Writing to Change the World

The entire world has become unraveled.  In a matter of two weeks in our small corner of the gigantic globe, non-essential businesses have closed their doors in a dramatic effort to stop the spread of the deadly and infectious coronavirus.  Never in this generation’s lifetime has anyone witnessed something like it.  People who thought their jobs were secure learned otherwise.  Many are taking advantage of the financial institutions’ offer to defer loan payments up to six months.  In Saskatchewan, all crown utilities have implemented a bill-deferral program with zero-interest charges. Churches, recreation and entertainment facilities, and other services have been instructed to follow the strict guidelines to minimize contact with others.  The world has been told to “shut-down”.

This pandemic, declared by the World Health Organization on March 11^th, has led to massive job layoffs and created fear.  Many people live with uncertainty. Some financial aid is forthcoming from the federal government to carry people through this crisis.  In the meantime, as in most calamities, everyone will look for ways to cut their spending as a result of reduced income. 

The role of financial planners is to assist their clients manage through the chaos. Eventually this scare will pass and life will return to a state of normalcy. When it does, the wise step would be to have a solid action plan. Most people know what they should do, but don’t. Hopefully, this unfortunate world crisis will cause us to see the importance of an emergency fund (or rather…a disaster fund). No one saw this coming; and no one would have expected this. But it’s true with any disaster. When you are prepared for an emergency (or disaster), you alleviate the pressure created by excessive worry.

All the writings shared at this website have been written with one purpose in mind.  That purpose is to help you fulfill your dreams while you manage money issues. The one major take away I gleaned from this pandemic is the importance of my family and friends.  They are an integral part of my life and they take priority over material things.  Today’s society has forced everyone to want more, be more, and have more.  That just doesn’t sound right considering what we all have witnessed on the world stage today.  Being safe and keeping my family safe is now top of mind.  I hope it’s on yours too.  Although the world outside our sphere appears to have become unraveled, let it not drastically affect our inner sphere.

When You Don’t Know What to Do

Everybody, who has picked up the notorious Western Producer, got a true picture of the grim news facing farmers and the agriculture industry.  This past month the headlines proclaimed some harsh realities. 

•       Spring canola harvest looms (February 13^th)
•       Financial stress soars (February 20^th)
•       Coronavirus disruption may increase fertilizer prices(February 27th)
•       Blockaders must pay financial price for their action(February 27th)
•       U.S.-China deal tackles non-tariff trade barriers (March 5th)

The organizers and sponsors for a workshop held on February 27^th in Yorkton, Saskatchewan, couldn’t have chosen a better title. “Managing Through the Storm” encapsulated the dramatic impacts on agricultural producers from different angles, financially and emotionally.  The presenters were well-chosen to address the hot topics. 

Gerry Friesen, is an acclaimed stress expert, motivational speaker, and blogger who wears the title, The Recovering Farmer.   

When his sister asked him what it meant to be are covering farmer, he wasn’t certain, so he conducted some research. With the aid of a dictionary, he discovered, “Recover means to return to a previous level of health, prosperity, and equanimity.”   Gerry was extremely straightforward with his listeners and didn’t mince words. “When you have a problem and you think you can hide it, the truth is you haven’t hidden it very well.”  Gerry learned this truth from his family as he fought to conceal his own crises.  Now he willingly shares his wisdom with others.

Gerry’s insights lead one to believe hope is available to anyone in desperate situations. The key is to understand how our brain tends to react when news is delivered to us and processed through us. Are we responding with our thinking brain or feeling brain?  One brain but two thought processes. Gerry presents an interesting perspective on the feeling brain. It’s the “Drama Queen.”   I believe we can easily associate a drama queen to someone we encounter in our daily lives. This person blasts anything and everything out of proportion. The feeling brain resides within us, therefore, we must carefully distinguish which brain we use to ensure our decisions are founded with clarity rather than emotion.     

The more aware and educated we become on topics presented from experts like Gerry, the more we will talk and share these intricate details with others.  These findings are critical to the need to overcome symptoms of stress.  During his presentation, Gerry shared concrete ways to “conquer and kill” our unwelcome demons. 

I sway in my writings about money matters from either perspective, a salaried employee or a self-employed individual. Regardless of your role, money management is part of everyone’s picture.  For an owner of any enterprise (farming or otherwise), your business must strive and thrive in order to fund personal goals, dreams, and aspirations. Although we cannot expect ourselves to be experts in every area, we can direct people to resources where they can find assistance when facing unforeseen challenges. HELP means to make it easier for someone to do a job, deal with a problem, or assist them in finding suitable solutions.  

To provide a broad perspective on the word H-E-L-P, let’s look at ways to pave the road to recovery.

H – Hear the media reports happening around you; Highlight only the ones which affect you and are within your control.   

E – Engage with others; Educate yourself on the issues that cause you deep concern. In the end, you are driving the bus and you pick the most appropriate route to take for your business and personal life.

L – Look for support; List your options; and Learn what works the best for you.

P– Plan the next step most suitable for your present needs. Prioritize well-researched and well-thought-out strategies.

We often have heard that “quitting” is not an option…and really, it isn’t!  Many years ago, I handed our son a scroll with the same poem which Gerry ends his presentation.  Although quitting is not an option, “switching gears” certainly is until you find your ways back to health, prosperity, and equanimity.  So when you don’t know what to do, just ask and someone will lend a listening ear and guide you to someone who can help you.

But “Don’t Quit”.

       When things go wrong as they sometimes will,

      When the road you’re trudging seems all up hill,

      When the funds are low and the debts are high

      And you want to smile, but you have to sigh,

      When care is pressing you down a bit,

      Rest if you must, but don’t you quit.

      Success is failure turned inside out –

      The silver tint of the clouds of doubt,

      And you never can tell just how close you are,

      It may be near when it seems so far;

      So stick to the fight when you’re hardest hit—

      It’s when things seem worst that you must not quit. 

To hear more about Gerry’s thoughts, advice and his story, take a peek on his website, The Recovering Farmer. 

Set Yourself Up for the Win

Find the Inspiration

Can someone spend too much time watching curling?  The answer on behalf of all curling enthusiasts is, “Heck no!”  For most diehard curlers, playing the game is even better than sitting back and watching it.

Incredible inspiration comes from seeing this game of strategy play out on a sheet of ice with rocks and brooms.  There’s a keen resemblance between the sport of curling and the achievement of dreams.  I was excited to watch the Manitoba rink, with Skip Kerri Einarson, win their first National Title in the Scotties Tournament of Hearts this past week.  When you look at the efforts of the Einarson Team, you saw heartbreaking setbacks, missed opportunities, and undeniable successes.  All in the game of curling.

The accomplishments of this curling team and your goals, dreams, and aspirations are achieved by knowing how to set yourself up for the win. I checked with my clients whether their financial plan made a difference. They shared the plan helped them save more money and be more mindful of their spending.  The best comment was, “It has been challenging to save the extra money at times, but I am sticking with it.”   Sticking with something is hard work.  To win a National Curling Championship is hard work as well.  You must prepare yourself physically and psychologically.    

If we wish to fulfill a dream, anything in life that challenges us is worth doing.   Like Booker T. Washington said, “Nothing ever comes to one that is worth having, except as result of hard work.”  That’s exactly what spectators witnessed with all the teams curling in the Canadian Scotties Tournament.  This is exactly what you can expect when you put together a plan to achieve your dreams.

Picture the Perfect Eight-Ender

In curling each player on the team throws two rocks (stones). When all the team’s rocks strategically land in the house (without any opponents’ rocks), they score a perfect eight-ender.  That’s what we plan to do here.  We will examine the perfect eight-ender that will rock our financial goals.

1. Set Goals.  We need to set out our expectations in black and white.  You could see the importance of this playing out in the game of curling.  A curling game is divided into ends much like an inning in a baseball game. Each team has either eight or ten ends to achieve a win.  Mapping out a financial game plan sets ourselves up for a win.

2. Practise Patience. Patience is a requirement in virtually anything and everything we do.  How many times have you heard, “Patience comes to those who wait”?  We often expect things to happen instantaneously, but seldom does it work that way.  In the game of curling, a team throws eight rocks each end.  When it is all said and done in a ten-end game, a team delivers eighty (80) rocks from one end of the house to the other.  The outcome of the game cannot be determined from the start and neither can the process be rushed.  The same is true when we are saving money gradually for something we want to achieve. Slow and steady wins the game.    

3. Create the Best in Every Situation.  Each curling end may have its share of struggles and opportunities. Certainly, every rock may not always be placed precisely where we intended.  When we compare a curling end to a year based on financial outcomes, we, too, may have years with unforeseen struggles and opportunities.  The key is to do the best with whatever has been thrown at us.  This poses the need to have emergency savings in place, insurance coverage for the what-ifs, and a manageable budget to balance both struggles and opportunities. 

4. Pick Your Priorities and Make Hard Choices.  We previously spoke about the importance of goals, but our goals need to be put in order of priority.  What do we want to achieve first when we can’t possibly do it all?  That’s hard. Sometimes, we may need to give up something now to capitalize on something later.  I look at some curling ends when a team conceded a point, only to be in a better scoring position in the next end to score more points.

5. Play as a Team.  The most impressive efforts occur when a team plays effectively together.  The Manitoba rink has a wonderful relationship. Their communication was the driving force behind their success.  In some ends, when they talked less or not at all, then the outcome was disastrous. Certain things can be done in isolation, but for the most part, teamwork produces remarkable results.  Whether you are single or a couple and are attempting to achieve financial goals, you need an active support network.  Others’ encouragement prompts you to keep going when the road gets hard.  Talk. Talk. Talk. This technique is the pinnacle to any win.  Did you notice the teammates talking about the strategies between the stones thrown?  They were constantly planning the next move. The encouragement to the sweepers the shouts of, “Hurry hard” or “Sweep” were relentless.  Can you imagine having people in your corner shouting, Great job!  You got this!”  You would feel like you were sitting on top of the world with the ability to achieve anything with the backing from your encouragers. The next important pillar is what you and only you can control, your mind.       

   

6. Stay in the Zone. I can think of three D’s (no doubt there are more) which stifle performance.  Distractions. Discouragement. Disappointments.  At the Scotties, the curlers face overwhelming media attention, noisy chatter and cheering from the spectators, and activity from the other sheets of ice.  When the curlers played, they required a keen focus on their game to secure a win. They must keep all distractions at bay as if they don’t exist.  Any discouragement must be released after a bad end.  Any evidence of disappointments in their team performance must be pushed aside and discarded.  We can learn from them. Our minds are prone to wander at the best of times. But it’s not only our minds, our eyes and hearts do an exceptional job of leading us astray from our financial goals.  We must stay in the zone while we zone out everything around us.  That can be difficult.  Why-wait-when-you-can-have-it-now screams at us every time we watch television, look at our phones, or open a newspaper.  We need to remain fixated on our written financial goals. (This is our rock-solid foundation).          

7. Acquire a Coach.  Mastering the game of curling can be likened to mastering the game of finances.  The terminology in curling can be daunting. Terms, like house, rings, or the button, may mean only the obvious if you are new to the game. Likewise, with finances, investments like RRSPs, TFSAs, and RESPs may be foreign to you if someone didn’t explain them.  A coach (or teacher) broadens your understanding of any game, as well as, presents unique strategies to help you play your best, and even sets you up for a win.  At the Scotties Tournament, often the coaches were called onto the ice for consultation to plan the best strategy in tough situations. This truth applies to financial experts who are consulted to share their expertise on our unique financial circumstances.  A coach comes with fresh eyes to shine light on the blind spots and advises accordingly.  From here, a team effort (both advisors and clients) agree on a suitable strategy.  A coach’s expertise provides us with the confidence to make the right decisions.    

8. Have fun. The one aspect everyone appreciates about curling is the “fun”.  You would never curl if you didn’t enjoy the game.  Also, you wouldn’t watch the game if you didn’t understand it.  No two games are ever alike.  It’s because the sheets of ice are never identical; the weight (the amount of force each player uses to deliver the rocks) is different, and obviously, the strategies implemented by each skip are unique. Curling can be frustrating, as well as fun, when you attempt to secure a win for the team.  Managing our money can be equally challenging and fun.  Money allows us to pay our bills, feed our families, and enjoy the simple (and even the exotic) pleasures in life. Striking a balance between our needs and wants is indeed a challenge.  When we set ourselves up for a win, we can enjoy both.

Formulate a Game Plan

Any time we venture out to learn something new, we face a steep learning curve.  The one stipulation would be to understand the rules.  Then we can adapt a plan to achieve the goal of mastering and managing the outcome.  Take, for example, everything we witnessed at this week-long curling event.  Some teams went home empty-handed while only one team secured the ultimate win.  The other provincial teams will be back next year.  They haven’t surrendered; and they certainly don’t feel defeated.  They played their best at the national level.  They arrived at this junction because of their hard work. You, too, will arrive at your destination with the right strategy and knowledge.

When you have a game plan, take a shot at your financial goals.  Allow yourself to be flexible and adjust to the conditions.  With the right rocks in play, you are setting yourself up for the win. What’s the one thing you can do today to make this happen?    

Where to Begin

Where to begin? 

Within the allotted timeframe of one hour, Elaine Froese, a Farm Family Business Coach, delivered a wealth of practical insights about finding fairness in farm transition to a banquet room filled with farm families and advisors. I would have been disappointed if I hadn’t hear Elaine speak.  It’s a struggle to condense her presentation, jam-packed with useful information, into a brief commentary…but it’s also reassuring to know anyone can access her valuable resources from her website. 

Right off the start, Elaine tied the importance of communication to action. Ironically, she referenced one cuisine served for the banquet meal and instructed her audience that the first step in making cabbage rolls (holubtsi) is to cook the rice.  You can talk all you want…but “Talk doesn’t cook rice.” This is especially true in a farm transition plan.  When members of the farm family openly share what F.A.I.R. looks like to them, then they are likely to find fairness in the farm transition. Elaine explained in detail about the importance of Financial transparency, Attitudes, Intent, and Roles (the acronym for F.A.I.R.).  For all of us, her online resource, Finding Fairness in Farm Transition, is extremely helpful.

During her presentation, Elaine shared several catchy coaching phrases.  (It’s comical and coincidental that Elaine’s last name, “Froese”, is pronounced as “Phrase”).  She has written a captivating blog called, The Froese (Phrase) That Pays.  One memorable message, which isn’t penciled on her list, but was part of her talk, is  “Someday is not a day on my calendar.”   Honestly, this message stresses the dangers of procrastination.  When we wait for that elusive “someday” to occur, an unexpected event may transpire before that day, wiping away and shattering any hopes of an anticipated dream or goal for our families and ourselves. Her advice is to change our approach about stating “I should”.  Here’s her example.

“Counselors use a term “don’t should on yourself”. Rather than saying, “I should talk to my son and his wife about their vision for this farm”, say “I am going to start having conversations about what is working for our family farm team, and what needs to change.”

At the Steaks and Stems Producer Appreciation Night in the city of Yorkton, Elaine posed this question, “What are your deepest fears?”  The audience could secretly respond with a text message to her cell phone.  Fears are real; and the natural inclination would have been to share them.  But at this event, her cell phone remained silent.  This was unlike a previous event when Elaine spoke to Alberta farmers who did not hold back.  Sometimes, we suppress our fears and prefer to put them on “ignore” rather than face them.  We know that’s not the ideal solution.  So what is?

The first step is to simply begin with the right tools.  I often share my favorite quote: “Do not wait; the time will never be ‘just right’. Start where you stand and work with whatever tools you have at your command, and better tools will be found along the way.”  It so happens Elaine’s website offers a free Farm Family Toolkit filled with useful tools (documents) to help families communicate better and grow stronger on their farms. A great ending to one’s farm family story is a successful transition to the next generation. Let’s begin. 

How Do We Choose

When someone tosses out a brainy quote, we are likely to pay attention. Ben Stein (an actor) shared the obvious – "The indispensable first step to getting the things you want out of life is this: decide what you want."  This sounds easy enough.  But I honestly see we often face some hard choices at different times in our lives.  We may have decided what we want but with a combination of only so much time and only so much money, how do we choose? 

If we had some ground rules (although they don’t necessarily need to be rules but rather helpful tips), we might be able to lessen the stress in the decision-making.   We are not talking about the decisions surrounding the types of coffees we drink or the different restaurants where we dine…but rather the hard choices, the ones that trip us up. Do we take an annual vacation or save for a down payment on our new home? Do we save for our children’s education or renovate our kitchen? Do we buy a new vehicle or pay down debt?   

Decision-making is quite complex.  Books have been written extensively on this subject; videos on the paradox of choice have been seen shared on TED Talks; and blogs from professionals have been posted about what successful people know about decision-making. All this information is overwhelming when our only desire is to ensure we choose the best option. 

Let’s toss out a few basic tips when you’re faced with a tough decision.

1. Make a list of the pros and cons about one choice over the other with regards to the timelines and costs.
2. Take your time in these decisions.  Rather than be impulsive, weigh all the information thoroughly and allow yourself space to think.  
3. Prioritize the things on your list in order of importance.  You may be surprised you have a stronger desire to put one thing in first place rather than second.
4. Talk about the choices with your spouse or partner and family especially if the decision impacts them.  Listen to their concerns and opinions. 
5. Keep in mind you are only able to do the best with the financial resources you have available. Extending yourself into debt may not be the ideal solution to achieve your desired option.
6. Ensure the things you want (your goals, dreams, and aspirations) are clear and concise.  You want to feel it, see it, catch it, and master it in your mind before you leap into the final pick.  
7. Finally, acknowledge the proverb which tells us, “all things come to those who wait.” Being persistent and patient in saving for the things you want will pay off in the end.          

Decisions involve both logic and emotions.  Only you can make the best decision for your family and you.  You can invite professionals, family, and friends to weigh in with their skilled opinions and advice.  In the end, the decision will always be yours.  How you spend your time, financial resources, and other treasures, like your talents, is your choice.  The important parts are to trust your decision, move through the motion of following through with your plan, and then see the results unfold.  That’s how you get the things you want out of life. 

If you have an ideal technique to help with decision-making, let the rest of the world benefit by sharing your helpful tip in the comment section.

You Got This

Elbert Hubbard said, “Self-discipline is the ability to make yourself do what you should do, when you should do it, whether you feel like it or not.” We can be good at self-discipline some of the time, most of the time, all the time, or the extreme--not at all.  But occasionally, having someone come along and say, “You got this!” is a dose of encouragement we all could use. 

At the beginning of a new year, we may be filled with enthusiasm. A whack of giddy-up and go is just what we need but…realistically, some things will drag us down.  In the heartland of the Canadian prairies, we become consumed by the extreme cold weather.  The frigid temperatures tend to suck our energy as we move about our day.  When we pick up a magazine or browse the newsfeed on the Internet, we are reminded of the list of resolutions pushed in our direction to motivate us to take action.  Rather than propel us forward, we remain frozen like popsicles. We are immobilized to take any kind of action…but we must.  Here’s why.  Time does not stand still. 

Our granddaughter, Layla, turned ten years old this month.  I shared with her my memory of the day she was born.  The first time I heard her cry, I knew she was real.  With each passing year, I am grateful to have pictures to remind us how quickly time passes.  We see the growth in her physical body and the development of her personality and character.  But there’s a hidden truth in “the lapse of time”.  The truth is screaming: make the most of it; use it wisely; make memories; and above all, don’t waste an opportunity.  Now, more than ever, we can stay in touch with Layla even though we are miles apart. Sending her a quick note or a snapshot tells her how much we love her. We have no excuse not to be a part of her life with the advances in technology.  Here’s where the importance of time transitions to our financial affairs. 

Do the things that matter most.  Someone once jokingly complained about their "First World Problems". The Oxford Dictionary defines these consortiums of problems as "A relatively trivial or minor problem or frustration (implying a contrast with serious problems such as those that may be experienced in the developing world)."  Most people living in Canada have an array of First World Problems.  But if the truth be told, these are inconveniences we have escalated into problems (for example, a slow internet connection).  We must sort and sift through our financial affairs to determine a potential hidden First World Real Problem (no wills, powers of attorney, or health care directives).  

When we are serious about being disciplined with our finances, we take a hard look at the "Financial Wheel of Life" and make time to address our concerns.  My take is we can't drive life on a flat tire.  Technically, we drive on a flat when we neglect to take action in specific areas.  Thankfully, we don't have to work on all the areas at the same time.  If we take small steps in each part of the financial wheel, we will get the job done.  These areas are:  Financial Management, Asset Management, Retirement Planning, Risk Management, Estate Planning, and Tax Planning.  When professional financial planners were asked about their New Year's Resolutions in this Reader's Digest article, their action steps fell into one of these six areas.  If it's on their list of resolutions, maybe we should consider following their lead.  Just in case, you need help, look outside your sphere for some motivation. 

What can be better than devouring a chocolate-dipped ice-cream cone, witnessing a beautiful sunset, or listening to a favorite song?  All these are indeed treasures. Most certainly, the greatest treasure (or motivator) comes when you receive the gift of words from someone who believes in you and your abilities. The value in encouragement is priceless.  No matter how difficult your tasks appear, they could always be worse, like eating alive frog.  Take heart. Take action...because "you got this!"

A New Year Brings New Tax Changes

Both small and large tax savings lie in waiting for us to grasp. Some are handouts from the federal and provincial governments and others are strategies we have to put into practise.  Unfortunately, taxes are a way of life for Canadians.  Our tax dollars help to pay for government programs and services. On the flip side, we have financial goals and dreams, too, just like the government has theirs.  Every cent we can save for ours is invaluable. 

 

As always, it’s not a surprise to see the tax brackets modestly increase each year to adjust for inflation. But a much-welcomed surprise and an unusual adjustment is to the Basic Personal Amount (BPA)--what I refer to as our tax-free zone. For 2020, the proposed Basic Personal Amount is $13,229 whereby personal income tax does not apply on these first dollars of income. The bonus is these small tax-free gifts will continue in the forthcoming years. The Federal government’s intention is to increase the BPA over four years until the amount reaches $15,000 in 2023.

This year Canadians with income above this minimum threshold will hardly notice the difference. The tax savings will equate to $174 ($13,229-$12,069)x15%) when you compare the Basic Personal Amount in 2019 of $12,069 to the newly proposed $13,229.  The increased savings will come with time. 

The priceless suggestion is to make time to assess and analyze where your income will land, both on the federal and provincial ladders. This practice is most beneficial as one year ends and another begins.  The tax brackets help to pinpoint your marginal tax rates.  If you are conscious of saving for specific goals, I always encourage looking at the amount of income tax you have paid by year-end. 

Your last pay statement of the tax year or T4 information slip provides valuable information.  Seeing firsthand the amount of income tax deducted from your gross income may shock you into action and cause you to plan different strategies to keep some of your hard-earned dollars in your pockets.

During your working career, a useful and practical strategy is contributing money to an RRSP (Registered Retirement Savings Plan).  This is especially applicable when your income falls in the second tax bracket and higher. In the diagrams below, the ladder draws your attention to the fact that as your income increases so does your marginal tax rate.  All Canadians start at the bottom. 

The tax savings, derived with deposits to an RRSP, generates a tax refund for other financial goals.  This ripple effect creates a dual bonus.  As you save for your retirement, you have additional cash to pay down credit cards.

Here’s a basic example: 

All year, you have diligently saved $100 each week so by the end of the year, you have tucked away $5,200 in a daily savings account.  Now you are contemplating your goals for the year.  You stare at your retirement savings and credit card statements and wonder what to do.

One possible strategy is depositing your savings into an RRSP investment vehicle to reduce your taxable income for the year.  Once your tax return is filed, you receive a tax refund for your top-up contribution.  I choose to think of this as having your cake and eating it too. 

The math tells us.  Your annual income is $55,000 (which falls in the second tax bracket).  A contribution of $5,200 deposited to an RRSP refunds $1,066 ($5,200 x 20.5%). Now the refund can be applied towards your credit card.    The dual purpose is you have saved for your retirement and reduced your debt.  

This quick glance looked only at the federal side of taxable income and tax credits. Our provincial governments also offer different packages of tax rates and credits.  The tax savings exist on two levels.  The tax side to wise financial planning can be complicated.  With an array of tax planning incentives and strategies, you may need some assistance to decipher which apply to your family and you.  A new year always brings new tax changes to help us.  Ensure you make the best of a taxing situation with sound financial advice.    

Does It Really Matter…

Every new year we promise ourselves to start, finish, or complete a task…only to fail miserably! We may begin yet never quite finish.  Sometimes, we remain stuck in the thinking-about-starting phase for a list of reasons (or perhaps excuses).  You know the typical resolutions: eat healthier, lose weight, stop smoking, or start exercising.  Then, the typical money ones are pay down debt and save for retirement.  Our intentions are to improve ourselves physically, mentally, emotionally, and spiritually. 

We need to ask ourselves.  

               
Does it matter if I don’t lay off the sweet desserts?

               
Does it matter if I don’t stop smoking?

               
Does it matter if I don’t track how much money I spend?

               
Does it matter if I don’t save for my children’s education?

These questions likely trigger deep-seeded feelings of guilt.  When we don’t like this feeling, we suppress it by deferring the task to someday in the future. We would never want to make ourselves feel guilty on purpose. But you see this unpleasant feeling is a warning for us to take action.  You know what -- action wipes out guilt.  When we truthfully answer the question, we know the answer is a resounding “Yes”.  Does it matter? Of course, it does.  Everything we do matters.  We want to be, stay, and remain healthy in every dimension of our lives, financial, physical, intellectual, social, etc.

As I glance at my writings, I pondered, “Does it matter if I don’t write blogs about money management?” The answer thrown right back at me is “Yes”.  I hope I make a difference in at least one person’s financial well-being.  I hope they grow a healthy financial tree.  

We often jokingly say, “happy wife - happy life”.   Let’s take this and create a unique self-made motto, “Healthy financial tree - Wealthy me”.  This sounds a bit bizarre but if a play-on-words helps you remember why you need to do the right things, then it works.  We can’t dispute logic.

A financial tree is divided into three parts.  The top branches focus on taking care of the family’s needs first.     These items have a direct relationship to meeting a family’s needs if a catastrophic event occurs.

• A Written Financial Plan
• A Will and Estate Plan
• Living Will and Power of Attorney
• Insurance: Health, Disability, Life and Credit

The second part of a healthy financial tree is made up of the other items related specifically to money:

• Pay yourself first
• Registered Retirement Savings Plan (or Tax Free Savings Plans)
• Pay your mortgage more frequently
• Three months of savings
• Credit:  Get it while you don’t need it
• Registered Education Savings Plan for Children or Grandchildren

The third part, the roots, represents the type and amount of debt.  Debt will either make your tree flourish or stifle its growth.  “Good debt” often refers to mortgage or student loans. Building equity in your home or receiving an education to secure a well-paying job contributes to a person’s assets or ability to earn an income.  Excessive loans for any other purpose than these may jeopardize our financial health.  

All these branches are essential and impact your entire well-being.  Your stress is reduced when you have an action plan.  You control and drive your life.  

Your slate has been wiped clean of all unfulfilled promises.  Go ahead; create new and fresh promises with the intentions of following through.  If you’re stuck in “start” mode, focus on this favorite quote. “Do not wait, the time will never be ‘just right’.  Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.” (George Herbert).

Shoot Close Up For Impact

“Shoot close up for impact” (SCUFI) is a great technique for taking pictures. One I will always remember because I have seen the benefits.  I learned this technique and others from a great instructor, Greg Johnson (The Tornado Hunter), in a two-day photography workshop.  The application and impact of this strategy are shown throughout this writing!  

We often say, “A picture is worth a thousand words”.  Guess what? This also applies to our financial circumstances.  One snapshot speaks volumes about our present situation; and when we apply the “rinse and repeat” process every year, we can measure our progress…all because we use the following special technique. Really!  

The creation of the Balance Sheet, also referred to as a Net Worth Statement or Statement of Financial Position, lists all the assets (everything we own) and liabilities (everything we owe) at a specific time in a calendar year. This special approach enables us to calculate our net worth, the difference between our assets and liabilities.

CIFP The Canadian Institution of Financial Planning

We are having this conversation now because a new year is rapidly approaching.  Scheduling an appointment with ourselves to do this on the same date every year develops into a new worthwhile habit.  This financial snapshot provides insightful information and comes in handy...

• When we are applying for a loan including a mortgage,
• When we are planning our retirement,
• When we are developing our estate plan or writing our will,
• When we are estimating our tax liability upon death,
• When we are determining our life and property insurance needs,
• When we are creating our wealth investment plan,
• Or if we are resolving a divorce settlement.  

The initial commitment may be time-consuming but the effort will be valuable.  Once our first Net Worth Statement is created, only minor tweaks in following years will be required to keep the statement updated and current. 

The wheels of our progress will be clearly visible with each passing year and with the creation of a new balance sheet.  If we’re in a downward spiral and our net worth has decreased (rather than increased), then we know we are headed in the wrong direction and need to apply the brakes on “something”. 

You are invited to take a picture. Collect your financial information; list your assets and liabilities on a balance sheet; and then determine your net worth.  One client, who did this exercise, was astonished with the results.  He felt stressed by the impact of his newly-acquired car because he understood the impact of his newly-acquired car loan on paper.  He was dragged down with debt; and he could see clearly what changes he needed to implement. A financial picture is worth a thousand words. Here’s your opportunity to shoot close up for impact and see the results for yourself.