When saving money becomes expensive

When does saving money become expensive? When your DIY project goes horribly wrong.

The New York Times recently published Even to Save Cash, Don’t Try This Stuff at Home  to demonstrate how people intent on saving a few dollars inadvertently cut corners and end up spending more — in some cases, thousands more — to remedy the problem.

So, when considering doing things yourself to save money, think it through carefully. Would you have been spending the money because you were too lazy to do it yourself, or is it something that is totally unfamiliar to you? If it’s the latter, getting it done right by a professional the first time will be the best way to spend your money.

Financial education concept gaining momentum

The idea of educating people when it comes to money and personal finances is gaining ground. With 20% of debtors feeling like they are in over their heads, it’s no wonder people are asking themselves where they can go to learn more about managing their money. Read more about this in Corporate push to boost financial literacy for youth.

Kudos to non-profit Junior Achievement for reaching out to high school students with their program, Dollars and Sense. For some kids, this is the first and only exposure they get to financial education. However, it’s only a drop in the bucket compared to what we need. And today, adults need the education as much as kids… not only to learn proper money management skills, but to be able to teach them to their kids.

Want to know more about The Healthy Wallet’s personal financial management corporate training services? It is based on the Money Mastery program and its 10 proven principles to successful money management. The Money Mastery program is the only program that covers all four areas of financial management: controlling spending, eliminating debt, maximizing savings and reducing taxes legally. This is the only comprehensive program of its kind. All other financial management programs cover only part of the financial puzzle, leaving people without the full picture on how to properly manage their finances.

The Healthy Wallet is currently offering corporate training in the Toronto, Ontario (Canada) area. We will expand our offering to more geographic locations in the near future. Contact me, Marla Anne, for more information at ma[at]money-mastery-for-life.com for more information or to offer this peace of mind to your employees.

The financial gurus teach their kids about money, and so should you

Since many adults are still trying to make sense of the economic mayhem, it’s hard to imagine translating all of it in a way kids will understand. But those who know something about money – the business professors, the bankers, the financially literate – see this downturn as an opportunity to teach fundamental lessons about budgeting, savings, job security and even empathy to the next generation.

The Globe and Mail covers this topic in A teachable crisis.

Start a business with (almost) no money down

Inc. magazine is an excellent resource for anyone wanting to start a business or wishing to grow theirs.

With that advent of the internet, free web tools and the ability to outsource to anywhere, it’s not difficult to get many businesses off the ground with nothing more than a pocket change, sweat equity and some patience. So, if the idea of having little or no capital to invest in a business idea has been holding you back, perhaps you’ll find inspiration in this great Inc. article called How to Start a Business for (Almost) Nothing. The companies cited in this article have grown to generate significant revenues over time, yet their founders started with almost no money. The art of bootstrapping is alive and well.

If you have ever worked in a financially stable corporate environment (or at least one that has the appearance of being financially stable and flush with cash), your brain can get corrupted with the idea that it takes spending plenty of money to make money. While this may be the standard course for many large businesses, this is an antiquated idea for start-ups. Doing things as inexpensively as possible force you to be more creative, not just with your investment, but with the process and even the delivery of your product.

Personal finances top source of employee stress, directly impacts morale and productivity

A recent survey by pharmaceutical company sanofi-aventis, studying attitudes and preferences of Canadians as they relate to their employer-sponsored health benefit plan, discovered an interesting finding: personal financial concerns greatly impact employee stress levels.

The survey findings, released in May 2009, indicated that nearly one-third of those surveyed agreed that stress in their home or personal life made them physically ill in the past year. Personal finances or meeting personal financial responsibilities was a top source of stress for 31% of respondents, and was a particularly prevalent source of stress to residents of Alberta and Ontario. Nearly 30% of respondents said they did not get much work done when experiencing stress.

“Today’s economic climate is a great opportunity for employers to assist in mitigating stress among its employees. Given the impact of stress on productivity and health, employers need to specifically and comprehensively address this issue from all angles, including wellness programming, help with counselling, fair workloads, support and communication,” said Jacques L’Espérance, president of J. L’Espérance Actuariat Conseil Inc. and a member of the sanofi-aventis Healthcare Survey Advisory Board.

“People are at the heart of an organization’s success — a weak economy doesn’t change this,” according to Chris Bonnett, a member of the sanofi-aventis Healthcare Survey Advisory Board and president of Toronto-based healthcare consulting firm H3 Consulting.

The survey also found that companies which invest in providing health and wellness programs can generate tangible returns. Employees at companies offering such programs were more satisfied in their jobs, and were more likely to say they felt an obligation to help their employer control benefit costs.

Through corporate training, employers can directly impact the productivity and morale of their employees by helping them where they need it most: increasing their knowledge on how to manage their personal finances. The more control an employee has over their personal financial situation, the less stressed and more confident they are. This increases the employee’s productivity and benefits the company’s bottom line.

Want to know more about The Healthy Wallet’s personal financial management corporate training services? It is based on the Money Mastery program and its 10 proven principles to successful money management. The Money Mastery program is the only program that covers all four areas of financial management: controlling spending, eliminating debt, maximizing savings and reducing taxes legally. This is the only comprehensive program of its kind. All other financial management programs cover only part of the financial puzzle, leaving people without the full picture on how to properly manage their finances.

The Healthy Wallet is currently offering corporate training in the Toronto, Ontario (Canada) area. We will expand our offering to more geographic locations in the near future. Contact me, Marla Anne, for more information at ma[at]money-mastery-for-life.com for more information or to offer this peace of mind to your employees.

Tighty whities track recessions

What does underwear have to do with measuring the progress of the recession? Plenty, say economists. If you have put off buying replacement tighty whities, and your significant other hasn’t done it for you, then recession probably isn’t over yet.

Currently, men’s underwear sales suggest that the economy may have bottomed (pardon the pun) but has not yet started to recover.

Underwear sales a frivolous measure you say? Perhaps. But no less than former US Federal Reserve chief Alan Greenspan is a fan of men’s underwear sales as an important economic indicator. Who among us would have guessed Mr. Greenspan has an underwear fetish?

For more, go to How your undies track the recession.

CGA Canada recommends Canadians improve their financial literacy

The association of Certified General Accountants (CGA) of Canada recently released a report entitled Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy. Highlights of the report have been covered in previous posts here on The Healthy Wallet blog.

The majority of respondents (65%) felt that debt limits their ability to reach financial goals in at least one of the critical areas of retirement, education, leisure and travel, or financial security in unexpected circumstances. CGA Canada recommends a balanced approach to spending and saving, and that Canadians increase their financial knowledge.

Although the association recognizes the importance of consumer spending for business development and for economic growth, CGA Canada recommends a balanced approach to spending, saving and paying down debt over promoting consumer spending as a solution for the current economic downturn. Long-term financial goals should include accumulation of appreciable financial assets, and building a larger, more diversified financial cushion and retirement investment.

While debt is rightfully a personal decision, however, it is crucial that Canadians be aware of potential risks of increasing individual household debt. Just because your financial institution gives you credit doesn’t mean you should use it. After all, it’s not the bank that will be responsible for paying it back with interest. Use your judgment when taking on debt and be realistic about your ability to pay it back.

I am happy to see in the report that CGA Canada agrees (with me) there is a lack of financial literacy among Canadians. We frequently don’t understand the effect of carrying debt and the costs associated with servicing debt. Canadians’ knowledge and skill in understanding their own financial circumstances and the motivation to borrow, spend and save become crucial to their financial security and well-being. Canadians need to take very seriously the issue of developing their financial knowledge, skills and discipline when making financial decisions.

Want to improve your financial knowledge so you can make better spending decisions? Go to the Money Mastery For Life website and sign up for the no-obligation free 21-day trial to learn more.

Canadian families and British Columbians hardest hit with increasing debt

I recently wrote about the association of Certified General Accountants (CGA) of Canada report entitled Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy.

The report points out Canadian families in particular are struggling with increasing debt. Households with one or more children under the age of 18 reported debt as rising more often than those with no children, with 49% reporting their debt had substantially increased. Respondents with lower income were much more likely to report increasing debt compared to the respondents in other income groups. And, those with low wealth continue to sink into debt and experience further deteriorating net worth. So, the poor are getting poorer.

By contrast, the debt-free respondents lived in one or two-person households and were significantly less likely to have children under the age of 18. This is an interesting measure as it indicates the high cost of raising a family in Canada is putting a financial strain on parents.

Regionally, as many as 56% of British Columbians indicated their debt increased compared to the Canadian average of 42%. About 30% of residents in the Atlantic Provinces maintained an unchanged debt level compared to 23% of the total respondents who said their debt remained the same. Debt-free respondents were more likely to be living in the province of Ontario.

To read the full CGA Canada report in PDF, click on this link: Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy

To read the highlights of the CGA Canada report, click on this link: (Highlights) Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy

Where has the money gone? Canadian household debt highest ever at $1.3 trillion

On May 26, 2009, the association of Certified General Accountants (CGA) of Canada released a report entitled Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy and the Canadian media covered different angles of this report in the following days. Even so, I wanted to take the weekend to digest the information before blogging about it because some of the key findings are quite profound. Anyone thinking Canadian individuals overall are in a sound state financially are in for a surprise.

In Canada, household debt is at an all-time high, reaching $1.3 trillion ($1,300,000,000,000) in 2008. With an estimated population in Canada of 33,212,696 (July 2008), this means each man, woman and child in Canada is carrying the equivalent of $39,141.66 in household debt. Household debt is used to fund consumption rather than investment and encompasses credit card debt, car loans, personal loans and home mortgages. This raises concerns as Canadians are financing their consumption with unearned money. Families are increasingly reaching for credit to finance day-to-day living expenses.

Also alarming in this report is that 85% of Canadians in debt reported they have outstanding debt on a credit card. Given the high rate of interest on most credit cards, Canadians are giving their money away in interest instead of paying down their debt or using that money for savings. A large proportion of Canadians acknowledged their debt level is increasing. 21% of Canadians who are in debt say they are in over their heads and can no longer manage their debt load.

Even with the temporary relief of a credit card or line of credit, 25% of Canadians would not be able to handle an unforeseen expenditure of $5,000 and 10% would face difficulty in dealing with an unforeseen expense of $500.

Over 30% of Canadians do not commit any resources to savings. Astoundingly, the majority (78%) of those surveyed said they would not change their saving patterns in order to build or rebuild the financial cushion lost from recent economic events and the stock market drop. Is anyone else surprised by this news?

They are probably not changing their habits because the Canadian economy has been recession-free for 17 years before the events of 2008. The most recent recession took place over a 12-month period between April 1990 and March 1991. Therefore, many Gen X and all Gen Y adults today don’t remember the last recession, so they do not understand the impact on their personal wealth, nor the consequences of continuing with the same overspending patterns they are currently accustomed to.

To read the full CGA Canada report in PDF, click on this link: Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy

To read the highlights of the CGA Canada report, click on this link: (Highlights) Where Has the Money Gone: The State of Canadian Household Debt in a Stumbling Economy