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    Amber from Montreal Asked:

    How can I budget and save without a secure income?

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    Budgeting without a secure income is the expertise of Lisa Elle who is both a Financial Planner & Cashflow Specialist. Here’s her answer:

    Budgeting and saving is sometimes challenging for most of us. Not to mention if you do not have secure or consistent income. So how do you budget and save without a secure income? What if you are on commission or unsure of the exact amount you will earn each month?

    I recommend before you take a commission based job without a secure income or base salary to have at least 1-2 months income in the bank as your safety net. If you are already working a commission job, this may be tricky, but best to have that buffer available to you. This may require some financial sacrifice for a few months. You may have to cut back on lattes and dining out for a little while until you have established enough savings that you feel comfortable with. I do think it is important to get a few months ahead, meaning don’t spend what you earned this month, but spend what you had earned a few months ago.

    Once you have your “buffer” savings set up, I would then recommend starting an emergency savings account in separate account. It’s okay if you have to build up your emergency savings fund slowly.

    It is best to set an amount you feel comfortable with and every month have that amount transferred automatically to your emergency fund.

    Without a secure income it can be frustrating to juggle your finances. Creating a safety net account and emergency fund will give you a sense of confidence and security.

    Most importantly, do not be too hard on yourself if you have a bad month. I have worked commission jobs many times. You have to take the good months with the bad months. It’s usually the good months that get us into trouble and give us a false sense of security. When money is flowing, that is when we need to be setting some aside for the bad times.

    Answered on July 18, 2016 Ask Another Question
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    Dani from Toronto Asked:

    I find making budgets complicated. What is the best way to make one, and then follow through by tracking and sticking to it?

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    Budgets… Ahhh! Our Financial Planner and Cash Flow Specialist, Lisa Elle, has got you:

    First of all, I don’t blame you at all for feeling that budgets are complicated. Actually, I think most people would agree that budgets can make you feel constricted, weighed down, and want to poke your eyes out. 

    Budgets feel like you are putting your money on a diet, and let’s be real here – that is NO FUN. If a budget makes you feel good, then by all means, please do one. However, as a financial planner, I have found that traditional budgets do not work for most people. 

    Traditional budgeting shows where all your money goes for a period of time, usually a month. Then we have to reconcile our plan to what actually happened. It’s like a test, putting pressure on us to see if we “passed” and followed the budget we created for ourselves.

    Budgets don’t actually put any plans into action. They are a snapshot of where our money went for that month. Budgets don’t inspire. Budgets don’t help you accomplish your financial goals. 

    Money should be fun. Let’s allow ourselves to make it fun again! So let’s reframe, throw out the word budget and all the negative feelings that go with it and create a cash flow plan.

    A cash flow plan looks at your income, expenses, lifestyle, and financial goals. They allow you to enjoy the things you don’t want to give up, like lattes and handbags, without guilt! And still help you fund your dreams. 

    Cash flow plans vary from person to person, however, here’s a simple formula to start with if you are feeling overwhelmed with where to start. You can change the ratio of this to suit your financial goals depending upon where you are. There are no set rules of money because everyone’s financial situation is so different.

    budget

    Also, set up separate accounts for savings goals, debt repayment, etc.  I find it so much easier when you have separate accounts set up for specific money goals and can direct money to them. Most banks allow you to have free bank accounts as part of your monthly fee packages. You can also automate money transfers to these accounts as well. Make sure to nickname them with your money goal as well (I have one account nicknamed Shoes!)

    This formula will get you headed in the right direction. Taking action will make you feel good about your financial situation. The bottom line is that you are only going to stick with a plan that you see is working, fun, and easy to stick with. 

    Answered on April 18, 2016 Ask Another Question
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    Ilana from Toronto Asked:

    I pay $5 for each transaction I make when I use my overdraft protection my chequing account. Is this normal?

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    Understanding how overdraft protection works

    We all need to manage our money and a big part of that is managing our cashflow, which is money coming in and money going out.  To help with cashflow challenges, most banks offer a product called overdraft protection.

    Overdraft protection is intended to help you through a very short term tricky situation where you have to make a payment and you don’t have sufficient funds in your chequing account. Perhaps a payment is due and you’re only getting paid in a few days.  It will allow your balance to be negative for a short period of time. Your account is known as overdrawn.

    Using overdraft protection is not like using a credit card.  There is no paying the minimum amount.  Every dollar you put back into your account until you get back to zero will go to paying off what you owe.

    For the privilege of using an overdraft on your account, you will have to pay for it. The fee can either come in the form of a fee per transaction, as you’ve outlined, fee per day or an interest payment. In some instances it may even be a combination.  Most banks require you to make at least some payment within 90 days of your going into overdraft. You’ll have to check with your bank to find out the details of your overdraft protection.

    Also note, that you have to be approved to have overdraft protection on your account and you will also only be approved for a certain lmonetary limit.  I think it is a great idea to have overdraft protection for your chequing account even if you never intend to you use it. Typically, it doesn’t cost anything to use it, but it is good to have just in case of an emergency.

    I wouldn’t use overdraft protection as a primary way to manage my money if at all possible.

    Limor Markman
    Answered on February 21, 2016 Ask Another Question
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    Saving for vacation
    Saving for vacation
    Adi from Sydney Asked:

    Vacations are a must for me! How do I balance being able to go on vacation and save for my future?

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    We all have elements of our lifestyle that are important to us, and if saving for vacation is important to you, then so be it.  Don’t feel bad about it, all you have to do is plan for it and realize that there is an element of trade off.

    If you value saving for vacation, you have to decide what area of your life you are going to reallocate your money from.  Perhaps you can live in a smaller home, dine out less, give up your membership at your overpriced gym, or something trade off from some other aspect of your life (it can even be a series of small trade-offs).

    There are also a range of different types of vacations from camping nearby to five star hotels at exotic destinations.  You can still achieve that relaxed and exciting away from home feeling no matter where you go, so take that into account when you make your getaway plans.

    I believe in having a spending plan that allows you to allocate money to what is most important to you in your life. You have to be mindful and intentional about what your money goes towards and having a plan and tracking it, will ensure you have money for what you value most.

    I can’t tell you what to not spend money on, but you must realize that not every area of your life can be equally important and something has to give.  I do urge you not to cut back on your emergency fund or your long term savings. Trust me, you’ll be grateful at some point down the road that you had foresight to allocate funds to these areas.

    You may want to check out LimorTV episode on Saving tips for ideas!

    Have fun on your guilt free vacation!

    Limor Markman
    Answered on February 19, 2016 Ask Another Question
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    Emergency Fund
    Emergency Fund
    Jeremy from Toronto Asked:

    What is the best way to create an emergency fund?

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    You need an emergency fund, because eventually it rains…

    I know this sounds simple, but to build an emergency fund, you have to start to put a little money aside every single time you get paid, even if it is just a few dollars. You may even want to ask your bank to automatically move the funds.  Also if you don’t have an emergency fund and you find yourself earning a little extra unexpected income rather than treating yourself put those funds towards your emergency fund.

    The point of an emergency fund is to have cash available in case you have unexpected expenses come up.  For some reason this seems to happen all the time even if you are very good at planning and budgeting. You also want set these funds aside in case of unexpected decrease in income.  If you have money put aside for the unexpected, then you won’t have to go into debt or borrow the money.  Emergencies by nature can be very stressful and you don’t want to have to stress about how to get the money at the point in time.

    You’ll also want to ensure that your emergency stash is large enough so that it can see you through the emergency!

    Limor Markman
    Answered on February 5, 2016 Ask Another Question
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    Should I go back to school
    Should I go back to school
    Dave from Guelph Asked:

    I’m thinking of going back to school, but finances are tight. Should I be investing in more education?

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    It is my opinion that in general, investing in yourself is the best investment you can make!  I’m a huge advocate for continuing to better oneself…always! The question should I go back to school is one that many people ask themselves.  I personally considered going back to school to do an MBA about six years into my career.

    The first question to ask yourself is why do you want to go back to school? I was unhappy in my job and was looking for a change, which is why I started evaluating schools and wrote the GMAT. For me, going back to school wasn’t the right answer. I loved my career and making a directional or educational change would not have benefited me at that stage.  Sometimes, when things aren’t quite right in our careers, we think going back to school is the answer.

    If you decide that you want to go back to school, you have to consider what the extra education/ skill set / degree will do for your career.  Will it help to further your career in the direction you’d like to go?  Will it enable you to earn more money in the future?

    If the answer at this point is YES, to should I go back to school you now have to consider the financial implications. if the answer is yes, to should I go back to school.  How much will the program cost you? Are you able to do it part time or will you have to leave your job to be able to go back to school?  Will you have other additional costs like childcare or transportation that you need to account for? How long will it take you to recover the cost of the program?

    Also don’t forget that you can always apply for scholarships to help with the cost of your education. If the education is related to your current job you may be able to get some or all of the tuition covered by your current employer.

    Don’t forget, there are many different types of education, and there are many ways to improve your skills that don’t all entail a multi-year program.

    Keep learning and growing,

    Limor Markman
    Answered on February 2, 2016 Ask Another Question