Tag Archives: Family Finance

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

A REAL NEW YEAR’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.

Who’s The New Head of the Household?

Not since Rosie the Riveter rolled up her sleeves in the armaments factories and shipbuilding yards during WWII has there been such a fundamental shift in gender roles and earning power. As Canada’s economy coughs, sputters and chugs back to life, there are signs that some dramatic societal changes have taken place behind the scenes while we were all distracted by the recession. The new reality facing us is that more women than ever before are taking on the role of primary breadwinner.

The recent recession, labeled the “man-cession”, has been particularly cruel to working-class males. Statistics Canada reports that over the previous year a total of 249,000 men lost their jobs, particularly in the manufacturing sector. This compares to a decline of 28,000 for women. Even the rise of dual-income families has meant an erosion of the male’s economic power and control. (In 1980, 53% of couples were dual earners, compared to 65% by 2007.) This new domestic reality also parallels another emerging trend that sees women controlling more and more of the nation’s wealth – up to a startling 70% by 2019.

Seldom, if ever, has history recorded such a dramatic and unprecedented upheaval in the age-old standard of the man “bringing home the bacon” and the woman taking care of the house and kids, and maybe earning some supplementary income on the side. For many men this is a humbling even humiliating experience. For women, this role reversal can be just as emotionally challenging and psychologically threatening. She has not only lost her Prince Charming – the one person who was supposed to protect and defend and provide “forever after”, but there is increasing financial pressure and stress on her as well. And those kids still have to be fed, clothed and educated.

I take all of these social changes rather personally. My husband was also one of the casualties of the recession. He was co-owner of a small investor relations firm that specialized in the resource field, another sector that was also hard hit by the economic downturn. Trying to turn a crisis into an opportunity, he went back to his first love of copywriting and teaching history (waynemelvin.ca), which I fully supported. But I gotta say – the bucks are skinner and there’s now more pressure on my income to make ends meet. I’m ok with this – sorta, kinda, maybe….

I’m sure family counselors and economic advisors across Canada are struggling to make sense of this rapidly changing economic and social landscape. But maybe all this change isn’t such a bad thing — for both men and women – and for Canadian society as a whole. Sure we will have some major adjusting to do and it’s not likely to be easy. Nevertheless, there are great new opportunities out there that we can take advantage of as the new paradigm reveals itself. Creative work. More balanced, supportive and healthier relationships. A revisiting of priorities, dreams and financial goals. A new vision of how men and women interact in the workplace – and at home. Welcome to the new world order. We’d better get used to it – it’s here to stay. – 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.

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Do Financial Experts Really Know Anything?

One of my clients was recently shopping for a new investment advisor and, on my recommendation, interviewed several to see if she could find a good fit. While she found all of the advisors she spoke with to be approachable and very knowledgeable, none of them could assure her that they would be able to predict the next market downturn in time to protect her investments from a drop in value. She was also a little disconcerted that one advisor’s prediction about the market was the exact opposite of what another said. Disheartened, she came to this conclusion – “basically they have no idea”.

While this statement may be a little jarring, I think she accurately captured how people are feeling these days. If advisors don’t know, what are we paying them for and where does that leave us? As a consequence of the breakdown of trust in our “experts”, there’s been a big movement to the “do-it-yourself” model. This works well for some, but it leaves a lot of folks who are already feeling maxed out with life responsibilities feeling stressed, vulnerable and unable to move forward with their finances. Clearly there is still a need and important role for advisors to play.

Fortunately there is a new advice model evolving in the market place. The old “expert-client” model where the advisor “knows all” and the client “knows nothing” is being replaced by a more collaborative relationship. This profound paradigm shift can be troubling for both the advisor and the investor who aren’t prepared for this monumental change in how we do business. On the other hand, it can lead to a much healthier approach to money management. Let’s face it; financial advisors are neither soothsayers nor all-knowing experts (as this past year has certainly demonstrated). And, thanks largely due to the internet, clients are much better informed than ever before. Financial advisors are still a valuable resource – we simply need to get more involved, redefine our expectations and learn how to work together better.

Become an Informed Consumer of Financial Services
By becoming educated, involved and on top of your money, you will be in a better position to work more collaboratively with your financial advisors. You’ll have the confidence to be an active partner in your financial affairs rather than a passive observer or helpless victim.

So, how do you choose a financial advisor under this new model? The first task is to find someone you can trust. This can take some time and research. It starts with you being clear with your goals, the type of advice you are seeking and an awareness of what your expectations are of your advisor.

It’s best to ask for referrals and interview 2 or 3 potential advisors. Ask hard questions and remember – the advisor is there to serve you so make sure they are listening to you and treating you with respect.

Questions to ask:
Can you describe the type of clients you serve?
Do you have a minimum investment or net worth requirement?
What are your qualifications?
What are the fees for your services and any products/investments you sell?
How are you compensated?
What products and services do you offer?
How often will we meet and how much contact will we have?
Will I be working with you or with your assistant?

More questions for advisors who manage investments:
What is your investment philosophy or approach?
What can I expect from you in market downturns?
How will I know how much money I’m making?
How is my rate of return reported to me?
How often will I receive my statements?
Will you explain them to me?

Even if you work with a financial advisor, it is up to you to educate yourself so that you can delegate, not abdicate responsibility for your money. And trust your gut – if you don’t feel good about your connection with the advisor then move on to someone else. – Karin Mizgala

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Move over Piggybank, Moonjar is here

For many kids the gift of a piggy bank from a grandparent is about the closest they get to a financial education. Little wonder then that years later many adults find talking about money intimidating, confusing and stressful. Is there a better way to introduce children to healthy attitudes towards saving, spending and sharing? The partners in an innovative school program in British Columbia believe they have some of those answers.

The pilot project is a collaborative effort between Moonjar Canada, a children’s financial education company, the North Shore Credit Union, and the North Vancouver School District. The project is built on the Moonjar financial educational program for children that encourages them to “shoot for the moon”, to go after their dreams and goals, but to learn good money habits along the way. Moonjar was initially launched in 2001 by Eulalie M. Scandiuzzi, a native of Seattle, but it is now found in homes and schools around the world.

Central to the Moonjar approach is a whole new style piggy bank. Instead of the old one-slot icon we are all familiar with, the award-winning ‘Moonjar’ has three compartments “that remind us of the choices we can make with our money. One each for: Saving, Spending and Sharing.” A host of games, books, teaching aids and other materials rounds out the program for a wide range of age groups.

Brent Dobson lives in Ottawa and works in the financial management and consulting world. He discovered Moonjar while looking for positive tools and resources to help teach some basic money concepts to his three children, ages 8, 5 and 1. “I know how important money is in people’s lives, but most of us get off to a bad start”, he explains. “I wanted my own children to grow up with a healthy attitude towards money, so I went looking for something we could use as a family to open up conversations about allowances – about sharing with others – about making smart financial choices – and saving for things you really want or need.”

Dobson became so passionate about the Moonjar program that he obtained the Canadian rights. He now shares his enthusiasm with financial educators and parents across the country. The first Moonjar kid in Canada? His daughter, Emma, now 8-years old. “I was really impressed with her”, Dobson relates. “She went from being a spender to a sharer. We had long conversations about the different places she could direct the share portion of her money. She decided to help support the Children’s Hospital. That was her choice.”

Equally enthusiastic about Moonjar are Lianne Dunster and Catherine Downes of the North Shore Credit Union, in North Vancouver. In partnership with the North Vancouver School District, they are running a customized bilingual version of the program, using what they call a “Wishbank.” Joanne Robertson, District Principal for the North Vancouver School District, says “The ‘Moonjar’ moneybox provides us with a creative way of teaching financial literacy in the primary years. It fits well into the Grade 2 math program.” Plans are already in the works to expand the program to other school districts and other grades.

As Dunster says, “It is so exciting to help a child open their first savings account. This program just builds on that. It makes money matters easy to grasp.” And Downes adds, “It is so visual. And it is a cool way to open discussions about money.”

Sounds great. Now I know what I’m getting my husband for Christmas! – Karin Mizgala

The Goldilocks Guide to Life Insurance

Not too hot – not too cold – but just right! Unlike in the Goldilocks fairytale, most people don’t get it “just right” when it comes to insurance. Most of us are either under-insured or over-insured. Yes, over-insured!

So, let’s start with how much life insurance your family truly needs. If either you or your spouse dies, would the survivor(s) have sufficient means to:

Pay off debts
Maintain their lifestyle and continue to save for the future;
Pay added expenses, such as funeral arrangement, legal or estate tax bills.

If your family has the financial capacity to cover the above (make sure you go through the exercise for each spouse), then you likely don’t need insurance at all. If you don’t, then you’ll need to buy life insurance.

Your insurance needs are generally highest when you are just starting out with your career and family. Typically insurance needs gradually taper off as debt is paid down and assets are accumulated.

(While there are some specific reasons for holding life insurance throughout your entire lifetime (eg. business succession, transferring cottage assets to family members, dependents with special needs), these insurance needs are less common, more specialized and will definitely require individualized professional advice.)

Too little insurance:
Typically younger people don’t have enough insurance, and often it is the wrong kind. Usually we need a lot more insurance at the beginning of our careers, when children are young and especially if one parent stays at home. Term insurance generally works best here – it’s cheap and exactly suited to this type of need. However, with little understanding of insurance and the ever increasing complexity of insurance options, many younger people are talked into universal life policies that don’t match the reality of their lifelong needs. These insurance policies are also touted as savings vehicles, but as far as I’m concerned, they are unnecessary, expensive and too complicated for the average family.

Too much insurance:
What I’m seeing lately are many people in their 50’s or 60’s who put their insurance plans into place early on, but haven’t recently updated them. Since their last insurance review, their debts are much lower or paid off entirely, savings and investments have increased and, with kids now out on their own, household expenses are substantially lower. With these life changes, there may be little or no need for continuing to pay insurance premiums.

So, if the kids are relatively self-sufficient, if one income is now enough to live on, or if you have accumulated enough assets, then it’s time to revisit your insurance policies. Remember that term insurance premiums increase with age, so you may be getting the double whammy of paying more for coverage you don’t actually need anymore. I just went through this analysis with some clients and it saved them over $4,000 a year!

Just the right amount:
Take a few minutes to review your insurance coverage. Be realistic about your current circumstances and needs and your future requirements. (And don’t be pressured by those darned “bears” into paying for more insurance than you really need.) Determine exactly what the correct balance is for you and your family at this specific stage of your life. After all, it needs to be “just right”! – Karin Mizgala

Aging Parents – Reversing the Roles

I’m not sure when it happened, but sometime a few years ago I realized that tables were turning in my relationship with my parents. Although still extremely healthy and vibrant 70 years olds, my parents were starting to ask me for advice and I could feel a subtle shift in the power balance. I didn’t (and still don’t) feel ready to for what’s likely to come – but whoever is?

Most of the children of aging parents that I know are busy, stressed and ill-equipped to deal with the added time and financial demands of caring for elderly parents. And often the need to step in comes during a crisis. Needless to say, this isn’t a great time to make the emotional, financial and legal decisions that are often necessary.

If at all possible, have a conversation with your parents early. Find out what your parents have in mind for their future, get a sense of where they stand financially and get an idea of the role that you and siblings might be called upon to play. None of these points is easy to talk about and there is a need to be sensitive and to respect your parents need for privacy, dignity and sense of control.

Here are some simple guidelines to help in developing a “Care-Giving Plan of Action”:

1. Start your dialogue with parents and siblings as soon as possible – strive for practicality and openness. Remind yourself, and each other, that these issues will eventually have to be faced – and that it is best to be prepared well in advance.

2. One of the chief objectives of your plan should be to maintain your parents’ self-esteem and a degree of personal independence. Studies have shown that most seniors want to stay in their own homes as long as possible.

3. Get informed. Find out what services and assistance is available in your community. Local senior’s centers can provide a wealth of information and advice.

4. Get a sense of your parents’ financial capacity and their desires. Do they have enough money to cover medical expenses, the costs of home care or a retirement home? Do they have a retirement community in mind? Would they like to live nearer to you or other family?

5. Find out where your parents keep financial and legal documents. You don’t need to know all the details unless there’s a crisis, but know how to access the information quickly and easily if something does happen.

6. Find out if your parents have up to date wills, powers of attorney and health care directives.

7. Create a list of names and contact information for doctors, lawyers, accountants, brokers, financial planners, bankers, etc.

Don’t be discouraged if you try to broach the topic with your parents and it’s a non-starter. Be patient and gently persistent. (It took a couple of glasses of red wine to get the conversation going with my Dad!)

Knowing where your parents stand on these issues and having a plan in place will save your family much grief later. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service 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.