Canadian Personal Finance Blog

Consumers rarely do anything unless they feel they get something out of it. I keep wondering what savings motivating system banks could put in place?

Canadians are notorious for loving rewards systems, where they can accumulate points for later purchases, maybe something like that? A points system that would pay more monthly, the more money you had in your savings account?

I think I am on to something here, if banks paid people these points that they could use to purchase things, that might motivate people to save more money.

A Savings Motivating Refinement

What if this point system allowed you to swap points for money? Better still what if you didn’t accumulate points for having more savings, you accumulated money? Money that would be added to your account balance, and then the next month you might accumulate more money because of this added money?

This is possibly the greatest idea ever to motivate consumers to save money, isn’t it?

Click here to find out more about this Interesting Idea

So you’d like to get a pay raise, but you are afraid to go ask your boss for a raise? How could reducing debt help that? This is a cornerstone of Financial Literacy.

Here is a novel way to get more Net income, pay down debt! By reducing debt you have more disposable income. The arithmetic is simple, less debt payments (after you have paid down debt) means more money for you.

This is the simplest of arithmetic problems, yet it seems to be missed by so many people that I feel it is important to enumerate it for you.

Net Income = Income (I) – Expenditure (X)

X = ∑ all money spent (S)

I = ∑ all money earned (E)

Where ∑ simply means the sum of the variables in this case things like bills, pay cheques etc.,

Straight forward? So to increase your Net Income you can either increase your Income (I) or decrease X (your expenses), haven’t lost anyone have I?

So if we look closer and see that:

X = sum ( Mortgage Payment,Car Payment,Hydro,Natural Gas,Credit Cards,Interest on Credit Cards,Eating Out, …)

The whole idea is to minimize X (expenditures) and thus your Net Income or Savings increases.

This means the less you spend, overall, the more you have left over. It is much easier to lower your spending, than it is to increase your income (these days). You don’t have to ask your boss for a raise, or work overtime, you simply, spend less.

BCM Simple Rule of Money #1

If you want to make more money, you either increase your income, or you lower your expenses.

The rule seems quite simple, but is it?

“Never was so much owed by so many to so few“, –Winston Churchill

True Heroes

I paraphrase Churchill as a precursor to the latest data from Stats Canada about the National Balance Sheet. Remembrance Day is not far off, but allow me to borrow from Mr. Churchill a bit more.

Unfortunately, the phrase is very much in context. The so few, is the banks, unfortunately.

Stats Canada published their latest update of the National balance sheet and financial flow accounts, second quarter 2018, and as usual there are some very interesting numbers in this report.

It starts off saying that we are wealthier (but you need to read carefully what that means), but then we find out about our debt loads.

So Much Owed?

The report states:

Credit market debt as a proportion of household disposable income (adjusted to exclude pension entitlements) increased to 169.1%, as credit market debt outpaced income. In other words, there was $1.69 in credit market debt for every dollar of household disposable income.

Let us not frolic with glee, while the increase is slowing, it is still increasing (i.e. we are borrowing more compared to our disposable income).

For every $1 of disposable income you owed $1.69 ? That seems quite worrisome, because eventually, someone will ask for their money. Loans are callable, especially HELOC’s, Credit Card Debt and Loans.

We are worth more, but so much of that net worth is tied up in Real Estate. If the housing market goes bust, this could lead to disastrous consequences. So much more will be owed by all of us then.

It is RDSP awareness month in October (according to Plan Institute). As most of you know the RDSP is a topic near and dear to my heart. Watch all my social media streams ( Twitter and Facebook) for many great archive stories I have on the topic of RDSP Awareness Month. I will also include a bunch of other information about the DTC (Disability Tax Credit) and a great article about Henson trusts too.

Given the latest Market Volatility and drop in value, is now the time to crack open our skulls and eat the soft gooey stuff inside? No! Remember if you are an Index Investor, now is not the time to panic. Have the picadores finally slowed down the Mad Bull Market of 2009? I have no idea, but it is fun to create click bait for folks based on that.

This coming week it will be Happy Cannabis day (on October 17th). What exciting things will happen that day? I am not sure, but I think I may stay off the roads for a few days. Some employers are being quite strict with their rules (RCMP says you can smoke up to 30 days before your next shift, and DND’s regulations seem quite voluminous). Will folks show up to work stoned? It all remains to be seen, but remember, ” … Dave’s not here man!”.

Seems we will be saying good-bye to Google+? Must admit it never drove much traffic and ever seemed to have anyone on it, so this is no great loss. Will Google create another better Social Media site?

Deep Money Thought

“Believe me it is better to understand the balance-sheet of one’s own life than of the corn trade” –Seneca

You need to understand yourself before you attempt to understand your finances,
might be a conjecture from this thought.