Greetings from Wiesbaden, Germany! I've been here for the past week and a half for my Oma's 80th birthday. This is me stuffing my face with the Thanksgiving dinner that we prepared for our German family. Do you know how hard it is to find a Turkey in this country? It's not easy - let me tell you!

Travelling is an important part of my life, and it’s something that I try to do at least once a year. However, it can get expensive, and it’s something that definitely needs to be budgeted for. I’ve met lots of travellers who end up stressing during or after a trip because they’ve dug themselves so deep into debt.One of my personal goals is to help others create and manage their personal finances and budget for short or long-term goals. So, this post is a list of some handy tips to ensure that you have financially stress free travels.

1. Plan and research: 
It’s always smart to have some kind of idea as to where you want to travel to so you can start looking into flights and accommodation. This will be the most expensive part of your travels. Sites like Google Flights, Kayak, Momondo, and Cheapoair will scrounge the Internet for the cheapest flights possible. And with so many great accommodation websites like Airbnb, Couchsurfing, Booking.com, Agoda, Priceline, and Hostelworld, it’s always great to give yourself enough time to find the cheapest nights available in parts of the city you want to explore. It’ll also be helpful to read some travel bloggers who have recently travelled to your destination as they often discuss how much money they spent. On top of your flight and accommodation, you’ll also want to budget enough money for your food and drink, daily excursions, transportation, and a small emergency fund in case anything goes wrong.

2. Budget:  Just like your food, clothes, rent/mortgage, car etc., travel should be a line item in your budget. If it’s something that you foresee doing in the near future, add it into your yearly budget and account for it from the get-go. That way you won’t be scrambling a few weeks/months before you leave, and you’ll have already had some money set aside.

3. Save, Save, Save: When I saved $20,000 for my trip to South America and Southeast Asia in 2015, I took 15% of my paycheques and put it into a high-interest savings account that I didn’t touch. If I had any money left over after all of my bills were paid and my fun was had, it went into a TFSA where I invested in Index Funds. These funds paid out a dividend and gave me between a 5-10% return for that particular year. It’s one thing to save, but investing your savings will help you make money even faster, getting you one step closer to take off.

4. Open a Separate Account: Once you have a rough idea as to how much money you’ll need, open up a separate bank account that’s out of sight, out of mind. A TFSA and/or high-interest savings account is great because it will accumulate interest faster than an everyday savings account. For those who don’t know the first thing about investing, Wealthsimple is a really great platform that makes saving and investing easy and effortless.

5. Be Flexible and Open: When I was in Brazil, I was complaining to this Irish girl that the flight from Chile to Thailand was $2300. She suggested that I try to be a little more flexible with my timing and not look for a direct flight, but rather create my own trip around the world and book different lags of the flight myself. At first, I was a little skeptical but she helped me research some different itineraries and I booked 3 separate flights. Although it took me 48 hours to reach my final destination, I ended up saving over $900. It’s definitely worth being flexible and having an open mind because you can find some really great deals if you just think outside of the box.

  Conclusion? be smart with your money
For those of you who are as gung-ho about seeing the world as I am, be sure to work hard so you can play hard when on the road. The worst thing that could happen is that you start to travel and realize that you don’t have enough money to do the things that you want to do. This is a once in a lifetime opportunity for most. Make sure you’re smart with your money before you takeoff so you can leave your financial stresses on the runway. And as always, if you're planning a trip and need some personal finance guidance, please contact me!

People. Let me bring you up to speed here. Are you still paying the big banks to take out your hard-earned money? How often do you really use a bank teller anymore? You're probably using the ATM and doing most of your banking online, right? And you're still paying monthly bank fees for a Chequing account?

The thought of all of this craziness makes me feel like this...YOU'RE NOT ALONESince launching The Budget Babes back in January; I've had just over 45 consultations and see the same pattern over and over again. People are spending a lot of money on their daily banking fees! Almost 95% of my clients have some kind of monthly fee that they pay without thinking twice about it. And if you do the math, you'll find that you're spending a lot every year. Are your bank fees worth it? If they are, then keep on banking. But if you find that your bank isn't doing that much for you, maybe it's worth making the switch to a no-fee bank account like PC Financial, Tangerine, EQ Bank, or a Credit Union of your choice.

2017 COMPARISON OF BANK FEES
TD CANADA TRUST : 
The TD Minimum Chequing account will cost $3.95/month but can be waived if you keep $2000 or more in your account at the end of each day in the month. You'll get 12 transactions per month ($1.25/each for additional transactions), and access to their online/telephone banking. TD also offers an Every Day Chequing account for $10.95/month. This gives you 25 transactions (anything over $1.25/transaction), free Interac e-transfers and access to their online/telephone banking. TD will waive this $10.95 fee if you keep $3000 or more in your account at the end of each day of the month.  CIBC: Their Everyday Chequing account is $3.90/month. This gives you 12 free transactions (anything over that limit is $1.25/transaction), access to their online/telephone banking, and, well.... that's pretty much it. They also have a Smart Account that is more flexible and charges you based on the number of transactions you make. You could pay as low as $4.95/month up to $14.95/month. This account gives you unlimited transactions, unlimited Interac e-transfers and access to their online service. CIBC will waive this fee if you keep $3000 or more in your account, and you make a recurring transaction or 2 pre-authorized payments each month.

 RBC:
Charges for RBC's day-to-day bank account are $4.00/month. This gives you 12 free transactions (anything over $1.00/transaction), access to their online/telephone banking, and unlimited Interac e-transfers. They also have a No Limit Banking account for $10.95/month which gives you unlimited transactions, unlimited Interac e-transfers, and access to their online/mobile service.  SCOTIABANK: With fees starting at $3.95/month, Scotiabank's Basic Bank account gives you 12 free transactions (anything over $1.25/transaction), 2 free Interac e-transfers, access to their online/telephone banking, and you'll earn SCENE rewards. Their Basic Plan is $10.95/month which includes 25 transactions ($1.25/transaction after you've used the 25), 2 free Interac e-transfers, you'll earn SCENE rewards, and they waive the $10.95 fee if you keep a $3000 minimum as a closing balance after each day. And of course, you receive access to their mobile and online banking.

BMO: 
BMO's Practical Plan will give you 12 free transactions (anything over $1.25/transaction) at a cost of $4.00/month which they waive if you keep a minimum of $2000 in your account at the end of each day. You'll receive unlimited Interac e-transfers, and of course, access to their telephone/online banking. Their Plus Plan will run you $10.95/month which will be waived with a minimum balance of $3000 in your account. This plan allows you 30 transactions, unlimited Interac e-transfers, and telephone/online banking.

Conclusion:
 Do the math! How much are you spending on bank fees? $50/year? $180/year? It really adds up quick and this is for most basic banking plans! There are still premium/small business plans that are offered. Keep in mind that the above information doesn't even include overdraft protection, the cost of paper statements, cheques, and the charges that apply when using a different branded bank machine. The big banks are making billions of dollars every year. Although it's not all from bank fees, it's definitely helping with some profits. Do you need some help getting your personal finances under control? Contact me for a budgeting consultation! Bank fees are one of many tips that I often give to my clients to save money over the long term, but there are so many more tips that I'd love to share with you.

Happy New Year to you. And you. And you and you and you. 

I don't know about you, but I LOVE January 1. 

Why do you ask?

It's the first day of the year when there is not much else to do except set myself up for financial success for the year ahead. 

Our finances are always changing. Every. Single. Day. And it's important to evolve and change along with our finances and ensure that we're adapting as our circumstances change. 

Here are the top 3 things that I accomplished on January 1.

1. I updated my Net Worth Tracker. I love a good Net Worth tracker. It allows me to analyze and understand where all of my finances are, and how they've improved over the last year. 

2. I filled out the Financial Freedom calculator. Every year, I fill out a calculator that determines how much I need to save for the year ahead in order to reach financial freedom. I also use the CRA retirement calculator, which helps me determine what kind of CPP and OAS I'll be receiving when I hit a certain age. You can find that calculator here. https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html. Once I've figured out my CPP and OAS income, then I can go back and fill in the rest. Easy peasy lemon squeezy. Once I have my Financial Freedom number, it's time for me to set up my financial plan. 

3. Go through my budget and understand my cash flow for the year ahead. We all have financial goals. We also all have expenses. It doesn't matter if we work or not, at the end of the day, it costs money to live, and it's important that we understand our expenses on a monthly basis. Personally, this is a big year for me. I just bought a car, I'm going on a trip to Belize in March, and I'm getting married in August. There are a lot of expenses coming up, but I'm not worried. I have a solid understanding of my expenses for the year ahead, and I will have to change my lifestyle for a few months so I can accommodate all of those upcoming expenses. I track every single dollar that I have coming in, and every dollar coming out. I know that most people brush this idea of a budget aside, but what better way to manage your finances than to track it? 

So before you spend another day heading into work, I suggest sitting down and doing some of the above. It will not only help relieve some of the financial stress that you may be facing, but it will help put your finances into perspective and will allow you to focus on what's a priority. 

A what?

A Tax-Free Savings Account (TFSA) is a Registered Investment Account that has a whack-load of financial benefits. Want to know why I bolded and underlined the word investment? Because this account will benefit you the most when you hold investments in it, and not use it as a day-to-day savings account. 

Here are some of the main benefits of the TFSA and why you should open one (and use it) right now.  

The Benefits of the TFSA:

• Any income that you make from investments within this account is tax-free (hence the name). This means that you don't have to claim any income you've made from your investments on your tax return at the end of the year. I'm talking about free investment income here people.

  • Let's take an example - shall we?: Mary Lou Cannary contributed $10,000 into her TFSA on January 1, 2019, and invested it into the S&P500 ETF (VFV). In all of 2019, VFV made a whopping 25.13% return. WEO. What does this mean for Mary Lou Cannary at the end of the year? Well, her investment of $10,000 now has a current market value of $12,513 as of December 31, 2019. Now, because she invested this money within her TFSA, she could withdraw her investment income of $2,513 without paying a gosh-darn penny of income tax. Pretty neat huh? 

• You can contribute to your TFSA from the age of 18 and do not need a job to open one (unlike the RRSP). The contribution limits change every year, based on inflation (mostly). As of January 1, 2020, you can contribute up to $69,500. If you're unsure of what your contribution room is, you can sign onto your CRA My Account for Individuals and find out. 

  • If you don't have a CRA My Account for Individuals, you should get one. Sign up here. 

• The money that you contribute to your TFSA is used with after-tax dollars so there are no taxes to be paid when you withdraw the funds, making the TFSA a relatively liquid investment account (depending on the investment holdings within the account itself). This is a great account to use if you need money on a short or long-term basis; travelling, getting married, downpayment on a house, sending the little ones off to school, beefing up retirement income, etc.

What the TFSA is not:

• It is NOT a type of investment (contrary to some peoples' belief). You cannot purchase a TFSA. It is an account that is registered with the CRA which has tax benefits to it. Don't just put money into your account and have it sitting there. The whole point is to have your money working for you by investing it in stocks, bonds, mutual funds, ETFs, Reits, etc. 

• It should not be used as an everyday bank account. Although you can deposit and withdraw into your account when you want, there are some rules surrounding this so make sure you understand them. The CRA really breaks that down here.

  • When I first started investing in my TFSA, I made the mistake of not understanding the rules (because I was an 18-year-old and nobody was there to teach me). Unfortunately, I was taxed by the CRA and had to pay a big chunk of money ($300 buckaroos!). I don't want this happening to you so make sure you know your limits, and play within it. (See what I did there?)

Where Can My TFSA Be Held?

• At a financial institution of your choice. Your financial advisor will be able to open up a TFSA for you where they actively manage it (just be aware of the fees that you may be incurring as these can sometimes be hidden). 

• With a Robo-Advisor. This is a great option for those who are trying to get away from the bigger financial institutions, want lower fees, and are big believers in ETFs. 

• You can Self-Direct it. I do this. And I love it. Low fees, freedom to choose the investments I want, and the money that I make within my TFSA are completely made due to my efforts.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're doing good things (so long as your investments are making money). If you have a TFSA, have money sitting in one of those "high-interest savings accounts",  and you do not need that money any time soon, you may want to rethink your strategy.  

If you haven't opened one yet, get out there and open one up today. You'll be happy you did. If you're still somewhat confused, scared, excited, nervous, and potentially need some one-on-one coaching, contact us for information on our coaching program. 

Unless you've been living under a rock within the last week, or have completely shut yourself out from the outside world, you've probably heard that a majority of the services, restaurants, schools, and a majority of Canada, has seen a drastic shift due to COVID19. 

So - what does this mean for your finances? A lot. No need to panic, but it's very important that you grab this bull by the horns and understand how this shut-down will affect the economy.

I'm hoping though, with a little bit more information and education through this blog post, that I'll be able to give you a few tips and exercises that I urge you to do NOW to ensure you can stretch your dollars as far as possible. 

1. Figure out your Net Worth: the best thing to do right now is to sit down and organize all of your finances. What are the values of the assets that you have? Where are they? How easy are they to liquidate? Now, take a look at your liabilities. What do you owe? What are the interest rates?

2. Once you've gotten pretty organized with what you own (assets), and what you owe (liabilities), it's time to look at your cash flow. I suggest (now that we all have some extra time at home), that you print out the last 3-6 months of your credit card and debit transactions, and get real with your spending in as much detail as possible. I want you to figure out what you spend on housing, services, interest rates on outstanding debts, transportation, etc. When you add it all up, what do you spend on a monthly basis? 

3. Time to cut back. There are always ways to cut back in your spending, and there's no better time to do it than now. Restaurants are closed, your favourite coffee shop is cutting back on tables and chairs to socialize at, and we're being told to stay at home. Listen to this advice. It will not only keep you healthy, but it will keep your wallet healthy as well. Take this opportunity to only spend money on the absolute essentials; your mortgage/rent, groceries, monthly services such as internet and cell phone, insurance premiums etc. Nobody knows what the future holds, but it's important that we understand our cash flow as best as we can now so that we can understand how long our savings and assets can sustain us. 

I really wish I had a crystal ball and could tell you when this will all be over. Unfortunately, I can't. But what I can do is urge you to take action with your finances now. Nobody knows what will happen next week, next month, or next year, but let this be a wake-up call for all of us. Make sure that you're always saving for a rainy day, putting money into your emergency fund, and spending less than what you make. Your finances are always evolving and will continue to do so throughout your lifetime. What you do with those finances, at the end of the day, is really what matters. 

Be smart. And stay healthy. 

In light of everything that’s going on in the world right now, I thought there was no better time to write about managing your cash flow. Hundreds of thousands of Canadians have lost their jobs and income over the last few weeks, and they’re scrambling. This is not good. And from what I’m seeing, I think this is going to be a wakeup call for a lot of people. I wish things didn’t have to be this way, but this should be a learning lesson that money is not infinite. It comes and goes. But when it comes, it’s important to manage the crap out of it, and set yourself up for anything that may come.

I find it fascinating (and also scary) that a number of Canadians couldn’t financially support themselves until the end of the month. The amount of calls that the big five banks have received in regard to mortgage deferrals is incredible. Almost 300,000 as of today (April 4, 2020). And the number of people who couldn’t pay their rent on April 1 was through the roof (I’m sure).

However, regardless of where everyone is right now in their financial situation, it’s important to take a step back, look at what you do have, and stretch your dollars as far as you possibly can. Here’s a step by step breakdown on how to approach the next few months. More on managing cash flow in weeks to come, but here’s where to start.  

1. Sit down and organize your finances. Take a look at your deposit and investment accounts (or look at your Net Worth Tracker if you have one), and understand which accounts are easy to take money from, and which ones aren’t worth touching right now. Write down the total amount of money that you have in all of these accounts.

2. Figure out how much income you have coming in every month. If you had to apply for EI, or will be applying to any government assistance programs, write down these amounts. If you have other income from other sources, include those as well. I don’t care if it’s a few dollars here and there – every dollar counts.

3. Print out the last 3-6 months of your credit and debit statements and add up the averages in each category that applies to your spending. Figure out what you spend on a monthly basis. Write it down somewhere.
   1. Fixed Expenses don’t change on a monthly basis (rent/mortgage, insurance premiums, bank fees, etc).
   2. Variable Expenses change every month (grocery bills, dining out, utility bills, etc).
   3. Irregular Expenses are those expenses that happen infrequently (holidays, vacations, car maintenance, annual membership fees, etc).

4. Analyze. On a monthly average, are you spending more than you currently make? If you are, it means that you have some serious cutting back to do. You have to rework your numbers and completely change your lifestyle around for the time being (and maybe for a little while after that if you didn’t have an emergency account). On top of that, once you have your monthly expenses figured out, does the money in your accounts from Step 1 cover those expenses for the next 3-6 months? Example: if you spend $3000/month on average on everything, do you have $9000-$18,000 sitting somewhere that you can live off of?

Just remember that what we are going through is not permanent. There are going to be sunnier days, and hopefully, we’ve all taken something away from this. There are lessons to be learned, and mindsets to shift. There is no better time than now to actively start learning about personal finance because of how important of a role that it plays in our society.

If you're interested in learning more, please take a look at our website and find some upcoming webinars. www.enrichedacademy.com

Looking for a few extra ways to cut back during COVID19? We’ve compiled our top 5 list of proven ways that you can cut back on your spending to allocate your finances to what’s most important to you during these tough times.

1. Call current utility providers and ask for a better deal. I recently called my car insurance provider and cut back on my annual premiums by $150. It took me 5 minutes on the phone, and I was able to cut back on my car insurance since I’m no longer driving anywhere. You can do the same with all of your recurring bills. You just have to make time to call. And most of us now have the time! This is always something that you should always do on a yearly basis. Negotiate, negotiate, negotiate. 
2. A lot of the restaurants are no longer open, so your dining out and coffee bills are probably minimal. This is a good thing. Take this as an opportunity to get ahead of your spending and cut back in dining out as much as possible. This should also be a good opportunity to learn about your habits and how much you spend on a monthly basis on areas that may leave your wallet empty.
3. Sell unwanted stuff on Craigslist, Kijiji, Facebook Marketplace, or other apps like LetGo and Bunz. This is the PERFECT time to organize your house and go through your stuff to figure out what you need, and what you could sell for a little extra cash in your pocket.
4. Negotiate your Mortgage or look into a refinance. With dropping interest rates in Canada, it would be a good time to take a look at your mortgage and look into refinancing at a lower rate if it makes sense. Talk to your bank representative or connect with a mortgage broker.
5. Organize your pantry and make a shopping list when grocery shopping. If you already have lots of dry goods in your pantry, this will assist in not repurchasing it. Use up when you need and organize your pantry so that you know exactly what you have. On top of that, when you go grocery shopping, there is often a discount section for produce at the grocery store where products can be anywhere from 30-50% off. If you’re anything like me, I like to do my grocery shopping on Sundays which is also when I prepare my food for the week. I always hit up this discount section first to fulfil whatever I can in my shopping list. That extra 30-50% in money saved goes a long way and you’ll see this reflected in your grocery bill.

Some of these techniques have helped our own coaching clients save $1000's per month by executing on these tasks. It's a good time to start to analyze your credit card bills to make sure that you're not spending money on something you're not using. 

And now is the perfect time to do so, since we all have a little bit more time on our hands. 

We’ve been in isolation now for what seriously seems like forever. But the time is flying by, isn’t it? Our coaching division has been working diligently with our clients to help them navigate through this time, and I’ve compiled a list of ways to help clients cut back and think outside of the box to stretch their dollars the furthest. Here are some that may help you if you’re finding that funds are tight.

Take This Opportunity to Clean the House and Sell Your Unused Stuff: Have you ever taken a step back and thought about how much stuff you have but never use? Craigslist, LetGo, Kijiji, Bunz, Facebook Marketplace are some of the amazing platforms out there that allow you to sell and buy used (if you need anything). Not only will it feel amazing to get rid of everything, but if you can free up some cash, it will help in the long run. One person’s trash really is another person’s treasure!

Do You Have Any Reward Points That You Can Use?: I don’t know about you, but I’ve been accumulating PC Points for years. I signed onto my PC Points last week and found that I had $500 worth of free groceries. WINNING! So, then I started to look at some of my other rewards points that I’ve been accumulating all of these years and found that I had $100’s of dollars in reward points. This is the PERFECT time to use those points if you find that you’re strapped for cash. Air Miles? Coffee rewards? Points from your bank? Sign onto your platforms and see what you have and start to use them if you need. Also take a look at unused gift cards!

If You Absolutely NEED to Shop: Have you Heard of Rakuten? We all have things that we absolutely need right now. Perhaps those necessities can be purchased through Rakuten. It’s a website that gives you cash back on purchases that you’d be making in-store anyways. And if you use this link, you'll get $5 cash back on your first purchase!

Take a Look at Your Insurance: Do you have insurance on two or more cars that you’re not driving right now? Time to call your provider and cut one of the monthly car insurance premiums. If you’re able to drive one car between a family, you might as well scrap the monthly cost for the time being. Have you read the fine print of your insurance premiums? Maybe you haven’t taken a look at your insurance policies in a while. There are a few really awesome websites out there such as PolicyAdvisor and PolicyMe that will provide you with a quote in minutes. You can compare them to the policies you currently have. Maybe you can save a few bucks every month by making the switch.

Get Rid of Those Pesky Monthly Bank Fees: I've always asked my friends why they're paying a financial institution a monthly bank fee to take out their own hard-earned money? Unless you actually need a service that a No-Fee bank cannot provide you with, this idea has never made sense to me. Bank fees typically range anywhere from $5-$30/month, but it doesn't need to be that way. There are TONS of no-fee banking options out there that also offer high-interest savings accounts. Here are a few of them; Simplii Financial, Tangerine, and EQ Bank.

I know that times are tough right now, but with a little more thinking outside of the box, I’m sure there are a few other ways that you can think of. Feel free to share them with us!

Crush Your Debt – For Good

Have you heard about our brand spankin’ new program that we launched in May? It’s for all of you out there that have a little (or a lot) of debt to pay off. And we’re not just talking mortgage debt. This goes a little bit deeper than that. This program is tailored specifically for those who have credit card debt, line of credit debt, personal loans, and debts to family members. Interested in finding out more? You can take a look at the program here: https://enrichedacademytraining.com/debt-sales-page

Why did we create this program?

Getting out of debt is hard if you’re not educated on a wide range of topics. After launching our coaching program back in 2017, we saw a need for continual education surrounding debt. We kept seeing the same debt patterns time and time again, and we wanted to help our followers get out of debt by being able to use the same tools and worksheets that we use with our one-on-one clients. Introducing…….our Debt Elimination Program.

What’s so great about this program?

I think the question is, what is NOT great about this program? It’s specifically constructed to provide you with the education, tools, and resources that you need to get rid of your debt. These are proven methods that we teach to our one-on-one clients, but now you can have access to the education, the resources, and the worksheets to feel more empowered and confident in the next steps. The principles work, so long as you’re willing to do the work yourself.

The other thing that is really great about this program, is that we wanted to make it affordable because we know that getting out of debt can feel really daunting. We priced this at $197+tax. That’s it. And you get 7 modules, tools, resources, and an exclusive Facebook group to ask questions and get support.

What do you cover in the program?

Here are the 7 modules that we cover:

1. Creating Your Net Worth Tracker and Analyzing For Quick Fixes
   1. This is probably the most important thing that you can do to help organize your finances. We’re going to teach you how to go through all of your assets and liabilities with a fine-tooth comb and figure out any opportunities you can go through to get rid of your debts faster.
2. Understanding Your Cash Flow and Creating Your Budget
   1. My personal favourite module is all about creating your budget, and figuring out different way to manage your cash flow moving forward so you can prioritize your spending towards what matters most (getting out of debt).
3. Creating New Goals and Tracking Your Spending
   1. Chances are that you got yourself into this debt because you didn’t track your money coming in and money going out. We’re going to help you create some realistic goals that you can stick to moving forward so you can get our of debt faster.
4. Using the Debt Crusher Tool
   1. We have this really amazing tool on our website that calculates how much you need to put onto debts to get rid of them by a certain time. This really looks into goal setting.
5. Organizing Your Debts and Understanding Different Paydown Methods.
   1. Consolidation? Debt Avalanche? Debt Snowball? If you don’t know what these methods are, it’s difficult to focus on one thing at a time. This module teaches you all about those different method.
6. Understanding Compound Interest and How Your Credit Score is Calculated.
   1. Do you know your credit score? Do you know how your credit card or line of credit calculates interest? If you don’t, this module is for you.
7. Financial Freedom
   1. Ahhhh yes. Finally, debt-free. Now what? This module will take you through how to become financially free and what the next steps are.

So, if you’re unsure of any of the module breakdowns mentioned above, it sounds like you’ll get LOTS of value out of this course. Come check it out. You can learn more about it here.

It’s been a few years now since the term robo-advisor has surfaced, and we get a lot of questions. So many in fact, we have an entire webinar dedicated to explaining what they are and how they work. No time for a webinar? No worries, we have answered most of the common questions below.

What is a robo-advisor?

A robo-advisor is an automated, online financial advisor. It combines a questionnaire or text chat regarding your investing preferences with a lot of high-tech software and algorithms to figure out an ideal asset allocation. It then builds a portfolio of exchange-traded funds (ETFs) for you and continuously manages this portfolio as necessary based on your investor profile — buying, selling, and re-investing dividends. If you don’t want to do DIY investing but still want the simplicity and convenience of investing in ETFs, a robo-advisor may be perfect for you.

What are the fees?

Robo-advisors don't use a lot of human management and have relatively low fees. They charge an MER fee (management expense ratio) on assets under management of anywhere from 0.30% to 0.60% for their services, and then you have to add on the ETF fees of around 0.10% to 0.30%. At the end of the day, you may be paying around 0.7%. This is probably going to save you a bundle compared to the other options.

Let’s break down how robo-advisors compare to actively managed funds (mutual funds) from the big banks. Canada has some of the highest mutual fund fees in the world and the MER fee can be as high as 2.3%. If you have a portfolio of $100,000 with a financial advisor, you could be paying more than $2000 in MER fees regardless of how your fund performs. But if you're using a Robo-advisor, you're only paying around 0.7%, or approximately $700. That extra $1300+ you're not paying in fees every year will really add up as your investment returns compound.

Which robo-advisor is best for me?

Good question! This depends on your preferences, goals, and the portfolios the robo-advisors use. Each robo-advisor offers something different, so it’s important to take a look at which one works best for you. Here are some of the different things to look into:

• Fees (although this isn’t the only factor!)
• ETFs that make up the portfolio.
• The dashboard.
• Other benefits. Some robo-advisors provide you with a dedicated financial advisor, estate planning, insurance needs, tax-loss harvesting, etc. This may be something that you require, so it’s good to look into your own personal needs.

What next?

There is no better time than the present! If your returns have been less than stellar over the last few years, it may be time to rethink your current investment strategy and take a hard look at why you are paying the fees you do. Or maybe you’re ready to grab the bull by the horns yourself and start to

secure your financial future, especially if you don’t have any high-interest debts that should be taken care of first! If you feel like you’re still lost, and need some guidance, you can always check out one of our upcoming livestreams or sign up for one of our free financial assessment calls.

Have you ever gone through your bank to take a look at your credit score and haven't been super happy with the results? Or have you ever looked into getting a mortgage or needing to borrow money, and nobody will give you a loan? It's likely because you don't have a credit score that's in tip-top shape. This article will explain what a credit score is, and how to increase it. 

What is a Credit Score?

You credit score is a number (typically between 300-900) that is based on your credit report. Your credit score your financial report card, and it’s used by lenders to predict the likelihood that you will repay any future debt. Your credit score is based off of your credit report, which is a summary of how you pay your financial obligations. Lenders use your credit report to verify information about you and how you have been paid off your financial obligations in the past.

Why is This Important?

Your credit score will determine if you are a risk to lenders and it will affect the interest rates you pay on any loans you applying for. If you have a “poor” or “fair” credit score, and are looking at securing a mortgage, you may not qualify through a bank or credit union. You may have to go with a B-grade lender or even a private lender, where you’re looking at interest rates 3-6% higher than a traditional A-lender.Your Credit Score is one of the metrics that we track in our Coaching program, and if you can believe it, we’ve helped our average coaching client increase their credit score by 21 points over a 6-month period.

How Can I Increase My Credit Score?

There are 5 ways to increase your Credit Score. All of these ways need to be monitored and effectively managed in order to work.

1. Payment History: This is the most crucial factor in your credit score, and it makes up to 35% of it. Creditors want to know that you’re going to pay back the money you are asking to borrow from them, so they will look at what your payment history has been like from previous consumer debts. ALWAYS make your payments on time and make the full (or at least minimum amount owed) payment each time.
2. Amounts Owed: This makes up about 30% of your overall score, so it’s an important one. Try to keep your credit utilization rate less than 35% of your available amount, and don’t max out all your available debt options. If you use a lot of your available credit on your debts, lenders see you as a greater risk, EVEN if you pay your balance off in full by the due date. For example, if you have a credit limit of $10,000, you should not carry a balance of more than $3,500.   
3. Length of Credit History: This makes up about 15% of your score. Creditors and lenders like to see that you’ve been able to handle credit accounts correctly over a period of time. Newer accounts will lower your average account age, which may negatively impact credit scores. Never cancel one of your oldest cards because that marks the beginning of your credit history. 
4. New Credit Applications or Credit Checks: Every time you apply for more credit, your score will be affected, so try to limit hard inquiries. There is a difference between a soft credit check (checking your credit score) and a hard credit check (looking for more credit). Every time you do a hard credit check, your credit score will be lowered. This takes place when you apply for a mortgage, loan or credit card. 
5. Use Different Types of Credit: You should have at least two credit vehicles open (credit cards, LOC’s, car loans and mortgages.) Showing you can manage different types of credit will have a positive impact on your score. 

You should check your credit report and score once per year. One small error can have a significant long-term impact on your credit score. Your credit score is like your financial report card and having a bad score can have a negative affect on your long-term financial plan. We’ve helped 1000’s of clients increase their score. If you feel like you need a little one-on-one help, make sure to sign up for our free Financial Assessment Call.

What Are You Thankful For?

As we approach one of my favourite holidays of the year (aside from Passover, and Christmas, and Hanukkah, and my birthday), I’d like to check in with you to see what you’re thankful for?

I’ll start. I’m thankful for the health of myself and my family and friends, and also the financial education that my parents taught me at a young age, which now has provided me with the financial freedom to not stress about money. And I’m 33 years old. How many 33-year-olds do you know who can say that?

As the head of coaching for our Financial Freedom program, our program sees 1000’s of clients every year who are in really difficult situations because of a lack of financial education. Just remember, this is not your fault. We live in a broken system. But there is a way that you can make a change, and that change starts with altering your behaviours and habits.

How To Make Habits Stick

We all know bad habits are easy to pick up and hard to drop. Good habits on the other hand? Well, if it was easy, we would all be wealthy and fit (and able to wear the same jeans that we did in high school). I’m currently struggling to fit into the same pants that I was wearing before COVID hit. Damn you quarantine.  
 
But I’m going to let you in on a super easy secret that can help you create strong, lasting habits.
 
Make those habits as easy as possible. 

If you sat down and made a list of habits that you go through in a day, you can probably come up with around 10-20 of them. Here are a few of mine that may help you to create your list.

• Wake up and make coffee.
• Review budget.
• Read finance blog.
• Walk the dog.
• Brush my teeth.
• Make breakfast.
• Clean dishes.
• Get dressed in workout clothes.
• Work out.
• Do yoga.
• Shower.
• Make lunch.

Pretty crazy eh? It’s not even 1 pm yet and I’ve already gone through 11 habits that I don’t think about. I’ve gotten into a routine where I just do them.  

Atomic Habits is our favourite book on creating winning habits. The author, James Clear, outlines a few tips you to follow... 

Use this formula: I will (behavior) at (time) in (location). For example, instead of saying, “I will budget each month.” Try, "I will budget on the 1st of each month at 5 PM in my office." 

Every habit is initiated by a cue. The cue triggers your brain to initiate a behavior because it predicts a reward. We are more likely to notice cues that stand out. Setting an alarm on your phone for 5 PM monthly is a cue that you need to budget. 

Forming a new habit is hard so Make it Easy. We really strive for that in our Enriched Academy Programs.

And now I’d like to share with you:

5 Money Habits of Wealthy People 
 

These concepts are honestly so easy, and they truly are the key to building wealth. We see most of our successful Financial Freedom clients live by these means, and you can start to see results today if you follow the list below.

1. Live below your means. Spend less than what you earn. It’s as easy as that. Sit down and go through all of your sources of income, and everything that you spend money on. If you have money left over every month, and are putting money into an investment account, you’re beyond the majority of Canadians. If you’re overspending though, then you need to make some cutbacks unless you want to end up in debt for the rest of your life. It’s not about making more money. It’s about living with what you have and being smart with it. If Warren Buffett is worth over 70 billion dollar and lives in the same home that he bought 50 years ago for $31,000, and drives a modest Cadillac, then you can live within your means as well.
2. Learn one new thing a day. No one has ever gone broke buying books. I read a daily personal finance blog that keeps me up to date with what’s going on in the world. If your new thing is a recipe, or a craft, or a new trade, then that’s awesome. But just force yourself to learn something new.
3. Small steps each day. Have you ever read a book or taken a course but quickly found your motivation evaporated? Wealth is given to those that take small consistent actions daily. Ask yourself, what is one small thing I can do today to help me make progress with my finances? 
4. Track your net worth and budget monthly. You cannot improve what you don’t measure. These two numbers are the foundation for financial and time freedom. 30 minutes per month, that's all it takes. This is one of the biggest ways that we measure our clients in our Financial Freedom coaching program. We get them to track their Net Worth month and start to track their cashflow as much as possible. This way, they can see the correlation between the two. When you start to track your cash flow, and you spend less than what you earn, then your Net Worth goes up.
5. Learn to say “no”. Only spend money on things that bring you an immense amount of joy and happiness. Everything else, say no to. 

Once you’ve got the top 5 habits above in place, you’ll start to see dramatic results with your finances. You’ve just laid down the foundation to becoming financially successful. Congratulations. But there’s still more work to do! You need to review your financial goals and plan each month. Step 1 is creating that plan. Step 2 is constantly reviewing and making changes to your plan as things change. If you are not constantly reviewing your plan you could be headed in the wrong direction and not even know it. 

When COVID-19 hit and our economy, we worked with all of our coaching members to revise their financial plans because so many things were changing all at once. Some of our clients had lost their employment, their investment portfolios were going down, their kids were home from school, among many other things.

The one thing that we’ve heard over and over again is how thankful our Financial Freedom clients have been for having us work with them throughout COVID-19. Even though some of our clients have seen a decrease in income, they’ve seen an overall increase in their Net Worth. This education that we provide is something that will be with you forever. And we can help you change your habits.

Just the other day I received a note from one of my past students. It made my heart go all warm and fuzzy inside.

“I am not exaggerating when I say that what you all do is life-changing! You helped us so much and we are forever grateful ????”.

So, if you’re ready to take control of your finances and join the 1000’s of Canadians who have gone through our Financial Freedom Coaching, sign up here for your coaching assessment to see if we can help you.

You’ll be thankful.

Happy Thanks giving!

What a Year.

How did you manage? What did you learn? What are you bringing with you into 2021?

2020 was tough. Emotionally. Mentally. Physically. The pandemic has definitely taken its’ toll on my emotional and mental well-being. Not being able to freely walk around, see friends and family, and be constantly mindful of the people around me has really made this quite the year. It’s definitely been hard, but I think after all of this, there are probably a few things that we’ve learned in regard to our finances.

Here are a few things to bring with you into 2021. 

1. We don’t need a lot to live. I think for the majority of our coaching clients, the thing we hear the most is that the pandemic really taught them about the most important things in life. It wasn’t about the car they drove, the clothes they had in their closets, any other material object they once had, or even going to get their hair done bi-weekly, we’re surviving without all of it. There are always going to be things that we like to have. But when you really get down to the nitty-gritty of it, we don’t truly need a lot to live. Head into 2021 by taking a good hard look at your finances, cut out those things that may not be bringing you joy, and focus on those things that matter most to you.
2. You can manage your cash flow, regardless of your financial situation. This one was SO interesting to me. We had a number of coaching clients who had joined us back in February, and then lost their jobs because of the pandemic and had to take a paycut or live off of the CERB. And guess what? They still managed. By working one-on-one with our coaches, our clients were able to re-work their budgets and focus on the priorities of putting food on the table and a roof over their head. It just goes to show that it’s not the money you make, but the way you manage it.
3. Pay off your high-interest debts – ASAP. Being in debt can be hard. Being in debt during a pandemic can be even harder. But I hope (if you were one of the 1000’s of Canadians who had debt before the pandemic) that you had some ah-ha moments. Our coaching clients certainly did. Always pay off high-interest debts (above 5%) every month, or as fast as you can. Nobody knows what’s going to happen in the future, and I think the pandemic made a lot of us realize that our finances are not finite. Manage your income, dollar by dollar, and get out of the weeds when you have the ability to.
4. Have money set aside for an emergency fund. Remember how we always talk about having 3-6 months of necessary living expenses in an account that you can dip into for emergency purposes? I’m sure that really came in handy back in March if you were someone who lost your job. Figure out what your absolute necessities are, and keep a 3-6 month emergency fund in an out of sight, out of mind account that pays some kind of high interest.
5. Invest, Invest, Invest. Once you’ve gotten rid of all of those high-interest debts (above 5%), you can start to invest. Back in March, I was in the airport heading to Belize when the markets were crashing. I kept seeing them drop. Lower and lower and lower. Do you know what I did? I didn’t sell my investments. No, no, no. This was the opportunity that I’ve been waiting for. Everything went on sale! I maxed out my TFSA, RRSP, and had my partner do the same. To this date, our investments are up over 30%. Now, I’m not telling you to time the markets, because nobody can. But if you can keep costs low throughout the year, manage your cash flow, and have cash set aside for these kinds of opportunities, then you’re all set. Buy low, sell high, remember? Don’t panic. If you’re properly invested and diversified, you’ll never lose all of your money. Yes, it may be volatile, but if you can think of the future, you’ll come out on top.

"Be Greedy When Others' are Fearful and Fearful When Others' are Greedy" - Warren Buffet

At the end of all of this, it’s been really interesting to see our clients throughout this pandemic. Regardless of their financial situation, they’re excited about getting their financial house in order for a healthy and successful 2021.

Are you ready to join them? Sign up for your free Coaching assessment call here. Having someone else to give you a completely non-judgmental and non-biased view of your financial situation may just be what you need for your own successful year ahead. After everything is said and done though, make sure to not take any moment for granted. Hugged your loved ones. Take time away from technology, work, and enjoy every minute.

Happy Holidays and New Year from Enriched Academy

Happy New Year to all of you. I LOVE January.

Why, do you ask?

Because it marks the beginning of my personal financial year. This is where I sit down, complete my Net Worth Tracker, organize my budget, and fill out my Financial Freedom calculator so that I can figure out how much to set aside for the year ahead. My current financial goal is to retire by 45, and I seem to be on the right track (right now). Wish me luck.

I thought I would take this opportunity to write a post for parents out there who are wanting to motivate and teach their kids about financial literacy and money management. We get a lot of clients in our  Financial Freedom coaching program who take the education that they’ve learned and pass it on to their little ones. Financial literacy should start as young as possible!

Growing up, my grandparents always gave me Israeli Savings Bonds for birthdays and holidays instead of physical presents. I never understood why, and to be honest, it always pissed me off. Until I hit 18. Around my 18^th birthday, all of the bonds had matured, and I was presented with a cheque for $10,000. I couldn’t believe my eyes when I saw all of those zero’s! I kept thinking about all of the things that I could buy with that money, but my mom had another plan in place for me. I’m so glad that I listened to her advice. Looking back now, I don’t think I’d be where I am today without my mom’s guidance and financial education.

She immediately took me into the bank and had me open up a self-directed TFSA where all of the money was invested into Index funds. At this time, I had NO idea what any of these words meant. I just thought that there was a savings account and a chequing account. But my mind was blown after my mom had taught me about the different types of accounts one could have – and this was at the young age of 18.

For the entire year after, I didn’t think about or look at the TFSA. I just let it sit there and allowed the market to take its course. One day, I decided to take a peek and see what was happening. I had made just over $800! And I literally did nothing all year with that money. It just sat in the account, made a 7.5% return, and compounded interest while invested in these Index funds. Seeing the $800 return sparked my interest in investing. I had a conversation with my dad afterward about the money I had made, and about investing in general. He told me to “make your money work for you, and don’t work so hard for it”. That saying has stuck with me to this day.

Three years ago, I hit a milestone. I turned 30 (I’m currently 33). And since I’ve been tracking my Net Worth for the last 3 years, I remember taking a look at my savings and investment portfolio and having just over $100,000, at the age of 30. I’m now 33, and my investment portfolio has doubled in growth over the last 3 years. What’s the secret you ask? I’ll tell you how I did it.

Keep in mind that I am not a homeowner. I choose to rent. But I do have a partner, a car, and a lovely 2-year-old Bernese Mountain dog (named George). We live a great life in Toronto (one of the most expensive cities in Canada. So yes, it is possible to save).

1. Set goals for yourself and work hard. After that first year of investing, it became a personal goal to max out my RRSP and TFSA every year. And I can happily say that I’ve completed this financial goal since the age of 19. Before working for Enriched Academy as the head of their coaching program, I worked as a freelancer in the entertainment industry, and prior to that, worked in the restaurant industry.

2. Pay yourself first, and have fun after. I know that I have a different mentality about money than other people my age do. I don’t spend a lot on material things. I go out for dinners and drinks with friends, have a great apartment in Toronto, and bike/walk almost everywhere I can. I spend the majority of my money on experiences, food, and travel. I have the mentality that I need to pay myself first by maxing out my RRSP and TFSA, and then I can have fun afterwards. Knowing that I have that money in an account makes me sleep like a newborn baby every night.

3. Educate yourself and invest! I know that I wouldn’t be where I am now without investing. Learn the basics, take a course (like our one-on-one coaching program), and put some money into diversified investments so you begin to understand the principles. It doesn’t need to be a lot! Start with $10/week. A majority of my portfolio is invested in Index ETF’s, but I hold a few blue-chip stocks that pay out a dividend.

4. Budget, budget, budget. This is so important and will be the basis of your financial plan. Once you have a budget in place, you will see where your income is coming from, and what you’re spending money on. And if you have any “leftovers”, you can start putting it into your savings/investment account. This is really where you’ll start to see your Net Worth grow.

I know that I’m not like the majority of Canadians. And that’s ok. I'm incredibly thankful to both of my parents who took the time to educate me about money. It’s never too late. So make sure that you take the 2021 year as a teaching opportunity and start to make the financial changes that you need to yourself. Your kids will thank you later.

And no, the holidays did not come early this year. It’s RRSP season and the most exciting time of the year when you need to start preparing to file your taxes.

If you haven’t made a contribution towards your 2020 year yet, you only have until March 1 to do so. This date hasn’t really ever changed, so it always amazes me to see how many people are always scrambling in the last week to put money away into their RRSP’s. This is something that you can set up, and contribute to, at any time during the year. You don’t just have to wait until February when everyone starts marketing that the RRSP deadline is coming up.

If you don’t know what an RRSP is, let me tell you as simply as I can.

It’s a government-regulated account (registered) where any contribution that you make will give you an immediate tax deduction. Within your RRSP you can invest in things such as ETFs, stocks, bonds, mutual funds, real estate, etc.

Example: if your income at the end of 2020 was $75,000, and you contributed $10,000 into your RRSP throughout the 2020 year, then you are only being taxed as if you made $65,000 in 2020. This would bump you down into a lower tax bracket, and either provide you with a bigger tax refund, or would reduce the amount of taxes owed.

Keep in mind as well, that when you invest in a healthy and diversified portfolio within your RRSP, that your contributions grow tax-free until you start to withdraw them. And most people withdraw their RRSP when they need the income in retirement, so they’re typically in a lower tax bracket. You do eventually pay tax on your withdrawals, but if you’re retired and farting around the golf-course or sipping Pina Coladas on a beach somewhere, chances are you won’t be in a high tax bracket already, because most retirees don’t work. If you start young, build your portfolio up to $1,000,000, and only need $50,000 in retirement, then you’re only paying tax on your $50,000 withdrawals.

How Do I Get Started?

Well, to be honest, you should contribute to your RRSP throughout the year, but if you haven’t been contributing then you should do so before March 1. The contribution room that you have available to you can be found through your CRA My Account, or on your NOA from the previous year. Your accountant should also have that number somewhere. So don’t delay, start today.

Here are the three main ways that you can open an RRSP;

1. Managed: Personalized investment portfolios that are managed by advisors and professional money managers at financial institutions. Portfolios are tailored to the specific needs of the client depending on a number of factors such as your age, risk tolerance, and short and/or long-term goals. There are typically high fees associated with managed accounts since a human is deciding what securities to hold within that account and are actively managing it.

2. Robo-Advisor: A new class of financial advisors. It uses algorithms to provide investment management and advice with little human supervision. Using a certain type of software, a Robo-Advisor is able to automatically buy, sell, and rebalance assets in your portfolio. Don’t know the first thing about investing but want to invest in ETFs? Don’t you worry. Robo-advisors will do it all for you. So, if you’re new to investing, and want to reduce the fees you’re paying, then a Robo-Advisor may be a perfect fit for you.

3. Self-Directed: You have full control over the buying and selling of securities in your account. By managing your own account, you can reduce the amount of fees that you pay, putting more money in your pocket at the end of each year. With a self-directed account, you do all of the dividend re-investing and rebalancing of your portfolio.

We’ve helped 100’s of clients in our Financial Freedom Coaching program set up an RRSP and use it as an investment vehicle throughout the year. And we can help you too. If you’re ready to set up a Free Coaching Assessment call with our team to see if you’d be a good fit for our coaching program, then sign up here.

We can help you build a solid budget, set you up on a plan where you’re making weekly-monthly contributions into your RRSP, and save you from pulling your hair out every February as you scramble to find money to contribute.

Why hello there!

Have you been wondering about our coaching program since we launched in October 2017? Well, wonder no more! 

We took a few readers from Million Dollar Journey and took them through our 6 months of Financial Freedom coaching. They achieved some really amazing results, and THEN they wrote a really amazing review about us. 

If you've ever been looking for a completely unbiased review of our coaching program, you can read about it here. 

Enjoy:)

You might have heard Enriched Academy Co-founder Kevin Cochran explaining how YOLO (You Only Live Once) is the most expensive word in the English language. Kevin has a great point – justifying clearly unaffordable purchases with a YOLO attitude usually leads to a pile of very expensive credit card debt and more than a little regret down the road.

However, YOLO has a contender for the expensive word title, and that contender is procrastination. We are huge believers in education, fact finding, and analysis before making any important financial decisions, but at some point, you have to take action. Whether it’s opening an online brokerage account, meeting with a financial coach, or simply inputting your monthly household expenditures into a spreadsheet, you need to get moving.

The cost of procrastination when it comes to getting your finances in order is easy to overlook, so we are making it crystal clear by highlighting six issues where failing to act is definitely going to come back and haunt you!

Attacking your debt problem
Throwing everything you have to pay off a 3% mortgage doesn't make financial sense for most people. However, if you have higher interest credit card debt, car loans, or a line of credit that you are in no hurry to eliminate, you need to look at how much it is costing you. Once you see how much money you are wasting on interest every year and how many years (not months) it will take to pay back, your laissez-fair attitude to eliminating that debt will likely change.

Starting your retirement planning
Too little, too late is the story for many Canadians when it comes to funding their retirement. CPP and OAS aren’t enough to save you. The good news is you don’t need a comprehensive plan to get started. For now, if you have no plan or don’t know what to do first, open a TFSA and focus on maxing out the contributions every year and invest in an index fund. You can even automate the process with a robo-advisor and make it as easy as paying the phone bill.

Analyzing expenses and budgeting
Next month is not the time to start figuring out where your money goes every month and where you could/should/need to cut back on spending. The time to get started is today, and it has never been easier with hundreds of online applications and spreadsheet software, or you can go old school with pen, paper and calculator. Enriched Academy has a number of easy-to-use proprietary tools in our programs to help you crunch the numbers.

Getting started with investing
For many of us, it’s hard to get over the risk-aversion and fear of loss that goes with putting our hard-earned dollars into the markets. You need to be comfortable with your decision to invest and knowledgeable of strategies to mitigate the risk, but you also have to realize that holding cash at the interest rates we have seen over the last several years is not going create much of a retirement fund. The TSX was hovering around 5000 in August of 1996 and is just over 20,000 today. Had you invested $300/month for that 25-year period and achieved average market returns, you would have upwards of $500K today.

Creating an emergency cash reserve and a will
Two things you never know when you might need, but if the pandemic taught us anything, it was to prepare for the worst. Your income could unexpectedly and very easily disappear for a number of reasons, so you need to have enough cash on hand to tide you over for a few months. As for a will, they are pretty easy to get these days and there isn't any valid excuse for not having one, especially compared to the mess it leaves behind for your loved ones if you die without one.

Our goal at Enriched Academy is to educate and inspire you to take control of your financial life. We do our best to prepare you and get you moving, but it’s up to you to ensure procrastination and YOLO are not holding you back from reaching your financial goals!

Do you feel like you need to be part money coach, banker, accountant and economist just to manage your money?

Should it really be so hard to cover the household bills, make the payments on the car and mortgage, put away a little for the kid’s education, and make some solid investments that will hopefully leave you with enough left over for a reasonably comfortable retirement?

Money management might have seemed a lot easier a couple of years ago – before inflation and interest rates went into overdrive and the stock markets and real estate values nosedived 15%. Most of us were just trying to get by financially in 2022 and being buried by an avalanche of ideas and alternatives on how to survive the financial tsunami got very overwhelming and made it hard to decide on anything!

Why is financial planning so hard?
If you are retirement planning and looking for options on where to invest those hard-earned RRSP contributions, there are around 5000 mutual funds and 1000 ETFs in Canada to choose from! But that's only if you are already up to speed on the differences between mutual funds and ETFs, all-in-one ETFs, MERs and other investment fees, asset allocation, portfolio diversification, how RRSPs (and TFSAs) actually work and their many rules and regs, DIY online investment platforms, robo advisors... and the list goes on!

Unfortunately, personal finance management is likely to get more difficult and more complicated in the future. If you are lucky, some employers are now offering financial wellness programs as part of their benefits. Enriched Academy is also working with schools, colleges and universities in several provinces to ensure that students learn the basics of personal finance before they start their career path. This is great news for your kids and their financial future, but it isn’t going to help you…. unless you want to put your kids in charge of the household budget?

The key to a good financial plan
The biggest issue we see over and over at Enriched Academy is focusing way too much time and effort on making money. What really moves the needle is spending more time looking at where your money goes, and how to manage it better and make it work for you. Earning more money won't solve your financial problems if you continue to spend too much, make poor spending decisions, fail to invest, and have no goals to help guide you and measure your financial progress.

The reality is that most of us are on our own when it comes managing our money. The good news is that mastering the basics is a lot simpler than most of us realize. You can still use a pencil and paper to track your expenses and one of our free weekly webinars can teach you a lot in 60 minutes – from how to improve your credit score to how to pay off student loans. There are plenty of excellent learning resources, tools and apps out there that can save you a ton of time.

8 Easy ideas to start your financial plan
If you are ready to dive into your finances and looking for some basic fixes that don’t require a ton of research or knowhow to get rolling, we have eight suggestions for you.

1. TFSAs & RSSPs.
If you don’t have a TFSA or RRSP, take it off your wish list and get one (or both). There is no excuse for not having these accounts; they are free, can easily be opened online, and there is no minimum deposit amount required with many institutions. RRSPs allow you to defer paying tax until you withdraw the funds — ideally when you are retired, and your tax rate is low. The deadline to contribute to your RRSP and take the deduction on your 2022 income taxes is March 1, 2023.

A TFSA contribution doesn’t offer any immediate tax reduction, but you don't pay any tax when you withdraw that money. Furthermore, any income generated by investing your contributions can be withdrawn without any tax. You can open a TFSA and add money to it at any time throughout the year. The maximum you can contribute does not depend on your income like an RRSP, everyone over the age of 18 can contribute up to $6500 to their TFSA in 2023. If you have never had an RRSP or TFSA, you may find that you have a lot of unused contribution space because the annual limits carry over from year to year.

2. Reduce your expenses.
As proven by a never-ending stream of bankrupt celebrities and athletes who “lost it all”, regardless of how much money you have coming in, not tracking where and how much is going out the door is a recipe for disaster.

Countless articles are churned out every day on how to spend less, and they may yield some good tips that are practical for your situation. Look for easy hacks to supercharge your personal budgeting, like taking advantage of grocery store bargains, re-evaluating your mobile phone or cable services, collecting points or discounts on a credit card (but paying the balance in full every month!), or even clipping coupons!

There is no end to money-saving ideas and hacks, but the first step of your financial plan is to know your costs. You can’t kill what you can’t see, and household expenses are no exception. You need to track all your expenses for at least a month and analyze where your money is going. Don’t forget interest charges, memberships, and any other miscellaneous expenses — you need to include everything!

3. Automate your savings.
Making it invisible is the fastest and easiest way ever when it comes to how to start saving money.  Setting up automatic transfers every payday to a savings account (and then investing it!) will remove the guesswork and excuses from how best to stash your cash. It probably doesn’t need to be said, but money left in your daily chequing account has a way of disappearing!

4. Learn to manage debt.
If you are carrying a balance on your credit card, it's time to map out a realistic payment plan for an all-out attack on credit card debt. The average credit card balance in Canada as of September 2022 was $2121. Paying the minimum on that amount will require 187 months to eliminate the balance and cost you almost $2400 in interest. Paying the minimum plus $50/month will cut it down to 27 months and $518 in interest charges! If you have options to borrow more cheaply through a home equity loan and pay off your card, what are you waiting for? Balance transfer cards are another option as long as you investigate your obligations, create a strict repayment plan, and are disciplined.

5. Do I need a financial advisor?
A "high-interest" savings account is a huge misnomer, even with the recent increase in interest rates. You might get over 3% in a new account for a limited period, but chances are you are currently earning under 2%. The same goes for any cash sitting in your RRSP, TFSA, or your child's RESP. Financial markets were way down in 2022 and have been volatile, but stock have always recovered over the long term.  

You may not need a financial advisor if you have the time and motivation to handle your own financial education. Self-directed investing in financial markets is very do-able and will help keep fees to a minimum. Make sure you understand the risk and how it is mitigated, regardless of who is making your investment decisions and financial plan.

6. Understand your mortgage.
Investigate you mortgage options and how recent interest rates hikes will affect your payment when you renew. The average for a 5-year fixed mortgage in 2018 was around 4.5%, so you are likely looking at 1% to 2% more if you are renewing in 2023. That will add between $200 to $400 monthly to a $400K mortgage.

If you have a variable rate mortgage you are already feeling the pain unless you have a fixed-payment variable rate mortgage? If you do, you could be in for a shock, so make sure to confirm the situation and allow for the higher payment in your financial plan. Some of these mortgages have already reached their trigger rate while others have payments that are barely covering the interest and not making any dent in the principal.

7. How much should I spend on a car?
Cars can easily be bought and sold and there is almost always a cheaper option. Attachment to a car is usually much more emotional than rational, so it's less about giving up a real need and more about feeling good behind the wheel. If you are comparing car alternatives, make sure you factor in gas, insurance, parking, snow tires, oil changes, and any repairs not under warranty in addition to the monthly payment. You should be aiming for around 15% of your take home pay for all your car expenses combined.

8. What is a RESP?
You don’t need a financial advisor to understand that a Registered Education Savings Plan (RESP) is hands down the easiest money you will ever make on an investment. Deposits up to the $2500 annual limit receive a 20% grant from the federal government. If you miss a year, you are allowed to overcontribute to some extent in future years but playing catch-up is hard — just dump in whatever you can every year.

If you are short of cash, try taking a $100/month from your child’s CCB payment. Just like your RRSP and TFSA, you should be looking to invest the funds in your RESP rather than let it sit in cash. You can get a CDIC-guaranteed GIC at around 5% these days if you need a risk-free alternative until you get up to speed and feel comfortable investing in the financial markets.

Choosing a financial planning solution
Although it may seem daunting at times, learning how to manage your money and save and invest for the future will pay huge dividends over the course of your lifetime. Even if you come to rely on a professional for advice (some financial issues are very complex and consulting an expert is a wise move), a little financial education will help you evaluate their recommendations and make sound decisions, as well as provide an extra layer of reassurance and confidence.

2022 has been a financial disaster for many Canadians with high inflation, high interest rates, falling home prices in many markets, and stagnant wages. There is no easy financial fix for 2023 and it could be another tough year, especially if your financial knowhow is lacking.

We hope taking some concrete actions to improve your financial literacy and putting that knowledge to practical use to develop a sound financial plan is top of your resolution’s list. The choice of how you improve your financial literacy is up to you. Our advice is simple — make it a priority in 2023 and just dive-in!

Investing is something most of us should be a lot more focused on to ensure our money outbattles inflation, grows over time, and provides us plenty of options on how we spend our retirement years. Compound interest and investment returns work wonders — but only if you invest the funds in your Tax-Free Savings Account (TFSA) or your Registered Retirement Savings Plan (RRSP). However, there are many options and considerations when it comes to deciding how to invest your money. Even if you have done your homework and decided to make the switch and graduate from a financial advisor to a self-directed account, the process can still be intimidating.

Considerations for self-managed investments
The first thing that you need to establish before setting up a self-directed investment account are your parameters for risk tolerance, then you can move on to determining your asset allocation. Risk tolerance varies widely from person to person and also depends on your current financial position, your time horizon for needing the money, and how comfortable you are with market volatility.

RRSP and TFSA eligible investments include equities (individual stocks, mutual funds, ETFs) and fixed income assets such as bonds, GICs, cash — even gold and silver. For the purpose of this article, we will focus on equities and fixed-income assets for your asset allocation.

Let’s pretend you have 20 years until retirement, and you are comfortable with market volatility, so you decide on 80% equities and 20% fixed income for your asset allocation.  Great, first big step completed!

Where to invest your money?
You’ve decided on DIY investing and determined your asset allocation, so now it’s time to move on to deciding what you want to invest in. If we stick with the example allocation above — the 80% portion for equities could be split among individual stocks, broad-based exchange-traded funds (ETFs) which tracking a particular country or even the whole world, or focused ETFs which may track a particular aspect of the economy like technology, energy or infrastructure. The 20% portion dedicated to fixed income could be in GICs, cash, corporate bonds, short-term bonds, long-term bonds, or even a blended bond fund.

Before you decide to invest by yourself and make all the decisions, you must be comfortable doing so. If you want to be in control of how your money gets divided up that’s great, but you are likely in the minority of the population. The majority of us do not feel confident in knowing which country, region or industry to invest, or the optimum ratio of short-term bonds to long-term bonds. If you fall into this camp, there are a few simpler alternatives to consider.

All-in-One ETFs
The pressure to decide on which investments will meet your asset allocation may be too much for some and can cause analysis paralysis and a lot of stress. It may even force them to stick with their high-fee mutual funds out of comfort and ease.

Fund providers have noted that this is a very common problem and have started offering all-in-one ETFs that as the name implies, are designed to offer one-stop shopping for maintaining a given asset allocation and risk profile. Percentages differ, but most providers offer five choices ranging from 100% equity on the high end of risk – down to 20% equity and 80% fixed income at the low end of the risk scale.

All you need to do as an investor is decide on the all-in-one ETF that matches your asset allocation and risk tolerance!

How an all-in-one ETF works
The ETF provider’s investment management team monitors the economy and many other factors and makes all the investment decisions to rebalance your portfolio, so you don’t need to! For example, if you decided to invest 80% in equities and 20% fixed income and bought an all-in-one ETF, that 80% would likely be split between the US, Canada and international markets. The 20% fixed income would also be split between corporate bonds, government bonds, treasury bonds — all with varying maturity dates.

The beauty of this is that you are making the decision to buy a product that rebalances to your risk tolerance, but also has the benefit of relying on the ETF provider to move your money to different countries and/or sectors to adapt to changing risks. This is an excellent option for those looking to take control over their investing, but do not have strong enough skills/interest to reallocate their portfolio between regions or industries or adjust the type of bonds you are holding as interest rates change.

For example, an all-in-one ETF could have the equity portion allocated 35% US, 25% Canada, and 20% international one month, but after analyzing the latest data could flip to 25% US, 40% Canada, and 15% international the following month. This doesn’t affect your asset allocation in terms of equity versus fixed income, but you can take comfort knowing that actions are being taken on your behalf to keep everything aligned to your asset allocation and risk profile.

Invest with a Robo-Advisor
Similar to all-in-one ETFs, robo-advisors manage your portfolio based on the risk tolerance you set when you open an account. They adjust the actual investments you hold, but robo investing will always automatically rebalance to your equity versus fixed income percentage.

The main difference here is that you don’t need to make any decisions on an ETF investment strategy – that is done 100% for you by the robo-advisor account. The robo-advisor will also immediately reinvest any new funds you add, so you do not need to devote any ongoing maintenance to this plan — aside from adding more money on a regular basis!

Self-directed vs all-in-on vs robo advisor fees
We’ve outlined 3 investing options:  1) A 100% DIY approach where you pick all your own stocks and ETFs. 2) An all-in-one ETF where you choose one ETF based on your asset allocation. 3) A robo-advisor that manages a portfolio of ETFs continually rebalanced to match your asset allocation.

The DIY option should come with the lowest fees (MER or management expense ratio) as you can buy a balanced portfolio of ETFs for under 0.2% annually. Please note that every online brokerage platform has different fees for buying and selling ETFs and stocks.

The all-in-one option should come with slightly higher fees than 100% DIY since there is a slightly higher charge to rebalance your portfolio – but most seem to fall between 0.2% to 0.3%.

The robo advisor option would be the most expensive as most of their MERs are around 0.15% to 0.25% and they charge an additional management fee of 0.2% to 0.75% to automate the process for you.

Basically, the more you do yourself, the more money you can save. However, it is important that you take an honest assessment of yourself and whether saving a small percentage is worth it for you.

Other Considerations
Time – how many hours per week, day, month are you realistically able to devote to your investing plan? If you are going to go with 100% DIY, this should be established before you begin.

Knowledge and confidence – if you are leaning towards a 100% DIY approach, what factors would you be monitoring for changes to your asset allocation or where your money is invested.

Have a plan – if you are going DIY, come up with an investment plan and write it down before you begin. Set rules for yourself to follow, so you don’t start buying stocks based simply on emotion or other factors. For example “Invest in no more than five individual stocks at any one time totalling less than 15% of my portfolio. There has to be at least 75% in broad-based ETFs and I can only  hold up to 10% in focused ETFs that target particular industries. I will review my plan once a year and adjust as my circumstances change.”

Summary
Self-directed investing is great to help you save money on mutual funds MER fees and keep more of your money in your investments, but you need to make sure you set yourself up for success before you begin. Be honest with yourself about your ability and discipline to set and follow your rules because there will be no one holding your hand. A financial coach can discuss your goals, but your asset allocation will come down to you and your comfort level with the ups and downs of the financial markets.

Almost everyone in Canada has heard of the Tax-Free Savings Account (TFSA), but if you already have a savings account or maybe you are younger and don’t have a lot of money, is there any reason to get one?

The short answer is yes — and the sooner the better!

You may believe a TFSA is something to start when you get older or mistakenly think that it is something for locking away long-term retirement savings. The fact is that TFSAs are actually quite flexible when it comes to deposits and withdrawals, they can save you a lot on your taxes, and you can use one to save for a house or a car, or yes, even your retirement.

What is a TFSA and how does it work?

A TFSA isn’t anything like your regular bank account. The main differences are that it is registered with the government and the money in the account doesn’t have to be held in cash. Registered accounts like the TFSA (and the RRSP) track the funds going in and out for tax purposes and although you can hold cash in them, you can also hold investments like stocks, mutual funds, ETFs and many others.

Although a TFSA is unlike your regular account and isn’t for daily banking, you can open a TFSA at most banks and credit unions as well as online brokerages. You have to be at least 18 years old to get one, but there is no fee and no minimum amount required to get started.

What are the benefits of a TFSA?

The main reason to get a TFSA as the name implies, is to save on your taxes. The catch is that if you don’t invest the money in your TFSA, you won’t be saving much. Simply putting money in your TFSA and then letting it sit there in cash won’t do anything for you. This is very different from an RRSP which delivers an immediate reduction in your income tax. However, down the road when you take money out of your RRSP you have to pay the tax, but you can take all the money you want out of your TFSA at anytime and pay absolutely no tax.

So, the secret is to make as much money as possible by investing with your TFSA because all that money will be tax free. If you buy a share of Google for $100 and sell it 5 years down the road for $500, you have $400 tax free profit in your jeans. If you bought those Google shares outside of your TFSA in a cash trading account, you would be on the hook for a pretty big chunk of tax — 50% of that $400 gain would be fully taxable!

How much should I contribute to my TFSA?

The best part of a TFSA is that everyone gets to put in the same amount regardless of how much money you earn and unlike an RRSP, you don’t need to be working and making an income to contribute. In 2023, you can put up to $6500 into your RRSP. But if you missed a couple of years and now suddenly find yourself flush with cash, you can use the carried over amounts from each year since you turned 18. In fact, if you are now 25 and have never had a TFSA, you can drop in over $45,000 since you have 7 years of contributions carried over.

What is the minimum I can put in my TFSA?

Chances are you won’t be able to max out your TFSA contributions, especially when you are young. Only 10% of Canadians of all ages actually max out their TFSA. However, this doesn’t mean that a TFSA is just for rich people. If you could only come up with $100 monthly for your TFSA from the time you were 18 until you retired at 65 and received historical average stock market returns of 7%, you would have $438,643. If you upped the monthly amount to $225 you would retire a millionaire!

Of course, 47 years is a long time and things will cost a lot more, but don’t underestimate the power of compounded investment returns. There are a number of self-directed investing options (like broad-based index funds or all-in-one ETFs) you can use to invest your TFSAs that don’t require a lot of time or investing knowledge to use. Of course, some funds will do better than others, but the real secret is to get started early! Unfortunately, only around 5% of TFSA are held by Canadians under 25.

How do I withdraw money from my TFSA?

If you don’t want to wait until your 65 to start spending those TFSA investment gains, you don’t have to. In fact, you can take as much money as you want out of your TFSA anytime you want. You won’t have to pay any tax and the only downside is that you may have to wait until the following year if you want to put that money back into your TFSA — you cannot re-contribute the amount of the withdrawal until the following calendar year, unless you have available contribution room. If you do overcontribute to your TFSA you need to correct the mistake as soon as possible as you are subject to a penalty tax of 1% per month on the excess amount until it is withdrawn. It's important to keep track of your contribution room to avoid over-contributing.

What are the disadvantages of a TFSA?

You may be thinking a TFSA is the greatest thing since sliced bread and for most Canadians, it is! However, there are situations where another registered account may be a more optimal choice. For example, if your income is high and you are in a high tax bracket, contributing to an RRSP may be a better choice if you don’t have the money to max out both. Another case may be if you are saving for a home, the new First Home Savings Account (FHSA) offers the advantages of a tax reduction like the RRSP and the tax-free investment growth of a TFSA and is a great choice if you are saving up for your first home.

One additional caveat to be aware of with a TFSA is that there are limits on how actively you can trade the investments held in the account. For example, day trading is not allowed, and it could cause the CRA to determine that the income in your TFSA is from carrying on a business and is taxable. Rules and tax interpretations for day trading with regard to TFSAs are different than for RRSPs and the CRA uses a number of factors to make a determination.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're on the right track. Make sure the money is invested and confirm your annual return (net of fees) to ensure your investments are performing up to expectations.

If you haven't yet opened a TFSA, get out there and open one today! A few years from now you will be happy you did. If you're still somewhat confused, scared, excited, nervous, and looking for some support, we have a one-on-one coaching program that clients say is a financial game-changer. You can schedule a free financial assessment call HERE to get some feedback on how to improve your finances and the programs we have available, including one-on-one coaching.