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Budgeting: One Size Doesn’t Fit All Mr. Allen

Guest — Tue, 22 May 2012 09:00:00 +0000

This is the fifth post in a series of guest blogs throughout the month of May, with each writer trying out for a staff writer spot (or two) on Canadian Finance Blog. Once all the posts are online, I’ll publish a wrapup highlighting all the writers and their guest post. There are a lot of talented writers here, so it’s not going to be an easy choice! – Tom

I was browsing a bookstore the other day and picked up a decorating book by Ethan Allen. Good book as far as coffee table books go. Lots of pictures, ideas I wouldn’t have thought of myself, and in general, a good flow. But there was this one paragraph that made me so angry I slammed the book shut and left the store. Want to know what the paragraph said? I’ll tell you. It said “you must budget for decorating. Otherwise, a new couch will always seem out of reach.” That’s all it said, so you can see how my fit of rage may have been a bit out of line.

Why did I get so angry at that particular moment you ask? Well, it had to do with the fact that the week before, I had just started a “oh @#$%” fund for all the things that creep up that I don’t like. Things like parking tickets, car repairs, and dry cleaning (yes-dry cleaning). I had also decided to start a gift fund to save for the incredible amount of gifts I now buy for people. Baby showers, wedding showers, friends birthdays, friends kids birthdays, etc. These funds were started on top of my house emergency fund, RRSP’s, and regular savings, which meant I was up to 5 savings buckets! Let me be clear here, I don’t make a six figure salary…not even close. Like most people, I’m just trying to do the best I can. So you could see how I might be a little alarmed at this decorating book suggesting I now had to make an additional savings account so my home looked magazine worthy.

Insert me slamming the book shut and storming out of the bookstore. As I walked along the street in a huff, I realized something. Probably something you’ve already figured out. Budgeting is essential to get to your financial goals but the reason budgeting is great is because it tailor made for everyone. No two budgets are alike. If decorating isn’t your thing (like me), then there is no need or reason to budget for it. Plain and simple.

I’m never going to be one of those people who needs a new couch every few years. I like my furniture to stick around for a while and the latest and greatest just doesn’t appeal to me. But that doesn’t mean it’s not important to you! And if it is, it should be in your budget! What’s important to me is saving for a rainy day (RRSP’s and emergency funds) dining out, gift giving and not being caught off guard by a stupid parking ticket. I have tempered my budget based on the kind of risk I am ready to take and how prepared I like to be for certain situations. Your budget might include rainy day savings, a clothing allowance, a magazine subscription and a vacation fund. My budget will never be your budget and vice versa. Perhaps, after reading this you will take Ethan Allen’s advice and set aside some money for decorating. I on the other hand will throw a blanket over my couch and call it new…and the folks at Ethan Allen will just have to be okay with that.

Author Bio: She’s So Savvy is an online destination for professionals who want to live large in the city on a small budget. With so many career-focused, city-dwelling friends, Tiffany noticed they still couldn’t make ends meet while living in Toronto. As a consummate bargain hunter, she knew from experience that the deals were out there, but couldn’t find a single source of information where they could all be found. With her advertising, sales, and web background, Tiffany started She’s So Savvy as a guide for people who want to live a champagne lifestyle on a beer budget – the rest is savvy history!

Budgeting: One Size Doesn’t Fit All Mr. Allen originally appeared on Canadian Finance Blog on May 22, 2012.

Top Tips for Sticking to a Budget

Tom Drake — Thu, 19 Apr 2012 09:00:29 +0000

Creating a budget is fairly easy. You gather information on how you’ve been spending money, and list out your expenses. Then you create a plan that allows you to live within your means. The mechanics are simple – what’s hard is actually sticking to the budget you create.

Here are some ideas to help you stick to your budget:

Make Sure Your Priorities are Covered

Before you create a budget, think about your financial priorities. You are more likely to stick to a budget that reflects what’s truly important to you. Important items like bills need to be taken care of first, of course, but you should also consider how you use your disposable income. If you enjoy going out for dinner, account for that and cut corners in other areas. When you are doing what’s most important to you first, it makes it easier to stick to your budget.

Budget in Splurges

It’s also good to budget in splurge money. This is money that doesn’t need to have a specific purpose. Instead, it’s money that’s available for use on anything you want, as it strikes your fancy. If you don’t use your splurge money, roll it over to the next month, providing you with the opportunity to splurge even bigger. Fun needs to be budgeted in or you will come to resent your budget and feel that it is too restricting. Without fun being budgeted in, it’s easy to abandon your budget as you become disenchanted with always feeling denied.

A great way to budget for splurges is to factor in cash back rewards. For example, the TrueEarnings Card from Costco and American Express offers 3 per cent cash back on spending at restaurants, two percent on gas, and up to one per cent on your purchases everywhere else – so you’re earning cash back on everything from bills to dinners out. Make it a point to add the cash back you receive from your rewards card to the “splurge” pot. That way, you are offsetting some of the costs of your fun.

Look for Ways to Earn More Money

It’s much easier to stay on track with your budget if you have more money to spend. Taking a strategic approach to loyalty and cash back programs is a good way to maximize the money you earn. For example, when you’re at Costco, you can save by shopping in bulk and earning up to 3 per cent cash back when you combine the TrueEarnings Card with the Costco Executive Membership.

When you look for creative ways to earn more money and stay within budget, budgeting can be rewarding and fulfilling. When you view it this way, and if you make it a point to create a budget that matches your priorities, you are far more likely to stick to your budget long term.

Top Tips for Sticking to a Budget originally appeared on Canadian Finance Blog on April 19, 2012.

Pros and Cons of Using a Automatic Financial Tracking Application

Alan Schram — Wed, 21 Mar 2012 09:00:28 +0000

One of the first things that my parents taught me to do, financially, was track my expenses. I remembering getting my first bank account, and starting to keep track of everything that went in and out of the account. I had a little paper booklet that I wrote down how much the original balance was, what I bought, how much it was, and what the next balance would be. When I went back to the bank to make another deposit or withdrawal, I would get the updated balance, and compare it to my paper copy. If it didn’t match, I had to figure out where that extra money went to, and why there was a difference.

I hated it. I eventually just stopped doing it, because it ended up amounting to pennies, and it was all because of a simple math mistake or a forgotten purchase. I never caught the bank making a mistake, I doubted that they ever would, so I just stopped doing it. Thankfully, technology eventually caught up with me and I was able to enjoy the benefits of things like online banking. While now there was an automated method of keeping track of my finances, however, my online banking software does not keep track of my budget. Enter the invention of online financial tracking applications, like Mint.com. I’ve been using Mint.com for over a year now, and while I’ve had some problems with it, I love to use it. However, there are always advantages and disadvantages of using programs like these.

Pros

It’s simple to set up and use. When you’re creating your own method of tracking your finances, you first have to figure out how you’re going to do that. Are you going to use pen and paper, or software, or an excel spreadsheet? What are you going to track? How are you going to input that data, and how often are you going to do it? With an automated app, it tracks everything for you in real time. It has a wealth of information, so no matter what data you feel is important to track, it is all there and available for you – you just need to take a look to see it. There’s an easy user interface for everything as well. Whether you want to set up a budget, track a type of expense, or look over your financial history, there’s a tab or an option ready and waiting for you.

It’s instantaneous. The application will track all of your data for you. It doesn’t do it once a week or once a month, like you might if you were doing it manually. All the information is automatically brought right into your account as soon as it is available. That means that you have a day by day way of checking to ensure that you’re on track and moving in the right direction. I’ve had it where Mint.com actually helped me react very quickly to a fraudulent transaction from an ATM machine. Someone had gotten a hold of our bank account details through a card skimmer (most likely), and they withdrew a bunch of cash. Within a few hours, I had already been made aware of it through Mint, contacted my bank, and started the process of getting my money back, all thanks to the automated system that was already in place.

Cons

Your information is less secure, and probably being used and sold. If the service is free, then the product is you. Mint.com, like other financial apps, is a free service. They have to pay their bills somehow, so regardless of what their privacy policy may or may not say, just assume that your spending history and trends are going to be recorded and analyzed, by someone, somewhere. Now, you shouldn’t have to worry about credit card fraud or identity theft, these companies are large enough and secure enough that you’ll never have to worry about something like that. Just recognize that your information, most likely anonymous, will be used and potentially even sold. Personally, I have no problem with that, but if you do, then make sure you avoid these types of services.

Automating everything to do with your finances can make you financially lazy. If your bills are paid automatically and your finances are track automatically, then what is there left for you to do? Not a lot, to be honest. So you might stop caring about what you’re spending and where your money is going. Eventually you may look at your Mint data and realize that you’ve blown your budget over the last two months, but by then it is too late. So if you do choose to use this program, ensure that you are also being diligent in checking in on your finances. Set up a weekly or biweekly check for yourself to go through your finances and hit on all the important points.

What are the pros and cons of using financial tracking software for you?

Pros and Cons of Using a Automatic Financial Tracking Application originally appeared on Canadian Finance Blog on March 21, 2012.

Better Budgeting with a Credit Card

Tom Drake — Mon, 21 Nov 2011 10:00:00 +0000

So far in my series of posts where I’ve been sharing my thoughts on the TrueEarnings Card from Costco and American Express, I’ve discussed how to choose a rewards credit card so that you get rewarded for money you’re spending already. But something not often touched on with credit cards is how you can use them to help you create a budget and track your spending.

The Importance of Budgeting

Budgeting is important because it helps you ensure all bills are covered and sets limits on your spending, all within the amount of income you bring in. To improve your financial situation, you have to increase your cash flow by spending less than you make.

To budget properly, you need to know where you’re spending your money. This isn’t so easy if you spend mostly cash, though it can be done if you keep a notebook on you or save all receipts.

How to Plan a Budget and Benefit from Rewards

Using a credit card can help you keep track of your spending so that you have a meaningful budget that you can stick to. If you put all your spending on one card, then the statement becomes your monthly spending report. And likely all cards now allow you to login online to review your spending every day. Then, every month, you simply use your paycheque to pay the credit card bill.

But if you’re doing all your spending on a rewards card like the TrueEarnings Card, not only can you track your spending, but you’ll also be earning towards a nice cash back reward at the end of the year. This payment can help fund an annual budget goal like saving into an RRSP or TFSA.

How You Can Use Your Credit Card to Reduce Your Budget

While I’m using my TrueEarnings Card for all my purchases, it will also help me stay within budget since I get up to 2% cash back on gas, 3% on restaurant spending and up to 1% everywhere else, including Costco, where I’m doing most of my spending anyway.

And if you are shopping at Costco quite a bit like I do, reduce your spending budget for the year even more by getting Costco’s Executive Membership and receive another 2% annual rebate on most of your Costco purchases.

A credit card is a tool in your personal finance toolbox. Helping you create a budget and earning rewards are just a couple examples of the benefits when you use it responsibly!

Better Budgeting with a Credit Card originally appeared on Canadian Finance Blog on November 21, 2011.

Planning Your Meals Saves Time And Money

Robb Engen — Tue, 08 Nov 2011 10:00:39 +0000

Finding the time to cook healthy meals while balancing a household full of activities is a real challenge for young families. One of the best budgeting tips when you’re trying to save time and get the most out of your money is to create a meal plan.

Using meal planning to know what you are going to eat for dinner in advance can save you from making impulse visits to your favourite restaurant or fast food chain, as well as those last minute trips to the grocery store when your fridge is bare.

Tips to Get Started

Start by making a dinner list. I recommend matching the length of your list to your payday cycle. If you get paid weekly, plan for seven dinners, if it’s bi-weekly then plan for fourteen dinners. I get paid monthly and plan for thirty nightly meals. Stick your list on the fridge or another visible area in the kitchen so you remember to take something out to defrost before you leave for work.

Before you head to the grocery store, take stock of what’s already in your fridge, freezer, and pantry. From there you can use your dinner list to make your shopping list. I make a list for shopping at Costco that includes meat, dairy, frozen fruit and vegetables, and other staples. When I get home I make sure to split up the meat into smaller portions for freezing.

Then I make a list for Safeway or Superstore to shop for fresh produce and anything else we need that doesn’t come in mega-packs. I find the grocery prices at Safeway a bit high so I try and shop there on the 1^st Tuesday of the month to take advantage of customer appreciation day (15% off).

Shopping and Cooking in Bulk

Most people shop for convenience rather than looking for the best price. Consider the cost per unit when buying your grocery staples. For example at Costco you can buy a 1.5L bottle of ketchup for $5.99, or you can pay $4.99 for a bottle half the size at another grocery store.

When it comes to cooking, one thing we learned is that if it takes 15 minutes to prepare one meal, it will only take a few more minutes to prepare four meals of the same recipe. Pack the rest up and toss it in the freezer, and later when you need it, getting dinner ready is as simple as popping it in the oven or microwave when you get home from work.

Think of the money you’ll save by always knowing what you’re having for dinner each night or by having already prepared meals on-hand. No more last minute fast food trips or ordering take-out. Even with our small family of three it would cost us at least $40 for dinner at a restaurant. When you plan your meals and cook at home each dinner can cost less than $10.

Be Flexible With Your Plan

Planning your meals in advance can take some getting used to, but your plan doesn’t have to be written in stone. Sometimes life gets in the way. We switch our meals around all the time depending on what the weather is doing if we’re barbequing, if we’re running home late from work, or just to use up perishables before they go bad.

Since we started meal planning a few years ago we have saved around $250 a month. Quite often we end up with leftovers to use for lunch, which saves us even more money. Not only that, my wife and I have lost weight, tried and perfected a variety of new recipes, and have actually become pretty decent cooks. Best of all, we’re eating a lot healthier and enjoy more time with each other.

Planning Your Meals Saves Time And Money originally appeared on Canadian Finance Blog on November 8, 2011.

Small Changes Add Up To Big Savings

Robb Engen — Tue, 04 Oct 2011 09:00:20 +0000

Everyone’s heard about the latte factor, or about how much money you can save by quitting smoking. Our daily vices can quickly become a financial burden if we don’t keep them in check. But what about the more subtle habits that are a constant drain on our finances?

Years ago, before my wife and I got married, we lived down the street from a Tim Horton’s. Shocking, I know…considering there’s only one Tim Horton’s for every 8,000 people in my city.

Every weekend we would walk over to Tim’s for breakfast; which consisted of a large coffee and two everything bagel’s with cream cheese for me, and a large coffee, muffin and yogourt for my wife. Total cost – $10. Sometimes we ate there on Saturday and Sunday. This was our equivalent to the pack of cigarettes a week habit.

I’m not sure what we did to finally break this habit, but now we eat breakfast at home for about $2 a day, including coffee. And guess what? The bagel and coffee are just as tasty at home. Something as simple as changing our breakfast habits has saved us over $500 a year.

The point is that I used to think it was impossible to save more money or cut back on our expenses, but when I took a closer look at our daily routines and habits, I was able to find big savings just by making small changes in our routine.

Meal Planning

We’ve all come home from a busy day at work without giving a second thought to our dinner plans. So what do we do? Stop for take-out on the way home from work, or head out to a restaurant for a quick meal. Taking a few minutes to create a weekly meal plan helped us break that habit and saved us hundreds of dollars a month.

Budgeting

Most of us find the budgeting process tedious and believe that as long as we pay ourselves first we can do whatever we want with the rest of our paycheque. The problem with this approach is that you’re more likely to squander money on little things that you don’t even realize have become a habit. Tracking your expenses for a few months will give you a good sense of your spending habits and then you can develop a budget to keep your expenses in-line.

Spending

Canadians love debit cards, even if we have to pay up to $12.95 a month for the privilege of using them. After I got my finances under control, out of habit, I still used a debit card for my everyday spending. Then I discovered rewards credit cards, which worked just like my debit card except I was the one getting paid in the form of cash back or Air Miles rewards. Just make sure to pay off your bill in full every month and don’t overspend just to earn more points. I’ve earned more than $500 a year just by using my rewards credit card regularly.

Develop Healthy Routines

We all have our vices, and I’m not saying we need to eliminate the things we enjoy. But it’s important to understand the difference between healthy routines and bad financial habits. Small changes in your habits can save you hundreds, if not thousands of dollars a year.

Small Changes Add Up To Big Savings originally appeared on Canadian Finance Blog on October 4, 2011.

The Art of Doing Something with Your Money

Jim Yih — Tue, 27 Sep 2011 09:00:40 +0000

“When walking, walk. When eating, eat.” ~Zen proverb

In my workshops to help improve your personal finances, I have always preached that the best idea in the world is the implemented idea. It is better to have done something and failed than to have done nothing. We’ve all heard the saying “If you always do what you’ve always done, you’ll always get what you’ve always got.”

Is financial education the problem?

Many people and organizations have argued that we have a real problem when it comes to financial education and financial literacy. Although financial education is my business, I’m not convinced that lack of education is the problem. There is no shortage of information on how to become richer, how to have less debt, how to prepare for retirement, how to invest better or hoe to improve your personal finances. Information is abundant. As much as knowledge is important remember that you can have lots of knowledge stored in your head but if you do nothing with that information then what good is it to have the information.

Doing creates results

Reading is good. Researching is good. Discussing is good but doing is great because it is what creates results. Here’s a list of things you can do to improve your personal finances:

Figure out your net worth. This is so simple and yet not enough people know their net worth. All you have to do is take a piece of paper and on one side write down everything you own and on the other side write down everything you owe. How can you get ahead financially if you have no idea how much you are worth. Start with the basics and refine it later. To learn more details about your net worth, here’s an article with a downloadable spreadsheet to how I track my own net worth – Calculate your net worth

Track your expenses. Knowing how much you spend is a key determinant of financial success. Too many people are living paycheque to paycheque or even worse spending beyond their means. How would you know if you have a spending problem or not if you had no idea how much you were spending? Here’s another article I wrote sharing some different ways to track your spending – Know your spending

Take control of your investments. Nobody cares about your money more than you care. Start doing by simply taking stock of your investments and determine why you own what you do. Here’s an article on how to review your RRSP portfolio if you have not done so in a long time. If you are working with a financial advisor give him/her a call and book an appointment for a review. Walk into that meeting with a list of questions because you care about your money.

Get a will done.
Not only should you get your will done but you should also get a power of attorney and a personal directive done as well. In my 20 years in the financial industry I can’t count the number of times I’ve seen people without these key documents and the result is problems, costs, delays and conflicts.

Get the right bank account. A bank account is something we use everyday and in today’s world, not all bank accounts are created equal. My suggestion is to look into high interest bank account options because they are the types of accounts that work in your favour because they pay interest and charge no monthly service fees. I am very passionate about getting the right bank account so here’s a few articles on getting the right bank account:

Have you reviewed your bank account lately?

Every penny counts in banking.

Keeping a minimum balance in your bank account

Start an automatic savings plan. For many saving money does not come naturally. Saving money is one of the four key disciplines to financial success. Putting away money for the future is so much harder when you don’t automate it. Doing is simply a matter of going to your financial advisor or institution and asking them to start a regular withdrawal from your bank account into a Tax Free Savings account (TFSA) or Registered Retirement Savings Plan (RRSP). If your employer has an option to take it off your paycheque, that’s even better. If your employer is willing to match your contributions that’s the best. If you need help saving money, here are my principles of saving money.

This list is far from complete. There are so many things you can be doing. I think this list forms some of the basic skills needed for tour financial health. If you have done these things then keep doing something else. There’s always room for improvement. Doing something is better than nothing. It’s never to late to start doing something. I think Nike said it best “Just do it!”

What kinds of things are you doing to improve your personal finances? What things are you planning to do?

The Art of Doing Something with Your Money originally appeared on Canadian Finance Blog on September 27, 2011.

Helping Your Budget With The TrueEarnings Card from Costco and American Express

Tom Drake — Wed, 07 Sep 2011 09:00:00 +0000

I prefer to use credit cards rather than a debit card or cash for a couple reasons. First off, it keeps my spending a little more organized. I can use one card for all my spending and then pay off the entire balance once a month. But another big bonus of using a credit card for all my day-to-day purchases is that I can take advantage of rewards programs. I’m spending the money anyways, might as well get something extra for it!

I’ve also written previously of my love for shopping at Costco, where I have an Executive Membership that pays for itself with weekly grocery and gas purchases, as well as everything from tires to wedding rings. However, they don’t accept any credit cards other than American Express.

So I was quite happy when I was asked to try out the TrueEarnings Card from Costco and American Express. The TrueEarnings Card has a few things I like, including up to 1% cash back on everyday purchases. Perhaps the best part (and a must for me) is that there is no annual fee.

Another nice thing that I liked about this card was the included travel accident insurance and a buyer assurance protection plan that doubles a manufacturer’s warranty up to one additional year. You might not appreciate the true value of these perks until you need them; either one could save you a lot of money depending on the situation. These kind of extra features are often found in cards with annual fees, not any of the other no fee cards that I have.

But the best feature of this card is ultimately the cash back rewards. And you don’t need to spend that cheque at Costco either; you can cash is out and take the cash. Because of this, you could use the money for an annual RRSP contribution or to make a lump sum payment on your mortgage. While you don’t want to spend unnecessarily just for the rewards, responsibly using a cash back card like this is a great way to earn extra money on purchases you are already making.

I’ll be sharing some more details about the TrueEarnings Card in the coming months as I get a chance to use it some more!

Helping Your Budget With The TrueEarnings Card from Costco and American Express originally appeared on Canadian Finance Blog on September 7, 2011.

Mint Review, 8 Months Later

Alan Schram — Wed, 03 Aug 2011 09:00:12 +0000

About 8 months ago I wrote a review of Mint. They had just launched the Canadian version of the site, and I eagerly joined as I had heard so many positive reviews from our southern friends. I had a couple of gripes about the site, but I loved many more things, and therefore recommended it as a product worth using. I did, however, note that I hadn’t been using it for very long, and as such, wouldn’t be able to give a full and complete Mint review. Well, I’ve been using Mint for 8 months now, and here are my current thoughts.

Pros

I don’t like to spend a lot of time on my finances. I’m much more of a “set it and forget it” kind of guy when it comes to budgeting, so I have all my bills and savings automated so that I never have to worry about not having enough for the phone bill or not being strong enough to set money aside for the future. Therefore, I absolutely LOVE Mint’s ability to let me hop onto the website, and within seconds the website has accessed my bank accounts and credit cards, gotten updated information from their websites, and compiled it all neatly in front of me. I often will just log into Mint, ensure that nothing looks terribly out of place, and will rest assured that I don’t have any fires to put out.

At the same time, Mint is also great at getting down to the nitty and gritty. Once every two weeks or so, I will go through all the transactions that I’ve made, again, just confirming that transactions went through okay, I wasn’t double charged for anything, and everything is labeled correctly. Every single transaction in or out is listen for me, chronologically, and I can quickly find a bill and sort the transactions by that type to ensure that my latest cable bill, for example, matches with what I have been getting charged in the past.

Best of all, Mint’s powerful budgeting and trends calculations get better with time. At first, I could only look back a month or two, but now that I have been using it for 8 months, I have almost a year’s worth of data to look back upon. I can see exactly how much I am spending on my car, for example, and if I spent more in the summer or in the winter. I can see in which months we spent a lot on groceries, and in which we were eating through our freezer. I can tell in which months we were tired and stressed the most, as those are the months we ate out the most. Seeing all of this incredibly personalized data about myself helps me learn about my own personal spending habits, and helps me address them for the future. Mint teaches me how I have been using my money, and by doing so, teaches me how to use my money better

Cons

Sadly, the cons that I listed on the first Mint review still stand. I still can’t add my Student Loans (seriously Mint?), Mint still mislabels transactions, and Mint still has me adding assets manually, so depreciating assets like vehicles are going to constantly mess up my financial totals that Mint provides to me. I would have to go in and manually change them as the valuation on my vehicle or home changes. I avoid that particular problem by just not adding any additional assets.

Even more sadly, a few more negatives have popped up in the last few months. The first, and foremost, was a weird issue with the system. To be honest, I don’t know exactly what happened, but somehow I started seeing duplicate transactions in my account. I thought, at first, that I had been charged twice at a particular restaurant, but when I noticed that I had multiple charges at a couple of locations I got suspicious. I checked with my credit card’s website, and that did not report the same double charges. Back on Mint, I finally figured out that my credit card had been added twice to my account. At first, I just went through and labelled the duplicates as duplicates, and Mint removed them. That, however, was time consuming. I then tried to figure out how to remove one of the credit cards from the site, but was unable to. When I contacted Mint’s support, I finally figured out that this was an issue that they are aware of, and the “fix” was to go into the settings on one of the credit cards and to mark it as “hidden”. It seems quite odd to me that there is no easier way of removing an account from my Mint’s portfolio, and to this day it is still sitting there, hidden away. Mint is still usable, but I do not know if a bunch of the data that I had marked as duplicate is now completely gone, as I do not know if the transactions that I marked were from the duplicate or the original.

The only other issue that I have is that Mint will randomly stop being able to pull the information from one of my accounts. Currently, my credit card account has not been updated on the site for about a week. Mint keeps asking me to confirm that my account still exists on the credit card’s site (it does), and to confirm my login information (it is correct), yet will constantly time out and be unable to pull the credit card’s data. It has done this before with my online account and my other bank account. Often this problem fixes itself within a few days, but is nonetheless annoying to deal with.

Conclusion

Overall, Mint is a fantastic resource and I highly recommend people check their site out. I, personally, have not had any type of privacy or security concerns, and the benefits that I get from having all my personal financial information in one location, stored historically, is far greater than any fear I have. If you were unimpressed with Mint’s tools, check them out again once they have a few more months of data, you may be surprised at what it can do.

Have you been using Mint? What do you think?

Mint Review, 8 Months Later originally appeared on Canadian Finance Blog on August 3, 2011.

Why I Don’t Have A Budget

Nelson Smith — Thu, 30 Jun 2011 09:00:51 +0000

Since I’m still pretty new here at CFB, I’ll forgive all you guys for not knowing a little secret about me. And since we’re all pals, I’ll tell you. Lean in real close now.

I’m lazy.

I’m not just a regular amount of lazy either. I’m so lazy I’ve been known to eat meals directly from the pot to avoid dishes later. I once didn’t cut my grass for an entire month, only giving in when a neighbour yelled at me over the fence. I’ve been known to not shave for weeks at a time. I really have no idea how I’m still gainfully employed. I’m clearly just eye candy for the ladies of the office.

My laziness almost knows no bounds. Like all of you though, I want to get ahead financially. What’s a lazy fella to do? Do I sacrifice one for the other? Do I have to make a budget and stick to it, like just about every financial guru tells us to? Hardly. In fact, I’m here to tell you that being lazy can actually be good for your financial picture.

Let’s talk specifically about budgets. Many of you probably have one, in some form or another, in varying degrees of detail. Some people use a cash system, allocating cash for each budget category. Others use spreadsheets or one of the many different finance pieces of software to track their spending. If you use any of those budgets and it’s working for you, then keep using it. Getting ahead financially is the important part, how we get there is but a minor part of the journey.

This is why I don’t have a budget. I’m too lazy to spend time figuring out how much money I want to spend on any of 25 categories. I’m too lazy to rob money from one category when I run short in another. Luckily for everyone, there’s a much easier way. It’s so easy I can explain it in just one sentence.

All you need to do is pay yourself first.

If you want to save 10% of your income, just set up an automatic withdrawal each time a paycheque enters your account. Any bank can set this up for you in a matter of minutes. The 10% magically disappears instantly, off to some other account that’s earmarked for investment. Then, feel free to spend the rest. I don’t care what you spend it on either. Have a fancy for Starbucks? Drink away. Just make sure you don’t touch those savings.

Once you set up the automatic transfer, all the work is done. Paying yourself first is the easiest way to get yourself to start saving money. The simplicity of paying yourself first is the real appeal to the plan. A lot of people start a budget, do great for a month or two, and then fall off the wagon. Either some unexpected expense comes and busts a budget category, or the person making the budget gets tired of the work. For whatever reason, the budget fails and the person making the budget is back into financial difficulty.

Unless you’re some sort of budgeting master, you have 10% worth of wiggle room in your budget. If someone has $500 to last them until next payday, people are generally pretty good at making it stretch the amount they need. When faced with scarcity, people find cutting out extras easy. So why not artificially create yourself some scarcity?

People are typically bad at determining the difference between wants and needs. I’ve seen budgets that have an allocation to things like manicures or golf. I understand we all have our vices, but these vices directly cut into savings. If you have to make the choice between golf and food, usually food wins out.

I spend zero time every month figuring out what I can spend on categories. I know approximately how much money I can spend every month, and then do it. In the meanwhile, my savings are slowly accumulating in a different account, ready to be put to work in whatever investment I decide. It leaves me all sorts of time to play video games, hang out with my friends, or to sit around and do nothing, an activity I’m particularly fond of. If you’re so detail oriented you feel the need to know where each dollar goes, then maybe budgeting is the ticket. If you’re like the rest of us, people who want to get ahead using a minimal effort, then I’d recommend paying yourself first.

Remember folks, simplicity is best.

Why I Don’t Have A Budget originally appeared on Canadian Finance Blog on June 30, 2011.