Wednesday, January 30, 2013

The Family Budget

It's January. That special time of year when we look to make changes, start fresh, go to the gym, lose weight, quit smoking, and any number of other goals on the self-improvement list. It's also that time of year when the holiday credit card bills arrive, and the reality of our spendthrift ways can hit us squarely in the face like a bucket of icy cold January water. January is a great time to be thinking about your finances and how you can keep your family on track in the year to come.

With all this in mind, I trotted off one day last week to sit down over lunch with Sandra Hanna, Co-Founder and CEO of Smart Cookies. Their philosophy is all about "living a sweet life, debt free." It's not about being cheap or denying yourself, but about being smart in your financial planning and decisions.

We talked about three main topics - Setting and Sticking to a Budget; Finding Hidden Money; and Working with Your Spouse.

Setting and Sticking to a Budget

This has been a tough one for me. Both the setting and the sticking. I asked Sandra about budgeting tools to help me get started. She reassured me that fancy software isn't a necessity, and this is something easily done in a basic spreadsheet (like Excel). Essentially you need a column to identify your expense categories, a column for your budget allotment for each category, and a column for your actual spending to keep you on track. And of course, you need to know what you're starting with - how much money is coming in - so that you budget realistically. Sandra pointed out that it is smart to try to keep enough in savings for about 2-3 months worth of living expenses, so be sure to budget to put a little away each month as well.

If you are looking for something a little more elaborate, a great online resource is This is a free service that securely gathers all of your financial information into one spot. You can set and manage your budget online, and access it easily even on the go, with their free mobile app. The system allows you to set up and monitor your progress towards goals, and offers tips and financial products to help you get there. It does take a little bit of work to initially set up, categorise your spending, etc., but it's quite easy to use, and convenient. Perhaps most importantly will send you a variety of alerts (you can set what you want to receive) to help keep you on track.

You can also check with your bank to see if they have a budgeting tool available with their online banking services. My bank, for instance, has a "Spend Manager" function for my credit card spending, so I can see where my money goes each month. I can set limits (budgets) in different categories and receive alerts when I am approaching or exceeding those limits.

It's important to remember to re-visit your budget regularly to make sure you are keeping your finances on track, and to give you space to re-calculate and adjust as needed. If you aren't using a system where you can automate alerts, Sandra recommends setting an alarm on your phone, or marking a date on your calendar, to remind yourself to check in.

Finding Hidden Money

This one makes me think of the slogan of a major Canadian bank. But it is true. You can often find "hidden money" by finding savings in certain areas, or free options to replace ones for which you've been paying. For instance - do you have gift cards in your wallet that you will never use? Maybe they are for a store that's not your style, or not available in your area, or to a restaurant you don't enjoy. Services like exist to buy and sell unwanted gift cards. They need to make money too, so you won't get the full face value of your card, but their purchase price will be way better than the $0 you were enjoying from carrying the card around with you unused.

What about your reading material? If you own an e-reader, you may be able to borrow books electronically from your local library. In some areas you can also access free, current issues of popular magazines through your public library via a service called Zinio. Think of how much you could save on subscriptions while still staying up to date on all the news, gossip and trends! If digital reading is right for you, check with your local library for available options.

What about energy costs? Having an energy-efficient home can result in huge savings. If you don't already wash in cold water, consider this - a detergent like Tide Coldwater, which is specially formulated to clean in cold water conditions, can save you money. With every 2.95L bottle of Tide Coldwater and a cold water wash, you can save up to $7 on your energy bill. Considering the number of loads you do a year - that adds up! 

Hidden money can also be found in various services you use daily - cell phone, cable, home phone, for instance. Take a few minutes to review your current services and be sure you are signed up for what you actually need and use. Are you paying for extras you never use? Is there a better package available? Sandra points out that cell phone plans change all the time. She recommends making a call to your provider every month or so to discuss your plan and inquire if there is a better and less expensive fit available for you,.

Working With Your Spouse

This can be a doozy if you don't approach it the right way.  Do you and your spouse agree on everything? Parenting, money, vacations, pets, and many other areas can be cause for disagreement and differing values. If one spouse is thrifty while the other spends seemingly without a thought to the budget, or is completely opposed to the strictures of following a budget, you can definitely get into financial trouble and create stress in the relationship.

Sandra's advice is to try not to address this issue in the heat of the moment, right when you see the Visa bill.  If you and your spouse are coming from different viewpoints on financial issues, set a time to get together in neutral territory and discuss your goals. Call it a money date.  You want to both be calm when you discuss your finances and to go at it as a team. A good approach is to start with goal setting. What are your short and long-term goals for your family? A special vacation? A larger home in a better school district? Maybe you need a new vehicle for your growing family? Once you both agree on your goals, and get excited about them, financial decisions and discussions can centre on those. The question of whether or not to spend can then be couched in terms of would it be better to not spend right now, and instead see that money as a step towards reaching your ultimate goal.

My conversation with Sandra was so enjoyable. She is real and approachable, and very smart about money. We had a great time discussing shopping, saving, our kids, and more. I've since signed up with the Smart Cookies community and look forward to receiving more tips to help me get (and keep) my financial life on track, while still having fun and enjoying pretty things.

Thank you to Procter & Gamble and their PR team for organising this meeting with Sandra. I am a P&G Mom, and I get to enjoy great perks like this as part of my relationship with them

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