and started earning interest on it, that money would, in fact, be “invested.”

Investing means putting your money to work for you. If you stick it under your mattress and it earns you nothing, it’s saved, but not invested. If you stick it in a stupid account that pays you just 0.25% interest it’s invested, although you could probably do better.

There are loads of ways to invest. You can stick with the tried and true savings account, tie the money up a little longer in a GIC, or buy a bond. You can look to the stock market and choose individual shares of companies you feel have promise. Or you can decide to diversify by using a mutual fund to spread your eggs over several baskets. Or maybe you’ll just “buy the index” and go with the flow.

Each of these “investment options” or “investment vehicles” is just a different way to put your money to work. Each has positives and negatives. If you’re an “investor”, it’s all about finding ways to put your money to work so it earns you more money.

Investing isn’t always easy to do, particularly when you’re looking for higher rates of return. It takes research, analysis and hard work. You only put your money down once you’re pretty sure that there’s a reasonable expectation of profit. The risk isn’t completely gone, but you’ve done enough digging to know exactly what those risks are and what to watch for so you’ll know when it’s time to sell your investment.

Saving, on the other hand, is easy-peasy. All you have to do is NOT spend. Then take that money you did not spend and pile it up so you’ll have it for later. Like I said, easy-peasy.

Sourced from: http://gailvazoxlade.com/blog/?p=5882