Retirement should always be on your mind or at least at the back of your thoughts because if you want to enjoy the fruitful golden years you need to make money today and save it for tomorrow.
Does that mean we should shy away from investing in our future if all of our retirement plans can get flushed over-night? No, I don’t think so but I do believe that Canadians need to be aware of what is going on out there and stay on top of their investments which includes their house.
A whopping 26% of Canadians feel they are in a worse financial position than they have been over the past two years according to a recent Manulife poll. I’m not surprised with the way prices are go up, incomes not moving anywhere but down and consumer debt on the rise.
Every month we review our investment portfolio online to check performance, some days are good other days are better. There will be days,, months and maybe even years that are crap but you can’t predict everything even if you are your own financial advisor rather than hiring one to do the work for you.
The retirement game can drive you bonkers especially when you are freaking out with the rest of the country about your investments wondering whether they will survive what looms around the corner. Not everyone is confident at this point in 2016 so it’s a mere waiting game, especially for Canadians.
What is the best way to make your money grow?
For one you need to have money to invest money which means you need to either save cash or earn extra money to put towards potential growth yielding investments. Don’t take that literally because nothing is for certain but saving something is better than saving nothing at all.
Many people still don’t agree with investing their money in any investments even if there are historic trends of making money, good money.
The recent Manulife Poll investment sentiment is at its lowest and with that comes uncertainty in just about everything including investing.
The mere fact that someone could lose their money by investing it scares potential investors. They opt to save money the old-fashioned way, which is in the bank or other safe havens such as gold.
I know many people who believe their home will be their retirement fund along with government handouts. Although that’s all they have it’s not the best route to take for retirement savings, but what options do you have when retirement is knocking at your door? Not much.
Canadian investors are facing a long list of uncertainties, including tremendous volatility in both oil prices and the value of the Canadian dollar. The outlook should become more clear over the course of 2016,- Frances Donald, Senior Economist, Manulife Asset Management-Source: Manulife (increasing number of Canadians hesitant to invest in housing) 2016
Having cheap gas is one thing but when it snowballs into a myriad of other potential issues for Canadians it becomes a big deal to those of us who have investments, including a home. Even now Canadians are backing off the housing market because it’s just not worth the investment. The thought of adding value to a home is on hold because most people don’t have the extra money nor do they want to risk blowing it if everything real estate goes downhill.
A recent conversation with our real estate agent recommended that we don’t overboard with our renovations because we may not see as much of a return if the housing markets falls flat. Houses in our neighbourhood have held strong recently with the highest prices we’ve ever seen but that could all change. Friends of ours struggled to sell their house last year because no one wanted to pay the price even though it was comparable to past house sales.
Investing is always going to be a game where we win some, we lose some and if we hang on tight we may come out on top. Nothing and I mean nothing is for certain no matter what anyone says which is why paid our mortgage off because that was one certainty we knew, our interest rate at the time which was fairly low.
Canadians are increasingly viewing housing as a less attractive investment having dropped three points in the last year. The two largest drops were in British Columbia (13 point decrease since November 2014) and Ontario (decreased six points in the same time period). Canadians are also less likely to prioritize investing in their home in the near future (falling five per cent in the last six months).- Source Yahoo Finance Article (increasing number of Canadians hesitant to invest in housing) 2016
Seriously, forget about all the money-making schemes that come knocking at your door, flood your email or ring your phone because you are the only one who can make money today and save if for tomorrow.
Make money today for tomorrow
Even successful businesses require owners who will work around the clock until they are required less because the business sustains itself financially. That doesn’t mean they still aren’t invested in their business it just means they have more time to do other things they enjoy while others take the wheel. At the end of the day though the owner is still responsible for the business finances.
The same goes with your personal investments, you need to review them quite often to make sure they are performing as you would like them to be. You can’t just set it and forget it especially if you think your investments are making you money. If the money is not rolling in ask yourself what can I do to change this and how should I react to the situation. Sometimes doing nothing at all but having patience will suffice.
Working Canadians can contribute up to 18 per cent of pretax income annually to their RRSP to a maximum of $24,930 for the tax year 2015, and unused contribution room can be carried forward indefinitely. Source: Globe and Mail Six little known facts about RRSP’s that can save you money.
When I started working in Canada back in 2007 I had a low-income compared to what I have today. I invested a bit in the RRSP but for the most part my unused contribution room carried forward. Moving forward almost 8 years and I’m now playing the catch up game with my RRSP and TFSA. In 2015 I put a lump sum into my RRSP and with the income tax return I’ll keep rolling the money back in until I’m caught up.
Now that the 2016 TFSA contribution room has been trimmed back to $5500 again I’ll work on that once my main retirement savings is where it needs to be. At this point with a defined benefits package with my second employer I have to also watch my investments closely until I’m hired on full-time. I’m not going to stop investing in my RRSP just because I think I will be signing a full-time position later this year.
If my full-time dream job happens then we will have to look at investments again. Even I’m a bit leery with everything that is going on in the world however since the 2009 financial crash we’ve made our money back so we are holding strong that things will work out. Had my wife freaked out and pulled her investments she would never have done as well as she has in her retirement funds.
How do we make money today and save it for tomorrow without going bonkers?
You invest in your investing, meaning, take care of your future retirement by knowing what is going on in the world. Learning how to save money is the first step because without extra money you can’t stash it away for a later date. Don’t tell me you can’t find the money to save because even a dollar a day saved over time is a savings that will get you further ahead when you’re in a financial rut.
If you have little to no investments and a house is not in your future you should still investigate what your retirement may look like and how to approach investing. Failing to plan is the number one reason most don’t have savings in the first place. It’s not about having a low-income job or a high 6-figure income, it’s about how the money is being spent. Such a simple concept if one believes that it’s not possible to save when they can.
Over the years I’ve talked to many people who say they just can’t save money nor go out to earn extra money to get them to the next level. Not everyone is in a position to do so but if you can, do it. If you can’t it’s even more critical that you budget your money. YES! My wife and I used the premise behind “Make money today and save it for tomorrow” many years ago to fuel our savings and pay off our mortgage.
As we all sit on the edge of our seats waiting to see how the investing game will unfold we will continue to invest our money. I believe we should still make money today for tomorrow even if that means keeping it in a high-interest bank account or a low-risk TFSA. A huge chunk of our savings sits in a high-interest bank account and that’s fine with us for the moment as we’re maximizing our other investments.
I don’t know what to expect when I hit the golden years but one thing for certain is that I don’t want to look back and say I didn’t do everything in my power to pave the way. Whether I plan to retire early or not is still a mystery but if the cards fall that way I’m going to do it. Some days I do go bonkers working 7 days a week but for now that extra money is going towards our house renovations, son’s education and retirement savings.
Don’t shoot the messenger– online articles are written with intent to inform. Heck, just listen to the news or read the newspaper. Talk to your financial advisor if you’ve got questions but don’t stop investing in yourself because of what could happen. There is always tomorrow so stay positive and plan your financial escape if you need one but don’t go crazy doing so. Stay positive and watch your money grow to become a money machine for your future.
What is your strategy to make money today so you can save it for tomorrow? Are you worried about the current financial climate in Canada and the USA?
Our net worth 2016
RESP Contribution 2016: $208.33 a month.
Changes to our Net Worth in January
As you can see from December to January, the investments didn’t grow at all, in fact they shrank. The contraction was only minor and we’re not that worried as there is always ups and downs.
The left-over income from the month certainly made up for any shortfall in investments, although that’s not what you would want to see on a regular basis.
I went ahead and reduced our vehicles by $2,000 dollars as they got another year older. This leaves the two vehicles worth $5,000 between them. There isn’t much I can do about depreciation, it occurs whether you like it or not.
The vehicles will never go up in monetary value unless you have a rare vehicle. Keeping a vehicle in good working order should reduce your overall maintenance costs by catching problems early and limiting their effects.
The value of the house was not increased even though our street has a few recent examples that would give us an accurate value. I’m not entirely certain that the housing market can sustain much more growth so I’m being cautious.
Understanding net worth
What Does Individual Net Worth Mean?
Net Worth is a snap shot of your financial health sort of like a picture or debt to net assets. In simple terms it’s a total of the value of your assets minus your liabilities.
We credit the growth of our net worth due to patience, perseverance, using a monthly budget and not giving up. Your numbers may go up and down but don’t let the numbers scare you rather understand why and move on.
If you would like to use our budget I offer a FREE downloadable budget which I created and that you can use at home just like we do. I don’t charge for it because I want you to save money not spend more!
There are tonnes of other free printable lists offered at Canadian Budget Binder to help you achieve some of those financial goals and build your net worth.
Now… what you need to do is determine just how much net worth you actually have and go from there….
Determining net worth
Figuring out net worth is fairly easy as long as you know your personal numbers or monthly finances which means you need to do your homework. Net Worth is simply adding up all your assets (what you own) then taking away your liabilities (what you owe) which will give you a net worth number.
Understanding your net worth will help you determine if you are on track to meeting or beating your personal financial goals. It doesn’t get any easier than that.
Net Worth = Assets – Liabilities
Calculate net worth
Do you know how to calculate your own Net Worth?
Now you can stop asking yourself the question, how do you find out your net worth? Why? It’s easy to determine. We like to calculate our net worth every month so we know if we are still on track. Some people calculate it yearly or quarterly. It’s really up to you and how informed you want to stay when it comes to your financial health.
Net Worth is essentially an estimate and not everyone uses the same type of figures. Some people don’t include vehicles like we do or they may leave out the assets inside the home like we have. It depends on what you want to calculate or what you can sell today and make money on.
Why not go ahead and calculate your own using our Free Money saving Tool Net worth Calculator (Canadian Budget Binder 2012)
Why you should set goals
Setting goals are the only way we work towards achieving what we want to get done as a couple around the house and in our financial life. I know that without them we would be flying by the seat of our pants which wouldn’t work for us.
I find it’s much easier to be held accountable when I share what we need to do with all of you. Yes, my wife refers to the list when she asks what I plan to do next. I’m not sure if that’s a good thing for me or not.
In the graphical representation below, I have used excel to provide a prediction based on the past years monthly net worth figures.
Using figures from our actual net worth gains over the past 12 months (the solid blue line) it has suggested that by the end of this year (2016) we should be just shy of $900,000.00. This can change over the course of the year and is only a prediction based on known historical figures from our finances.
According to the chart, we should hit the million mark in June 2017.
This is nice to know but anything can happen over the next year. Hopefully with some careful planning we can achieve this goal and go beyond it.
Do you set goals for the year?
Our financial numbers
When budgeting anything is possible, we are proof of that although we still have a long way to go in our journey. These are our numbers and our goals, not a means of comparison towards your own goals to others target goals.
We don’t care how much money others make or if they have a high net worth or if it is lower than ours as it’s not a competition. I hope our experiences perhaps will help guide you along your financial path working towards debt freedom.
We all have different financial paths
Not everyone has the same path in life. Some of you may have had to start over like I did or go to school a second time and now have OSAP loans to pay back.
Others may have divorced, lost money in the stock market or other investments, suffered job loss, fell ill or was injured on the job etc. but you can’t let that stop you from achieving your financial goals.
Some of you may have been given trust funds, paid-for homes, paid educations or perks in life that give you a financial kick-start and that’s OK too. Remember what I said, “It’s not about how much money you make, it’s how you save it”.
Focus on you and don’t let the evil eye of money jealousy or keeping up with the Joneses cloud your vision. No one cares about your money as much as you do so don’t waste your energy trying.
The only reason people accumulate wealth is because they know how to save or invest it wisely even if they did inherit money or win the lottery. The smallest improvements should mean big strides in working towards reaching your goals.
Sometimes we have to fail in order to learn and we’ve all been there. Money can be an evil force for some people especially those who have a negative attitude towards their own financial situation.
I urge you to be optimistic and little by little with determination you too should see improvements, if you want that to happen.
Net worth updates 2016
Below you can click the links to read past 2016 net worth updates to see if we were on target or if we struggled with some of our numbers.
In the last year since January 2015 our net worth according to our figures has grown $130,082.72
January 2016 $775,436.82 – January 2015 $645,354.10 = +$130,082.72
That’s all for this months net worth update but please check in at the beginning of March 2016 to see how we made out in February 2016 and what has happened to our finances since.
How is the financial market tugging at your financial strings or is it?
Remember: “It’s Not About How Much Money You Make It’s How You Save It“
Check out our past actual Monthly Budget Updates to see how much money we earned and where the money went for the month.