Top 4 Emergency Fund Tips

/in , /by

Financial gurus frequently mention that having an emergency fund worth three to six months of your normal expenses is crucial to financial success.  With that in mind, we set out to answer the top 4 things you need to know about emergency accounts.

1. HOW DO I START?

They say a journey starts with a single step.  The same is true of creating an emergency account.  No matter your stage in life, having money available to cover both small (i.e. vet bills) and large (i.e. job loss) unexpected changes in your finances can drastically reduce your stress.  What you invest in is less important than building the funds to cover these scenarios! 

2. WHAT TYPE OF ACCOUNT SHOULD I SAVE IN?

Start by creating an account specifically for emergencies.  The key to an emergency fund is having quick access to your money without paying significant fees for transfers or being subject to a market downturn.  A high interest savings account is a good choice.  If you have room inside your Tax-Free Saving Account, you can hold your “emergency focused” high interest savings account there, which will save you money on taxes.   

**Masterclass Hack** As your emergency fund grows, you may want to keep a portion of it in your high interest savings account for smaller emergencies, while holding the other portion in a low-risk investment to take advantage of higher returns.  This option carries higher risk and is only recommended for those who have multiple months’ worth of emergency funds saved.    

3. HOW MUCH?

Set up an automated transfer from the account where you receive income to your emergency account.  How much?  Consider the amount you can afford without needing to move the money back to your primary spending account!   

**Behavioural hack** By setting the automated transfer to the same day you get paid, you may forget the transfer even happened and simply get used to living on what remains in your spending account.  As you gain momentum, think about elevating how much you save as your income grows.  For example, if your salary goes up by 5%, boost your emergency fund contribution by at least that amount.   

It may seem far away, but at some point, you will reach your 3 to 6 months’ worth of expenses goal!  Once you are there, it is time to focus your extra funds on your other financial goals. 

4. I HAVE AN EMERGENY!  NOW WHAT?

We’ve all been there.  It’s minus 40 and the furnace stopped working…  The good news is you set this money aside for a reason and now you don’t have to stress the unexpected expense!  Having a good understanding of what it will take to refuel your emergency account should be something you learned from your journey so far.  Rebuild that account! 

Want more information on building your emergency fund?  Our Conexus financial gurus are just a call or email away!  

5 Tips for Managing Money During Extreme Weather Events

/in , /by

We live in Saskatchewan – we know how unpredictable and harsh the weather can be. Are you set up to be able to navigate the impact a severe weather event can have? This blog looks at ways you can safeguard your financial well-being in the event that the weather makes a dent in your budget. After all, you may not be able to control the weather but you can impact how you can respond to it.

Wildfires, heatwaves, tornado warnings, blizzards – we hardly have dull moments with the weather these days! I learnt that adapting is easier when we have a plan in place. We are a family of planners. We have a plan for everything from groceries to summer vacations to having a retirement plan. But honestly, none of these plans have ever accounted for a severe weather event.

A recent letter from my home insurance company got me thinking. Our home is no longer covered for flood damage if the flooding is caused by a body of water. We must pay an extra premium if we need coverage.

After some time on the internet, I realized the hidden costs we face are due to global warming. Phew, this blew me over! Saskatchewan is a province of resilient people. No one keeps track and is ready for changing weather patterns more than us.

But are we ready to see extreme weather events in greater numbers? Are we ready to add a variety of costs to our day-to-day living?

Let’s scratch the surface on the costs that can add a dent to a monthly budget. Here are a few that have impacted my family:

  • The increased cost of insurance coverage for home protection
  • Increased heating and air conditioning costs
  • Comprehensive insurance packages

Here are few changes to the way we handle money and that has helped me feel more confident:

Communicating with my family and prioritizing expenses

We sat together and compared monthly budgets from past years and identified weak spots. For example, we discovered there are cheaper internet plans available, the money saved there can go towards increased utility bills.

Setting aside some funds every paycheck

This seemed the toughest when I tried doing it myself. My emergency saving funds started accumulating only when I reached out to my financial advisor. I followed her advice and have now set up a pre-authorized debit from my chequing account to an emergency saving account every paycheck.

Getting buy-in about saving resources from the family is teamwork after all

We agreed on using natural light as much as possible. After all, Saskatchewan has 300 sunny days on an average per year! Getting creative about saving resources is also fun. My daughter came up with a plan of recycling water from the sump pump to water the plants during the heatwave this summer.

Completing annual maintenance of the water heater, furnace and HRV system is on my to-do list of annual home maintenance

Prioritizing annual maintenance and upkeep on these things can drastically impact the length of time they can go without being replaced. If you’ve ever had to shell out money to replace a water heater or furnace before, you can definitely relate to how quickly it eats into months of saving.

Shopping around and researching insurance at the time of renewal

We noticed we often got complacent and renewed our insurance from the same provider every year. There are so many options available that can suit all budgets. It all starts with researching and ensuring to read up on the documents until the end to know if you are covered for uncertainties.

Check out this MONEYTALK blog on quick tips to save on insurance.

We never know how bad or how quickly a weather event can set us back. Adapting has been an ongoing process and knowing that my family and I have taken baby steps toward handling our money in order to adapt to these changing times gives me peace of mind.

It’s Time to Talk About Wills

/in , , , /by

Having a conversation about your will is something that nobody wants to do but needs to be prioritized. Not only is it intimidating, but nobody enjoys discussing what happens when they die. This blog breaks down what you can expect during the process and how to get the conversation started. 

Where there’s a will, there’s a way…. for you to have the last say.

Why do people avoid writing their last will and testament? It’s a fact, we’re not immortal. We all have an expiry date but continue to make excuses to not have the uncomfortable conversation. An Angus Reid survey revealed that 51 per cent of Canadians had no last will or testament. Of those who did have a will in place, 35 per cent admitted to it being out of date. I’ll admit, I’m one of those people and I have experience in dealing with a parent with no will and one with an outdated will – lots of work and heartache.

What’s the top reason for not having a will according to the survey? People think they’re too young to worry about it. Yes, we all hope to live to a ripe old age but there are so many factors that can come into play and chances are, most of us won’t leave this earth that way.

If you’re 18 years or older, whether you own any assets – solely or joint, in a long-term relationship or have dependents (this includes your pets) – you should have a will. It makes everything easier for those who are left to deal with your estate. People have trouble making daily decisions like where and what to eat. Try making important decisions in times of extreme grief and heightened emotions. Who makes these decisions if you don’t have a will? The law will decide (on your dime) what happens to your assets and dependents and their choice may not be what you had in mind.

Having a Will Uncomplicates Everything

Writing a will doesn’t have to be complicated. It’s actually more complicated if you don’t have a will especially if there is business ownership involved, property in a foreign country or second marriages with children in the equation. Luckily, there are experts to help you every step of the way.

To get started, all you need to do is set up an appointment with a lawyer and bring along some information. This may require you to do a bit of homework.

Here are a few things you will need to bring:

  • Valid government identification
  • The name of the person to be your executor. You will need to ask the person if they are willing to take on this responsibility. It doesn’t have to be a family member. It can be a close friend, relative or trust company – someone you feel is trustworthy.
  • If you have children or pets, the name of the legal guardian you want to take care of your children after you are gone. It’s a good idea to have a discussion with the person(s) to ensure they are willing to take on this responsibility and the financial implications that may incur.
  • List of your beneficiaries and assets you wish to bequeath to them. This includes any donations to charities.
  • List of insurance policies including company names and addresses.
  • Name of your financial institution(s), list of accounts and investments.
  • Funeral/burial instructions. These do not have to be elaborate unless you want them to be. They may just state whether you want to be cremated or buried and where?

Be Prepared Financially

Depending on the complexity of your estate, costs can run anywhere from a few hundred dollars to thousands and often, more than one trip to the lawyer’s office.  A less expensive alternative is online services such as Willful and LegalWills which allow you to create a customized legal will. However, you’re still required to print and sign your documents to make them legal along with the signatures of two witnesses.

Did you know that your witness can’t be anyone who benefits from your will? Canadian law also requires that in order to be legally-binding, wills must be physically printed and stored offline. With the restrictions of COVID-19, Saskatchewan now allows you to have your will witnessed over video chat but one of the witnesses must be a lawyer in good standing with the provincial law society.

Be aware that if you expect to have a complex will, online platforms may not be the best choice to capture all the legal requirements necessary.

Make It a Priority

Don’t delay any longer. Make it a priority! It may take twenty minutes online or two hours in person, but the peace of mind it will bring for everyone involved will be worth it. Planning ahead will help reduce stress and avoid arguments between loved ones. Plus, as we’ve learned in the last year dealing with a pandemic, it’s always good to have a plan in place for the unexpected.

Remember, your will is not written in stone. It needs to be updated when you have a life changing event such as getting married, divorced, having children or if you no longer own the asset you bequeathed.

It all comes down to choice – your choice. Don’t leave it to chance. Let the last decisions made be your own.

Visit the Public Legal Education Association (Plea) to learn more about wills and other legal topics specific to Saskatchewan and Canada.

Buying a Second Home – Where Do I Start?

/in , , , /by

You’ve already been through the process once and bought your first home. But now your mortgage is up for renewal or you’ve outgrown your house or for any other number of reasons, you’ve decided it’s time to move onto your next house. Because you’ve done it before, you know how the process works. But there are some things that you should consider with your second house that you didn’t need to with your first.

Budget vs Pre-Approval – yes there can be a difference

Buying your second house, generally means you will be spending more than you did on your first. So one of the first things you should do, like with any big purchase, is figure out your budget – what you can actually afford to spend. Yes, you will get pre-approved for a mortgage to find out how much money your lender is willing to give you, but there can be a HUGE difference between this amount and what you can afford to spend. Before you even think about contacting a realtor, you should sit down and look at your budget to see how much extra you can afford and what that extra amount going towards your mortgage could mean for the rest of your budget. It may mean that you will have less money to go on vacations or you need to reduce your discretionary spending. Talking to your financial advisor is another great way to figure out how much extra mortgage you can personally afford.

Stick to your budget – don’t even see the carrot

Once you figure out what you can afford, you need to make sure your realtor knows that amount and sticks to it. It’s so easy to fall in love with the 3,000 sq ft open concept house with the huge restaurant style kitchen with granite countertops, stainless steel appliances, dual temperature wine fridge, four bedrooms, finished basement, etc. You may even begin bargaining with yourself to justify the  price tag that is $50,000 above what you can afford. The easy solution? Make sure your realtor knows that you do not want to see anything above your budget. On a side note, if anyone is selling a house like I just described, please let me know…

Figure out what you need  – what does your dream home have?

You’ve learned a lot, and maybe sacrificed a few things, with your first house and those learnings will really help you figure out what you need for this new house. Maybe it’s more space, more bedrooms, a garage (attached or unattached), walk-in closets, a breakfast nook, office, multiple bathrooms, a bonus room, a finished basement, etc. The list of options is endless for things you could want in a new house, but you need to really decide what your non-negotiables are. Maybe you need a separate bedroom for each of your two kids and you also want to have a guest room for family that comes to visit and you need an office space because you work from home, plus your master bedroom. So you need a 5 bedroom house. You don’t want guests having to walk all the way upstairs to use the bathroom, so you need a main floor bathroom. If you live in Saskatchewan, you probably need a garage.

The clearer you can be on what you need in a house, the easier it will be for your realtor to find you the perfect one.

Settling vs Compromising – it’s all a matter of perspective

We all want that diamond in the rough – the perfect house with everything on our wish list that is below budget. But very few of us will actually get it right off the bat. The key is in shifting your perspective. Maybe that means getting an older house for a lower amount that with a bit of work can become your dream home? Perhaps it means getting a bit less square footage so that you can get the big backyard? Maybe it’s considering moving out of your desired neighbourhood? None of these things need to be considered as settling because it’s all about compromising and deciding what’s most important for you.

Ready to start looking?

  1. Make a list of things you find yourself saying “I wish I had…” in your current house.
  2. Check out current listings in your area to see what’s available and what you do and don’t like.
  3. Try out a mortgage calculator, like this one, to see what different mortgage amounts would mean for monthly payments.
  4. Talk to your financial advisor for help figuring out what you can afford

Good luck in your home search!

Celebrating Credit Union Day: Building Financial Health

/in , , , , /by

Today is Credit Union Day – a day to pause and reflect on what it means to be a Credit Union and why we exist. For us, it’s to improve the financial well-being of members and communities. This year’s theme celebrates Building Financial Health for a Brighter Tomorrow. At Conexus, we believe a brighter tomorrow is the result of a well-equipped financial toolbox. Having the tools, knowledge, confidence, and resources to help guide you through difficult decisions and situations and find balance in your finances. Let’s dive a little bit deeper into what that means.

Finding balance in your finances is key to reaching your goals – but it isn’t always easy to achieve. Knowing where you should be focusing your efforts, how much you should be saving, identifying goals, the list goes on. Even Eric Dillion, Conexus CEO, and Joel Mowchenko, Conexus Board Chair struggle with financial well-being from time to time. Eric shared, “your income doesn’t matter – people experience the same emotions around money, and they aren’t always positive.”

To make it easier, we’ve defined balance using four categories: Spend, Debt, Emergency, and Save.

Spend

Understanding your spending habits is about knowing the amount of money you have coming in versus the amount of money you have going out. AND this truly is the foundation of money management – getting to a place where you spend less than you earn on a consistent basis.

What is comes down to? Awareness of where your money is going.

You’re probably sick of hearing this, but managing your spending well is about understanding your wants versus your needs. Here are a few tips:

  • When you’re thinking about making a purchase that is a want, sleep on it! If you wake up the next morning with the same desire to purchase, it’s likely a sign it’s a better purchase.
  • Try considering your “want” purchases in terms of hours you’d need to work to pay it off. Does it still appeal to you on the same level?
  • Ask yourself, what are my money thieves? Those, often small, but compounding purchases that can quickly add up over time. Understanding what these are can be a good reality check.

Here are a few blogs that help break this down even further:

  1. “Ouch, My Budget!” – Tips for Getting Your Finances Back on Track
  2. What I learned From My 90 Day Spending Freeze
  3. Kick-start your finances: tracking your spending

Debt

Debt is inevitable – but it’s often given a reputation for being bad. While not all debt is bad, regardless, it’s important to have a plan to pay it off. Here are two key things for managing your debt effectively:

  1. Avoid carrying a balance on high interest debt products

Although appealing at first, it can cause you to quickly spiral into a sea of debt. For example, carrying a large balance on your credit card from month to month. This can be very expensive and impact your potential for saving.

  1. Know how much of your income goes to paying debt (A.K.A “Debt Servicing”)

As I mentioned, debt is inevitable. It’s often needed to purchase a house, buy a vehicle, for school, etc., but having the right balance of debt-to-income is important. Its recommended to keep this percentage at or below 35%, and if you are more risk-averse, the lower the better with this number.

Looking to dive deeper? Check out these blogs:

  1. Good Debt vs. Bad Debt
  2. Top 5 Strategies to Pay Off Your Debt
  3. Credit Cards 101
  4. The Real Cost of Carrying a Balance on a Credit Card

Emergency

We’ve all had them. Those unexpected situations that disrupt any financial stability or plans we might have had. From cracking your phone screen and needing to replace it, to your water heater breaking – having an emergency fund can ensure you’re financially prepared.

When you have your spending in check and you are not carrying a balance on high interest debt, it is time to build an emergency fund. Best practice is to have between 3 and 6 months of “usual expenses” available in case of job loss, sickness, family emergency, etc.

You are likely thinking… my goodness that is a LOT of money. It is. Trying to break it down into manageable steps will help you get there. Further, keeping your emergency fund in a separate account is proven to help keep you accountable.

Where should you keep your emergency account?  A high interest savings account, redeemable term deposit or low risk investment fund are all possibilities, depending on your risk tolerance!

Check out, The importance of having an emergency fund, to learn more.

Save

Okay!  Made it.  Spending is in check.  Not carrying high-interest debt. An emergency fund is on its way. It’s time to think about short term and long-term savings goals!

For your short-term goals, be it a down payment on a house, a new bike or a trip to Europe, it’s key to plan for these expenses in advance.  Like an emergency fund, it is ideal to hold these funds in a named separate account (keeping your eye on the prize) and contribute to them on an ongoing basis.

For long-term goals, like retirement, the concept of paying yourself first remains key here.  Again, moving a certain percentage of your income towards your long-term goals on pay day is a great strategy.  Making this automated, to remove any barriers or reasons not to contribute, can help keep you on track.

Want to know more? Give these blogs a read:

  1. The Gift of Goals & How to Reach Them
  2. What Does it Really Mean to Pay Yourself First?
  3. The Key to Basic Savings
  4. When should I ACTUALLY start saving for retirement?

Joel Mowchenko shared, “financial health is how we think about money, how we relate to it, how we interact with it”, and everyone’s version is going to be different. Having a well-equipped financial toolbox; the knowledge, confidence, and resources, will ensure you’re building a healthy relationship with money, ultimately enabling the life you want to live.

At Conexus, we’re working on building a financial tool that will help members balance their spending, get control of their debt, and set up emergency and saving goals. If you’re a Conexus member and you’re interested in being a test user, sign up here to join our waitlist. We’ll contact you from there.

Good Debt vs. Bad Debt

/in , , , /by

The word “debt” is usually met with a negative connotation but what if we told you that it isn’t always such a bad thing? This blog breaks down the difference between good/bad debt while highlighting strategies for responsibly managing it. 

Good Debt vs. Bad Debt

When I was younger my mom told me that there were certain “four letter words” that I wasn’t allowed to say. Debt was not on the list, but I ended up adding it to the category myself. Partly due to horror stories I heard about people being in debt and partly from being naïve about how debt worked. Because of this, I didn’t want a credit card or a loan and I bought my first car in cash. It wasn’t until I had a conversation with a financial advisor that I began to learn that there are two types of debt: good debt and bad debt.

It wasn’t necessarily good debt vs. bad debt, but more the management of debt that was good or bad. To help illustrate this, maybe you’ve heard some of the following statements:

  1. Thanks for helping me. I owe you one.
  2. I forgot my wallet, can you spot me? I promise, I’ll pay you back.
  3. Can you work my shift this weekend? Next weekend I’ll work for you.

Each one of these scenarios is a form of debt. When we borrow something with a promise to pay it back, we are in debt until the item is paid back. There is nothing inherently good or bad about these situations. What makes them good or bad is the ability or inability to pay back the debt.

Financial Debt

Just like paying our friend back, when we borrow money from our credit union or bank, we have to determine if we are able to pay the debt back. We must be willing to ask ourselves honestly if we are in a good position to pay back the debt or not? Borrowing money can be a great tool, but if we cannot pay back the debt, it can be incredibly destructive and becomes one of those “four letter words.”

As we can see below, borrowing money can be a great tool:

  1. Student loans allow us to get a higher education before we are 40
  2. Car loans help us with transportation for work, school, and holidays
  3. Credit cards give us access to funds and help build a good credit score
  4. Mortgages allow us to buy that dream home before we retire

Once I understood that debt was not the root of all evil, I shifted my gaze to managing my debt rather than worrying about it.

Managing Debt

When it comes to managing debt, every situation is different. Rather than focusing on how to manage debt, here are some things I do every time I’m looking at borrowing money to ensure I’m able to pay back the money I borrow.

1. Talk to an Advisor: If you only take one thing away from this entire blog, this is it. Always talk to a financial advisor before you borrow money. When you do talk to your financial advisor, listen to their advice.

Anytime I’ve ever had to borrow money, or take on more debt, I’ve booked time to talk through my finances with my financial advisor. This includes before getting a new credit card, increasing my credit card limit, buying a new car or boat, adding overdraft protection. If you don’t have a financial advisor, I would recommend seeking one out like a family physician. Find someone who can stick with you and give you sound advice. My financial advisor knows everything about my finances. She knows how much money I make, how much I spend, my passions, my goals, what I’m saving for, what things stress me out and more. Because my advisor knows me, she is able to advise me.

2. Can You Afford the Debt?: Before you take on debt, either for the first time or you’re taking on more debt, ask yourself (or your advisor) if you’re able to manage the debt. Could you manage the debt if you lost your job or if an unexpected expense came in?

There are options to help manage unexpected debt such as debt consolidation to have a lower interest rate. This is another great reason to talk with an advisor. Financial advisors are experts and may know products and services to help you that you may be unaware of.

3. Paying Off Your Debt

The biggest difference from paying your friend back for a meal and paying your loan or credit card is interest. Interest is the cost of borrowing money. If you are unable to pay back your debts, the interest can quickly add up so it is very important to ensure you are in a good place to manage debt before taking it on. One of the best tips I can give you when it comes to managing debt is to always pay your monthly bill, and if possible, pay off your debt as quickly as possible. Especially credit card debt as the higher interest rates can do a lot of harm if you aren’t careful.

Good debt management means being able to pay off the money you borrow consistently, and if possible, as quickly as you can. Paying of debt quickly helps save you money by lowering the amount of money you will end up paying towards interest.

4. Are You Borrowing for a Need or a Want?

Like we talked about earlier, borrowing is neither good nor bad, but sometimes we can take on unnecessary debt that can put us in a bad position. If we already have a credit card that is almost at the $10,000 limit, then taking on a new debt for a boat might not be the wisest decision. The decision to wait and save some money or wait and pay the credit card off might be the better choice.

Talking with your financial advisor about managing current debt or taking on future debt is absolutely critical. They are the experts. My financial advisor has dealt with loans, credit cards, and debt management for well over 10 years. She has likely seen and heard of almost every situation regarding debt and I rely on her expertise, opinions and advice.

Final Thoughts

Debt is a tool and comes in different shapes and sizes. It can help us with unexpected expenses or help us take our dream vacation. However, when debt isn’t managed properly it can lead to stress, anxiety, broken homes, damaged relationships and so much more.

Everyone’s financial situation and lifestyle is complex and unique. Before taking on debt, you should always talk with your financial advisor who can help you develop a clear plan to manage and pay off the debt so you can take on debt confidently.

Happy borrowing!

A Grad Student’s Guide to Going Back to School

/in , , /by

Contemplating heading back to university for grad school? This blog breaks down the obvious and hidden costs while providing tips to manage the change.

Here I go again!

Just when I thought I was done with being a student, I’m heading back to university, but this time as a business grad student at the University of Calgary.

Back in June 2020, I made the decision I wanted to go back to school to complete my Master’s Degree in Business Administration. This decision is one I didn’t make lightly as it comes with some big costs, sacrifices, and a lot of life changes. From the moment I made the decision to accept my spot into grad school, I spent many hours thinking about why I wanted to do this, what I wanted to get out of it, researching various schools, studying for the entrance exam, preparing my applications, and doing interviews.

After being out of school for so long you forget about how much time and money it takes to even just apply.

3 things to know before applying to grad school

This new adventure hasn’t come without some big changes. I’m living in a new city, balancing work and my studies, and managing the pressures of increased financial demands. Depending on your situation, you might find yourself in a similar situation. But if it’s the right path for you and something you are determined to do, then in the end, its worth it.

Here are three questions that helped me determine that this was the right path, complete my applications, and prepare for all the changes that were about to come:

  1. What are the financial demands?

To put this simply – graduate programs are expensive! However, every program and school are different and there are many options available to lessen the financial load. It’s important that you understand what to expect for tuition, student fees, books, etc. so that you know what supports you might need and how much you’ll need to save.

  1. What’s my why?

On top of the financial demands of a graduate program, they are also quite intensive and require a lot of time in and out of class. Knowing your “why” will ensure going back to school is the right decision for you, assist in choosing what classes you want to take and help give you that push to study when your motivation is running low.

  1. What program is right for me?

There are endless options when choosing a program. Once you choose a discipline, you’ll also have to map out your specialization or focuses, executive programs, accelerated programs, part-time/full-time course load, etc. Make sure to do your research and tailor this experience to you.

Costs to consider

When I was thinking of going back to school, I immediately considered all the obvious costs like tuition, books, and student fees. What I didn’t expect were all the expenses that would come before I even got in. According to Stats Canada, on average a Master’s in Business Administration costs roughly $27,000 and that only includes tuition. In the table below, I break down my expenses from applications to tuition.

 

Note: My program is accelerated meaning it has fewer classes. If I was applying for a typical MBA at this school, the total costs would be approximately $7,000 more.

On top of the costs that come with school, I also had to consider the costs that would come with this big life change. Including:

  1. Moving to a new city
  2. Lost income

Not being from Calgary meant I would be moving. These costs include rent or the purchase of a new house, moving costs to rent a U-Haul, packing boxes, and all the fees that come with it. For some, it will also mean lost income. For full-time programs, you are typically required to take three classes at a time and they tend to be during the day, making it much more difficult to work.

Tips on managing the costs

While all the expenses outlined above can seem overwhelming, there are lots of resources available to support students:

  1. Look into scholarships and grants – do this early and do your research!
  2. Employer education programs – talk with your employer to see if they offer any supports to employees looking to further their education.
  3. Student financing options – such as student loans or student lines of credit.
  4. Personal savings – if you can, start putting money away each month into a savings account.
  5. Look into part-time programs or executive programs – both are designed to allow students to work while completing the program.
  6. Ask yourself, where can I start cutting costs now to save more? Consider your wants versus needs.

In the long run, depending on your career goals, going back to school is worth it. But it doesn’t come without an adjustment period. Just remember, make sure you understand the financial demands, know your why, and do your research to find the right program for you.

Credit Cards 101

/in , , , /by

Our world is a little bit different now and so is the way you pay – less cash, more credit cards. But before you sign up for a credit card for the free stress ball or the chance to win an iPad, it is important to know why you should consider a credit card in the first place, how to choose one that is right for you, and understand how to use it.

Why Consider a Credit Card?

If you’ve been living that cash life you may have noticed a shift in preference for people and availability at retailers for a contactless transaction. If you’ve never had a credit card, you’ve probably had to rely on your parents or your friends to hold that hotel room for your annual girls trip or to simply complete your Amazon order. Here are some of the benefits of having a credit card in your wallet:

  • Opportunity to build credit
  • Make purchases online
  • Handle emergencies or unplanned expenses
  • Contactless transactions
  • Ability to put a hold on a hotel room or car rental
  • Ability to earn points and redeem for cash back, travel or merchandise
  • Purchase protection and extended warranty

Before Adding a Credit Card to Your Cart

Stress ball or iPad aside, choosing the card that is right for you is the most important part of the process. Credit cards offer a variety of different features with the key differences between being interest rates, the fees and the rewards and benefits. This page does a great job of breaking down the different factors you should consider when choosing a card:

Compare credit card interest rates

The interest rate, which is the price you pay for borrowing money, may be an important factor to you if you regularly carry a balance. Although, spoiler alert, in the tips for using a credit card section below, I’d recommend always paying your credit card bill in full on-time and avoiding carrying a balance if possible.

Compare credit card rewards and benefits

Many cards offer benefits like rental or travel insurance and rewards programs that allow you to earn and redeem points for cash back, statement balance credit, travel and accommodations or merchandise to list a few popular examples. When comparing, you’ll want to think about which are appealing to you, how often you’d use them and understand how you accumulate points and any limitations to earning the rewards and benefits. This article also includes a few examples of estimating the value of rewards and benefits to help guide you.

Compare credit card fees

Credit card fees can include anything from the annual fee (which usually means the card offers extra rewards and benefits or a lower interest rate), to cash advance fees, to inactive account fees, and more. When choosing a card, make a list of all the fees that could apply and understand which you have to pay and which ones you can avoid by learning how to use your card properly.

There is a lot to think about when choosing the card that is right for you, especially since there are so many options out there. If at any point you’re feeling overwhelmed, I would recommend reaching out to friends, family or a trusted financial advisor to get their opinions and experiences!

Tips for Using a Credit Card

Whether you are a new card user or have had a card for years, here are some tips to keep your credit card game strong:

Pay your bills on-time, in full – not just the minimum

This is something I wish I would have known when I got my very first credit card. Without knowing any better, I thought paying the minimum was standard and I’m still not quite over the fact I let my hard earned dollars go to interest simply because I didn’t understand that I would be charged on carrying a balance.

You will never pay interest if you are paying your bill on time and in full each month. Paying in full can also help you spend within your means. Want to know the real cost of carrying a balance on your credit card? Check out this blog for a breakdown of the actual cost and even better, a tool to figure out how long it might take you to pay off your balance!

Make it a routine to pay attention to your credit card bill

Review your charges – this way you can view and adjust your spending habits as well as report unauthorized charges. Rest assured, many cards have you covered with “Zero Liability” if that were to happen!

Use your card to build credit

Lenders and credit card issuers want to see how you use credit for future lending. Your credit score is determined by how you manage your card, so make purchases, make payments and take advantage of card benefits and rewards. If you display a pattern of being able to pay off your card with no issues each month over a long period of time, lenders will trust you more and will be able to offer you more credit for bigger purchases (ie: house). To learn more about the importance of credit, check out this blog for the building blocks of credit and how to use it responsibly.

Take advantage of the card benefits and rewards

You will want a card that gives you something in return – so understand the card benefits, rewards and features and take advantage! For example, if you’re earning points – use them! I personally love to use my points towards flights to feed my travel bug but while I’ve had travel on pause, I’ve been taking advantage of redeeming my points for cashback straight into my savings account! Some other options for points redemption can include a statement credit or spending them on merchandise items like gift cards to stores and restaurants. What does your card offer?

Sharing is caring, what other tips would you suggest to keep your card game strong? Comment below!

Managing Money as a New Canadian

/in , , , , , , /by

Moving to a new country and becoming a new Canadian is incredibly intimidating. Not only do you have to know a whole new currency, you have to learn to manage it as well. This blog features a story from a new Canadian from India who breaks down what they learned by establishing their financial well-being in their brand new home. 

Humble Beginnings

On January 22, 2018, I landed in Regina as a new Canadian on a cold night with my husband and my 10-year old daughter. In 2019 alone, approximately 85,000 immigrants landed in Canada from India making it one of the main source countries for new immigrants to Canada. I am so excited to be one of them.

Our family of three came to Canada carrying around $30,000 CAD (~1.7M INR) of survival funds. We knew that if we weren’t careful, we could spend all of it in the first six months – especially if we did not secure a job so it was important to be cautious with our spending until we got our legs under us in our new country. We educated ourselves about spending money in Canada by not shying away from asking questions to colleagues, neighbours and fellow immigrants.

Little did we know, that $30,000 could quickly dwindle on things you didn’t even expect to purchase when adjusting to a different environment. For instance, the three of us had never purchased winter jackets before but it was an essential buy as we had moved midway through winter in Canada. We had a choice to make between thrifting or buying. “Frigid” would be an understatement when it comes to Saskatchewan winters so buying new jackets to last us for years was a reasonable choice.

We leased a condo apartment in the first week of us having landed in Canada. Putting cash down on a used van to ensure we were mobile and independent was also important to us. We shopped for kitchen supplies from the dollar store and our furniture shopping ended after buying a box spring and a few mattresses. We were ready to take on the world and build our new nest each day, piece by piece!

Budgeting

Finding a job as a new Canadian is hard. It took us five months to get stable jobs that covered our monthly expenses and allowed us to begin our savings again.

Being salaried employees in our previous jobs, my husband and I were well-versed in the principles of budgeting and saving for retirements and emergencies. Having a conversation about budgeting and setting strict spending rules was a great place to start. Our google spreadsheet had titles like groceries, gas, utilities and even alcohol & salon expenses. Every little detail mattered and was essential for us to plan better. We now use the Conexus Budget Calculator. This is a wonderful tool that allows you to get a clear picture of monthly expenses in percentages.

A perception survey conducted by Insightrix in 2020 stated that 62% of Saskatchewanians say money causes stress and 61% say their top financial concern is not having enough savings for emergencies. Being disciplined in saving money may seem like a hassle at the time, but it quickly transforms into hope, security and confidence as you know you are covered for emergencies and you can take comfort in the fact that you are actively contributing to your future (ie: down payment on a future home).  We have learnt over time that categorizing savings in different accounts and naming them after our goals/purposes (ie: “vacation”, “home expenses”, “miscellaneous”, “emergency”) is helpful for staying on track. Here’s a helpful tip: you can save emergency savings in a TFSA account as well as the interest earned on that account will not be taxed.

Building Our Credit

As a new Canadian, it’s important to start building your credit score as soon as possible. In most cases, the credit history you’ve built in your home country does not transfer into Canada and unless there is enough cash to pay up front for all purchases, a family will need to work towards building a decent credit score.

To get credit, you need history and to build history, you needs to get credit. This is a vicious circle!

We were lucky to get approved for basic credit cards with no annual fees under the newcomers’ program.  In cases when a financial institution does not have a program like this, you can opt for a secured credit card.

When building our credit score, doing these things helped build it up faster:

  • We ensured that we paid out the card fully every month before the due date
  • Avoided cash transactions
  • Used no more than 30% of our credit limits
  • Avoided unnecessary credit applications

Our First New Car

As we were taking baby steps towards settling here, we were yearning to buy a new car. Being avid road-trippers, getting rid of the van and buying an SUV was at the top of our list.

We thought a six-month credit history was enough and started car shopping around summer. However, we soon found out that six months was not going to cut it. After trying four different dealerships, 11 hits on our credit report and waiting for an additional three months, we managed to get a loan from Ford Credit after we accumulated nine months of credit history. We did manage to hit the road before fall with our first camping trip to Moose Mountain in our brand new black Lincoln MKX Reserve.

My experience of working in a credit union helped me understand the importance of saving and having a good credit score. However, a few things should be left to the experts. For instance, I wish we had met with an advisor for the car loan before venturing out on our own. The 11 hits on our credit report knocked our score down further and that cost us time to rebuild the credit.

Buying Our Home in Regina

Coming into a new country – you are faced with the decision: “Should I buy or rent?” Our decision depended solely on the fact that we needed stability, preferred paying a mortgage versus renting, and having a place we could call “our home”. A mortgage seemed like a better option and a better use of our savings. We used money saved from our survival funds and extra savings from our jobs for a down payment. Researching the importance of having a Registered Retirement Savings Plan (RRSP) was also crucial for us. We opened our RRSP account as soon as we started working and set up direct debit contributions into the RRSP account. RRSPs can help you save for retirement, save taxes and you can withdraw from an RRSP account for a down payment under the first time Home Buyer’s Plan. This withdrawal helped us with extra wriggle room for buying new furniture and paying lawyer fees. A first-time home buyer can withdraw up to $25,000 from their RRSP account without worrying about taxes as long as they pay back the withdrawn amount within 12 years. We managed to get keys to our new home in July 2019!

We Are Still Unfinished

Financial literacy is a critical life skill. I was lucky enough to learn a lot by working for a credit union and could pass it down to my husband. We often wonder how things would have shaped up differently if my career path took me to a different profession. We try to financially educate every new Canadian we come across and try to make the transition easy for them. Our friends believe we have a story with a happy ending. We believe that we are still learning the fine skills of being financially healthy and staying on track while continuing to do what we love – traveling, camping, and living each day as it comes!

If you are a new Canadian and are on your own journey, I wish you the best of luck. If you have any questions – don’t hesitate to reach out to a Conexus financial advisor who are here to help you out, every step of the way.

Eliminating the Stress in Buying a House

/in , , , /by

Buying a house is stressful. At least, that’s what I hear. As someone who is planning on buying a house within the next few years, I want to make sure my experience is stress free… or at least as stress free as humanly possible. That’s why I decided to do a little sleuthing to see if I could uncover some tips and tricks to improve the home buying experience so that you can enjoy the process as much as possible. 

Tip #1: Use a Real Estate Agent

Simple, right? Using a real estate agent will definitely cut down on the amount of stress you feel while purchasing a house, especially if you’re working with someone you can trust. Yet as of 2020, 12% of people still don’t use them. Why?

Well, most people who aren’t using a real estate agent are looking to save money. This can work out if you’re already familiar with the property and are buying from someone you trust, like a family member. But if you’re looking at properties that you’re not familiar with, it has the potential to lead to all sorts of issues. Long-term, not using a realtor has the potential to cause far more stress than using one.

But what about the money? Well, using a realtor may not be as expensive as you think. Of course, it’s not free either. You will need to pay realtor fees. But the real estate agent’s commission generally comes from the seller, not the buyer. So, it may not add up to quite as much as you expect.

Using a real estate agent does come with its own stresses (we’ll get to some of those later) but overall, it’s the correct choice for most people.

Tip #2: Get Pre-Approved for a Mortgage

While doing my digging, I decided to reach out to our team of Mobile Mortgage Specialists to see what the number one tip they would give prospective home buyers was. The answer was nearly unanimous: get pre-approved for a mortgage!

What exactly does that mean? Well, it’s just like it sounds. Having a mortgage pre-approval means that a lender has reviewed your financial information and has determined that they would be willing to provide you with a mortgage to buy a house. Having this in-hand while you’re shopping for a home makes it easier for agents and sellers to take you seriously and can possibly save you from future disappointment.

Don’t believe me? Here’s what Lehanne Potts, one of our Mobile Mortgage Specialists, had to say about getting a preapproved mortgage:

“Getting pre-approved for a mortgage is your first step towards homeownership! It’s important whether you’re a first-time home buyer or an experienced purchaser. When you have a pre-approval, you can shop confidently knowing that you are looking in the right price range. And if there are any issues with the application, we’re able to develop a game plan to set you up for success in the future. By taking this very important first step, you can help avoid any disappointment or frustration that may come along if you skip this process.”

Tip #3: Know When to Compromise

Home buying involves compromise. Odds are that you aren’t going to find that perfect home with the attached two car garage, huge walk-in closet in the master bedroom, partially covered back deck with a hot tub. And if you do find a house that has everything you want? Odds are that it’s probably going to cost twice as much as you can afford. What I’m trying to say is, it’s important to know what sorts of things you’re willing to compromise on and which ones you aren’t before you get started.

The budget for your home isn’t something that you should typically be making changes to halfway through the process. A study by homes.com in 2018 showed that 13% of people feel that they overpaid for their home. That’s not a good feeling and it’s not one that’s going to go away anytime soon either. Avoid bidding wars and stay away from spending above your budget on the things you “want” for your house (like that hot tub) and focus on the things you “need” your house to have (like enough bedrooms for your growing family).

Another thing you don’t need to compromise on is your timeline. I know I was just talking about how great realtors are a few paragraphs ago, but sometimes they will try to get you to work on their schedule instead of your own. That’s because they’re likely working with several potential home buyers and the sooner you purchase your future home, the sooner they can switch their attention to helping someone else.

Well, that speed has the potential to add stress. There are a lot of important things to do and decisions to make during the home buying process, even after you’ve put an offer in, and this is not something you want to feel rushed while doing. If you are feeling the pressure to move through the process too quickly, talk to your realtor and let them know you need more time.

Tip #4: Talk to Someone Who’s Done It Before

There are a lot of things to consider when you’re buying a house – more than we could possibly cover in just this one blog. It can be overwhelming, especially if you’re buying a home for the first time (and if you are a first-time home buyer, you might want to check this blog out as well). Like so many things in life, it can start to become clearer and you will start to feel better if you talk to someone about it.

Obviously, you can always go to your realtor to ask them questions. But you can also learn a lot by speaking to other people in your life who have already gone through the process of owning their own home. They might have great tips to share with you about what they thought they did well when buying their house. Or, more likely, they might be able to share things they wish they’d done differently during their own home buying experience.

To test this out, I decided to ask some homeowners from my own life what advice they’d have for me. Here’s what they had to say:

“Buying a new house for the first time can be filled with a lot of emotions – but the first one should always be excitement!

If I could go back to the first time my husband & I bought a house, I would make sure I sat down and prioritized a “wants” and “needs” list. My needs list would be the things that the house would HAVE to have and I would not budge on. The wants list would be filled with things that I really want in my first home, but that when push came to shove, I could sacrifice. For example, something that was on my needs list was three upstairs bedrooms and something that was on my wants list was an attached garage. I ended up sacrificing my attached garage in order to find something with three bedrooms upstairs.

Don’t forget to have fun and enjoy the process – you only get to be a first-time homeowner once!”

– Amanda, Moose Jaw

“As a first-time homebuyer, I found working with an experienced realtor to be extremely beneficial throughout the process. I had lots of questions, and they were able to answer everything I asked in terms I could easily understand. By using a realtor, I found that it took a lot of the stress of the process off my shoulders. I would also recommend doing your research into the home buying process beforehand so that you are able to ask the important questions.”

– Jarvis, Watrous

“I would recommend that people shop around. Don’t let the real estate agent dictate what you do or the speed you do it at – they are there to serve your needs. Also, make sure you get a house inspection. If you can’t afford one, you probably can’t afford a house.”

– Eric, Swift Current

The Answer to The Question…

So, can buying a house be totally stress-free? Honestly, probably not. There’s always going to be a certain level of stress that comes with making such a costly and impactful purchase.

But as I’ve learned while writing this, there are a lot of things that you can do to reduce the amount of stress you feel throughout the process. By using the tips in this blog as a starting point, you’ll be setting yourself up for a successful experience.

Happy house hunting!