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Pile of sticky notes with New Year resolutions written on them

Adjusting your New Year’s resolutions

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If you’re struggling to stick to your resolutions or have already failed trying, don’t give up. Instead, adjust or re-start your resolutions following these tips to help you succeed.

We go into the New Year saying this is going to be the best year yet. And it is…for the first few days anyway. Then the holiday excitement wears off, we go back to our normal routines and continue with the same habits we did before. By mid-January, we start to realize the resolutions we set were a bit more than we could chew and we soon give up on what we said we were going to do.

When it comes to sticking to our New Year’s resolutions, statistics show only 8% of people actually succeed. Why? Often the resolutions we make are unreasonable, unrealistic or we’ve set too many.

Does this sound familiar? If you’re struggling to stick to your resolutions or have already failed trying, don’t give up. Instead, adjust or start your resolution over. The only way to succeed is if you continue trying.

Here are a few tips to keeping your resolutions.

Have an action plan

Resolutions are goals and should have an action plan showing you where you want to go and how you’ll get there. Review these plans every so often and adjust your plan based on your personal situation, helping you to stay on track for success.

Don’t bite off more than you can chew

We can only do so much at once. Instead of trying to do everything at once, prioritize your goals in order of what’s most important to you. Focus on completing one or a couple goals at a time to not feel overwhelmed with trying to do it all.

Celebrate the small wins

Create milestones within your plan and celebrate when you achieve them. Smaller goals are easier to reach and help keep you motivated in reaching your goals.

Ask for support

Share your resolutions with your friends and family. Ask them for support and to hold you accountable to these resolutions. Speak to professionals for advice on your goals and tips for achieving them.

Whatever your goal is, it’s important to be agile and take the time to pause and adjust as necessary.  We may only be a few weeks into the New Year, but now is a great time to re-examine your resolutions and make any adjustments to ensure they’re realistic, reasonable and set up for success.

Did you make any New Year resolutions this year? What were they and are you on track to achieving them? What are some of the challenges you’ve come across? Share by commenting below.

List of payments

How much money should I spend on…

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Where should you be spending your money? This blog shares the recommended percentages on where you should be spending your money on things such as housing, transportation and more.

 

A budget is a plan that can prioritize your money. It allows you to see how much money you’ll bring in each month (income) and where you plan on spending (expenses) your money. It also allows you to understand where you may be able to decrease budget within some categories such as living expenses or increase your budget in other categories such as savings. Most importantly, it helps to set a plan to not spend above your means.

A budget can also help you see what percentage of your income you’re spending within the different expense categories. Below we break down the different expense categories and the recommended percentage of income you should be spending within each.

Housing

We recommend keeping your housing expenses to 30-40% of your income. Housing expenses include your mortgage/rent, condo fees, property taxes, insurance, maintenance and utility payments.

One popular rule of thumb says that you should set aside 1% of your home’s value each year for ongoing maintenance (vent cleaning, paint refresh, etc.). For example, if your home is worth $250,000, you should budget $2,500 each year for maintenance. We recommend setting money aside each month into a savings account to cover these maintenance costs when they occur. Doing so, will help you be prepared for those larger expenses and not be ‘scrambling’ to find money within your budget to cover a large expense.

Though many of these expenses are fixed, meaning you can’t change the expense amount, there are a few ways you can reduce these expenses. Consider reducing the amount you use/spend on utilities. This can include installing a rain barrel to collect rainwater to water your yard or trying out one of these eight energy-saving tips.

Transportation

We recommend keeping your transportation expenses to 10-20% of your income. Expenses in this category include vehicle loans, gas, insurance and maintenance.

Some ways to reduce expenses in this category include using city transit, carpooling or saving on gas by using GasBuddy.com to tell you where the nearest and cheapest gas stations are.

Living expenses

For living expenses, we recommend keeping to 20-30% of your income. These expenses include childcare, groceries, eating out, entertainment, phone, personal care, clothing, gifts, donations, medical, etc. Though there are a lot of expenses in this category, many of these are variable expenses meaning they can be adjusted based on your financial situation.

You may not be able to change your childcare fees, but expenses related to groceries, eating out, entertainment, phones, etc. can be adjusted. Things such as cooking at home vs. going out to eat or picking a smaller cable package or cell phone package are all ways to help reduce these expenses.

Budgeting doesn’t mean you can’t have fun but instead helps you be aware of how you’re spending your money and to treat yourself in moderation and within your means. Here are a few creative alternatives to consider to help keep expenses down within these categories.

Debt repayment

If you have debt, such as a balance on a line of credit or credit card, we recommend keeping your debt repayments at 10-20% of your income.

It may be tempting to reduce expenses in this category before others when adjusting your budget, but we recommend trying to reduce elsewhere, like your living expenses before adjusting these expenses. Setting 10-20% of your income towards paying off your debt sets a plan in action for eliminating your debt and helps towards your financial freedom.

It’s important to always budget money to ensure your debt’s monthly minimum payment is covered and then apply extra money to your debt to reduce the amount owed even faster. For additional advice and tips on eliminating debt, we recommend checking out our Eliminating Debt blog.

Savings

For savings, we recommend putting 10% or more of your income into savings each month. This includes savings for your goals (short-term, intermediate and long-term), retirement, emergency savings, RESPs and more.

This category is truly about being sure to pay yourself first. Not sure what we’re talking about – discover more here.

To make budgeting easier for you, we recommend checking out our online Budget Calculator. All you have to do is insert your monthly income, expenses and savings and you’ll get a clear picture of where you are financially. You’ll also be able to see how your expenses fit within the recommended percentages we just discussed.

At the end of the day, setting a budget can help you stay focused on what’s important and give you guidelines on how you’ll spend your money. As for ensuring you stick to this budget though, that will be up to you.

bill that says past due

Kick-start your finances: eliminating debt

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Debt can have a negative impact on your day-to-day life. Here are a few things to know to become and stay debt-free.

It’s no secret that money can be stressful and is one of the top stressors on individuals, relationships and our ability to give back to our communities. Debt can be one of the reasons for that stress and play a huge roll in your health (physical, mental and emotional) and in the way you interact socially.

Debt can also prevent us from getting ahead financially. Whether one larger debt or a combination of several small ones, it can be difficult to make payments to eliminate that debt while still saving money for your goals. What is the key to eliminating debt and having financial freedom to save more money for your goals?

Don Hendrickson, Conexus Member Experience Coach, says there are three things to know to help you succeed in eliminating your debt:

  1. Being aware;
  2. Creating a budget; and
  3. Setting up automatic transfers.

“It’s key to understand how much you owe and the interest rates on each area of debt so that you can create a realistic plan on how you’ll eliminate this debt,” said Hendrickson. “As part of this plan, you need to create a budget that sets out a schedule on how you’ll spend your monthly income which should include your debt repayment amounts. If you’re struggling to find money in your budget for your debt repayment, look to see if any of your want expenses such as entertainment can be reduced.”

Once you’ve created a plan, set up automatic money transfers to have your debt payments come directly from your account each payday. This helps reduce the temptation on spending elsewhere and keeps you on track to reaching your set goals.

When it comes to multiple debts, Hendrickson says tackling your highest interest debt first will save you the most money in the long run but you may also want to consider paying off a smaller balance first to help motivate you.

“There’s some research that shows paying off a smaller balance first gives you the feeling of success and will help motivate you to continue,” said Hendrickson. “For example, if you have a $1,500 line of credit balance and $10,000 in credit card debt, tackling the $1,500 will give you the feeling of success and may also provide a great learning experience that you can then apply to tackle your other debt.”

When it comes to avoiding debt, Hendrickson said there are many things you can do including:

  • Living below your means and not spending more than you earn.
  • Don’t feel the need to ‘keep up’ with those around you. Only do what you feel comfortable with and that your budget allows.
  • Pay yourself first by making a habit to take 10% or more of your income and put towards your goals including an emergency fund. Having an emergency fund will ensure you’re prepared for whatever curve life throws you.
  • Sit down with a financial advisor at least once a year to review your short-, medium- and long-term goals and make a plan, or re-evaluate your existing plan, to ensure you’re on your way to successfully reaching those goals.

Debt can be stressful and coming up with a plan will not only reduce this stress but also help you towards financial freedom. Be sure to contact your financial advisor for assistance. Not only will they be able to help you come up with a plan to eliminate your debt, but also work with you to set a plan for your future. There’s no better time than now to take control of your finances – get started and make tomorrow, today.

Woman holding piggy bank

Kick-start your finances: automatic savings

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You can’t spend what you can’t see, right? Set up automatic money transfers from your chequing account to your savings account to reduce the temptation of spending somewhere else and keep you on track to reaching your financial goals.

You may have heard the term ‘pay yourself first’ but what does that actually mean? For us, it means setting goals, creating a budget and putting money aside regularly to achieve those goals. An effortless way to do this is by setting up automatic saving transfers.

Through automatic saving transfers, it’s easier than ever to save money. Through the tool, you’re able to schedule reoccurring money transfers between your accounts. Because it’s done automatically, it doesn’t let you think twice about moving the money into your savings and reduces the temptation to spend it on something else. You can’t spend what you don’t see, right?

Once you have your short and long-term goals identified, we recommend opening up different accounts for those that require savings. Talk to a financial advisor to determine what type of account is best for you (e.g., TFSA, RRSP, savings account, etc.). From your budget, determine how much money to transfer into each account and how frequently you’d like to contribute. Then, using online or mobile banking, set up a reoccurring transfer each month.

If you’re paid bi-weekly or twice monthly, we recommend setting up your automatics transfers for each payday. This way, you can have smaller, more frequent transfers that add up to the same monthly amount, but don’t seem to be as large of an impact all at once.

Automatic payments take away excuses and procrastination. There’s no more saying you’ll do it tomorrow as it’s automatically done – making tomorrow, today. By taking directly out of your account, you’ll forget it’s there and won’t be tempted to spend it elsewhere. You’ll also be on track to reaching the goals you set and could be surprised at how quickly it adds up!

Paying yourself first means investing in yourself. It is one of the best things you can do for yourself and your financial well-being. Now it’s your turn – take the challenge and be one step closer to taking control of your finances today.

person holding sign that says budget

Kick-start your finances: creating a budget

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Create a budget that works for you using the information and templates in this blog.

Let’s create a budget. A budget is a tool that helps you manage your money. It shows you your full financial picture – the money you bring in each month and where you plan to spend it. It helps you determine what a want vs. a need is and shows you where you can cut expenses to ensure you only spend what you have. It also allows you to see where there may be any extra money that you can put towards reaching your overall goals quicker.

This blog focuses on creating an annual budget that works for you. You can complete this challenge manually on a piece of paper or online. If doing online, here are several great budget templates that can assist you:

Whatever method you choose, the process will be very similar.

Determining your monthly income

The first step of a budget is figuring out how much money you’ll have each month (see Kick-start your finances: where’s my money going). Under the income section of your budget, list all sources of money (pay, support, grants, etc.) you’ll receive in the coming months. Remember, this is the take-home amount as it’s the money you actually have available to spend.

For those with a regular pay cheque – one that is the same each time – your income should be around the same amount each month. Note: If you’re paid bi-weekly, there are two months each year that you’ll receive three pay cheques.

For those that have irregular or seasonal income, it can be a bit more difficult and there are two ways you can determine a monthly income amount for your budget:

  1. Use your average monthly income. You can find this by taking your last six months’ total income and dividing by six.
  2. Use your lowest amount of monthly income that you received in the last six months. For example, if you’re monthly income over the last six months ranged between $1,900 and $2,200, use the $1,900 amount in your budget.

Whether you have a regular or irregular monthly income, it’s important to not over-estimate this amount when creating a budget. A budget provides you guidance on how you will spend this money and over-estimating will cause you to budget money you don’t have. If you end up receiving more money in a month than what you budgeted, use this extra money and put towards reaching your saving goals faster.

Remember, you shouldn’t include any non-guaranteed income such as tips and money received as gifts into your anticipated monthly income budget. Non-guaranteed money is exactly that – not guaranteed and unknown – and should be treated as extra money for your goals.

Creating a budget based on what you have

Now that you have noted your income for each month, it’s time to create a plan to spend this money. First, create a list of all your expense categories. The spending analysis you completed in the Kick-start your finances: where’s my money blog can assist you in creating categories specific to your spending habits. Be sure to include categories for your saving goals and any debt payment expenses, such as credit cards, you may also need to budget for each month. Once you have these categories, take it one step further and create sub-categories for each expense. This helps provide a detailed understanding of each category and identifies fixed expenses (ones you can’t change) and variable expenses (those you have control over and can change).

Example:

Next, you’ll need to allocate money to each expense. It may be easiest to start with expenses that are fixed such as mortgage/rent, utilities, etc. and then move into the variable expenses such as groceries, entertainment, etc.  Don’t forget to include expenses that aren’t monthly such as sporting fees, gift purchases, etc. – for these expenses, place the budgeted amount under the month they’ll occur. It’s also okay to leave a category at $0 if you don’t plan on spending anything in that category within a given month.

Once you have your amounts allocated, look to see how it measures against your monthly income. If you’re under-budget, woohoo! With this extra money, look at adding more to your saving goal categories to help you reach your goals faster.

Example:

If you’re over-budget, some adjustments will need to be made. First, look at your variable expenses – are there any places you can reduce your budget such as groceries, entertainment, etc.? Adjust as needed until you become balanced, or even better yet, under-budget.

If money is really tight in one particular month, consider not budgeting money for one of your saving goals. Use this as a last resort though and ensure it doesn’t become a consistent thing. If you’re noticing a trend in not having enough money to cover your expenses month after month, consider bringing in extra income or making some changes in your day-to-day life. For example, pick up a part-time job to bring in more income or start using public transit to help reduce costs related to your vehicle.

One-time, occasional expenses

Expenses that only occur once or twice throughout the year can have a big impact on our monthly budget. For these expenses you can do two things:

  1. Budget the full amount in the month the expense occurs; or
  2. Budget smaller amounts each month leading up to the expense.

The second option helps reduce the pressure of finding these one-time costs within your budget all at once and is especially helpful if you have several large, one-time expenses that all occur within the same timeframe.

For example, your child plays soccer and club fees of $400 are due every September. Consider putting smaller amounts into your budget each month that can be used to pay for the expense when it comes due. If you were to start in February, by putting $30 away each month, you’ll have $210 by September which would only leave you with $190 extra to budget in September to help cover this expense.

Example:

Create separate savings accounts for your goals

When saving for your goals, place this money in a separate account for each goal. Set limits on accessibility (i.e., must go to a branch to access the money) to reduce the spending temptation. By placing in a savings or investment account, you’ll also gain interest and see the money grow faster.

If you put these all together, you have your annual budget – your full financial picture.

Setting a budget helps you focus on what’s important and gives you guidelines on how you’ll spend your money. It’ll be up to you though to ensure it actually happens the way you say it will. You can do this by keeping track of your spending – see Kick-start your finances: track your spending for more information.

Have any questions? Ask below in the comments!

receipt on top of a variety of items purchased

Kick-start your finances: where does my money go?

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Not sure where all your money is going? This blog helps you dig deep into your spending habits and understand where your money is going each month.

When you think about your finances, do you immediately feel overwhelmed and stressed? Do you ever wonder where all of your money is going? Do you keep saying you’re going to get on track with your finances tomorrow, but tomorrow never happens?

In order to do so, you first need to understand how you spend your money. We’re here to help. In this blog, we’ll look at your spending habits and at the end, you should have a better understanding of exactly where your money is going. Before starting though, be sure to check out and complete Kick-start your finances: goal setting.

To complete the steps in this blog, you can do online using a personal financial management tool or manually. Regardless of the method you choose, you will need to gather the following information prior to starting:

  • Any financial statements from the last year including bank accounts, mortgages, investments, lines of credits, credit cards, etc.
  • Pay stubs showing the income you made in the last year.
  • Any other documents that show income or expenses incurred last year that may not show on the documents listed above (i.e., receipts for cash purchases, etc.).

Step 1: What is your monthly income?

This means all the money that you make – any source of income including your pay cheque, support payments, property income, etc. Look back at the last 12 months and write down all sources of income you made each month. Note the take-home amount (after deductions) as this represents the money you have available to spend.

If you received any non-guaranteed income, such as tips or money as gifts, note in a sub-category called ‘Extra Income’. Separating this amount is especially important when determining your monthly income for budget purposes. As this amount is not guaranteed and unknown, it shouldn’t be included as income when setting a budget; instead, any extra money received should be noted as ‘Extra’ and go towards helping you reach your goals.

Knowing the money you bring in helps give you an understanding of what money you have to manage. Later on in this blog, you’ll also use this amount to see if there were any months you spent over what you actually brought in.

Step 2: Where does my money go?

When we see how much money we bring in, sometimes we are shocked and wonder where it goes – especially if we aren’t consistently budgeting and tracking our money. To understand where your money goes, categorize each month’s spending transactions for over the last year. Categories should be specific and could include:

  • Mortgage
  • Utilities (separate per utility to provide a further breakdown of each cost)
  • Groceries
  • Entertainment
  • Restaurants/Eating Out
  • Insurance
  • Gas
  • Investments
  • Savings

If you took out cash and are unsure of what purchases you made with it, place into a category called unknown.

Being as detailed as possible is important to really help you understand your spending habits. In order to compare your spending to your monthly income, categorize each month’s spending individually. To see a yearly total, simply add the category’s total for each month.

Once all transactions are categorized, you’ll be able to see what you spent per category. Take these amounts and compare to the recommended spending guidelines below:

  • 25-40% on housing;
  • 10-20% on transportation;
  • 40-50% on living expenses such as groceries, etc.; and
  • 10-20% on savings.

How do you compare to the recommendations? Were there any categories you didn’t realize you were spending that much on?

When you look at spending as a whole vs. individual transactions, the results can be shocking. Typically, when we make smaller purchases, we don’t tend to think of them as making a difference; grouping similar purchases together though, give us the big picture and some of the small things can actually be bigger than what we thought.

Step 3: Am I spending above my income?

To understand how your spending compares to the money you’re bringing in, take your monthly income and minus the total expenses you had that month. Were there any months you overspent? What products, such as credit cards, etc., did you use to compensate? If you found any months that you overspent, take a look back at the different categories and transactions – was there anything you could have done differently?

An additional bonus for Conexus members:

As a Conexus member, you have access to our Personal Financial Management tool which will make this challenge a bit easier to complete. Through the tool, you not only can see all of your Conexus accounts but you can also connect and see any accounts you may have at another financial institution. The tool does its best to categorize your transactions automatically, but you may need to change the category on some transactions from time to time.

Another benefit of using this tool is that you can set up budgets later on. You can find more information, including tutorials and “how to’s” here. And hey, if you’re not a Conexus member but really want to use this tool, consider becoming a member today!

Now, it’s your turn

Having an understanding of the money you bring in and how you spend it is a big task alone. It can also be a bit stressful and overwhelming when you start to see the big picture of your spending habits. This could be your opportunity to kick that feeling and to help you reduce this stress.

Take the challenge today. Look back at your income and spending over the last year. Is there anything that stuck out? Are there any themes such as one-time yearly expenses that you weren’t prepared for, etc.? Be sure to note any themes or areas you want to improve as next week, we’ll be taking this information a step further and focusing on how to create a budget that works for you. We’ll also show you how to prepare for those one-time yearly expenses and eliminate some of the unnecessary spending you didn’t realize you were doing until today.

We want to hear from you. What is your biggest take away from this blog? Were you surprised by any of your spending habits? For us… let’s just say we didn’t realize how fast those daily coffee purchases were adding up! Join the conversation – share your experiences below.

man kick boxing

Kick-start your finances: goal setting

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Setting financial goals helps you to figure out what’s important, focus on priorities and analyze your wants vs. your needs. 

We all dream about what we want to do and what we want to achieve. From going on a vacation, paying off debt, putting money away for our child’s education or having enough money set aside for retirement; these dreams become our goals and like most things, have a financial component to them.

Unsure of where to start? Taking the time to set goals will provide you with an understanding of your big picture. It allows you to figure out what’s important to you, focus on priorities and analyze your needs vs. your wants. Below you will find some advice on creating realistic and achievable financial goals, helping you make tomorrow, today.

Creating goals

There are three types of goals:

  1. Short-term Goals: These are goals that you can achieve in a short amount of time – less than one year – and can include things such as a minor home renovation, paying off a credit card or starting an emergency fund. These goals can also be shorter goals that contribute to a larger, long-term goal such as starting to put a small amount of money away for retirement.
  2. Intermediate Goals: These goals take a bit longer to achieve – between one to five years. Saving money for a down-payment on a home or saving for a family vacation are great examples that may fit into this category.
  3. Long-term Goals: These goals tend to be longer – 10+ years. These goals are often re-assessed throughout the course of their timeframes to ensure you’re on track and often are adjusted due to changing situations/environments. Some examples of long-term goals may include saving for your child’s education, paying off a student loan or saving enough money to retire.

Now that you know the different types of goals, write down your short-term, intermediate, and long-term goals for 2018. When making a list think about things such as:

  • What makes you happy? (e.g., family, vacation)
  • What makes you stressed? (e.g., credit card debt)
  • What do you wish you had? (e.g., new furniture)
  • What things do you like doing? (e.g., traveling, spending time with friends)
  • Where do you see yourself in one year? (e.g., taking a hot vacation) Five years? (e.g., having a down payment for a home) Ten years? (e.g., having my student loans paid off)
  • What does having overall financial well-being mean to you? (e.g., understanding my money and not having to worry if I’ll have enough when I retire.)

When setting your goals include specifics, such as costs and timelines. Also look to see if your goals are realistic and achievable. Small goals are easier to reach and help train your brain into believing you can achieve it. This can also increase your chance of success in future goals. Below is an example of how you can take the things important to you and group into short-term, intermediate and long-term goals.

Prioritize. Prioritize. Prioritize.

Once you have your goals written and organized, it’s time to prioritize. This will help you understand what’s most important and where you should focus your time, money and energy.

Though it is great to have lots of goals, actually achieving them all may be difficult. You must take a look at your goals and ensure they’re also realistic and achievable when you look at them all together. It’s important to set yourself up for success and work within your means.

Prioritizing will also allow you to make any adjustments needed to make these goals achievable. When prioritizing ask yourself:

  • If you could only achieve one of these items, which one would it be?
  • Are there any goals on my list that are needs vs. wants?
  • How long do I have to achieve this goal – is that a must or can it be adjusted?
  • Can I break any of my larger goals into smaller goals?
  • Can I put a hold on any of these goals and begin working on only once I have completed another goal?

When prioritizing and making adjustments, be aware of how achieving these goals will impact your finances now. Online calculators can help you understand exactly what you need to do now to achieve your goal within your timeline. Depending on your current financial situation and the impact your goal will have (e.g., monthly contributions), you may need to re-adjust or plan your goals differently.

Team effort

If you are married or have a significant other in which you share financial responsibilities with, it’s essential you work together when creating your financial goals. Work together to develop a list of goals and discuss what’s a priority and what’s not. Together, determine what is achievable and ensure you’re on the same page – if not, you could be setting yourself up for failure. Once set, be each other’s motivation and hold each other accountable to help ensure success.

Talk to your financial advisor

The most important thing you can do once you’ve created and prioritized your list of goals is to talk with your financial advisor. They will be able to provide you with advice on your goals and help you look at the big picture. They may also identify any obstacles that impact you reaching these goals and provide guidance on what types of adjustments can be made. Your financial advisor will also be able to tell you which products, such as RRSPs, Tax-Free Savings Accounts, mutual funds, etc., you should consider helping contribute towards your success.

When it comes to kick-starting your finances, start off by understanding what’s important to you and what you want to achieve with your finances.  Create short-term, intermediate, and long-term goals and prioritize accordingly. Once you’re done, make an appointment with your financial advisor to discuss and determine what tools and resources are available to help you succeed. Don’t have a financial advisor, no worries – you can request financial advice here.