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Celebrating Credit Union Day: Building Financial Health

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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.

Basement Renovations: The Expected/Unexpected Costs

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If you’ve been watching a lot of HGTV during the pandemic and have been mapping out your home renovation, this blog will go through the expected and unexpected costs of getting the job done so you can start hammering down your renovations budget. 

When we moved into our house, like many people, there was an unfinished basement. And like many people, we had a plan to eventually finish it but instead it became a bit of a dumping ground for everything that didn’t fit anywhere else. We’d talk about how great it would be for everything to have a place but we just didn’t have the time to commit to it.

Fast forward a couple of years and we decided it was time. My husband had a break in work which meant he was home and we were in a pandemic so time wasn’t an excuse anymore. Also, with the new Home Renovation Tax Credit announced by the Saskatchewan Government, we would be able to save money. We had talked about hiring someone to come in, but we didn’t think it was too big of a job and we were up for the challenge! Plus, I’d seen lots of friends posting their reno pics and I was inspired to take on my own home project.

We decided on a floor plan, bought the lumber, purchased tools (that I still maintain we don’t need), grabbed the insulation and got to work!

The Physical Costs

What about the permit?

You may be asking yourself, “Didn’t you forget a step? Don’t you need a permit for a renovation like that?” Yes, you are correct, we did need a permit and more importantly, it was the first thing we did after deciding on our floor plan. As part of the permit application, we had to submit the floor plan to make sure that it passed building code and there wasn’t anything we had done wrong. I know this is one of those topics that a lot of people have an opinion on and I’m not going to judge people for whether or not they choose to get a permit, however, if you don’t get one and an inspector drives past your house and notices renos are happening without a permit, you can be fined. Plus, if you ever want to sell your house, you’re going to want to make sure you have gotten all the necessary permits to prevent any issues. If you are looking to do renos at all, including building a deck, check in with your city or rural municipality office, most can be found online like for Regina.

Don’t forget that there is a cost to the permit that is based on the square footage of the space and there will be a slight increase to your property taxes. However, there is also an increase to your property value!

Amateur vs Professional

Although we decided to finish the basement ourselves to save money, there are some things that had to be done by a professional. Because we are in an attached townhouse and share a wall with our neighbours, we had to have an electrician come in and do all of the electrical work and pull that part of the permit. This was a cost we hadn’t budgeted for and cost over $3,000 (thank goodness for tax returns). To be honest, I definitely feel more comfortable having a professional do the electrical work because there is history in my family of amateur electrical work that ended in a bathroom fan switch turning on a closet light in another room.

Materials

One thing I learned is that there are some materials that are necessary to the project and you just can’t get away from and there are other materials that are “necessary” to your husband. Lumber, insulation, drywall, nails, screws, mud, tape, sand paper, primer, paint, paint supplies, flooring, lights – all things that are absolutely necessary. A new drill, an air nailer, a new TV and some other tools I don’t even remember the names of – nice to haves that you may have to convince your building partner out of. Right now, lumber prices are higher than normal and that’s not something you can get away from. For us, the following tips helped us to stay within budget:

  1. Research what materials cost with a quick trip to your local hardware store.
  2. Talk to the professionals working at the hardware store. I was on a first name basis with quite a few people at Lowe’s. They can help advise how much product you will actually need.
  3. Build your budget once you know how much the materials cost. Remember to add in a bit of extra room for when you inevitably break pieces of drywall or dump an entire bucket of mud.
  4. Borrow tools from friends or family rather than buying for one project.
  5. Buy things in bulk and on sale when possible.

The Mental Costs

It will take time

Unlike what I was led to believe from home reno shows on HGTV, it does not take a week or two to finish an entire basement – well not without an entire team of professionals anyway. I knew it would take time, but didn’t expect to be sitting here almost a year later and just be painting. At first we had talked about it being done for Christmas 2020, and now our goal is fall 2021. My one bit of advice on this is to be realistic in your timelines, especially when working full-time. It can feel a bit disappointing to not have it done, but it’s so important to celebrate the wins from each stage!

There will be dust

One of the things I didn’t realize, was how much dust is involved in renovating. Between the sawdust from framing, the drywall dust, and the sanding there was dust everywhere. I was sweeping, vacuuming and washing the basement floor often at first, but it became an exercise in futility as there was so much dust in the air that would fall over night that it was so overwhelming. I accepted that it was a construction zone and I’d do what I could and do a big clean at the end.

Almost done

Within the next week we should have all the painting and flooring done so I can move things downstairs and get the basement set up and I absolutely can’t wait. While the physical costs, money and body aches, were more than I expected, it was the mental costs of living in a construction zone I was completely taken surprise by. But nothing will compare to being able to go downstairs and feel so much pride that we did it ourselves.

Will I do it again? Maybe on a much smaller scale like a painting a wall, but doubtful we’ll tackle an entire floor of a house. I don’t have much experience with DIYing and I want to give so much credit and kudos to people who do it often – it’s exhausting!