Tag Archives: personal finance

UNSTUCK: How to Get Out of Your Money Rut and Start Living the Life You Want

A REAL NEW YEAUnstuck-with-BorderR’S GIFT

At this time of year, no matter how much we try not to….it’s hard not to get caught up in holiday madness.

December is a time where merchants and retailers are vying for your nickel. January is a time where you get that sinking feeling about where all your nickels went!

And that’s the kind of feeling that Karin Mizgala and Sheila Walkington want to help you address. They want to help you get a grip on managing those precious funds to help you start the New Year off in the black, not the red.

The founders of Money Coaches Canada and the Women’s Financial Learning Centre are proud to offer UNSTUCK – How to Get out of Your Money Rut and Start Living the Life you Want, a book written by Canadians, for Canadians that will show you how to live a sane financial life.

There is no better time than now to order a copy of this new book. It will arrive just in time for the New Year and help you begin the year with a fresh outlook on your financial life and stick to some of those resolutions!

Start the New Year off right with this proven step-by-step money management guide that will show you how to stop living paycheque to paycheque and give you the tools and insight to the emotional and psychological challenges of today’s money culture.

2013 can be the year that you, your family, friends, business colleagues, employees, students, entrepreneurs, and everyone you know can stop the financial insanity and make the year the most profitable one yet – both in your life and in your bank account!

Put your hard earned money to good use by ordering a copy of UNSTUCK – How to Get out of Your Money Rut and Start Living the Life you Want today!

Stop the insanity and check out UNSTUCK today on Amazon.com http://amzn.to/XLNhlf

What makes this book different? Here’s what:

“Kudos to Money Coaches Canada! This book reveals your practical yet caring expertise. You showed me that financial calm is possible for me and for so many other Canadians who have fallen between the financial planning cracks. Unstuck will change lives. It will change the lives of our kids.” Patti-Jo Wiese, Vancouver, B.C.

Leave a reply

Are you on Track with your Money?

Now is a good time to assess your financial health and knowledge. These days there’s a chill in the air and it’s not just the wintry weather!

Across Europe it has been the chill of economic uncertainty as Europe wavers on the brink of a debt crisis. Here at home, the Occupy protesters are a reminder of discontent that has been brewing over corporate bailouts and executives payouts.

With all this turmoil people are probably wondering about their future. They’re asking themselves, do I have a sound financial plan?  Is my financial house in order? Do I even know what I’m doing?

We’re happy to tell you, in our experience as money coaches, we have found people usually know more than they think they do. So while it’s no time to throw caution to the winds, relax a little — you probably know more than you think.

Here’s a five-point check list for the basics:

1) I have completed a net worth statement: I have added up the value of everything I own (my assets) and what I owe (liabilities) to come up with my net worth.

2) I manage my cash flow, tracking money that comes in and all my spending.

3) I have a spending and savings plan so I know money is there to pay the bills when they come due and I can make choices about whether it’s more important to save for a designer dress or if I’d rather put that money towards a ski trip.

4) I have built up a good credit history and I pay my credit card off in full every month so I am not paying high interest rates to fund buying that is beyond my means.

5) I have an investment and retirement plan which I review regularly and I seek professional advice because it’s worse to remain in ignorance than to worry about asking questions for fear of looking dumb.

If you have answered yes to most of the questions, you’re on your way.

You have a handle on your finances and are aware of the some of the key issues that can make a difference between financial security and not sleeping at night because you’re worried about paying the bills.

If you didn’t answer yes to all, don’t be too hard on yourself, you’re not alone – but it is time to take control.

Many of the respondents in the Desjardins personal finance index survey who were aged 45 to 64 had no retirement savings plan. And 40 per cent in that age group who were still working had no idea how much they’d need to live on when they retired.

As money coaches, we can help you discover those answers and take responsibility for your own finances. We’re not here to judge but to empower you with the knowledge to take control of your financial future.

Call us and take a step towards securing your financial future.

Leave a reply

Money Coaching – “I know you’re on my side!”

A few years back, Sheila Walkington of Money Matters was dubbed by CBC as Canada’s first Money Coach, but quite honestly most of us in the financial planning biz thought she was crazy.  Who would pay someone to help them get out of debt and deal with difficulties in living within their means?  But we were so wrong – Sheila now has a thriving practice and can’t keep up with the demand.  She’s so busy in fact that she’s started an associate program and is looking for like-minded advisors across Canada who also want to help people take charge of their money – and their lives.

When asked about what a Money Coach actually does, Sheila Walkington laughs and says, “Basically, I help individuals and couples get a grip on their money.” She then goes on to explain that she grew increasingly uncomfortable with earning commissions while also dispensing financial advice.  “I saw a big gap in financial planning.  People were seldom getting the objective financial advice they truly needed. The focus was always on investing, but people often needed help getting out of debt, managing their cash flow, and focusing on what they really wanted out of life. That’s where I can help best.”

According to Sheila, being a Money Coach often entails dealing with some core financial issues. Most Canadians are certainly spending more than they are taking in. Credit cards and overdrafts are often maxed out. Debt loads are at an all time high. There are strains in relationships as new couples merge their financial affairs or start raising a family. Other common challenges include career transitions or job losses, buying a house, divorce or retirement. Very few Canadians have even a basic financial plan to help guide them through these hurdles.

There are also emotional issues around money matters including guilt, anxiety and even shame. But, as Sheila reassures us, this doesn’t have to be the case.  For one thing we’re definitely not alone in experiencing confusion and stress around money.  Its just one of the downsides of the voracious consumer culture we live in. And, judging by the volatile economic news from the world, even large corporations, financial institutions and entire governments are feeling the heat. In her experience, as both a Money Coach and financial educator, Sheila has found that most people just need some good independent advice and a simple working plan to regain control of their financial lives.

When people come to her for advice, Sheila charges them a fee to set up a system for managing their money. She then helps them stick with it.  “I first get them to take a close look at where they are at right now, Sheila emphasizes. “Then I get them to look at where they want to go. Once they get clear on their dreams and goals then they get very motivated and determined to reach them. It then becomes much easier to focus on getting rid of debt, setting up a workable savings plan, planning for a family, buying a new home and preparing for medical or other emergencies and retirement.” And, she adds, “When you know where you want to go, it becomes much easier to say no to those things that are keeping you from your dream.”

Sheila has helped a lot of people over the years and has earned the respect of her clients and her colleagues both past and present – myself included. I recently asked her about a highlight of her career as a Money Coach and Sheila replied with the story of a recent client who paid her the highest compliment by simply saying: “I know you’re on my side.” – Karin Mizgala

Originally posted to Financial Post Magazine Daily on May 18th, 2010

Leave a reply

Employment Insurance for Self-Employment – Is it worthwhile?

EI for self-employed. At first blush this sounds pretty good. But how good is it really?

Starting in January 2011, self-employed Canadians will be able to collect Employment Insurance (EI) special benefits which include:

  • maternity benefits;
  • parental benefits;
  • sickness benefits; and
  • compassionate care benefits.

How it works
The program is voluntary for self-employed Canadians and you register online through My Service Canada. If you register after April 1, 2010, you must pay in for a full year before you are entitled to benefits.  In 2010, if self-employed earning are $43,200 and over, you pay the maximum annual EI premium rate of $747.36.

You can cancel your participation anytime unless you have collected EI benefits. Once you collect, you have to pay in as long as you are self-employed.

What you get
If you are eligible to collect, the weekly benefit is 55% of the average weekly earnings from the calendar year before the year you submit an EI claim.  Maximum weekly benefit is $457 subject to a maximum depending on the type of special benefit.  (6 weeks for compassionate care, 15 weeks for sickness and maternity, 35 weeks for parental leave).

While some of these benefits might provide much needed relief to those who truly need them, proceed with caution. If you work part time or your business generates income while claiming sickness or maternity benefits, your earnings will be deducted from the EI benefit dollar for dollar. You can earn up to a maximum 25% of your weekly benefit if you are claiming parental or compassionate care benefits without affecting your benefit.  Anything earned above that amount will be subtracted from the EI benefit you receive.

The Reality
Certainly there are circumstances where a person’s ability to generate self-employed income would cease completely because of caring for aging parents or having a baby. But most self-employed people I know would do just about anything to keep their business going through thick and thin using technology, creativity and just plain stubbornness. It wouldn’t take long to see the EI advantage disappear completely.

Some skeptical observers see this new initiative as just another way to top up the much depleted EI fund (expected to peak at $10.74 billion next year). Perhaps not coincidently, the announcement comes along with news that EI premiums are about to rise sharply for both employees and employers to pay down the deficit and set aside a $2-billion cushion.

While the new EI program might work for some, be sure to crunch the numbers before committing to it. I know I’m not rushing out to sign up. – Karin Mizgala

For more: Check out Service Canada’s FAQ’s.

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

1 Reply

How Much is Enough?

A few months ago – a woman came into my office. I was a bit taken aback as she was dressed pretty shabbily and her hair was disheveled.  Honestly, I wondered if she had the wrong office. Turns out she was worth $12 million.  But the real kicker was that she was worried that she didn’t have enough money and would end up as a bag lady living on the streets. How can this be?

Although her case is an extreme example, most of us suffer in some way when it comes to money. Where is the next dollar going to come from? How am I going to pay off the Visa bill? Will I have enough for retirement? And on and on it goes.

In my experience of working with clients for 25+ years, I can safely say the question of “enough” really isn’t about the numbers. Sure we need money to survive, but let’s be honest, the math needed to balance our chequebook isn’t all that hard.  It’s the “relationship” we have to money that holds us back from looking at money too closely. And if we give money the cold shoulder, how can we possibly become successful or comfortable with it?

In my favourite money book, “The Soul of Money” Lynne Twist describes money as the “most universally motivating, mischievous, miraculous, maligned, and misunderstood part of contemporary life.”  I agree completely.

We figure that if we work harder and make more money, we will have more – perhaps so we will be more? In a culture that largely defines success through monetary pursuits and the acquisition of more material things, who can blame us. But somehow we know this isn’t quite right and, judging by the state of the world and our personal suffering, we have to begin questioning the conventional wisdom of acquiring and accumulating beyond what we truly need. Gandhi said it beautifully: “The world has enough for our need but not for our greed”.

Perhaps we need to think about what’s enough – for us. How much do we really need?  Are we earning and spending our money in ways that are consistent with our higher values and commitments? This certainly doesn’t mean deprivation, poverty or lack, but it does mean being conscious about how money flows through our life.

It also means taking responsibility for our personal finances and paying attention to what we spend money on. It means taking charge of our money and holding it accountable to our highest beliefs. It means believing that we are ok right now, no matter how much money we have.

I came across a quote by a great spiritual leader who said that “money is a medium of transformation”. What’s so reassuring about this phrase is that it captures both the potential that money has, and at the same time it puts money in its proper place. It’s simply a medium, not an end in itself.

It’s certainly not easy to maintain this higher level perspective living in the midst of our consumer culture. But the more awareness that we have about the role that money plays in our life, and the more we can clear any blocks we have around our relationship to it, we can then aspire to see the transformative powers that money has.

What this allows us to do on a practical level is to look at the numbers without fear, plan for the future with confidence and enjoy what money has to offer without guilt.   And that is enough!!! – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

Leave a reply

How to negotiate the best possible salary in tough times

For Carrie Gallant negotiating is more than an art or a science it is a way of life. “We negotiate every day,” she insists. And it’s not just in business, but also in our marriages, with our children, and every other aspect of our lives. “We compromise. We make trade offs. We offer to make dinner if someone else does the dishes. We negotiate something countless times every day.” But, she adds, “this doesn’t mean we’re always good at it.”

Gallant is a former lawyer who works as a professional negotiator and expert in conflict management and resolution. Her clients include large mining and pharmaceutical companies, small businesses, government organizations and individuals. She sees a growing necessity for people to bone up on their negotiating skills. For some this need is particularly urgent because their income or even their jobs are at risk.

According to Gallant, the recent recession has put a lot of financial pressure on both employers and employees. Raises that people were counting on are being axed. There is a much tougher line on salaries, bonuses and expense accounts. Even pensions are under siege as employers are looking for ways to cut back.

So, what happens the next time negotiating or renegotiating your salary? How can you make sure that you are earning what you are worth – even during a recession or a down dip in your employer’s fortunes? (After all, many Canadian employers are hiring their own top notch negotiators to nail down a tougher deal with you and your co-workers.)

Negotiating can vary from culture to culture with some countries embracing the art of haggling while others find it unseemly or stressful. Many women find negotiating salaries a particularly nerve wracking experience. Gallant says that some studies show that women can leave as much as a half million dollars on the table during their careers – simply from not valuing what they do and asking for what they are worth.

Negotiating is a learned skill, Gallant says, but it does take a little homework and some practice to get good at it. While it is difficult to share all of the tricks of her trade here (Gallant is writing an entire book on the subject), she does have a few helpful tips to help guide us through what can be a very trying process – especially if there is a lot at stake.

  1. Be prepared. Do your homework in advance of salary negotiations, promotions, or a change in jobs. “Work it out. Plan it out. Rehearse”
  2. Know and appreciate the true value of what you do. What leverage do you have – such as work experience, transferable skills, length of time with your employer, strong relationships with clients and suppliers, etc. In short, how much are you worth to them – to another employer – and, most importantly, to yourself?
  3. Realize that your employer’s offer is often just a starting position. In fact, it could be a test to see how confident you are in your job and how well you negotiate on their behalf
  4. A “no”, doesn’t necessarily mean the end of discussions. It could very well signal the real start of them and may simply mean you need to frame your desired outcome in a way that the other person can justify to “their people”
  5. Don’t be pressured into making a quick deal. You are entitled to think things over and get advice
  6. Know at what point you are willing to walk away if your legitimate needs are not being met. What alternatives or options are available to you within the organization or, perhaps, with a new employer. Remember that “No deal is often better than the wrong deal”
  7. Skilled negotiations often call for creative solutions. Maybe you can’t get more cash, but you can reduce your hours or have more vacation time. What do you have to trade? For example, you could offer to take a smaller office in exchange for an accelerated performance and salary review

Gallant’s style of negotiating is not about “winning vs losing”. It is about creating a deal that is fair to both parties based on mutual trust and respect. But you still have to negotiate for what you want and need. – Karin Mizgala

Check out www.thenegotiationcoach.com

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

Leave a reply

Do RSPs Still Make Sense?

For most people they still do.That’s the short answer, but it is well worth reviewing your overall retirement strategy and the role that RSPs play in your financial decision-making.

So what are your neighbours doing about RSPs?
It’s true that lots of them are shying away from investing in RSPs citing disappointing markets, big mortgage payments and newer TFSA options. Statistics Canada reports that 88% of tax filers were eligible to contribute to an RRSP in 2007, but only 27% actually made contributions. They only used 7% of the total contribution room available to them and there is now almost $500 billion in unused RRSP contributions being carried forward. The median RSP contribution was only $2700.

Some advisors recommend paying down your mortgage before investing in RSPs. I disagree. The problem with this strategy is that with large mortgages and longer amortization periods, by the time the debt is paid off, there is limited time to save for the income needed in retirement.

A paid off mortgage is great, as it means lower expenses in retirement, but you still need income to cover the rest of your retirement expenses. So, unless you plan to sell your home or significantly downsize in retirement, you still need to save and invest.

RSPs still almost always make good sense if:

  • You are under 50 with 10-15 years left before retirement
  • You have less than $200K invested in RSPs to date
  • You are in the highest tax bracket now
  • You pay less than 6% on your mortgage
  • You have a balanced portfolio of conservative stocks, bonds and cash investments in your RSP

Here’s what I recommend:

  1. Set up a plan to be debt-free before retirement – preferably 5 years before the big day.
  2. Invest monthly in your RSP especially if your income is higher than $40K.  If your income is less than $40,000, use a Tax-Free Savings Account (TFSA) instead. You can always move the money to an RSP later if your income increases.
  3. Take the time now to figure out your investment game plan. Decide on the optimal mix of equities, fixed income and cash to meet your specific needs and risk profile. (Note: Choosing the right asset mix is far more important than what investments you actually select. Most people spend time on the wrong things here.)
  4. If you’re a “do it yourself investor”, then use low-cost mutual funds or index funds (Hot Tip: Check out Investor’s Aid Coop).
  5. Otherwise use an advisor that provides “value-added” financial planning advice. Ask questions to make sure you are getting the advice you are paying for. (check out: Questions to Ask your Financial Advisor).
  6. If you don’t feel you can pay down your mortgage and contribute to your RSP, then review your cash flow and reallocate your resources so you can. Sure you might have to give up some good stuff today, but you’ll thank me at retirement!

Since most people think twice about withdrawing money from an RSP before retirement, topping up your RSP will help ensure you have some savings when you retire, even if you do have to pay some tax. Just do it! – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

2 Replies

Men and women see retirement differently

When I started out my career in financial services I was skeptical about gender difference claims when it came to money. But over the years I’ve come to believe that while the capacity for financial understanding isn’t different, the relationship women and men have with money is. For one thing, women generally admit to having a lot more fear about money and studies have borne this out.

A few years ago, the US company Allianz Insurance found that over 90% of women lacked confidence when it came to money and 50% of women, even those earning over $100,000, worried about becoming a bag lady one day.

Some of the challenges women face are well-founded – women often still earn less that men. (On average, Canadian women earn about 66% of their male counterparts). And, although the gap is narrowing, females can still expect to live almost five years longer than males which add to the severity and complexity of their concerns, especially in their later years.

A recent study by Sun Life Canadian Unretirement Index highlights some other differences:

  • Twice as many men than women say they want to work past 65
  • Women are more likely to be concerned with long-term care, low interest rates and death of a spouse
  • Women working past age 65 are more apt to worry about covering their basic living expenses
  • More women believe their company pension plan will not be enough to live on
  • Fewer women than men are confident they will be able to maintain the lifestyle they want
  • Women tend to be less confident about the overall economy – and their personal finances

Each of these points has wide-ranging implications not only from a financial point of view but also in terms of emotional well being. Somehow individuals, financial advisors and we as a society need to address the stress and anxiety that often come with retirement. This is especially true as the Canadian population continues to age and there is less financial certainty in respect to the overall economy, government and company pension plans, and our own investment savings.

The Sun Life study also points to a possible remedy to retirement concerns. Both women and men were “significantly more confident about their retirement if they had worked with a financial advisor.” Coming from a financial services company, this last statement might seem a little self-serving, but there is no question that being more educated, knowing where you stand with your money and doing some advance planning can make a vast difference in your level of financial confidence when it comes to retirement. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

Leave a reply

Mutual Fund Lingo – A Primer on Fees

Chances are you own or have owned a mutual fund at some time. But do you know how much you are paying for your funds? Because you don’t usually see what fees you are paying on your statement, it’s easy to ignore the issue of fees. Turns out most other Canadians are doing the same thing.

According to Garth Rustand of Investor’s Aid Inc., Canadians are very passive when it comes to fees and we consistently pay the highest fees for mutual funds of any industrialized country – apparently we pay as much as 60% more than in the US and 200% more than in Europe – yikes!  Are we getting our money’s worth? Pretty hard to tell unless you understand some of the industry lingo and what goes into the mutual fund fee calculation.

Take “management fees” and “management expense ratios”. It’s a common mistake for investors to use the terms interchangeably, but they are definitely not the same.

Simply put, management fees represent the payment to fund managers for selecting the investments to include in the fund and are only one component of the overall fees you are charged.  The number that you should really be interested in is the management expense ratio or MER.

The MER includes the management fees plus other “indirect” costs such as: fund administration charges, legal, audit, custodian fees and transfer agent fees, advertising and marketing expenses and GST. It can also include sales commissions and ongoing trailer fees that are paid to your financial advisors for selling you the funds.

And just how much of a difference is there between the two charges? Let’s look at an example. Fidelity offers a Large Cap Canadian mutual fund with a management fee of 2.00%. After adding in all the other charges, the MER comes out at 2.47%.

So where does the MER show up in your fund? Because the MER is embedded in the published rate of return you don’t really see it, but it’s there if you look closer.  If the above mentioned mutual fund had an annual rate of return of 5.3%, this means that the investments actually yielded a return of 8% but then expenses of 2.47% were subtracted.

If you are comparison shopping this is the main number that you will need to compare – the rate of return after all expenses are deducted. MER information is published in the prospectus that you are given when you buy a mutual fund and can also be found on mutual fund info websites like globefund.com and morningstar.ca or by asking your advisor.

When comparing MERs from one fund to another make sure that you are comparing apples to apples. Typically management expenses ratios are highest for the specialty stock mutual funds and lowest for money market funds. Bond and balanced fund fall somewhere in the middle. Don’t try to compare the MER from one fund to another if the underlying investments are from different asset classes.

Because the MER can include commissions and trailer fees paid to the advisor channel, “load” funds typically have higher MERs than bank funds or “factory direct” mutual funds. Some of the better know mutual funds companies like Mackenzie, Fidelity, CI and Templeton are load funds offered through financial planners and investment advisors

“Factory direct” funds like those offered by Phillips Hager and North, Leith Wheeler, Mawer, or Steadyhand to name a few, often have lower MERs because they sell their funds directly to the investor through their own advisors.

Should you always go for the lowest MER funds? Of course it’s better to keep more in your pocket, but you also have to weigh out the value of advice. If your advisor is giving you great service and top notch financial planning and investment advice, then as long as you know what you’re paying for and see value, don’t fix what ain’t broke. If not, it might be time to explore some of the lower expense investment options. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

Leave a reply

“Money Matters – But Less Than People Think”

On one otherwise unremarkable day, countless eons ago, one of our shrewder ancestors first exchanged puka shells, a red pebble, or a nugget of shiny metal for a wildebeest steak and human commerce was born. Or, more accurately, money was born. Ever since then people have been trying to link money and happiness. Are we happier with more money? Are we less happy with less money?

When asked if she is happy, Lara Aknin just laughs. Aknin is a doctoral student working with Dr. Michael Norton, Assistant Professor at Harvard Business School, and Dr. Elizabeth Dunn, Professor of Psychology at UBC. They are part of a growing body of researchers examining the links between money and happiness.

Lara speaks enthusiastically about her research and the conversation ranges from various psychological theories, to the recent economic crisis, to the country of Bhutan, the small Himalayan kingdom which measures its Gross National Happiness (GNH) along with its GDP.

“Money is only one factor that influences happiness,” Aknin says. “Work in the fields of Social and Positive Psychology, shows that personal relationships, religious beliefs, exercise, feelings of gratitude, random acts of kindness, as well as higher income, can all affect our sense of well being.”

Aknin is co-author of a recently published paper entitled “From wealth to well-being? Money matters, but less than people think,” that appears in the Journal of Positive Psychology.

According to their research, “a striking inconsistency surrounds the relationship between money and happiness.” It suggests that people “engage in behaviors designed to increase or maintain their wealth because they overestimate the impact that income has on well-being.”

People at different levels of income were asked to report on their own happiness and to predict the happiness of others. As one might expect, those surveyed accurately predicted the “moderate emotional benefits associated with being wealthy”. The big surprise was that they expected “low household income to be coupled with very low life satisfaction”, but that wasn’t necessarily the case.

As Aknin points out, this research might have important practical considerations for career choices, shorter work weeks or early retirement.

I frequently reassure my clients looking at a career transition or early retirement that a reduced income might not be nearly as bad as they fear. Now, thanks to Aknin and her colleagues, I have the research to back up my pep talks. As for finding an extra day for myself every week? That’s something that would make me very happy! – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-only financial planner with an MBA and a degree in psychology. She’s the President of LifeDesign Financial and co-founder of the Women’s Financial Learning Centre.

Leave a reply