Having Trouble Saving Money? (This System Works for Any Income Level!) By: Paul Barton & Barry Spilchuk

Thinking of her youth, Donna can recall many fond memories of time spent at her Grandparents farm. Donna would help her Grandmother with the annual fall ritual of making things like relishes and jams, and preserving them in jars for the winter months.

It took a lot of time and effort to preserve the various fruit, vegetables, relish, jams, and pickles. Many jars were needed to preserve the harvest from the growing season. Each jar was carefully labeled with the contents inside, and of course, the secret recipe for each preserve was kept safely hidden!

In a way, saving, managing, and preserving money is somewhat similar to how Grandma would preserve the many items from her garden. Putting money aside in various jars, or cans, or envelopes, or whatever is available to hold money, is a great way for anyone, at any income level, to establish saving habits.

Using visual aids, such as a money jar, may be especially helpful for parents looking for an effective way to demonstrate to their children how to set aside money for various goals. In one case, David was planning a trip to Boston with his family. The kids were involved with the planning of the trip and a “Boston Jar” was placed in plain view for the family to see. Each day, mom or dad, and sometimes even the kids, would place spare change into the jar. Within a few months, enough money was saved to pay for return airfare tickets for the whole family.

To some, the use of money jars may seem unnecessary; after all, with automation today, wouldn't it be easier to simply establish monthly transfers to various accounts using an automated pre-authorized method of saving? The short answer to this question is yes! Those that already use an automated method of saving often don't miss the money coming directly out of their bank account. However, for those that don't use preauthorized savings, then a money jar system may be the answer to help develop effective saving habits.

Part of establishing new habits is through repetition. If saving money has been a struggle for you, seeing your goals labeled on several jars sitting where you can see them daily is a great way to be reminded to set money aside in each jar. Even a few cents a day can add up over time.

T. Harv Eker, founder and master trainer of Peak Potentials based in Vancouver, teaches a form of money management using a simple jar system. Mr. Eker's explanation of his jar system is highly entertaining, and most memorable. Many people have written to Mr. Eker with testimonials describing how easy saving and managing money became once adopting his money jar system.

Even though you can probably imagine what we mean by using a money jar system, we have outlined below how you could label several jars for specific purposes. The labels shown are for illustration only. Label your money jars with whatever is appropriate for your situation.

Jar #1 Long-Term Goals Money in this jar could be for any number of reasons, such as; travel, saving towards a new vehicle, or accumulating money to pay down debt.

Jar #2 Education This could be for your children preparing for post secondary education, or it could be for you upgrading your skills. Some people dread going to work at a job they don't enjoy. Perhaps they have limited skills to work in a job they would truly love. Setting aside money to upgrade skills may help land that desired job!

Jar #3 Personal Use When was the last time you treated or pampered yourself…without feeling guilty? Setting funds aside for you to use any way you choose is a very good way to achieve balance in your life. Saving without ever spending is no recipe for happiness; however, spending without ever saving is a recipe for disaster.

Jar #4 Giving/Donating Some people donate anywhere from five to 10 percent of their monthly income to a worthy cause, and/or to their place of worship. How much should be placed in these jars each month? Many thoughts exist on how much money should be allocated. Some will be able to put larger sums into each jar, and others may only be able to put a few cents in each jar.

Every person's financial situation is unique, therefore, it may be hard to place set rules on how much money should go to various spots. If in doubt, remember to seek the guidance of a licensed financial advisor to help get you on track. Anyone could easily adopt a money jar system of saving…all it takes is action!

“Action may not always bring happiness; but there is no happiness without action!”- Benjamin Disraeli

Living on a fixed income

Living on a fixed income can be a challenge. Each person’s financial situation is different. Spending without a financial plan can lead to financial ruin. Financial plans work best when individuals make choices they are willing to put into action. By making informed choices you can create a financial plan that works for you.

Wants, Wishes, and Needs

Knowing what we want is not always easy. It may be helpful to know that others have found it takes some thought to answer this question in a meaningful way. A major factor in getting what you want is knowing the difference between needs and wants.

Have you ever thought, “If I just had more money …”? More money is not an instant cure. Wishing for money does not make it exist. When we allow money to control us, conflict and uncertainty increase. We need to be realistic in our expectations.

It is very important to learn to recognize the difference between needs and wants. A need is something you cannot live without, such as food, clothing, and shelter. A want is something you would really like to have, but you could substitute something else for it.

Thoughtful planning is the key. Planning what you want and how to get there helps you to be in charge of your own financial situation. Knowing what you want can reduce some of life’s stress and provide you with a sense of security.

Know What You Have

Be aware of what you have. Having more things is not necessarily better. Do you need the things you have? Does having these things cause you to spend more money for upkeep? Take an honest look at current income/ pensions, investments, and savings. Do you have an emergency fund? Know how much money you have and where your money goes.

Know Where Your Money Goes

Write down every item purchased and the amount spent. Keeping a record of exactly what is spent can help you to know exactly where your money goes. Then you can consider possible options. Be sure to track your spending for a few weeks before creating a plan. Be sure to track fixed, flexible, and occasional expenses. Fixed expenses are costs that are the same each month. Flexible expenses are costs that vary. Occasional expenses are quarterly, yearly, seasonal, planned, and unplanned costs.

Remember to include charge accounts and loans as expenses, too. In 1996, 1.1 million Americans filed bankruptcy. Many of these cases of bankruptcy were due to personal overspending. Credit can be easy to get. Credit overuse may make it harder to carry out your plan. Having credit does not mean you have to use it.

Choose Your Action Plan

Compare dollars available and dollars spent. Set priorities for spending. Know your limits and adjust your spending. Seek creative solutions. Then put your plan in writing. Setting short-term and long-term goals gives your plan purpose. Rethink your current buying habits. Do you buy because you have a need? Do you shop because you might find something to buy?

Remember it is okay to say no. If you are barely able to pay for minimum necessities, saying no to things you would like, but do not need, can be helpful. You may be able to think of other choices. Having a financial plan may help you say no when it is necessary.

Each person’s financial situation is unique. Do what works for you. Think positively. Avoid comparing yourself to what others are doing. Be realistic in your choices. Plan ahead. Consider substitute activities—things that you could do for little or no cost. Perhaps a part-time job or a hobby could bring in some extra income.

Once you choose your action plan, try it for a month or two. Rethink and adjust your financial plan to make it work for YOU. Keep the part that is working. Decide what needs to be adjusted to make your plan work. Your action plan will need to be fine-tuned periodically as changes occur in your life.

A major factor in getting what you want is knowing the difference between needs and wants.

Summary

Financial planning should begin 10 to 15 years before retirement or earlier. The earlier financial plans are made the better. Financial planning will not always prevent all problems, but it can prevent some and make others easier to deal with.

Ask Yourself These Questions

■ Can I find a way to spend less than my income?

■ What do I need to change?

■ What am I willing to change?

■ Did I plan to save for emergencies?

■ Are my wants and wishes realistic?

 

By making informed choices, you can create a financial plan that works for you.

Managing the Family Finances (Should You Have Separate Bank Accounts, Or Will One Do?) By: Paul Barton & Barry Spilchuk

Is it better to have one main bank account for your family, or should each spouse operate from their own account?

In our travels, we have occasionally been asked such a question. Sometimes, this question seems to arise when a husband and wife disagree on whether or not one main bank account is better than each spouse having their own account. One spouse feels his theory of operating one main bank account for the family is the more effective system and looks for validation for his theory, hence the question!

First of all, in our opinion there is no right or wrong answer to the above question…either system can work effectively. The decision to maintain one account or two accounts for the family finances often derives from personal preference and comfort level on how the family finances should be managed.

Pete and Mary maintain one main bank account where they each have their pay deposited directly into this one account. The mortgage payment, the car loan payment, and preauthorized payments for insurance and retirement savings plans, all flow out of this account.

In Pete and Mary's situation, Mary looks after the family finances and takes care of paying the bills. Mary finds it much easier to reconcile one bank statement each month and likes the idea of seeing all of the family income and expenses flowing through one account. As well, a monthly “discretionary allowance” is deposited into their own separate saving account, which allows Pete and Mary to spend or save their own money as they wish. Pete calls this his “mad-money” account.

Before Pete was married, he never paid much attention to monitoring his personal finances. As long as he had money in the bank after he paid his bills; that was all that mattered. When he and Mary were married, Pete was more than happy to let Mary handle the family finances. For Pete and Mary, the one account system works fine!

Another couple, Rick and Judy, prefers instead to operate from their own account separately. At one point, Rick and Judy tried to operate one main bank account, however there were many situations when one of them took money from the account without telling the other, or without recording the withdrawal in the cheque register. In one instance, this lack of communication resulted in their bank account being short funds and a cheque Judy wrote to a friend was returned non-sufficient funds. Judy was embarrassed Living the single life for a few years prior to marriage, Rick and Judy had developed a comfort level and a routine in terms of managing their own finances. With Rick and Judy each having their own preferred way of handling the finances, having one main bank account just didn't work for them!

Rick and Judy now have their pay deposited directly into their respective accounts and have decided to divide the monthly expenses equitably. The mortgage payment and property taxes come out of Judy's account and all the other monthly utility and household expenses come out of Rick's account.

Rick and Judy each wanted to be in control of their own finances. Their first priority was to ensure the bills were paid, and any money left over from their own pay cheque was available for them to do as they each wished. Both Rick and Judy feel that operating their own account provides them with more control of their own finances.

Whether you operate one account or two, as long as the bills are being paid, and as long as money is being set aside for short term and long-term goals…then it becomes a matter of personal preference regarding how the family finances are best managed. Bank account fees would be something to consider in your decision.

Regardless of which type of bank account system you use in your family, here are three tips on how you might minimize bank account fees:

· Use your own bank's automated banking machine rather than another institution's machine. This could save up to $65, or more, per year, assuming one withdrawal per week.

· Investigate packaged services for bank account usage. Depending on your usage patterns, you could save money with properly suited packaged account services.

· When paying your bills, either through the bank machine or at the bank wicket, bundle all your bills together and withdraw only one amount for the total. This means you would only have one cheque or withdrawal coming out of your account.

“Even differences prove helpful; where there are tolerance, charity and truth.”- Gandhi

Understanding the Role of Money! (How Many Cows Are In Your Bank Account?) By: Paul Barton & Barry Spilchuk

Exactly what is money? What is wealth? Answers to these questions usually provide typical responses such as money means power, control, security, comfort, happiness, satisfaction, enrichment, etc. These responses simply represent feelings or experiences from exchanging something of perceived value for goods and services.

In reality, money itself is a means of exchange, and nothing more! Over time, wealth has been measured in many ways. In ancient times, wealth was measured by ownership of such diverse items as gold pieces, seashells, animal furs, crops, and, yes, even the number of cows an individual owned. Some of these measures of wealth still exist today in some parts of the world.

For people who use what we think of as primitive forms of monetary items, the same feelings of power, control, security, comfort, happiness, satisfaction, and enrichment are experienced when something of perceived value is exchanged for goods and services. In previous times, the wealthy farmer needed enough cows for barter in order to sustain life and provide a comfortable lifestyle for his family. Today, the paper and coins we call money does the same thing.

Have you ever wondered how the use of paper currency became accepted as a means of exchange? You may not realize that Canadians were the first in North America to use paper currency. In North America's early days, settlers here were often cut off from their previous homeland for months at a time. During such prolonged periods of isolation, coins became in short supply while waiting for the next supply ship from the “motherland” to cross the Atlantic.

By the late 1600's, silver coins were scarce to the point where the authorities of the day were unable to pay the soldiers wages. Enter Mr. De Meulles to devise a solution to divert an economic collapse, not to mention a mutiny from the military! Mr. De Meulles came up with the idea to write a monetary value on ordinary playing cards. He signed each card as evidence of their authenticity and the modified playing cards soon became widely circulated and accepted as legal tender.

The experiment in the use of paper money was deemed to be such a huge success, playing card money continued for many years, and eventually evolved through various forms of paper money to the point of currency we use today. In thinking of money and wealth, how much different is society today versus generations ago? Perhaps not as different as one might think! The main difference between life today and that of previous generations, as we see it, is in the way present society defines what living a comfortable lifestyle means.

We currently live in an era where technology and communication play a very big part of our everyday lives, much more so than experienced by previous generations. Most of us have televisions, radios, computers, household appliances, cars, and other modern conveniences we feel we need to have in order to live a comfortable lifestyle.

As a result, society has categorized us into the “haves” and “have not's.” It seems many people feel that if they cannot afford some of today's so-called luxury items, they are not wealthy, at least in terms of society's current definitions of wealth. One suggestion as to why people so readily use loans and credit cards today is to purchase goods and services, which in turn help individuals to feel wealthy, at least wealthy as seen from their point of view! This has caused some people to have difficulty in sorting out, in their own minds, the difference between “need to have” items and “nice to have” items.

Certainly, we need the paper and coins we call money to survive in today's world, just as people of earlier generations needed cows, gold, and furs to survive. An important issue to consider lies in how we are defining our perceived wealth. One dictionary defines the word “wealth” as:

“Riches, feeling of enrichment, being rich, rich people; abundance, having an abundance of money!”

From this definition, we can see that wealth does, indeed, make reference to money; however, it also makes reference to abundance and enrichment. Abundance could be money, but it also could be an abundance of love, or perhaps an abundance of family harmony. Enrichment is not just about money, either. Enrichment could also be simply how you feel about your life at the present time. Many people feel enriched because of their friends and family, or, perhaps, by their contribution to the community.

Money does not equal happiness! This is perhaps one of the most common money myths experienced by many people today. Happiness is the experience or moments you create for yourself, whether you actually use money or not. Happiness is not a destination; it is an ongoing journey, which sometimes, but not always, requires money!

“Happiness sneaks in through a door you didn't know you left open!” - John Barrymore