Introduction

The surge and rise in prices of goods and services in an economy are called inflation. The increment in price results in your currency buying fewer goods and services resulting in the decreasing purchasing power of your money.

As I am revising this article, the inflation rate in Canada and the U.S. is around 8% the highest in four decades.

I am going to write about what I have been doing to save money during this inflationary period.

I have spent more than 25 years in the financial services industry. I have lent money, managed money, traded money, and seen two recessions, the tech crash in 2000, 9/11, 2008, and now 2022. The COVID-19 crisis was an outlier or a Black Swan. The challenge with the COVID-19 crisis is that we had to quarantine ourselves, as countries around the world had been hit by a pandemic that was merciless, carcinogenic, and catholic. The knife was in the stomach, turned around and salt is being rubbed in the form of a shortage of many goods, disruption in supply chains, hoarding, and inflation.

I would strongly recommend that you create a budget and stick with it. Inflation kills your budget.

The future is uncertain and the times are scary. However, we will overcome it.

One question on your mind is whether you will come out ahead financially at the end of this. Here is what I am doing to deal with inflation and save money.

Save on Car Insurance

It is easy to save if you own two cars. Debbie has a short drive to work. I am working from home. We will be driving the car once a week to get groceries. This month, I called the insurance agent and took one car off the insurance. Total savings is $125.

Save on Cell phone, cable, internet

As a loyal customer with a provider, you have to negotiate and it can save you money. I called my provider and negotiated better rates for the cell and internet. I switched to IPTV where I get 5,000 channels and only pay $15 a month. Total savings is $50.

Hair color for Debbie

Debbie used to go to a salon for coloring her hair. I learned how to color her hair. Total savings  $125.

Cutting grass

I have a huge lot and for the last couple of years had a professional company cut my grass three times a month. I am going to cut the grass this year. Total savings $100.

Save by Working from home

I requested to work from home. It saves me two hours a day stuck in traffic. I am saving $160 in gas and $50 in parking. Total savings $210.

Cooking at home

I am cooking all my meals at home. I used to eat out pretty often. No need for Uber Eats or Door Dash. Total savings $150.

Cut the non-essentials

Inflation could last for a while. No one knows if another wave of COVID-10 will come. So, the more money you save, it can sustain you.

Refinance, consolidate and lower your rates

If you have many loans, lines of credit, and credit cards, I recommend you refinance your mortgage and consolidate. This way you will have only one payment. Call your banker and lower your interest rate. I recommend Ashish Lala. He is the best in the business.  Continue to invest in conservative stocks that will give you a dividend and ask for a raise.

I hope some of these tips will help you to save money during these inflationary times.

Photo Credits: Tonik  Richard Burlton Andraz Lazic Andre Gaulin Diogo Brandao Max Ilienerwise Becca Tapert Anastase Maragos Sharon McCutcheon

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Do you want to save money? Here are my favorite quotes on saving money.

Never spend your money before you have it. – Thomas Jefferson

Do not save what is left after spending; instead, spend what is left after saving. – Warren Buffett

He who buys what he does not need is stealing from himself. – Swedish Proverb

The price of anything is the amount of life you exchange for it. – Henry David Thoreau

Therefore, it is not how much you make, but how much you save that matters.

It was 2001. I was a young, aggressive, investment advisor on Bay Street. A call came in and being the broker of the day I answered.

Meeting potential clients

The caller was in his late 30’s, an executive in the hydro business and his wife was a marketing executive. They had two kids. He wanted to meet with me as he needed help to save money and start saving for retirement.

Are you kidding me? Sure…. It was an opportunity of a lifetime.

I called the wife and told her I would be late for dinner.

I am dressed to kill. The car is washed. I am ready to make an impression. I am ready to open an account and help this couple save money.

I drive around and check the hood. I see a Mercedes and BMW parked outside their home.

I am excited. My heart is beating fast. I have my pitch perfected.

I ring the doorbell and they welcome me.

Zero Savings

After the basic get to know chat, we sit down to have a more serious conversation. The numbers are impressive. They have a total family income of 250,000 plus bonuses. I can work with that. I can give them tips on how to save money.

After that, I ask how much do you save at the end of the month?

Their face completely changed. They had zero savings.

The monthly payment for the mortgage was $ 3,000, each car was leased for $ 500, private school per child was $ 2,000, trips, vacation and eating out took the rest.

I made some recommendations that included some lifestyle changes to be made in order to reach their goals and how to save money.

As a result, I left empty-handed and never heard from them.

As a VP with a US discretionary manager, I covered Ontario and Manitoba. I would only go to see a potential client who had a minimum of $ 750,000 to invest.

I flew to Sudbury to see a surgeon, an executive in the construction business and a retired janitor.

How to save money

As a result, I googled the home of the janitor and it was not impressive. To be honest it was in a derelict state. I thought to myself he probably wants free information on our stock picks and is not interested in our services.

I went to see him at 5 pm and he preferred that we sit out in the balcony. After the usual small talk, I explained a little about our services and asked him the usual getting to know your client questions. I asked him about his net worth and he did not have a clue. He brought out two statements from different banks and the total was about $2.5 million.

As I am looking at all his holdings, he tells me he also has some share certificates and bonds. He brings about 30 share certificates and bonds and they consist of all blue-chip stocks listed in Toronto and New York.  His liquid net worth came to approximately $5 million.

I recommended that he convert them to electronic shares.

Above all, I was fascinated. I wanted to know his story.

He shared that he started off as an 18-year-old janitor and saved a lot of his money and invested in shares. He retired at 55. He was not interested in impressing anyone. He lived within his means and took vacations. Overall, he lived a simple life. He did want to leave a legacy with a few charities. He was good at saving money.

Conclusion

In conclusion, if there is something, I have learned from being two decades in wealth management is that it is not how much you make but how much you save.

It is important to go out, travel, spend time with family, and do other fun stuff but it has to be within your means.

Photo Credits: Michael Longmire Vanessa Lee Javier Reyes Zan Allef Vinicius Benedikt Geyer

The post Its Not How Much You Make But….How Much You save appeared first on Four Columns of a Balanced Life.

Money touches everything. It affects how we sleep, how we eat, how we raise our children, and how we dream about the future. Yet too often, we treat finances like a separate compartment of life, disconnected from faith, family, and well-being.

What if we approached money the way we approach health, looking at the whole picture instead of isolated parts?

In this conversation, Jason Trueman, Portfolio Manager with Cumberland Private Wealth Management, shares why a holistic approach to household finances matters. From buying a quality mattress to investing with discipline, Jason explains how thoughtful spending, long-term vision, and balance can create not just wealth, but freedom and peace of mind.

Welcome to Four Columns, where food, faith, finance, and family are not separate conversations, but part of the same story.

Jason, welcome to Four Columns, a holistic blog on food, faith, finance, and family. Please tell me a little about yourself.

I am a Portfolio Manager with Cumberland Private Wealth Manager. Cumberland is headquartered in Toronto. I work with a talented team in Kingston, Ontario, including a CFP, CA, CPA, and TEP, providing holistic wealth management services for successful Canadian families and business owners.

How did you end up in personal finance?

I graduated from Queen’s University with a Bachelor of Commerce Degree. I received my CFA charter in 2001. I started my career as an Underwriter with Chubb Insurance. I was recruited by AIG and worked in Bermuda for 7 years before returning to Kingston to raise our young family in 2010.

Give me three tips on how to have a holistic approach to personal finance?

Control your spending by buying things you need and on an average cost basis (i.e. you will spend one-third of your life on a mattress so buy a good one).

Be disciplined with your investing. Buy dominant companies with great management who care about both their customers and their shareholders (these are rare and require work to find).

There is a balance between disciplined spending and enjoying your life; life is short so if you need a trip or a new car or new shoes to enjoy your life then spend the money.

What happens when we live on credit cards and not on our salary?

Credit cards that you pay off in full on a monthly basis and never pay interest on and accumulate rewards are great. When you overspend and pay exorbitant interest living beyond your means then you will suffer from difficult financial decisions and increasing stress.

How important is it to have a budget as part of a holistic approach to our personal finance?

I find long-term goals are helpful in providing meaning to your actions like why am I going to work and saving for my child’s education or retirement. Budgets help keep your life and spending in order; like a calendar and daily to-do lists.

What are some important tips to start saving?

Paying off your higher interest-bearing debt is most important. Taking advantage of government savings programs like RESPs, RRSPs and TFSAs is enormously important as well. Again, buying things you need (healthy food, a quality mattress) instead of buying things you want for status and cost a lot on a per-use basis (the tenth pair of shoes, vacation properties) is critically important.

How do you balance faith, food, finance, and family?

I believe in humanity; if we all do our part to contribute, we collectively accomplish amazing things. If you don’t spend money on healthy food then you’ll pay the price with poor health and physical limitations. Finance is about independence; ideally, a career doing something you enjoy while creating financial freedom to do nothing if you so choose. Raising kind, caring and confident children who find something productive they love to do in life are our number one job as parents.

Can you recommend some great restaurants in Kingston?

Kingston has an enormous array of awesome restaurants – having 35,000 students in the city helps. I prefer local family-owned restaurants such as Tango, Woodenheads, and Harpers.

You manage money for the wealthy, what have you learned from the experience? Do they have a holistic approach?

Success usually requires some form of sacrifice at some stage in their life. For many that mean focusing on academic excellence instead of always finding the nearest party. For others, that means pursuing an idea, a vision, and taking on considerable financial risk, and working excessive hours to make their dream a reality.

How important is food to you?

Food has an enormous impact on how you feel and how you look. Humanity would benefit from healthier eating with lower health care costs, lower greenhouse gas emissions, and an overall more productive society and cleaner earth.

The post Holistic Approach to Household Finances appeared first on Four Columns of a Balanced Life.

Liz is the creator behind Minding My Thirties, a financially focused blog where she discusses the necessary evil that affects us all, money, debt, and finances. For her, money doesn’t have to be so evil. In fact, money can work for us. It can actually be the tool that lets us spend more time with our family, travel the world, or learn a new skill. It can give us time, which is really freedom after all.’

Liz’s goal with her blog is to ‘understand how to better harness’ money. She got her Eureka moment when her credit card got declined for a $7 beer. She had $70,000 in student loans and consumer debt. She researched money management and personal investing to pay down her debts and also save for her future. She became more aware of her personal finances, gained control of her money, and became debt-free at the age of 30.

Just like families evolve in our 20s, 30s, 40s, and 50s, so do our finances. I interviewed Liz on finances in our 30s.

Liz, a pleasure to have a fellow financial blogger on Four Columns. Please tell me a little about yourself.

Thanks, Jerry! Well, I’m a 30-something-year-old American expat living in Germany with my (German) partner, Timo. We left the States, Chicago to be specific, in January of 2020. Despite the global pandemic, we’ve been settling well and embracing a slower lifestyle here in Germany. Back in Chicago, I was working for a high-end interior design firm as a Designer, collaborating on residential projects all over the country. I’ve always been passionate about design in any realm possible, from graphics to interiors to website design. I think what I love most is that design is much like storytelling, which is probably what piques my interest when it comes to blogging.

But after finishing my graduate degree in interior design, I found myself in about $70K of combined student loan and consumer debt. I spent most of my late twenties working to get out of debt as quickly as possible. I also dedicated a good chunk of time towards understanding finances and learning how to manage and invest my money for the long haul. Somewhere along the way, I discovered minimalism and the FIRE (Financial Independence Retire Early) lifestyle. I was hooked! I decided to start blogging about personal finances as a way to document everything I was learning and to connect with others going through the same experiences when it comes to money.

Since then I’ve focused my time on prioritizing my personal values, financial goals, and building quality relationships while removing the excess from my life. While tackling my finances and adopting a minimalist lifestyle I’ve become more mindful of how I spend two of my most valuable resources: money and time. My long-term goal is to be able to remove money from the equation altogether by achieving financial independence. In doing so, I’d like to be able to make decisions based on where I see value and opportunity – and not just a paycheck.

I love your blog and graphics. What made you decide to become a financial blogger?

Thank you! The graphics are a lot of fun to put together. It was kind of the perfect storm with the development of the blog. As I mentioned in my backstory – I spent a ton of time researching personal finances and climbing out of debt myself leading up to our move to Germany. I also knew I would not be able to legally work for a while when we got to Germany. While I do not necessarily intend to make a living off the blog (although a girl can dream, right?), I knew it would be a great opportunity to start one seeing as I had the time to do so.

I also thought it would be a great way to document everything I learned about personal finances. And in doing so, I could offer help to others, which has been the most rewarding part. Most people think they have to have some unique story or niche to start blogging. That’s not necessarily true. Sometimes the best bloggers are the most relatable ones. The ones who have stories and experiences just like you and I. These are the people we can easily connect with. I thought my story and prior relationship with money was very relatable: I had debt. Made a modest salary. No real assets to my name. I didn’t understand how money actually works. Nobody taught me about finances and I didn’t pay someone to handle it for me. Everything I achieved was through hard work and persistence with my financial education. I thought – if I could do it, surely someone else could.

I’d love to be part of the reason someone better understands their finances. I’d love for others to experience this awakening – or – mindfulness when it comes to finances. Because once you’re able to fully harness your money, so many other opportunities open up.

Talk to me about how women can be empowered by having control over their personal finances?

I love this question because taking control of my personal finances has been beyond empowering! Being able to control your money, instead of it controlling you, is freedom. Zero debt and a comfortable saving in place allows you to capitalize on opportunities and take some calculated risks (like moving halfway around the world with no job  ).

When I was about 5 or 6 years old my parents divorced. Leading up to the divorce my mom never really built much of a career as she was focused on taking care of my brother and I. In fact, she was just a semester shy of finishing her masters in creative writing when she became a mother. Of course, you can’t fault my mom for putting us first before her career and finances. Being a mother is in and of itself its own job, and in many ways, being a stay-at-home mom today makes financial sense for some couples.

But throughout much of my childhood, I watched as my mom had to build her career, and finances, from the ground up. Divorce happens, of course. But sadly, it’s usually the women who face financial risk when it does. They are the ones who put their careers and earning potentials, on hold while raising children. And they are the ones that go back to work with a dormant skill set and reduced earning (and a wage gap) after years off. But watching my mom come full circle 25 years later as she is about to retire next year has been an exemplary achievement. One that I admire and respect. It empowers me to continue taking an active approach with my finances. It’s a reminder to pay myself first and make sure my financial future is taken care of regardless of whether or not I get married and have children. I think seeing this type of achievement, especially by other women, can really empower more women to take an active role in their finances.

Oh, and by the way, a few years ago she also finished that last semester of grad school and finally earned her masters! I am very proud of my mom!

How do men and women approach finance differently?

Oof, that’s a loaded (great) question! I think there are many different ways men and women approach finances. But for the sake of keeping this brief, I’ll focus on the investing side of things. Research shows men tend to show more interest and knowledge when it comes to investing. Men also tend to express more confidence, leading them to riskier investments, which ironically means that the women who do invest are actually getting slightly better returns.

But I think a lot of this psychology might be rooted in our cultural norms and traditions since the beginning of mankind. Women and men always had very separate, independent roles from hunter-gatherers all the way until now in modern society. And to some extent, due to biological differences, men and women will continue to have separate roles. But when it comes to finances, men used to dominate the workforce not that long ago. Because of this, I think for most men it was a point of pride, of ‘macho-ness’, to be able to provide and handle the finances. However, I think this is changing now that more and more women are earning a living for themselves or in some cases – becoming the breadwinner of the family! Hopefully, it’s not long before we have more women taking an active, vested role in their finances.

Money is an emotional thing. People do not like to talk about it. Money can also be used to satisfy an urge by shopping or binging on food. However, money can also be used for many good things. Please explain?

Absolutely. There’s a saying that money is a necessary evil. But I’d like to change that mindset. It doesn’t have to be so evil. We just have to know how to better harness it. Money – or at least the opportunities, experiences, and even things money can buy – brings lots of joy to people. It can also solve or ease a lot of problems in the world. One thing I’d like to see more in the financial community in discussions around charity or sustainable spending: how and where we put our money can really make an impact. I’d like to see more people incorporate a dollar amount for charity in their retirement plans or find ways to be sustainable with their dollars: invest in socially responsible companies or shop at local stores. This is something my partner and I are now starting to look into. We’d like to minimize our carbon footprint and find ways to not only do so in our daily lifestyle but ways to financially support the efforts around fighting climate change.

Money, money, money when is it enough?

Ahh, that’s the million-dollar question, isn’t it?! I believe there are three answers to this question, only two of which I can provide data.

There’s the salary, or how much money we need now to be happy now. For most, it’s enough to cover our essentials and pay off debts with some leftover for discretionary spending. According to researchers at Purdue University  the ideal individual income for optimal life satisfaction is $95,000 per year. But our emotional well-being is satiated with just $60,000-$75,000. Of course, this varies across regions, cultures, and individuals.

The second way to answer this question, and the one that is often difficult for people to understand – is how much money do we need in retirement? In fact, only 1 in 10 Americans actually understands how much they need to save for retirement. Our financial education system is failing us!

Here’s how to calculate how much you’ll need in retirement. First, determine your annual spending. This is how much you spend on everything for an entire year (rent/mortgage, car, food, clothing, travel, etc.…). Multiply this number 25 (for a safer, cushier retirement, calculate by 30). If you’re spending $35,000 per year, you’ll need approximately $875,000 ($35,000 x 25) to retire. This also assumes that you’ll withdraw around 4% or less from your investments in retirement. And of course, variables such as asset allocation and the current market will affect the success of this retirement portfolio. This method is not full-proof but it’s a great jumping-off point to get you started. It’s something that should be re-evaluated every year. If your annual expenses go up, your retirement number will too. This is why keeping your lifestyle in check is so important.

And finally, there’s the number of how much money YOU – personally – need to be happy, something I cannot answer. Many people will spend their off-hours ‘hustling’ to earn more with a financial goal in mind: to pay off debt, save for a child’s college or a down payment on a house. I think these are great, commendable reasons to maximize your earning potential. But there are many who approach money with an insatiable mindset – making more just for the sake of making more, or worse – making more to fulfill lifestyle creep. This is dangerous territory. If you don’t understand how much money you need then no amount will make you happy.

How are finances different when you are living alone compared to living with a partner or in a marriage?

I think when you are living with a partner or in a marriage, it’s incredibly helpful to share a financial vision. This can be tough to do as you may have very different views on how to spend and invest money. One of you may be making significantly more than the other, which can also add a point of contention. There are lots of variables at play here. So, I think the key is finding common ground and compromising.

There are also some couples who choose to keep their finances completely separate and split everything down the middle or proportionately to what they make.  This can be a valid approach when you have strongly opposing views on finances. But I still think it’s important to find a common goal or outlook when it comes to shared expenses and work on it together – after all, that is what being in a partnership is all about.

Like most things in life, there’s more than one way to do something. The same goes for money. So, it’s important to keep an open mind and hold judgment when discussing finances with your partner. The best thing you can do is talk about your financial goals early on in the relationship and maintain regular discussions – or check-ins – about your finances.

Of course, living on your own means you are accountable for all the financial decisions. This can be empowering and freeing, but of course, so can being on the same financial page as your partner and having twice the income working towards a shared goal!

I am teaching my daughter about money. I also went to the bank and opened an account for her and gave her a debit card. How important is financial literacy?

Super important! I believe financial literacy should be part of every high school curriculum! That’s wonderful that you are starting her early with a debit card and getting her used to the concept of income versus expenses. I say it’s never too soon to start teaching your children about money.

I never truly understood just how interest on a credit card worked, which is why I found myself in $10K worth of consumer debt. Learning to be fiscally responsible is not usually something that comes naturally to us. After all, money is a man-made construct. There’s nothing innate about our users with it. We may have certain personality types that make us more likely to be savers, frugal spenders, or over-spenders. But many times, these are learned behaviors. Which means anyone can learn how to better manage their finances.

The sad part about our lack of financial literacy is that, without it, our financial decisions could follow us for years or even decades into the future if we don’t understand how money works. Financial literacy is a topic I’m particularly vocal about on my blog and social media.

What are some of the biggest challenges your generation is facing with regard to money?

In many ways, our generation has it easier than those before us. The power of the internet makes not only obtaining knowledge just a keystroke and click away, but so is investing and saving. We have an app for everything. Apps that will itemize our budget for us, automatically roll over our change on purchase into a savings account, or buy index funds. It couldn’t be easier.

However, with the internet comes a lot of noise and distraction. We are constantly being shown ways to consume instead of saving. We see dozens of sensationalized stories every day of how others accumulated wealth in passive and ‘simple’ ways. We see influencers living large doing the bare minimum. I think this can be very de-motivating. To be in constant contact with unattainable, and sometimes falsified, lifestyles and overnight success stories warp our vision of reality.

We are also becoming a culture of instant gratification because of the internet and things like Amazon Prime. Many of us give into immediate wants, such as buying the latest trends (even if we can’t afford it), instead of stashing away a few hundred dollars a month to save for our future wants. Our priorities are out of touch and I really believe the internet has a huge impact on that.

I have always saved 10% of my paycheck. Pls. comment?

10% is a great start! But you should definitely try to increase that. Here’s why: Let’s say you’re making $50,000 a year (after taxes). Saving 10% equates to $5,000 a year, which means you are spending about $45,000 a year. To maintain this lifestyle in retirement you would need about $1,125,000 invested. If you started investing $5,000 a year at 25 years old, you’d still fall short of this goal after 40 years by almost $100,000! This math scales. So even if you are making $100,000 per year but still only saving 10% (or $10,000), you’ve fallen into lifestyle creep and are now spending $90,000 a year. To maintain that lifestyle in retirement you would need about $2,250,000 in the bank. A 10% savings rate would get you to about $2,060,000 – still short!

A more sustainable savings rate is between 15-20%. Try increasing your savings rate by 1% every 3-6 months while reducing other unnecessary expenses. By gradually building up your rate, you’re less likely to feel like you’re pinching pennies or making drastic reductions in your lifestyle. When I first started my financial journey, I discovered bloggers who were saving in the vicinity of 75-80% of their income! I felt dwarfed by this in comparison as I only saved around 5-8%. But, little by little, I managed to cut the spending on things I really didn’t care about and save more. In doing so, my partner and I reached a savings rate of 52% while living in the States. Of course, this is more extreme as our goal is to reach financial independence as soon as possible. For someone on a traditional timeline, not wanting the option to retire early, they would do just fine with a rate closer to 20%.

Finally, give yourself advice when you were a teenager and in your early 20s?

Don’t overcomplicate your finances. Debt can wreak havoc on your financial AND emotional well-being. Be careful with it. Don’t buy crap to impress people you don’t care about. Spend less than you earn. Invest the rest. Start investing now and let compounding interest do the work for you. Financial independence is great but enjoy and trust in the process. It’s truly as simple as that.

And in life: be mindful of what you do today, it matters tomorrow. Eliminate the clutter in your life – whether it’s things or toxic relationships; both will slow you down. Design a life YOU want to live first and foremost, or someone else will do it for you. Don’t be ashamed if you choose the less beaten path; this is often the most exciting and fulfilling one.

The post Money, Debt and Finances in our 30s appeared first on Four Columns of a Balanced Life.

A household budget is a financial plan that allocates future personal income towards expenses, savings, and debt repayment.

Welcome to my series, How To Use Money To Make You Happier.  In the introduction section, I gave some stats and mentioned a few reasons for starting this series. I am going to break this series into a couple of steps:

Introduction

Make SMART financial goals

Create a budget

Income

Expenses

Needs and wants

Debts

Difference between good and bad debt

Pay off debt

Use the credit to your advantage

Give to charity

Introduction

Budgeting has only one rule: Do not go over budget – Leslie Tayne

A debt problem is, at its core, a budgeting problem – Natalie Pace

When it comes to money and so many other things in life, understanding your weaknesses and strengths can help you with your future plans – Tagene Brown-Mcbean

If there is one thing, I have learned being in the wealth management business, teaching financial planning, and counseling people over the last two decades is that Americans do not like to create a budget. As a result,  I have heard it all. Jerry, you are taking away all the fun from life. You mean I cannot take three vacations a year. I cannot buy a new pair of shoes every month. I cannot buy expensive makeup. I cannot eat out all the time. No! I am not saying that. In conclusion, I am empowering you to live within your means by creating a household budget.

The main goal of a household budget is to show how much money you are making a month and how it is spent. It is the foundation to build your financial future. Above all, a budget helps you to use your money efficiently.

A household budget gives you control. It allows you to balance your income with your expenses.

If you do not balance your budget and spend more than you bring in then you end up in debt.

Income

The first step in creating your household budget is to look at your monthly net income. If you get paid on the 15^th and the 30^th of the month and you get $2,000 every payday then your monthly income is $4,000.

Expenses

It is important to keep track of all your monthly expenses.

I like to break down expenses into fixed, variable, and discretionary.

The first thing to look at is your fixed expenses. The fixed expenses could be your student loan payments, car payments, rent, or mortgage. These payments are fixed and you cannot decrease them.

The second thing to look at is your variable expenses. These expenses can change from month to month and would include gas and groceries.

Discretionary expenses would include shopping, entertainment, travel, and recreation.

The bank or the credit card will provide you with a proper breakdown of your expenses.

You have now documented your net monthly income and your fixed and variable expenses. You can see where your money is going and you can make changes. If you make $4,000 a month and you are spending $3,600 and saving $400 a month, give yourself an A+. If you are spending more than $4,000 a month, then you need to look at your discretionary expenses and changes need to be made.

Create a System

I will let you decide if you want to use a pen and paper, Excel budget template, money management apps, budget calculator, financial software, or a system designed by the financial gurus. At the end of this article, I will give you a simple example of a budget worksheet.

Advantages of having a budget

It empowers you and gives you control

It keeps you focused

It shows waste

Reveals your spending habits

Reduces stress

Helps in becoming more disciplined

Helps you focus on your goals

Motivates you to save for vacations and unexpected bills

Needs and Wants

You cannot always have what you want. Sometimes you get what you need. – Linda Berdoll

Supply the needs first and the wants later, for one can only obtain true peace, love, and joy when one supplies the needs first and not the wants. – David Benedict Zumbo

A need is something you have to have in order to survive. Food, clothing, shelter, and health care are examples of a need. A BMW, Nike shoes, Polo T-shirts, eating out, going to the movies are wants. Try to spend 80% of your income on needs, 10% on wants, and save 10%.

Example of a Household Budget

Monthly Income                   _____           Insurance                   _____

Net Income     4,000                                            Car

Dividends                                                               Health

Interest                                                                   Life

Benefits                                                                   Home

Charity                                   _____             Personal                     _____ 

Savings                                   _____            Groceries

Vacation                                                                Personal

Retirement                                                           Other

Wants                                                                    Miscellaneous

Credit Card Debts                _____          Entertainment           ______

Visa                                                                        Meals

MasterCard                                                          Movies

Amex                                                                     Gym

Loans                                      _____

Student

Car

Home                                      _____                                

Mortgage/Rent

Taxes

Heat

Water

TV/Cell/Internet

Monthly Income minus all your expenses let you know if you are over or under budget

Finally, it is important to review your budget, every quarter. A budget is a piece of art and not an exact science. Look at some of the areas you need to get better. If you are getting better reward yourself.

There will be times when you have an unexpected expense. That is when your savings come in handy.

Email me back as to how this has helped me and any other questions you may have.

The post How to create a household budget appeared first on Four Columns of a Balanced Life.

How to make SMART financial goals.

Welcome to my series, How To Use Money To Make You Happier.

In the introduction section, I gave some stats and mentioned a few reasons for starting this series.

I am going to break this series into a couple of steps:

Introduction

Make SMART financial goals

Create a budget

Income

Expenses

Needs and wants

Debts

The difference between good and bad debt

Pay off debt

Use credit to your advantage

Give to charity

SMART Goals

It must be borne in mind that the tragedy of life doesn’t lie in not reaching your goal. The tragedy lies in having no goals to reach – Benjamin Mays

I am a big fan of having goals that are SMART. Your financial goals need to be specific, measurable, agreed upon, realistic, and time-based.

Your financial goals must be defined and clear to you. It should be obtainable and you need to know and find out when it has been achieved. It needs to be agreed either by you, by everyone in the family or household, within the time frame to achieve the goals.

Three Kinds of Financial Goals

I want you to take a piece of paper and a pen and write down your goals.

Divide your goals into three parts.

The short-term goals are those that you want to achieve between 1 and 3 years.

Car repairs, home repairs, home improvements, vacation, personal items, credit card payment, student loan payments, insurance, rent or mortgage payment, emergency fund, and any other day to day expenses come under short term goals.

Medium-term goals are those that you want to achieve between 4 and 10 years.

Saving for a down payment on a house, debt payments, saving to buy a car, are examples of medium-term goals.

Long terms goals are those that you want to achieve after 10 years from now.

Saving for retirement, paying off your mortgage, saving for your children’s education are examples of a long-term goal.

When you set goals, you are setting a foundation upon which to build your future.

The goal of this series is for you to use your money to make you happier. As a result, you need to focus on the fact that your goals are there, so you do not worry, have shelter, food, enjoy your hobbies, have a car, go on vacations and save for your children.

Specific

A specific goal needs to answer which, why, where, who and what you want to achieve.

The what goal could be to save, so you can tour Europe.

You might want to pay off your mortgage in the next fifteen years. A goal could also be that you want to retire by 55. Another example would be, you want to go to the gym four times a week.

The why goal is there for a reason. Why do you want to tour Europe? Do you want to see different countries? Do you want to experience different foods and cultures? Why do you want to pay off your mortgage in the next fifteen years?

The why has to be aligned with your goals, values, vision, and mission about your life. There needs to be a link here. Once that link is there, you will be happier.

The where goal looks at what gym you want to join to go four times a week?

The who looks at everyone else involved in your life. If you are single then that is good also. If you are married or living with someone, then the who looks at all the other people involved in your life who might be impacted by this goal.

The which factor looks at the exercises you will do to stay in shape. The other factor is which countries do you want to visit in Europe?

Measurable

The measurable aspect will look at how much. How much looks at the amount of money you have to save to go to Europe. How much do you need to save to retire at 55? How much is the mortgage and what will it take to get it accomplished? You need to measure; how much you are saving monthly or quarterly for that vacation.

Achievable

The financial goal needs to be achievable. As you get closer to your goal, you will feel good and motivated. Do not create some pie in the sky.

Realistic

Keep in mind all those around you. If you have a mortgage, two car payments, and a couple of kids, then making a goal to save $40,000 in a year is not a realistic goal.

Time-Based

Your goals need to be based on a time limit.

I want to show you, how you can do a SMART goal to pay off your mortgage or student loan in 20 years.

‘I want to pay off my student loan in 20 years’. ‘We want to pay off our mortgage in 20 years’. This is an example of a specific goal.

‘The balance of my student loan is $ 20,000, I want to bring it to zero by 2039’.

‘We want to pay off our mortgage of $250,000 by 2039 is another example of a measurable goal’.

If you are a single professional and making decent money, then maybe paying off $ 20,000 in student loans over a 20-year period is attainable. The same is possible for the mortgage.

In order for the goal to be realistic then your income and lifestyle need to match the goal.

The 20 years is the time-based goal.

Take some time and complete this assignment.

Thanks for reading and do write back to me as to how you are coming along with this and if you have any challenges.

Photo Credits: bongkarn thanyakij Andrea Piacquadio 

The post How To Make Smart Financial Goals appeared first on Four Columns of a Balanced Life.

In this post, I will show you how to use money to make you happier.

In the 21^st century, money is critical, essential, influential, significant, vital, fundamental, and important.

We go to school, college, and then university to become capable of earning it. After graduation, we spend the next four decades, making it. We think about it, how to make more, how to spend it, we worry about it and finally dream about winning the lottery.

Is money the root of all evil or can it be used to make a difference in society? In a divorce, arguing over money is one of the reasons given for separating. Our emotions ride high and low with how the stock market behaves or the value of the real estate. Some want the easy way out and resort to crime to achieve it. The world is judged by being first, third, and developing based on how much they have in terms of money.

In 2010, Bill Gates and Warren Buffett started the Giving Pledge. The top 1% is being asked to give more than half their net worth to sustain the environment, reform criminal justice, culture, arts, medical research, empowering girls and women, to get rid of poverty and other causes. 154 billionaires have signed the pledge. They do not want to leave the money for the next generation.

I found myself having to deal with money when I was in grade 8. I was in boarding school and a bank account had been opened for me. I was allowed a set amount of pocket money a month. At Bishop Cotton, the bank was on campus. However, all withdrawals had to be signed by the housemaster.

At college and university, I had to budget and make sure I never spent more than I had in my bank account. I did a co-op (internship) at Hotel De La Paix in Geneva. The crème de la crème of Geneva had their meals at the hotel. The tips were great.

I worked at a bank for a decade of lending money and then managing money for individuals. After that, I spent more than 15 years on Bay Street. Every couple of years, we had to update the client information. When I called clients for information on money, it was a tough fight. I soon learned that people are willing to talk about everything but money. It is an emotional thing. Our ego, identity, and everything else is attached to that paycheck.

Money is essential so we can have food, clothes, and shelter. Money can give us many options. However, do we use the money to have more free time or more things?

Does money make us happier? From the 1940s to the 90s, the purchasing power of Americans increased by 150%. Here is an interesting stat. The stats reveal that depression among people during that period went up by more than 10 times.

Tibor Scitovsky in 1976 wrote The Joyless Economy about human satisfaction. The author comes to an amazing conclusion. The best things in life cannot be bought with money. All research has shown that purpose, meaning, relationships, and connecting with nature bring people satisfaction.

Join me on the money series as I write on how to create a household budget, save for emergencies, retirement, and vacations, how to pay off debts, give to charity, and use credit to your advantage. I promise you this series will transform how you look at money and your life. You will learn how to use the money to make you happier.

The post How To Use Money To Make You Happier appeared first on Four Columns of a Balanced Life.