Thursday, December 28, 2017

A Time for Reflection and Planning

Have you ever had a song’s lyrics, playing over and over again, stuck in your head?  During the holidays, I kept hearing these words to “So It is Christmas” so much so that I felt compelled to share its message with you.

“So this is Christmas and what have you done
Another year over, a new one just begun…”

“A very merry Christmas and a happy new year
Let's hope it's a good one without any fears…”

This time between Christmas and the New Year can be an excellent time for reflection, to think about what we have done, both good and bad.  Since Santa keeps a list of all the children who are naughty and nice, we could copy Santa’s practise by keeping a list to see if we are naughty or nice with our finances.  

How Much is Enough? Financial Planner Diane McCurdy

During the holidays, my brother-in-law toasted to a year of “having enough”. In all seriousness isn’t that all we need, “enough”?  Diane McCurdy, a CERTIFIED FINANCIAL PLANNER® professional, wrote the book, How Much is Enough, and created a list of twenty key strategies for making enough.  We could all take a lesson from her.

Here’s your assignment.  

Read through the list below.
Reflect on what you have done.
Plan to make enough.
And have a great 2018!  

Twenty Key Strategies for Making Enough

  1. If you know what you want, you can get it.
  2. It's never too late—or too early—to start financial planning.
  3. A little is better than nothing.
  4. Any interest you pay is money you can't spend on yourself.
  5. Clearing up debt is short-term pain for long-term gain.
  6. Make compound interest work for you, not against you.
  7. Pay yourself first: take at least 10% off the top to save and invest.
  8. Registered retirement plans put more money in your hands and registered education plans put more money in your children's hands.
  9. Revisit your wish list to refocus on what you're aiming for.
  10. If you didn't want something in the first place, it's not a deal no matter how cheap it is.
  11. Never hand over financial control—no one else cares about your future the way you do.
  12. Get rich slowly—put your money regularly into solid investments.
  13. Markets go up and down. Don't panic.
  14. Invest only in things you understand and feel comfortable with.
  15. If you miss an opportunity, there will always be others.
  16. Borrow only for things that appreciate in value (except for your first car).
  17. A financial advisor can make sure you're making the most from your money.
  18. By taking care of yourself, you're helping other people.
  19. Reward yourself in big and little ways for staying on track.
  20. Know where you are on the road to where you're going. 

Thursday, December 14, 2017

The Ultimate Checklist

If you have your vehicle serviced on a regular basis, you are generally given a Vehicle Inspection Report.  The report has three separate categories highlighted in distinct colours. When the vehicle’s systems and components are checked, the appropriate colour receives either a “thumbs-up” or “thumbs-down”.  

Checked and Okay at this time
May require future attention
Requires immediate attention

We would never drive a vehicle that was not road-worthy for two reasons.

          1. We might never reach any of our destinations because the vehicle would simply quit working.

          2. We could potentially be injured or killed if we chose to ignore any maintenance required to our tires and brakes.

Here’s the dilemma.

Without regular check-ups and the proper maintenance, our vehicles can create frustration and grief for us. So what happens when we don’t regularly review our financial goals and check our current financial status? How do we know whether our systems are running up to speed? In other words, how do we know whether we are efficiently meeting our financial goals?

Financial Planning Standards Council created a publication called “Get More Out of Life”.     To begin my client conversations, I refer to FPSC’s checklist to gain a better understanding of my clients’ feelings. 

Scrutinizing the nine questions below allows us to conduct an inspection test.  Each question can be assigned a distinct colour to determine whether everything is okay at this time or requires future or immediate attention. If you are far away from having many “Green” thumbs-up, you might consider a service package, a comprehensive financial plan, to gain peace of mind and confidence about achieving your life goals.    

Do you feel…

q    In control of your finances?
q    Prepared for a financial emergency?
q    That you have sufficient discretionary income to lead the life you want?
q    The people you care about would be financially looked after if something were to happen to you?
q    Able to retire in your desired lifestyle?
q    You will be able to pass along your wealth in a tax effective way?
q    There is enough money to pay for post-secondary education for your children?
q    Your goals and aspirations are achievable?
q    You have peace of mind?

Since we are in the Christmas season of creating lists, this list is worth putting in our stockings as we approach the New Year.  If we wish to begin the New Year on the right foot, then we could use some help identifying where we need help.  Reviewing our list is a great start.  

Merry Christmas!

Thursday, November 30, 2017

“Somehow” Doesn’t Just Happen

A vague sadness looms over the days and weeks following the annual Grey Cup game.  This all-important finale marks the end to the year’s CFL season. Everything comes to a standstill.  The year is built on rough and tough plays, unpredictable wins and losses, surprising statistics, and the firing, hiring, and trading of players and coaches.  Anything can happen in the season.   Unexpected! Unanticipated! Sometimes ending with a dramatic and exciting finish like this year!  

This is the CFL, though. This is Canadian football. Bo Levi Mitchell hit Jorden for a deep ball, a gutsy throw. He had a shot at the end zone. The ball sailed up through the snow, and for a second in the press box a reporter yelled, “He’s open!” The clock was ticking down.

And Matt Black, an old Argo, came across and intercepted the ball in the end zone. Eight seconds on the clock, and the snow was still falling. Somehow, the Argos won the 105th Grey Cup, 27-24.”

You can breathe now.  The game is over.  But you have to admit that as the clock ticked down, you must have held your breathe like I did. 

No surprise here, I am not a sports columnist and this is not a sports blog.  So, why am I sharing Bruce Arthur’s sports column about the upheaval the Toronto Argos created for the Calgary Stampeders in Sunday’s Grey Cup Game?

Hidden in the sports columnist’s writing is one word which defines the chances of this happening. 

Read it again.  Search for it. See if you can find it.

The word is “somehow”.  There’s a mystery surrounding this word. “Somehow” means “in some way” or “by some means”. Unknown! Unexplainable!

As a financial planner, I am all about “certainty” and “surety” especially when it comes to having a “game plan” for the future. 

Yet, I appreciate the similarities between a well-played, well-executed football game and a well-designed, well-executed financial plan.  Both have the ability to create winning drives which result in achieving goals and dreams. 

When the word, “somehow” gets thrown in, it seems like any clear thought out plan did not exist.  There’s no strategy; there’s no planning with “somehow”.

Here’s the question:

Wouldn’t we rather be certain about our financial future than uncertain?
          Somehow means we’re not sure.

          Somehow, one day we will pass our business to our children.
          Somehow, one day we will retire.
          Somehow, one day we will be debt-free.

Think of your life as one important Grey Cup game. Imagine each of your life planning stages divided into separate quarters.   

          The 1st Quarter is your 20’s, 30’s and 40’s.
          The 2nd Quarter is your 40’s to early 50’s.
          The 3rd Quarter is your mid-50’s to early 60’s.
          The 4th Quarter is your 65 to 70.

Then you are at the Grey Cup Party, enjoying your well-designed retirement into your 70’s and beyond.   When the game is well-played and has ended, you have the distinct privilege of hoisting your victory cup, living your dream retirement. 

Every quarter, or life planning stage, has its own unique challenges.  Each quarter will come with a change of priorities, circumstances, and needs. When you create winning plays in each quarter, you will reap the benefit when your game is complete.  Your life’s playbook is specific to your needs and should be designed to drive your goals and dreams.  You shouldn’t have to wonder whether somehow you will achieve them.      

At age 20 or 30, your retirement years will feel so distant when your focus is on paying off your student loans, planning your wedding, acquiring a house, and raising your children. At age 40, your retirement will feel more realistic.  By the time you are 55, you might recognize retirement knocking on your door.  By 65, you may actually retire.

No football game ever plays out the way we would like.  Real life is like this too.  Your playbook is a compilation of strategies built on everyday realities.   Winning plays are created to tackle your debt, pick you up after a fumble, and to keep you in bounds with your spending plan.  Specific interferences can rock your game plan.  Your drives might need to be tweaked to combat life’s intrusions, like a disability, an unexpected death, or the adversity of a divorce. 

Financial planners know that creating your own winning plays might be difficult.    A financial plan, is like a playbook, specifically aimed at successfully reaching your retirement goal.   Having a plan is far better than wondering if “somehow” you can win without one.  No longer will your retirement have to be an elusive dream, some pie-in-the-sky fantasy. When preparation and planning begin early and play a part in all life stages, your dream can become reality.

Robert Collier makes an excellent point. He conveys “Success is the sum of small efforts repeated day in and day out.”   When you believe this to be true, you will be ready to design your game-winning playbook.

Thursday, November 16, 2017

Zoom in on a Bigger and Brighter Future

It’s obvious, isn’t it?  The zoom tool on a software program is used to make our text or images appear larger.  When we click on the magnification icon, we can see our working image or document much clearer.    

A prototype of this tool can be invaluable for looking at our circumstances. Sometimes, we have a minuscule view of our financial future.  A zoom tool would help change our settings to a grander view for a bigger and brighter future.  Undoubtedly, thousands of books are written with helpful advice to do just that, to improve our financial well-being so we can have a better outlook. 

Here’s a different kind of book to add to our collection.  It’s not about money; it’s about thinking.  The book, How Rich People Think, may be our “zoom tool” to change our perspective.    Steve Siebold, the author, identifies one hundred different ways the middle class and world class think, focus, believe, worry, earn, equate, experience, and dream about money.  Every short chapter compares the “middle class” (the average person) and “world class” (world class thinker).  This book made me curious about examining how I think.   Do I think like the middle class or the world class?  You may be wondering the same thing about yourself.

I met Steve Siebold when he and his wife, Dawn Andrews, instructed the Bill Gove Speech Workshop in Chicago.  Steve is very sincere and genuinely interested in helping others succeed.  Like he says in his introduction, he was inspired by the wealthy.  As a college student who was completely broke, he set himself on a journey looking for answers to become rich.  Steve said when he changed his thinking, he eventually became a millionaire.  He wrote this book to be our guide. 

“What does he say?” you might ask.

To whet your appetite and convince you that owning a copy is justifiable, I am sharing a summation of only four of Steve’s observations.  Again, like me, you won’t be surprised by the findings. If these have crossed my path, I know they likely have crossed yours.

1st.     Middle Class believes money is the root of all evil…World Class believes poverty is the root of all evil.
How many times have you heard this infamous saying, “money is the root of all evil”?  You, like me, and countless others may have been brainwashed into believing this to be true.   Steve is quick to point out that it’s a result of poor programming and ignorance which infected us with the disease of focusing on lack and limitations. The world class thinks differently.  Although they realize money will not buy happiness, they know their life will be better because of it.  They choose to focus on the wealth within themselves and build world class beliefs to create a better life for themselves. 

2nd.     Middle Class worries about running out of money…World Class thinks about how to make more money.
If we lie awake at night worrying about our finances, we could take a lesson from the World Class.  When the World Class thinks about how to make more money, they think about how to creatively solve problems.  Certainly there is no lack of problems in our world today.  The middle class have a tendency to focus and direct their energy on worrying about a shortage of money;  the world class use their creative energy to develop great ideas to ensure they have a continuous cash supply.


3rd.     Middle Class has a Lottery Mentality; World Class Has an Action Mentality.
The difference is that the middle class do not have an empowering belief system about money to lead them into action like the world class.  The middle class believe the lottery is their only chance to get rich.  Both classes may have the desire except desire alone does not trigger the appropriate behavior which creates results.  Steve concludes, “If you want to get rich, dissect your beliefs about money and upgrade them to world class.”   

4th.     Middle Class believes money is complicated…World Class believes money is simple.
The World Class view is a game changer.  If we could only grab hold of an opportunity and believe its value, then our ability to solve a problem on the world market could turn into wealth.  The strategy doesn’t have to be complicated.  The complications arise in our mind when we believe it’s difficult and next to impossible.  The World Class embrace the endless possibilities.  They see trading solutions for money as a means to becoming rich.  “The bigger the solution the bigger the paycheck. It’s that simple.” 

Crossing Over from Middle Class to World Class

You might already be on the side of the World Class.  You have embraced this kind of thought pattern and are experiencing wealth.  You are enjoying the worry-free life that Johnny Carson proclaims. He says, “The only thing that money gives you is the freedom of not worrying about money.”  

However, if you are interested in making the transition to the World Class, Steve offers useful zoom tools at the end of each chapter:  an inspirational quote, additional rich resources, critical thinking questions, and action steps.  These magnification tools will help you zone in on any problematic thought patterns as well as offer inspiration and guidance to take you on a new journey. 

Like Steve, I want you to succeed financially.  Examining how we think might be a revelation that will result in a positive change.  When you dissect your belief system, who knows what you will find. 

Thursday, November 2, 2017

What is Your Farm Child’s Sweat Equity Worth?

When I don’t know the answer to a burning question, I go hunting for it.  Usually, the best answer is found by researching the topic. What do the experts say? They’re the ones with the insight and experience.  We look for answers in the same way we hunt for a tasty recipe, an effective worksheet, or a lucrative bargain. When we need to know something, we will discover the path. 

Recently, the agonizing question was calculating sweat equity.  Each farm family, who has worked together for many years, has a different way and means for determining the value each family member brings to their business.  Until I began researching the topic, I believed the contentious issue was limited to only sweat equity. I had no knowledge that slave labour was also prevalent on some Prairie farms because of unfair compensation.    

Here is something I do know: Peace and harmony are achievable among family members when you begin your succession and estate planning early.  Determining what your farming child brings to the business in the way of labour and management abilities may play a big part in getting your succession plan off the ground.  Sweat equity is certainly an important component of the plan.    

Experts Share Their Perspectives

On my discovery path, I came across an article written by Country Guide’s senior editor, Maggie Van Camp.  She did her homework.  She hunted down experts and shared their expertise in her article, Cleaning Up Sweat Equity.     If you catch yourself awake at night because you are wrestling with the best way to treat your children fairly, you might find some comfort in her publication.

Both sweat equity and fair compensation deserve equal recognition.  When your farming child decides to return to farm with you, the first question is, “Can the farm support another family?”  This leads to the next question: “What is fair compensation for the child’s labour and contributions to the operation?”   Don’t stop there. Because then you will need to know, “Do they deserve more based on their commitment to take on risk, unique contributions in terms of management skills, and living their dream while carrying on your legacy?”  

I see a line that eventually gets crossed.  Initially, a farming child may be working for Mom and Dad but eventually working with Mom and Dad.  What may begin as compensation for hired labour may later be factored as a combination of compensation and sweat equity for their contribution.  
One of leading experts is David Goeller, a transition specialist with the department of Agriculture Economics at the University of Nebraska-Lincoln.   He provides an example in his paper, Putting A Value on Sweat Equity, as a guideline to determine the successor’s contribution based on the Net Worth of the family business at two specific time periods.  You can liken this to “before and after” financial snapshots of the family farm.  What was the farm’s financial net worth before the farming child returned and then after his return at a specific future date?  All participants, Mom and Dad and their farming child, will share in the growth of the business.  

The example set forth by David Goeller is only a guide.  This is a starting point which you can build upon.  As he states in his paper, every operation will have different factors and likely arrive at a different percentage for the value of the successor’s contribution.   

Mr. Goeller made a very profound statement when addressing non-farming children. He said, “Treating unequals equally, may be the most unfair thing you can do!”   

“Sweat Equity” Vital to a Successful Succession Plan

Your succession and estate plans are important but when you can estimate sweat equity you are one step closer to finalizing these plans.  

We are often reluctant to do something unless we understand the purpose of a specific activity.  Diligently keeping accurate Net Worth Statements provides proof of the farm equity built up over the years as a result of your efforts and those of your farming child.  This evidence may be the proof needed to convince yourself as well as other non-farming members.  I fear that if there are no means of tracking, then you have no means of measuring financial success.   

You may even recognize that your farming child’s contribution may be the leading factor in the expansion and profitability of the farm. Without his or her labour, management ideas, specialized knowledge, leadership abilities, and experience, your farm may not have advanced as efficiently on your time clock. Using the financial statement as an assessment tool, or job performance report, may provide evidence for delivering compensation in recognition of a job well-done. Whether your farming child is the brains-behind-the-operation and/or the grunt-labour, you have a method to measure their contribution.

The Worst Outcome

The saddest outcome for any family is to find themselves in court disputing an estate settlement.  Parents are somewhat reluctant to openly discuss the decisions they have made about the division of their family farm property.   Your intentions shouldn’t surprise family members. Once you have a tentative decision, then your next step is to share this with your family to avoid any future litigation in court.

Your Net Worth Statements over multiple years will provide concrete proof of the family member’s contributions. This truth allows you to justify your actions to your children while you’re alive rather than have them wonder what you were thinking once you’ve passed away.  I’ve heard comments, “I’m afraid what our other son will think if we leave our home quarter to his brother.”   I realize fear is often a factor that hinders people being open and honest.  Having family members duke out unresolved issues in court is far worse than you facing your fears and sharing your intentions.  

Information Helps You

Information educates us about issues we might normally never have considered.  Arming yourself with a wealth of resources is equivalent to arming yourself with ammunition. When you do, you are prepared to set the stage for meaningful conversations with your family to determine what works for you and them.   

I recognize the benefit of starting the “planning phase” early so you can measure the fair market value of your farm at pre-set increments to determine the contribution your farming child makes (or doesn’t make) to your farm business.   

In the end, I value and appreciate the wisdom David Goeller shares as he wraps up his paper.  The main desire is to ensure your family will all be eating Christmas dinner together for years to come.

Thursday, October 19, 2017

Power and Control From Learning

Think of a time when you tried something new.

Do you remember how awkward it felt?  Do you remember feeling intimidated, even afraid you wouldn’t get it?  Working through a math problem. Fixing a lawn mower. Roasting a Thanksgiving turkey. Learning to dance.  Mastering a computer program.

Then there’s the subject of money.  You may have been daunted by opening your first bank account.  Learning the ins and outs of money matters didn’t stop here.  You needed to create a budget, pay for essential expenses, save for the things you wanted, and so much more.

Now you may be at the point where you’ve tried stretching your monthly income and discovered your way isn’t working.  You’re overwhelmed. You’ve stopped learning new ways to make “everything” fit into a neat and tidy worksheet.   

This is probably the ideal time for a new commitment.   Most students return to school in the fall. Whether they attend high school, college, or university, they walk the Halls of Learning in pursuit of a higher education. You, too, can do the same. Managing your money means finding new ways to achieve your financial goals.  

Plenty of information on money management is found at this website and in the Internet world to provide education. The choice is always ours whether to move forward with what we are given.  

As your financial planner, I could suggest you consider spending money on one less thing, invite you to create your dream list of things you want in life, or recommend you set up an emergency savings account for those unwanted and expected life events.

With all sincerity, often the best intended advice can be likened to the proverbial saying, “You can lead a horse to water, you can’t make him drink.”   Can this apply to us?   Let’s reframe the question.  When we know what we should do but choose not to do it, who are we hurting most? Ourselves, of course!

Some advice is common knowledge.  We know we need to exercise and eat well to carry on an active and healthy lifestyle.  The same principle is true for being financially healthy. We need to create a balance between spending and saving to lead an active and healthy financial lifestyle.

I am a firm believer that knowledge is at the heart of power and control.  When you choose to learn new skills, you are in a “control position”.  You are taking charge to make a change in your life.  In other words, it’s the perfect way to get yourself out of a “stuck position”.  Whenever we feel like we are drowning in debt, wanting to purchase a home, or planning to retire, we to learn more.  Seeking information from reputable websites and the advice from a CERTIFIED FINANCIAL PLANNER® professional will broaden your knowledge and deepen your understanding.  

Even though implementing changes can be intimidating, and at its worse, frightening, you don’t have to stay stuck in any situation. 

Typically we ask ourselves, “If there was one thing we could change about our financial circumstances what would that be?” Getting control over one only thing boosts our confidence and lead us to conquer other obstacles.

Putting ourselves in a control position generates a sense of power over our situation.  This happens because we choose to learn.  Not only will our learning lead us to be better money managers, but it can also help us find better jobs which pay better wages and give us the opportunity to achieve the things we set out to do in the first place.

To keep the task simple, let’s try implementing only one “Do” and “Don’t” strategy rather than create an endless list.

If you catch yourself in a stuck position:


Embrace learning new skills as an adventure.  Start where you choose to make the small changes in your life.  Keep the adventure ongoing.  Once you master one skill, move onto the next one.


Avoid the negative self-talk such as telling yourself you are not smart enough.  You can’t do this because it’s too difficult.  Turn negative statements into positive ones.   

The key message is to never stop learning.  There are a number of quotes written with this thought in mind.  One of my favorite is “The more that you read, the more things you will know.  The more that you learn, the more places you’ll go.” (Dr. Seuss).   With your dream list in hand, you will want to keep this quote in mind. 

As a CERTIFIED FINANCIAL PLANNER® professional, I am steering you to this website, Financial Planning for Canadians. Many less-than-a-minute-to-read articles are written to help you navigate through money matters.  There’s also an exclusive section, Life Happens--Financial Issues in Each Life Stage, to advise on the unexpected. These Life-Happens are real.  This great resource provides information on issues which can apply to your situation.

You have permission to ask for help.  Sometimes the obstacle is not knowing what to ask.  Knowledge can be derived from reading. You can experience a light-bulb moment when you connect the information with your situation. These articles then trigger the question, “Does this apply to me?”  If the answer is “Yes”, you are on the right path to gaining power and control. 

Thursday, October 5, 2017

How Do The New Proposed Tax Changes Affect You

Oh Canada! The True North strong and free!

Do you remember writing a research report for a school assignment?  

  • What were the lasting effects of World War II? 
  • How did the bombing of Hiroshima change the way the world feels about nuclear weapons?

Here’s a new topic we could add:  How do the new proposed tax changes affect you?
If you are a shareholder of a small business or farm corporation, you may be affected by the proposed tax changes brought forth by the Liberal government on July 18th. 
The 75-day consultation period, which ended as of October 2nd, permitted Canadians to share their views on the proposed changes. This excerpt from Bill Morneau, the Federal Finance Minister, appeared in an Open Forum letter published in the Western Producer:
Although the Liberal government received countless requests to extend the consultation period on the tax changes, the request fell on deaf ears. This motion was defeated Tuesday, October 3rd.  
The Government of Canada’s 63-page document, Tax Planning Using Private Corporations, specifically addresses three primary issues: income sprinkling, holding passive investments inside a corporation, and converting income into capital gains.     
Today as I composed my report on the proposed tax changes, I had a knot in my stomach.  As I read through news articles and media posts, I witnessed first-hand the controversy created over the Liberal’s proposed tax changes framed in their words as “tax fairness”.  Many across the country beg to differ, calling the changes anything but “fair”.  
The clients who I have worked with are shareholders in private corporations for both personal and business reasons.  Setting up a corporation was in their best interest in order to have more after-tax income to upgrade or purchase additional equipment and land, fund operating expenses, and save for emergencies and unexpected business problems. In some cases, the cash within their corporate accounts was to fund their retirement, the same way a pension plan would serve a salaried employee.
In the future, my clients would pay their share of personal taxes when funds were withdrawn from their corporation into their personal accounts.  The integration between corporation and personal tax filings assures that income earned through a corporation and paid out as dividends is subject to the same income tax as that earned by salary.
Kevyn Nightingale, CPA, CA (ON), CPA (IL), TEP is a Partner and Business Advisor at MNP, LLP.  In his two articles, Private Company Income Splitting Part 1 and Part 2, he clearly defines the current tax law and the proposed law regarding the income splitting proposals.  As a tax professional who understands the proposed legislation, Kevyn makes an astounding comment, “The legislation is conceptually simple, but the devil is in the details, and they are exceedingly complex.  There are 27 pages of new legislation.”
The Income Tax Act has always been complicated and complex. When I checked, the document, amended as of July 1st, 2017, is 3,128 pages.  And the number of pages is about to increase.  Once the new legislation is passed, owners of small business and farm corporations are encouraged to talk with their tax advisors to fully understand how the new changes will impact them.   An expert who understands and interprets tax laws can educate and provide us with wise tax planning advice.