Tag Archives: saving

How to teach your children good financial habits

Special to the Financial Independence Hub

Teaching your kids sound financial habits when they’re young can help them learn to make wise choices about their money, and ease their reliance on you later.

Alison Tedford blogs about parenting at Sparkly Shoes and Sweat Drops, and at home is a dedicated mom who teaches her eight-year-old son Liam about finances, among other life lessons. We spoke with Alison as well as Jeannette Brox, CFP®, a senior financial consultant with Investors Group in Toronto, who’s affectionately called “The Money Lady” by her clients’ children.

The value of effort versus reward

To help instil a sense of the value of money in Liam, Alison enlists Liam’s help as she works on her blog and manages her social media channels, and ensures that he understands the financial value of each activity. “When he wants something, we tell him it’s the value of a blog post, or a Facebook Live video,” she says. “That way, he understands the value of the item relative to the effort he needs to put into it. Then he can make a judgement call as to whether the money should be spent or not.” When a larger contract comes in for Alison, they discuss how to use the money as a family.

This principle of making money choices can be adapted to your child’s age and situation. For example, a new iPad might be equivalent to 20 “regular” toys. Or, if your child receives an allowance, you can help them understand the length of time it’ll take to save for what they want and what they might need to give up in the meantime. It all adds up to an important money (and life) lesson about short-term compromise to reach long-term goals.

Jeanette Brox, CFP, Investors Group

In Jeanette’s practice, she gets her clients’ kids to start saving monthly at a young age. “It becomes meaningful for them,” she says. “When they get older, they understand the power of money accumulating instead of blowing it on stuff.”

She uses the same “save early and often” approach for children of different ages, although the situations will be different. “A six-year-old is excited when they’re saving to contribute to something they want. When they finally get it, they have pride of ownership.” She’s also helped kids save up for things they may want in their teenage years, such as a car, and advised teenagers who are buying sports equipment to get it off peak season to save money.

Jeanette also encourages kids to save for their own post-secondary education. “Even if parents contribute to an RESP, there may not be enough money to cover all of their university or college expenses.” And she recommends that children cover the cost of their own first year of school. “It makes them more responsible to have made that financial commitment,” she says.

Problem-solving helps form sound financial habits

Alison engages in proactive problem-solving to teach her son responsibility, even in situations unrelated to money. “For instance, it’s a common parenting challenge to have kids come to you with homework that didn’t get done that now has to get done in a short period of time,” she says.

Instead of jumping to do the task for Liam when this happens, Alison points him in the right direction by asking him to troubleshoot how he can help himself and to analyze what got him into the situation in the first place. “We look at contingency planning for the next time, such as setting reminders, tracking deadlines and so on.” Continue Reading…

Generation X feeling the Retirement squeeze

Generation X, and to a lesser extent the Millennials, are already starting to feel the retirement squeeze, according to a Franklin Templeton-sponsored survey released Thursday.

Details are in my column in Friday’s Financial Post, which you can retrieve by clicking on the highlighted headline here: Generation X is ‘stretched beyond their financial limits’ and struggling to save for Retirement. 

The challenges should be familiar to members of any generation (four are mentioned in the survey): it’s never easy saving money when you’re starting out in life with low wages and high expenses. But Franklin Templeton cautions against the  rationalization embraced by younger investors that they simply can  choose to keep on working if they haven’t accumulated enough assets to generate adequate income in retirement.

That may not always be an option, since ill health or corporate downsizing (to mention just two) may prevent this. You can find full details about the fifth annual edition of Franklin Templeton Investments Canada’s 2018 Retirement Income Strategies and Expectations (RISE) survey here.

Stressed GenX resigned to retiring later than hoped

More than half of Gen Xers (aged 37 to 52) are resigned to retiring later than they would want (56% in Canada, 59% in the US). While the online survey included Canadians and Americans across four generations, “this year we felt in particular that Gen X and the stress of preparing for Retirement was the predominant thing coming out of the research,” said Matthew Williams, a Franklin Templeton senior vice president, in an interview.

Continue Reading…

How Finance Apps & Online Tools will revolutionize Millennial Financial Planning

By Drew Hayles 

Special to the Financial Independendence Hub

When you’re young, you feel like nothing can stop you. You’re in charge of your own destiny.

Things might look different in hindsight, but don’t worry about that now. The most important thing you can do right now is set in motion a plan to achieve financial independence as soon as possible. With the means to do what you want, when you want, you’ll open doors you never even knew existed.

Before you begin in earnest, make sure you have the right digital tools and apps in your corner. These user-friendly resources all have their place in a coherent, comprehensive financial independence plan, provided you use them properly and consistently.

Perhaps you’re using a few already.

 Digital Budgeting Tools: All Your Money in One Place

 This list of the “best simple and free budgeting tools” doesn’t get to actual digital solutions until the third entry, when it calls out the trusty old Excel spreadsheet.

If you’re in the market for something a bit more robust and hands-off than a wall of spreadsheet cells, consider later entries like Mint or PearBudget (which, to be fair, began life as an Excel tool).

These aren’t professional-grade tools by any means, but they’re nevertheless robust enough to accommodate basic household budgeting and ensure that you spend well less than you earn. Remember to download mobile versions and link your bank accounts for automated cash flow tracking.

 Automated Savings Apps: Ditch the Reminders

 Tired of remembering (or forgetting) to make regular savings deposits? Take the uncertainty out of the process with automated savings apps that quietly transfer small sums to your savings accounts without any input on your end.

Tools like Digit exist wholly for this purpose. More robust online banking solutions like Chime Bank typically have built-in automated savings features that round up every debit transaction to the nearest dollar and sock away the difference

 Educational Videos: DIY, But for Money

 Are you a DIYer at heart? You can learn a lot from high-quality investing and financial education videos. After all, there’s no need to pay for entry-level information and strategic advice when you’ve got a YouTube account to your name. If you need help or want to learn more about specific topics, you can always go straight to the source with questions.

Lightweight Accounting Platforms for Entrepreneurs   Continue Reading…

6 tips for managing your Kids’ bank accounts

By Emily Roberts

(Sponsored Content)

It’s 2018 and the days of buying your kids a piggy bank are long gone. It makes much more sense to let your kids have a bank account that will not only help them keep their money safe but also teach them how to grow and save it. Unfortunately, it seems as if most modern banks offer little to no incentive for kids to save their money and many focus on charging them as much as possible.

Transaction fees and unexplained charges can easily chew up what little money you deposit. Many banks will continue to charge exuberant monthly fees on small balances to the point where everything that was deposited is gone within a few months. This is why it’s important for you as a parent to find the right bank account for your kids that will help them get the most out of their money and hopefully grow it at the same time.

1.) Check those transaction fees

Most bank accounts come with a PDF or pamphlet (depending on how you apply) that stipulate the charges for every type of transaction. Sometimes these numbers are changed without notice, so be sure to check the fees for each type of deposit, withdrawal, and transaction. Advise your kids to deposit their money through your account or an ATM at the very least, as doing it over the counter is expensive.

2.) Teach your kids about saving

Educating your children about properly managing their money should be done long before they leave for college. Teach them how interest works, how saving their money is the right thing to do, and how to budget correctly. This way, they’ll know how to manage their funds better when they become independent.

3.) Link their bank to your phone number

Doing this means you can see every transaction that goes through. All of these usually come from a single number, so it won’t fill up your inbox. Not only can you see where their money goes, but if its stolen or their bank accounts are hacked, you’ll know first. Continue Reading…

Why Saving alone isn’t the best way to Financial Independence

By Elizabeth Lee

Special to the Financial Independence Hub

You’ve been told your entire life that you’ll never be able to accomplish anything unless you have a padded savings account: that every penny you can possibly set aside should be set aside, and you should absolutely never touch it.

You may even have been told that this is the only way you’ll become financially independent. You’ve been told wrong.

Saving is crucially important, but it’s important for entirely different reasons. You shouldn’t go out and spend your nest egg indiscriminately, but spending some of it might help you create a better and stronger independent (“findependent”) future. It all depends on how you strategize.

Why Saving is important

If you’re spending all your money as it comes in, what happens when you run into an expense you didn’t know was coming? Your car breaks down, you need to travel for a destination wedding, you find out you’re going to be a parent a little earlier than you’d originally planned, or you need to go to urgent care for a pesky sinus infection. How are you going to pay for it?

You had no idea that it was coming, and you didn’t budget for any of those things, because you didn’t know they were coming. If you don’t have savings, you might be set so far off track that you need to borrow to pay the bills. Without a savings account, you’re never truly protected from the financial variables life might throw your way.

Why Saving alone won’t make you Financially Independent

You need to spend money to live. Having a pile of money that isn’t doing anything for you won’t unlock a brighter future. Even in a high-yield savings account, the interest won’t amount to much. Financial independence means increasing your income, rather than just having an emergency stash to fall back on when something unexpected happens.

The idea of having savings is not to touch them unless you absolutely need to. The more savings you have, the more protected you are. But they aren’t helping you grow. Financial independence comes through growth, and it’s achieving that goal that will set you up for a smooth ride into your future. Continue Reading…