Keep your spending in perspective

I like to observe, listen, and reflect. To be honest, I find myself listening to others conversations very often, not so much to be nosey, but rather just to be aware. Whether it’s at work, out at events, shopping, walking, I listen and observe everywhere I go.

Recently, I overheard a conversation with 2 women talking about makeup. Very interesting conversation to me, since I am a female and I do like makeup. But I was simply blown away. They were talking about how much they spend on certain products, the name brands, how often they buy it. I was thinking to myself, how can anyone spend $80.00 on a bottle of foundation? My foundation only costs $14.99 and I try to buy it only when it’s on sale.

I came to realize that if someone were listening to me, talking about my makeup and how much I spend, they might experience the same shock value. They might think to their self, “Wow, how can someone spend $15 on foundation, I only spend $6.00.” These examples are present in all aspects of our lives. From media campaigns to situations we come across every day.

Simply put, it is all about perspective. It is how you view your current situation that should matter, not what the person across the table is doing. When you constantly try to compete with others, that is when trouble begins. You try to live outside of what you are able too, and gradually you put yourself into debt. Some people are able to spend $80.00 on foundation and to them, that amount represents $15.00.

With that being said, to understand your perspective, you need to know your current financial situation. Sadly enough, some people don’t even know how much debt they have, or the interest rates on their credit cards. The first step of putting everything in perspective is figuring out where you stand. Once you have determined that, everything else will fall into place.

 

My Budget Spreadsheet

Now that we are in the paperless society, have you converted to online budget software? There are so many different, yet effective software programs that allow users (you) to really understand your spending habits and see them visually (graphs).

Personally, I created my own budget spreadsheet with excel and I have found it to be very helpful. Microsoft Excel is a very powerful tool, especially when you know what tools and functions to use. I have included many graphs within my spreadsheet, drop down menus, macros, advanced calculations and many other functions, all in the name of budgets. Below is a snapshot of my spreadsheet.

The benefit of creating your own spreadsheet is the ability to mould it to meet your needs 100%. Since I have used my spreadsheet, I am able to compare spending habits over periods of time. For example; I previously talked about my Food cost over the last 6 months.

Other graphs that I have set up within this spreadsheet:
*Fixed Exp. Vs. Variable expenses
*Savings vs. Total Expenses
*Savings vs. Income
*Quarter Updates

I am happy that I have transitioned from pen and paper, to computer software. Not only is it enviro. friendly, I find it to be more motivating and allows you the ability to analyze in depth.

 

Business within the Family

So how often do business deals within a family go wrong? In my experiences, almost always. However, one of my close family members has just given me a thought to consider. Essentially he wants me to loan him a substantial amount of money, and he pay the money back + interest, around August 2010. I am completely fine with loaning him money, because he is very professional and everything will be done in an official manner.  However, this is the money I have been saving to start some serious investing.

Currently I save money within my joint account for our down payment; I have automatic withdrawals biweekly to 2 different investments, and my own personal savings which I might be loaning out now. If I do loan this money:

          1. My net worth will take a steep decrease
          2. I will feel broke
          3. I will have to put off serious investing for a another few months

On the other hand, come August 2010 when he pays me back, I will feel an automatic increase in net worth again. Another factor, I don’t know if I can say no to him, and I know he would be there for me if I needed him.

It is a tough decision, and I am going to have to really think this over in the next few days.

 

Daily Thought: Economic Situation

So I was reading through some numbers generated by Stats Canada, and it clearly communicates that the unemployment rate stayed at 8.6. In my opinion the economic situation is still as bad as it was. 

A quick look at July unemployment (previous month in brackets):

• Unemployment rate:                                8.6 per cent (8.6)
• Number unemployed:                              1,583,000 (1,591,900)
• Number working:                                      16,780,300 (16,824,800)
• Youth (15-24 years) unemployment: 16.2 per cent (15.9)
• Men (25 plus) unemployment:              8.3 per cent (8.4)
• Women (25 plus) unemployment:        6.0 per cent (6.1)

What does this mean for most of us? It is still going be a tough 2009, and 2010.

 

Live now, or Save now?

I always go back and forth. Should I:

           a)Save really hard now and then enjoy my life later on
                                             OR 
           b)Should I enjoy my time now more so than I do, and save all throughout?

Honestly, it is a really tough decision. One could say, you can save all the money in the world right now, but you never know what tomorrow can bring (death, sickness, and life changing events). Or, you can enjoy your time now; doing things you love (vacations, expensive hobbies, fine dining consistently, etc.) and work your entire life maintaining this lifestyle.

So…what is better? I honestly just don’t have an answer for that. I tend to live the Save now mentality. Whereby, I save a lot of my earned money now, for hopes of an extra early retirement, and enjoy life thereafter. One graph can really outline my current life. Illustrated below is the allocation of money saved, expenses, and money spent each month.

Money saved: refers to all money saved in any account, whether it is savings, RRSP, investments, or our joint account.

Expenses: refers to all living expenses, such as gas, food, transportation. (I am lucky enough to still live at home; therefore my expenses are quite low each month)

Money Spent: refers to money that I spend for leisure, so clothing, gifts, going to restaurants, movies, coffees etc. As you can tell, it is not very expensive.

As you can see from the graph, my savings far outweigh all other factors. I am really proud of myself for the commitment that I have made to saving and trying to provide a better life for myself and my family. However, there are some days where I think to myself, am I doing the right thing? What happens if I wake up tomorrow and experience a life changing event that makes me regret the fact I haven’t done anything extravagant for myself?

With that being said, since I do stick to my budget, I feel that I will be able to retire at a much younger age than ever expected and finally have a sense of freedom.

What approach do you take to living life? Do you save for the future, or do you live big now?

 

What does Wealth mean to You?

“Creating Wealth one step at a time”

It’s true. I am creating wealth one step at a time. Success is another word for wealth, of which I am aiming to create success within different aspects of my life. I am not the type of person to jump into something; rather I research, plan, calculate, and make goals. This way, it creates a mini flow chart for me that I can follow, and turn back if something doesn’t go right.

Wealth to me is more than just money. As a society, everyone is so caught up in money, everything revolves around money. People are willing to sacrifice time, family, health, hobbies, and interests, all in the name of money. That doesn’t seem right to me, it’s just not my goal.

My meanings of wealth are the following aspects:


Relationships: I couldn’t imagine my life without the key relationships that I have. All the money in the world couldn’t fill that void if the relationships were taken away from me. It is important to remember, that love and having a bond with someone (family/friends/spouse/etc) is a very important aspect and one should aim to create success within each relationship.

Money: Of course money is important in some degree for everyone. For each person it is different, I am not saying that what I feel is what everyone else will feel. But in my opinions, the journey to money should not be painful but rather fulfilling.

Freedom: Having Freedom is what I am working towards. Freedom represents everything that I stand for. The freedom to have an opinion, to voice your opinion to do what you feel passionate about, when you want too, is success to me. I want to escape the lifestyle of being told to report to work at 9 am and you can’t leave until 5 pm, that is not freedom to me.

Happiness: What is a life without happiness? Again, I could have all the money in the world x10, and if I wasn’t happy it would not fill my void. There are countless people that have too much money and they are miserable, compared to countless people who have enough money, but are just gleaming with life and happiness.

During my journey, Happiness, relationships, freedom and money all come together to create my Wealthy lifestyle.

 

Daily Thought: Cost of Education

Attending College/University can start your life off in debt. For parents with young children, it is important to plan now to try and assit your children once they reach the age of post secondary education. For a 4 year program, it can cost on average a total of $100,000. Of course it is dependent on a lot of factors, but it is better to plan big now, rather than later. Personally, I put myself through College with my own money, however having the help from parents may have allowed me to chose a different program, or a more enhanced length of time. With that being said, I don’t think that parents should fund school 100%.

 

July 2009: Net Worth Update

July-
What a crazy month it was. I was laid off at my current job for the first 2 weeks of July due to a Company wide shut down period. On one hand it was stressful because I was not being paid for those 2 weeks, yet on the other hand I did enjoy the time off. For my net worth update, I am happy to say that I had an increase of 7.58%. I had a strong increase due to the fact that we increased our joint savings account contribution to $400 each, biweekly. Also, my investments increase with the recovery of some of the markets. Finally, I was really, really frugal in July, especially since I didn’t work for 2 weeks.

Summary
Joint Account: Increased to 400 each biweekly, previously was 340 biweekly
Individual Savings: Increased to 180 per week, previously was 160 per week
RRSP #1: Maintained my direct biweekly contribution
Investment #1 (Allegro Fund): Maintained my direct biweekly contribution

Upcoming Goals:
The month of August should be a better month overall. At this point in time I don’t have any major set backs in August, although anything is possible that is why emergency accounts are so important. The one issue that I still face is my current job. I still need to find a better job overall, but it is just so hard in this economy.

For August I plan too:

1. Cut all costs to a minimum, recently cut my grocery expense from 60/wk to 40/wk
2. Continue to save
3. Continue to look for a different job

 

The changing factor of Net Worth

The Net worth of Canadians is changing- For the most part the net worth is decreasing per household, but also the Province with the highest average net worth is changing as well.

“Net worth, which measures someone’s assets minus debts, dropped 6.2 per cent for Canadians as a whole last year. But Calgary residents saw their wealth plunge 12.3 per cent, while Vancouver’s residents were able to hang on to much of their riches. There, net worth fell just 3.1 per cent between December, 2007, and December, 2008″. The Globe and Mail   

So, what is the solution?
          Live within your means
          Eliminate impulse spending
          Eliminate Credit Card purchases
          Create and maintain a budget

 

Modern Day Wedding on a budget

 Ever since I was young I have always dreamed of my wedding day. The only day that is about you, personalized by you to meet your expectations, and there probably won’t be another day in your life that is only about you on that scale. What other day would 160 people come to celebrate you, give you gifts, praise you, and pass along their well wishes? I can’t think of any.

The problem is, now that I am near that point I realize how expensive everything is. I am almost positive that weddings did not cost nearly as much as they do now even when you take inflation into consideration. So when and why did it change? Well, my own personal theories are that people (newlyweds) wanted a grand event and people were slowly earning more and more money which allowed them the finer things. Secondly, wedding items such as flowers, cakes, dresses, venues, photographers, DJ’s noticed that people could now afford these such things and started to raise their prices to make more profit. Vicious cycle in my opinion. However, all the services that these companies/people provide are in fact beautiful and magical, but some people just don’t have that kind of money to spend on one day. My wedding will not be as grand as I once imagined, but I am more than ok with that.

I will be having a somewhat Budget Wedding! In our opinion, there are 4 main sticking points with a wedding that we are willing to spend a little extra on.

Ceremony: Of course, the ceremony. Usually this is not an expensive item, and it wont be in our case. But what is a wedding without the actual ceremony?

Reception: The reception, the next more important factor. The food, the location, the style, the drinks…the place where all the fun and memories are made. We are willing to spend a little more on the reception venue because we value all of the aspects it brings to our wedding.

DJ: How can you celebrate without good music? People will always remember the good time they had at a party if there is good entertainment and music!

Photography: Pictures tell a thousand words? Pictures last a lifetime! Of course photos are so important as they hold the visual memories to this one special day.

The rest…we are willing to be frugal with. I have created a budget for our entire wedding of which I have included most of the details below. Although it seems like we are handing over a lot of money for this one day, we have taken into consideration the memories, once in a lifetime event, entire family in one place and the fact that it will be the beginning to our new life.

Below are 2 graphs that I have created:
1. The overall expenses of each factor within our wedding, and how the amount compares to each other. 

2. General Budget for our wedding.

Hopefully, we can come well under budget. I am really aiming for $25,000.00!