Tag: Budgeting

Spending Because I Can Afford It

Spending Because I Can Afford ItSome of my friends have this attitude that they have the money and they should spend it now while they can afford it.  They have the attitude that they are spending because I can afford it approach. We were out with another couple at a restaurant were the spouse ordered several dishes and barely touched any of them. I asked her why she ordered all this food and then did not eat it. Her response was, who cares, we can afford it. When I asked her if she was going to take it home for a later meal, her response was, NO, we do not eat left overs! We decided to add this post because it really illustrates how couples can save some money while still enjoying themselves.

Spending Because I Can Afford It – Surprised

My wife and I were really surprised at this brazen display of waste of both food and money. Our parents raised us to enjoy our food, to eat what was in front of us and not to over eat either. We always ate left overs, even from restaurants and just as important we always are careful with our money. We try to really enjoy ourselves but we avoid wasting it too. In this example, you might as well flush $20 or $30 down the toilet!

Why Should We Care About Saving or being Careful with Our Money?

For this couple that we discussed above, they are well off right now, both have jobs and make a good salary between them. They have more money than they need and their kids are out of the house and doing well on their own. So really, if they want to waste some money, why not?

Well it turns out there are lots of reasons to be careful with their money.  These range from loss of their current jobs, sickness in their family, sickness for one of them and causing them not to work, their investments nose dive, their company they work for goes bankrupt and they lose their pension, and any number of other potential conditions that could cause them to have money issues. What would happen if you lost your health insurance?

While we cannot predict any of these situations and we can never save enough money for all situations, some money should be set aside for a rainy day. When you are wasting money it is so easy to save for the future.

Saving Your Money for an Emergency

We do not have any idea if these friends of ours have savings or not and if they have enough to look after them if and when they have some kind of an emergency. Let’s hope that they do.

If they do not and they are spending money in this manner, it is really time to begin saving and make sure they have funds set aside to help them when they are out of work or are dealing with an emergency sickness or some other life style problem.

Everyone should have at least 6 months to 12 months in emergency savings set aside and they should have money set aside for retirement as well. Always diversify your holdings and make sure that you do not invest in some get rich quick scheme.  If you need the money at some point, you want to make sure that your investment is not at a low point which causes you to lose money.

Are they Just Showing Off

Could be that they are trying to show off to try to tell us that they can afford to do whatever they want to do. However in this particular case, I think they have no clue about money in general and investing. This is the same couple who asked me if they should keep their money in GIC’s or just in the bank to make sure they had access to it when they needed it.

They worry at night about losing their money they have saved and have gone to GIC’s instead. When we talked about financial issues, the wife does not even participate, leaving it all up to the husband to decide. She just spends money like it is water. Wow what a situation for home to be in. Glad that it is not me!

I really hope they never need to be concerned about their finances. At the same time, by being a little less frivolous, perhaps having a budget and investing wisely, they could have a lot more and do a lot more to.


Living Pay Cheque to Pay Cheque

Living Pay Cheque to Pay ChequeWe normally talk about how you can save money by doing things yourself around the house. However we felt that this topic was so important that we wanted to post it here on this web site. If you can get your monthly budget under control and develop some savings, you will be at far less risk of losing your home. Living pay cheque to pay cheque can also be very stressful. Saving money around the home will make it much easier to survive a job loss. Read on and let us know if you have comments that would assist our readers. This is your emergency fund that you can rely on when a financial emergency occurs.

Living Pay Cheque to Pay Cheque

The following survey is a sad picture of Canadian savings habits. It also high lights the exposure that over 60% of Canadians have to losing their homes, cars and more if they were to lose their jobs. The blunt advice that these people need to follow is :

  • Save 10% of your paycheck every month
  • Have 3 months salary in  savings available if you should lose your job
  • Get your budget under control and learn to live with less money so you can prepare for the future.

Survey Results

The results of the survey follow and it is a sobering message for many Canadians. Almost 60 per cent of Canadians live pay cheque to pay cheque and say they’d be in financial difficulty if their pay cheque were a week late.

A new survey from the Canadian Payroll Association released Monday showed some troubling signs about Canadians’ personal finances.

The 59 per cent figure is the same rate as the one found in last year’s survey. It is the second year that the agency has undertaken the payroll survey.

Almost half of respondents to a national survey said they are saving five per cent or less of their income. Financial planning experts generally recommend a retirement savings rate of about 10 per cent of net pay. They should also hoard three months’ worth of expenses in an emergency fund.

Although they don’t appear to be having much success doing so, 60 per cent of respondents said they were trying to save more money than they used to. The remaining 40 per cent said they were not trying to save any money.

“The most significant result of Canadians continuing to live pay cheque to pay cheque is its impact on their  personal finances and retirement,” CPA chair Cindy Forget said.

Younger workers feel especially vulnerable. 65 per cent of respondents aged 18 to 35 saying they would find it difficult to make ends meet if they missed a single pay cheque.

More than two thirds (69 per cent) of respondents said it would be difficult to find comparable employment with a similar salary if they lost their job.

For the survey, the agency interviewed 2,766 Canadian employees across the country. The survey is considered to be accurate within 1.86 per cent, 19 times out of 20.

It was taken between June of 2009 and July of 2010.

“End of Survey”

Summary

In case US citizens are reading this and feel that they may be better off than Canadians, think again. You have just gone through and are beginning to come out of a major recession which Canada pretty much avoided. You need to adopt these savings approach even more than Canadians, since jobs are more difficult to come by in the US than they are in Canada. If the past 4 years was bad enough, hopefully we all have learned that having some free cash available when you have an emergency can make a huge difference in your life.

In some cases having that emergency savings can mean the difference between putting food on the table or not. If you live pay check to pay check, and your pay check stops for some reason, there is no money to pay the bills or even buy groceries. Start saving now!


Save Money – Set a Budget

Save Money - Set a BudgetThis may seem like an odd title to write about for a blog that is dedicated to managing home maintenance costs. However when you think about it if you know were you spend your money, then you can make some decisions about what to spend and what not to spend. Developing a budget is one of the tools that can help you with this objective to manage your overall home costs.

Save Money – Set a Budget

There are a number of guidelines when it comes to building a realistic budget. Here are a few:

  • Be realistic about your budget. Setting it too small or too large will not allow you to achieve your objectives
  • Track your expenses against your budget so that you can compare
  • Develop your budget with the family so they can help you meet your targets
  • Need vs. Want. Evaluate whether the planned expense is something you need to have or merely want to have.
  • Always look for alternatives and ways to save money. This can be the difference between meeting your budget objectives vs. overspending
  • Just because you have not spent all of your money in a specific area of your budget avoid the tendency to spend it anyway. You might need this to offset an over expense in another area
  • Pay yourself as well. this is important so that you and your family have some mad money to spend on dining, hobbies etc

There are probably many other tips and areas that should be considered when setting up a budget. Based on my own experience, these are the important ones. If you have tips of your own, please feel free to leave comments on our blog. Spam comments will be deleted.

Categories for Your Budget

You probably cannot identify every budget item that needs to be included. We have listed some of the main ones for you to consider.

  • Auto – including gas, maintenance and repairs
  • Insurance – including home, auto, life, health insurance costs
  • Groceries – self evident
  • Utilities – cable, phone, cell, electrical, heat
  • Taxes – federal, state, city, provincial taxes, property taxes
  • Entertainment – including dining, movies, shows, etc
  • Vacation – travel costs and hotel, including dining and vacation entertainment
  • Home Maintenance – this is a big one and the expenses can be large. You may want to draw up a maintenance plan and then decide how much you need to set aside every month to ensure that you have sufficient funds to deal with the major expense. These include – window replacement, furnace , water heater, air conditioner replacement, roof repairs, driveway repairs, fence repairs etc
  • Home Decoration – Allow some money in your budget for decoration and furniture additions or updates
  • Pay yourself budget – although this may be a small item, budget to allow yourself to spend some money on frivolous items from time to time.
  • Clothing – plan your expenses around sales and updates to your wardrobe. Take advantage of sales to stay within your budget.
  • Office or work related expenses – lunch, transit, coffee at work
  • School – folks with young children will need to set budgets in this area as well, particular for that back to school time frame.

Keep Your Budget Simple

Sounds like a lot of work to set a budget and track it. It can be unless you keep it simple and really assess if you really needs things or just want them. It can be very rewarding at the end of each month to know that not only did you meet your budget, but you saved some money as well.  Stick to your guns with the family as well and set a time each week to over how you are doing relative to the budget for the month.


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