Monday, 19 June 2017

Weekly Column: Nurturing Competent Adults

Nurturing competent young adults

It must be difficult to be a young adult these days. Those of us that didn’t grow up with the Internet and social media remember a time where our parents didn’t always know where we were and couldn’t fix everything for us with a simple phone call.  

Are young people still learning to solve problems on their own, given their access to google to think for them and the bank of mom and dad to make their worries go away? You have to wonder, especially knowing that there are now courses in “adulting,” where young people can study online to learn grown up skills. The fact that a generation of people may not know how to follow a recipe, change a tire or write out a cheque is baffling if not scary.

Of course, these are sweeping generalizations. Look hard enough and you will find many young people with great problem solving skills and an independent outlook. But one has to wonder if the general population of millennials—children born between 1980 and 2000—is truly prepared to step into adulthood.

The season of recognition

The next batch of high school graduates is about to complete one phase of their lives, the time where they lived at home and had the daily guidance of parents and teachers to steer them. Looking back, one might ask whether any of us was really prepared for the real world at that age. But it’s also hard to resist comparing kids that have never done their own laundry with the great generation that marched off to war at the same age.

With these two extreme examples comes a spectrum of opinions on what childhood, adolescence and adulthood should be like. Many would argue that kids should be kids and not have to face worries about money, survival or adversity. Many others would argue that shielding youth from these challenges not only leaves them ill-prepared for real life, but also gives them an unrealistic expectation of what their future will hold.

If mom and dad have paid the cell phone bill and bought the brand-name clothes and taught you that you deserve the best that life has to offer, how will you transition to a minimum wage job, and rent, and a boss that might not recognize the special wonderfulness you have always been told you possess?

Cramming for life’s tests

If you are a parent, you might ask yourself how your kids are usually allowed to deal with a problem. Depending on their ages, there is usually a way that you can allow them to safely figure out what to do on their own. 

Whether it’s allowing them to spend their allowance frivolously and then having them sit out the next shopping trip, or transitioning a few bills into their names while they still live at home, and ensuring that those bills are paid on time, there are many ways to ease kids into a more independent role while still being available to advise them.

If your child is now finishing up high school and will be leaving home in the next few months, whether entering the work force or off to post-secondary in the fall, it might not hurt to evaluate some of their skills while they are still home under your care. Take an hour and change a tire together. Check the oil in their vehicle and make sure they can top up the fluids on their own, put air in the tires and boost a dead battery. 

Give him or her an evening a week where they cook for the family. Send them for the groceries with a set amount of money and a list. Stop doing their laundry and making their lunches, if you haven’t already. Show your affection in praising how they are handling these new responsibilities, rather than by doing it all for them.

Children learn responsibility by having rules and expectations. As parents, you have tried to nurture their self-esteem and confidence, but have you given them opportunities to grow capable and self-sufficient? Can they handle everyday problems and challenges, or should you spend this summer preparing them for adulthood?

A new world of independence is opening up to this season’s graduates. They’ve anticipated this moment for years, as have their parents. With the great adventures and new beginnings come new responsibilities. Websites like moneymentors.ca and practicalmoneyskills.ca are a helpful jumping off point if you’d like to make sure your kids are ready to handle their own money.

Creating competent young people is a combination of nurturing their emotional growth as well as their practical knowledge. Kids today have technology to help them, but are at risk of having it stunt their common sense. Giving them more responsibilities will help grow their independence.


Wednesday, 14 June 2017

Weekly Column: Are Bank Fees Bleeding You Dry?

Fees and service charges: is your bank bleeding you dry?

Not everyone that reads this is going to bother to find a bank statement or log in to their account to double check what they are paying in bank fees. Unfortunately, many people look at service charges and fees as a fact of life, an annoyance, and refuse to make an effort to eliminate these phantom expenses that slowly drain away your accounts.

The fact is, you should be able to bank for free. In many cases, minor effort on your part would ensure that you could. And even if you can’t bank for free, perhaps you can find ways to save on banking that will boost your bottom line and make a difference over time.

Examine different plans and options

What fees does your bank charge you? Has your life changed significantly since you selected the plan that you use? For instance, if you pay a high monthly fee so that you can use any bank’s ATM, are you actually using different ATMs often enough to make that a cost-effective option? Or could you reduce that plan and only use your own bank’s ATM for free? If this strategy could take you from $20/month down to $4/month, that is a savings of $192/year.

Likewise, if you are regularly into your overdraft, accept the fact and find an option that costs less. Some accounts charge a monthly fee for overdraft protection whether you use it or not. Others charge you on a per use basis, while still others do not charge extra if your account rises above zero at least once every month. If you find yourself needing an overdraft, finding a sensible option might save you enough money over time that you no longer find yourself “in the red” every month.

Minimum balance, minimum fees

Are you aware that keeping a minimum balance in your account often eliminates the fees that your bank charges? Do you know what that magical number is? If you find it hard to maintain a minimum balance and notice that you are often being charged the fees, find an account with a lower minimum balance. Or if you like the prospect of never being charged a fee, maybe an online bank is right for you.

Although many of us like the thought of having a bricks and mortar bank to visit and a real teller to serve our needs, online banks are gaining popularity with lower fees and more flexible options.

Online banks: the way of the future?

It’s comforting to know where your money is. But even if you deal with one of the major banks or a huge credit union, you are still only a number to them. The difference between an online bank and a traditional one is, increasingly, the fees that you are charged and the manner in which customer service is provided. Have you tried to phone a major bank lately? It’s not unlikely that, for people that do email, it’s actually easier and faster to reach someone via online chat or email message than waiting in queue on the phone or never being called back by the associate you’ve been trying to reach.

In every Internet search conducted for the writing of this column, two online banking options jumped to the fore. I’m not associated with either, and people should take the time to do their own research and determine what’s right for them. But both President’s Choice Financial and Tangerine have interesting options available for those willing to try a new approach to banking.

These online banks offer accounts that charge zero fees, with no minimum balance required, and are associated with established big banks so that you can access ATMs in your community.

With the President’s Choice option, you also receive PC points when you use your account. These points can then be used to buy groceries. When you consider that your regular bank does the opposite—charging you a monthly fee and possibly extra for each transaction—this should make discerning savers take notice. You can also use PC or CIBC ATMs without charge to access your money.

Similarly, the online bank Tangerine is owned by Scotiabank and used to be known as ING Direct Canada. It offers no fee chequing and savings accounts as well as a number of other options.
The point is not to sell you on a particular type of bank account, but rather to encourage you to look at your statements and see what you are being charged by banks that do little to accommodate your situation. There are other plans and options out there. Prioritize saving on fees and keeping that cash in your own account, rather than the bank’s, no matter where you choose to keep your money.



Thursday, 1 June 2017

Weekly Column: Penny wise, pound foolish

Penny wise, pound foolish

Many of us feel that we’ve tightened our belts in recent years. We’re spending less than ever and, now that some jobs are returning, a sense of normalcy is back, too. So, with the return of an income and the reduction of spending, why is it so hard to make ends meet, much less get ahead?

You watch the grocery flyers and plan your weekly meals around the meat and produce that’s on special, right? You eat your leftovers and use a rewards card that accumulates points or cash back. 

You’ve stopped eating at the drive-thru and haven’t bought yourself anything in ages. You’ve even gotten ambitious and examined your bills and plans to reduce fees and extra charges. You’ve gone paperless to avoid paying for the paper bill that comes in the mail, while also bundling or downsizing services.

You’re doing all the smart, budget-savvy things, so why don’t you have more money to show for it? Why are you still spending ALL THE MONEY every month, when you feel like you’re working hard to save?

There’s a sad reality many budget-conscious folks are waking up to—saving those pennies, nickels and dimes gets you no further ahead if you don’t do something with the dollars you’ve saved.

In other words, if you don’t move those savings out of your general account, you will spend them on something else. And when people feel like they’re scrimping and saving with nothing to show for it, many will eventually stop trying.

Luckily, a few simple steps will help you turn things around and hopefully give you results in no time.

The first thing you must do is take the time to look at your bank and credit card statements. Are there places you could continue to trim your spending? How much are you saving with the reductions you’ve already made? Come up with a realistic figure that represents this unspent money.

Let’s say, for example, that you cut your $100/month satellite package down to $80. You are saving $20/month. If you’ve eliminated your landline for a savings of $60/month, you now have $80 to do something with, right?

Make it automatic

This advice is not new. David Bach wrote about this years ago in his book “The Automatic Millionaire”. But the strategy still applies: take the $80 you’re saving and have it automatically transferred out of your main bank account before you have the chance to spend it. Make sure that you have a low or zero fee option for automatically transferring money between accounts.  Keep an eye on your bank balances and make sure you aren’t running yourself into the overdraft by doing this—you mustn’t begin spending more loosely because you know there is extra money. The point is to put that $80/month to work.

You may think that socking away $80/month won’t have a huge impact on your financial situation but, the point is, it’s still $960 a year that might otherwise have trickled through your fingers.

What to do with it?

Sticking with our example, you are now consistently saving $80/month. What is your most pressing financial goal? Have you got credit cards that need paying off? Any loans? What is your highest interest rate? 

If you drive an older vehicle, perhaps you should start saving for a newer one, or for the inevitable maintenance and repairs on the one you have. If you haven’t started saving for retirement or your children’s education, you may want to begin now. Likewise, if you don’t have money set aside for emergencies—whether it’s a dishwasher that springs a leak or an unforeseen layoff—your $80/month is at least a start.

Start small, dream big

Stashing away $80/month might seem, to some, an ineffective amount of money. To others, it might seem a lofty, far off goal. No matter your situation, don’t be discouraged by how small you have to start out. Watching a bit of money grow is sure to inspire and motivate you to further curtail your spending and find other ways to save. And when you do, be sure to automatically transfer that money and put it to work for you.

If you were offered an extra hour of work, would you do it for the money? Why not get up an hour early one day and examine your statements and accounts to find out where you are leaking money? 

For most of us, it is simple things like snacks and meals for the kids and impulsive purchases when you aren’t thinking of your goals. Cut these entirely from your budget and transfer that money to another account where it is either invested, saved, or put against debt.


Accumulating month after month, these automatic transfers are your ticket to a better financial situation.