Recently, over dinner with a few friends, I heard about a couple whose combined income was over $150,000, with the wife alone bringing in a six figure salary. Despite the fact that their combined income is higher than average and they don’t have any children, they struggle to pay the minimum on their mortgage every month and she was recently bailed out of a 5 figure credit card bill. 
I was gobsmacked. How is it possible that a couple is barely affording everyday living on a six figure income? I tried to imagine what our life would be like if my husband and I spent every cent—and more—that we earned. I couldn’t.
After all, we take trips, go to movies, eat out from time to time and yet we earn far less than this couple, manage to put in more than the minimum on our mortgage every two weeks, we don’t carry balances on our credit cards and we still tuck money into savings or investments every month.
But then I heard what this couple’s definition of ‘everyday’ living is; regular shopping trips for designer labels and buying a new luxury SUV with a larger than expected bonus instead of putting the money towards paying down their debt, to give you a hint.
As shocked as I was when I heard this story, I think I was more amazed—maybe ‘in awe of’ is a better way to put it--by Heidi’s story: when she and her husband were first married, they lived on $10,000 a year and didn’t rack up any consumer debt. In fact, today, the creator of the frugal living blog, Little People Wealth, along with her husband and two kids, still live a largely debt-free lifestyle, with just their mortgage and some student debt that they’re working to pay back.
When you hear two scenarios like this you can’t help but think something’s missing; one couple struggles to live on a larger than average salary and the other, who once managed on $10,000 a year, is now a family of four living on one salary (just $25,000 a year), still able to afford to take trips, is saving for retirement and their children’s futures.
Heidi, the oldest of 10 children, said the fundamentals of frugal living--living within ones means and saving what and where you can--is in her blood. She said she thinks one of the reasons she’s been able to avoid a debt-riddled life is because she grew up knowing the difference between wants and needs, and failing to tell the difference between the two is what Heidi says is probably the biggest reason people struggle to live on six figure salaries.
“The problem with wants vs. needs is it is always open to interpretation,” she said. “You may need a home, but at what point does the size and amenities make it a want? The same thing goes for food (do you need the cookies?), clothing (name brand or not?), and almost everything we spend money on. I've seen budgets where people justify expensive clothing that they ‘need’ for work, cell phones that they ‘need’ for communication, a new car that they ‘need’ because it is more reliable.”
In fact, Heidi said she would describe almost everything she buys as a ‘want.’ Knowing this, she said, has allowed her to more easily give up the things that she knows are not necessary nor important to her and her family and to make room in their budget for the things that are.
“The problem with believing everything you have is a ‘need’ is you feel trapped, constantly paying for things you believe you can't let go,” Heidi said. “If you train yourself to believe it is all a ‘want’ then you learn to appreciate what you have and make decisions you never thought you could before.”
This is why I find it so interesting when people say they choose not to be frugal because they don’t want to miss out or deprive themselves. Really, the opposite is true and frugality, or being able to decipher between what you really need and what’s just taking up space in your closets or on your credit card bills, is liberating or enabling.
In Heidi’s case, having a more discerning attitude with regards to their spending has meant she can stay home with her children, which is something that she and her husband feel is important for their family.
She said personalizing your frugal living, so to speak, is something that she tries to stress on her blog, to show people that you can use money saving tips and put money away for whatever it is that’s really important to you.
“Frugality should mean something different to everybody,” Heidi explained. “The problem is, when teaching somebody to be frugal, you show them everything and by doing that you run the risk of them becoming miserly or skipping it altogether because they are overwhelmed. I buy about 50% organic produce, but I never spend more than $1 on a box of cereal (usually it is free). If you said I couldn't buy organic produce anymore because it is a waste then I would feel deprived. The key is not to deprive yourself. If you find it too tedious to clip a cereal coupon because your favourite cereal never goes on sale then continue eating your favourite cereal without the coupon. Don't do every single frugal tip in the book. Do the ones that make sense for you and your family. If you do this right you will never deprive yourself of anything and you will have more money for the things that are important to you.”
Heidi’s site contains post upon post of the practical money saving tips and frugal how-to’s that she and her family use to save money; raising children while living well on one income, couponing 101, money management tips, where to find giveaways and more.
I asked Heidi about her favourite money saving tips and she said that while booking hotels when rates are cheaper or finding coupons to restaurants before they leave on family holidays is at the top of her list, coupons are definitely number one. Her Coupon 101 and How to Shop CVS or How to Shop Walgreens are great tutorials that anyone can use to help shave dollars off their grocery bills.
For her family of four, Heidi spends an average of $150 to $200 each month on groceries and it isn’t uncommon for her to get several items for free. But, before you start thinking she spends days clipping coupons, her routine is only 30 minutes and involves finding the coupons she needs in one newspaper insert and online. Another important tip that Heidi said helps her save money is she won’t buy 20 of an item just because it’s on sale.
Heidi breaks couponing down into three different levels and said you can put in as much time as you want or need looking for coupons, depending on the amount of money you want to save:
“In my coupons 101 post I teach people three ‘levels’ of couponing,” she said. “I would consider myself a level two. Level one just follows the sales, uses printable coupons, and can order the coupons they need from clipping services. I used to coupon that way. It takes almost no time (if you use an online coupon match) and I was still saving 50-60% of my grocery bill. Now I save 70-80% with my current method (one newspaper, clip what you need when you need it). Extreme couponers are people who get multiple newspapers and stock up on everything they can. They can save 80-95% of their bill.”
There’s no doubt about, it takes effort to save money. If it didn’t, the term ‘living paycheck to paycheck’ wouldn’t exist and we wouldn’t have the national debt loads that we do. Maybe you've already found yourself in a too-tight-for-comfort financial situation and you're not sure how to get out of it or how to start to live large on less. If you find yourself struggling to live large, asking yourself, "how can I fix my credit score," then there are plenty of credit companies who can help you get back on track.
Heidi is the first to admit she finds it difficult to be patient sometimes, to resist buying what she wants, when she wants, but to wait until she’s saved enough money. With that being said, she knows that the rewards of her frugal lifestyle are always well worth the effort she puts in:
“Most rewarding is everything I am able to do because I am frugal,” Heidi said. “My hubby and I had a 2 week honeymoon in Hawaii, where we visited 3 of the Islands, and we spent less for everything (airfare, all lodging, food, everything!) than what the first resort would have cost at full price. I was able to purchase a new car for less than the cars on the lot that were 4 years old just by using some savvy sense (and some strong negotiating). I cringe to think of all the things we wouldn't be able to do or have if we paid full price for everything.”
Heidi has learned which money saving tips enable her family to do the things they want to on their $25,000 a year salary while still paying their bills on time and putting money into their savings. If a financial balance is possible on a salary this size, anyone earning more is out of excuses.
Little People Wealth is a great place for the average Joe to go and learn how to make the most out of what they earn, to see how easy it is to stretch a dollar. More than anything, Heidi said she hopes her blog will show others that frugal living is about finding a balance and that living at either one of two extremes is a sure-fire way to wind up broke and stressed out or just plain unhappy.
“I hope that they learn that you do not have to be an extreme couponer to save money,” she said. “Everybody can do it. It isn't just ‘frugal’ it's smart and it allows low and middle income families to be and do things they never thought were possible.”
There was a
time when Mare, the creator of the thought-provoking and ever-so-important
blog, Holistic Mamas, didn’t know
much about natural health or remedies. In fact, the now Master Herbalist and
Certified Aromatherapist said she used to pop pills for headaches, bladder
infections and any of the other relatively minor and common ailments about
which she would visit her MD.
A lot has
changed since then and Mare said it was during the time when she owned a
 wellness spa that she grew increasingly interested in a more natural approach
to health. The MBA graduate started taking courses in aromatherapy and
herbalism and used this new-found knowledge to treat spa clients’ colds and
other illnesses.
When Mare
gave birth to her daughter, now 13 months old, her interest in natural health
took on a whole new meaning and importance as she wanted to do whatever was in
her power to nurture and maintain her daughter’s health using natural methods.
The blog, Holistic Mamas, evolved out
of her own journey toward holistic motherhood and Mare has been sharing her
knowledge and what she’s learned along the way with other parents, ever since.
“At first I
just started Holistic Mamas as a blog
to share with other Moms my journey to raise my daughter holistically/naturally/organically,”
she explained. “I didn't realize how hard it was! But then I realized that
other Moms are seeing me as a resource and asking me questions, so now I want
to be the premier online resource and community for mothers who want to seek
out and share information on natural remedies and natural healing modalities.”
Currently,
when you visit Holistic Mamas, you
will find posts rich with the natural remedies that Mare has used and found
effective, her musings about holistic doctors and practices like acupuncture,
osteopathy and aromatherapy, and find her candid and heart-felt accounts of the
self-doubting that every parent treating their child’s first fever, teething
pain or reflux with homeopathic remedies experiences.
Mare said
she hopes that some day Holistic Mamas
can become a knowledge base or resource for parents to find information on the
ingredients, like herbs and oils, the common ailments and remedies that they
can use to nurture the health of their own families.
Most of the
parents I’ve spoken to who have chosen to treat their children with natural
remedies and holistic doctors rather than regular trips to their MD and
antibiotics, have said that their desire to limit their children’s exposure to
the quick fix pharmaceuticals--that really don’t fix anything at all--is fuelled
by the fact that children are born with a clean slate, so to speak, and it’s
they, the parents, who have the power to start their children on the right
track toward a lifetime of good health.
Taking responsibility
for our health and employing the ingredients that have been used for their
natural healing properties for centuries is something that I, and a growing
number of others, feel very strongly about. It doesn’t just make the most sense
for frugal living, because of the lifetime of savings that a healthy person not
relying upon costly pharmaceuticals and doctors’ visits will enjoy, but it also
makes the most sense in terms of the way our bodies were designed to function
and heal.
Mare said
there are several factors that demonstrate to her that more and more people are
realizing the downfalls of our reliance on ‘modern’ medicine and are reverting
back to traditional healing practices:
“I think
first of all, it's an economic imperative these days to stay healthy. Who has
the money and time to go to the doctor anymore? Many Americans don't have
health insurance, or don't have good health insurance plans, and staying
healthy on our own is a MUST,” she said. “Also, more and more people are graduating
from Naturopathic Schools of Medicine, which signals an interest in this field
(people wouldn't be investing 4 years of their time if there was no way to make
a living doing this). More and more states are letting NDs practice as primary
care physicians. I also see more and more people interested in going to schools
for Traditional Chinese Medicine or acupuncture. More naturally-minded doctors
are also appearing on TV - Dr. Oz, as an example. He is always teaching about
herbs and natural medicines.”
In her own
experience, Mare said she finds that many of the people who have converted to a
less MD driven approach to health care have done so because they or someone
they know have experienced adverse side effects from prescription drugs or other
over the counter medicines.
She said
even members of her own family have started to recognize or recently learned of
the potential dangers associated with some pharmaceuticals, but added that it
isn’t always easy for us to believe that something we’ve been told will help us
could potentially do more harm than good.
“I've been
trying to convert my mother-in-law for a while, and just recently got her to go
see a holistic physician about osteoporosis and getting off Actonel,” Mare
said. “It took a combination of her son and me cajoling her AND watching Dr. Oz
AND seeing a specialist about how taking bisphosphonates could actually damage
her bones in the long-run for her to finally do it. I think it was  this latter
one (seeing on TV that women have actually built weaker bone as a result of
taking Fosamax or Boniva) that finally did the trick.”
What a lot
of holistic healing sceptics don’t understand is that many natural health
proponents, like Mare, see the merits in modern medicine and feel that there is
a place for MD’s in a more holistically driven health care approach.
In
actuality, Mare said herbalists have benefited from modern medicine because it
has helped to standardize some of ingredients that, in the right quantities and
concentrations, can effectively treat illness.
“…without modern science/medicine, we wouldn't be able to
harness the benefits of digitalin for heart disease (from the Foxglove plant),”
she explained. “Some leaves that you picked might not contain enough digitalin,
and other leaves that you picked might contain so much it would kill you. So
standardizing on an exact amount of digitalin that can be transferred from
plant to human is a very good thing. I guess my point is, modern medicine is
not all bad. It's just that (I feel) we need to get to a good balance of
natural health and modern, conventional medicine.”
It’s hard,
for some more than others, to accept change or to believe that what people in
positions of power, like doctors, scientists and politicians, have told us is
the best way for us to heal ourselves might be slightly misconstrued, if not
completely wrong. It goes without saying that there are still a lot of people
who are sceptical about trading in their cold medicine for slippery elm bark.
Mare offers
what are, in her experience, some of the reasons scepticism still exists:
“Firstly, I
would say that there is a general lack of education about the subject,” Mare
explained. “I don't remember learning about how to take care of myself during
school, what remedies to use, etc. I remember a First Aid class, but that's
about it. Secondly, I see that our American healthcare system emphasizes
sickness, rather than health. By that I mean that you only go see a doctor when
you are ill, rather than proactively visiting them to maintain a state of
optimum health (we might do that once a year, but other than that, your doctor
is not that involved in your life). Our current insurance system is set up such
that it pays doctors to just address symptoms quickly and efficiently and have
the patient ‘go away,’ rather than stay involved in their lives as a wellness
partner…Thirdly, conventional MDs look askance at herbal and natural medicines
because of the so-called ‘inconclusive research’ or ‘lack of research’ about
them. The truth is, it is expensive to do double-blind, randomized,
placebo-controlled clinical trials, especially if it is about the efficacy of
an herb, which cannot be patented or sold for huge profits. So, nobody here
looks at those (I feel that we are all in the pockets of big pharmaceuticals).
However, they do do this kind of research in other countries (Germany, China, etc.), but those research studies
are either not published here or simply discredited because they weren't done
here (here = United States). Lastly, there was a time in our
nation's short history where the public trust was abused by so-called
herbalists or practitioners of ‘natural medicine’ (i.e., the snake oil
salesmen, etc. etc.), so perhaps we are still suffering a backlash from that.”
It really
isn’t surprising that a lack of knowledge is one of the biggest roadblocks
preventing a wider acceptance of natural health. Just like anything else in
life, people don’t like or believe in that which they don’t understand or that
which is unfamiliar.
Despite her
work and the positive results she’s seen from natural remedies, Mare said she
still faces criticism from some of her family members who are reluctant to even
give a different perspective a chance.
“For my
grandmother's 100th birthday, she wanted a jumbo size of Tylenol,” she said. “It's
hard to argue with a 100-year-old. They can always play their longevity card
with you. Anyway, most of the scepticism is around the more ‘vibrational’ or ‘energetic’
medicines. One of my brothers has outright said to me that homeopathy is ‘quackery.’”
To be
clear, when Mare talks about the ‘vibrational’ or ‘energetic’ medicines, she is
referring to an understanding that homeopathic remedies stimulate functions of
the body so that the body can essentially heal itself.
Many in North America today have largely forgotten that
the body can and will heal itself and that, in many instances, proper diet is
the only thing that’s needed to ward off illness or to strengthen a sluggish
immune system. Mare said that teaching your children, from a young age, about
healthy eating and raising them on a wholesome and balanced diet is the best
way to keep them healthy. Then, when they do get sick, try natural remedies. If
that doesn’t work, a trip to your MD might be in order.
If you’re
ready to take a more holistic approach to not only your health but also that of
your family, I strongly encourage you to visit Holistic Mamas. Mare’s knowledge is a gold mine of information for
others, not to mention the blog has built a community of like-minded
individuals from which you can seek information and tips.
Breaking
away from the mold, so to speak, can be scary and there will surely be times
when you doubt your ability to heal yourself or your loved ones with plants or
essential oils. But failing to see that pumping ourselves full of drugs or
filling our mouths with unhealthy foods only puts us less in touch with our
bodies and further from optimum health is, at least for me, a much less
desirable end.
Whenever I see something like the TV show, Extreme Couponing or hear about people rolling their debt over and over again or defaulting on a loan payment, I’m reminded of just how hard it can be for us humans to exist happily somewhere in the middle.
I’m sure everyone has had an episode or two in their lives where they did something to the  extreme; either took no action or became borderline obsessed. Personal finance, or rather making, saving, spending and investing money, is not immune to this perpetual imbalance that so often gets the better of us. Learning a money management approach that puts us somewhere closer to the middle of the two poles of debt-ridden or saving fanatic is one of the best ways to guarantee a life that is less stressful, more secure and a heck of a lot happier.
"Trying to manage your money responsibly without becoming so focused on it that you don't get to enjoy life is a major challenge,” 2 Cents, the creator of the personal finance blog, Balance Junkie, explained. “I find setting up basic routines helpful. I look at our accounts monthly and try to do a ‘big picture’ review at the beginning of each New Year or when a major change in our circumstances comes up - and that's happened a lot recently. Still it's important to remember that money is just tool.”
When 2 Cents was first married, she realized she needed to learn more about personal finance and how to best manage their money. She started reading books about saving and investing but initially struggled to determine what type of approach would work best for her and her family.
That was close to 20 years ago. Since then, 2 Cents has developed her own financial approach through which, she said, she tries to maintain a good balance between what’s financially wise and what’s also conducive to a fulfilling family life.
Now, 2 Cents is the first to admit she isn’t a naturally money minded person but, throughout the pages of her blog, you would be amazed to see just how much she has learned and what a valuable resource her posts are to others who might not always think in terms of dollars and cents but who want to learn how to manage their money.
From Portfolio Options for a Risky Market, and Should You Take Money Out of RRSPs to Pay Off Debt, to Passive Investing: Mixed Feelings, Balance Junkie is the perfect place for those who are tired of the ups and downs of a disproportionate, or perhaps non-existent, financial approach and who are eager to learn their way to a more balanced way of living.
“For those who aren't naturally money-minded, there are ways to manage your money efficiently without feeling like you're a slave to cash flow,” 2 Cents said. “You may never get as excited about a spreadsheet or budget plan as those who truly enjoy the study of finance, but that doesn't mean you can't learn the basics. Learning to control your money rather than letting it control you can help you lead a less stressful life and leave you free to focus on the things that matter to you most. If you're not interested in the finer details, just keep it simple. It's really not rocket science.”
Sure, it’s always a little scary when we don’t feel we’re ‘good’ at something or something doesn’t come easily, and I’m sure I’m not the only one who feels added pressure when it comes to making decisions about what I think is the ‘best’ move for my money, but one of the worst things you can do is do nothing at all.
“Another important lesson for me was learning that I needed to take control of our finances and that no one else would have as much knowledge about our life and values as I do,” 2 Cents explained. “Getting professional help when needed is not a bad idea, but realizing that no one cares as much about your money and your life as you do is essential. In the end we're responsible for making sure we have enough money saved for retirement.”
As a mother of three, 2 Cents knows all about juggling the financial demands of having a family and, what’s interesting, is that one of her tips for keeping a financial balance while raising children is to involve them or at least tell them about how you, as a family, spend, save and invest money. This is certainly an excellent way to prepare children for their own financial futures too:
“Recently, I showed our boys our budget,” said 2 Cents. “They now have a rough understanding of how much money is coming in, where it goes, and why we have to be careful how we spend it. They see us looking for a better deal on major purchases. They understand that they may have to wait for their favourite cereal to come on sale before we buy it.
On the flip side, we try to point out that we are able to take them to a concert this month because we shopped wisely for other things,” she said. “They didn't get that connection at first. Now, it's gratifying to see them using similar approaches with their own money. No more blowing $10 at a time at the convenience store and then wondering why they can't afford the new guitar or violin they wanted to buy. Instead, they spend very little, save a lot, and then shop around for a good deal.”
When talking about how the rest of North America fares in terms of financial balance, 2 Cents said she thinks a lack of education when it comes to money and the “advent of easy credit and ultra-low interest rates” are to blame for a society that has largely lost touch with anything that’s in between all or nothing.
“Banks were more careful about lending in decades gone by and it wasn't as easy to qualify to borrow large sums of money,” she said. “We need to educate ourselves on how to control debt and maintain our savings in this type of environment. Many of us are already realizing that more stuff doesn't mean more happiness or fulfillment. Hopefully, the consumerism pendulum is starting to swing the other way.”
For me personally, and this extends to all areas of life, not just my personal finance approach, the best course of action is always the one I can sustain. So while I know it certainly wouldn’t be wise to not save anything, I also know that denying myself or taking frugal living to the extreme isn’t something I’ll want to keep up for very long.
One thing I do know is that reading how others are finding balance in their lives is one of the best ways to get motivated to change your own. Head over to Balance Junkie and learn how 2 Cents has learned to use personal finance, for the betterment of a balanced life.
Money
and investing are topics that my family will avoid discussing at all costs. I’m
sure the vast differences in the older (ahem, my parents) and the younger
generations’ opinions aren’t that uncommon and that many a family have put
money matters on their conversation hit list.
How
money should be used, when it should be spent or saved, or where to invest
money are all topics that have led to an inner-family dispute, or 20, I'm sure.
Without
a doubt, people’s perspective of money and how they handle it is shaped, even
in the smallest of ways, by the events and prevailing attitudes of the
generation in which one was raised. With that being said, money also means and
is used for many different things throughout the course of a person’s life.
Depending on the stage of life in which you currently exist, or the one to
which you’re headed, your perspectives of personal finance will change. 
Considering
the rather interesting experiences I’ve had while discussing personal finance
with generations older and younger than I, I found the blog Boomer & Echo to be a totally
refreshing and welcomed forum for multi-generational discussions about money.
This
site is not only informative, offering highly useful personal finance
information, but the fact that it’s written by a mother-son duo of the Boomer (Baby
Boomer) and Echo (the children of the Baby Boomers) generations, makes it just
that much more interesting from a reader’s perspective.
“When we
got together we always had conversations about the economy and financial
matters,” Boomer, a former financial planner, explained. “It was Echo's idea to
start the blog. We found that our opinions usually diverged from main-stream
thinking. We thought it would be interesting to compare how different
generations make their financial decisions based on current lifestyles and past
experiences.”
Boomer
and Echo saw that they could offer something different to the world of personal
finance blogs and started to write money-related posts on the topics that
mattered most to them in their respective stages of life.
Even
if there wasn’t a by-line to accompany each of the posts at Boomer & Echo you could probably
figure out who had written what just from the types of topics that you will find. From, How to Add Gold to Your
Portfolio or Choose Your Retirement
Date, to Pay off Your Credit Card
Balance Immediately or Wait for a Grace Period? and Creating
Your Estate Plan, Boomer & Echo
really has something to offer people of all ages.
What’s
interesting is that while people of different generations might disagree about
what the best financial moves are in terms of how much you should save or where
you should invest, those who were taught how to be financially responsible or
who taught themselves about personal finance, regardless of what generation
they are from, will likely agree on the fundamentals.
So,
for example, despite the fact that Boomer and Echo came of age at different
times and in very different economic climates, they said that their views of
money are quite similar, even if they disagree about the details like whether
to use online banking or receive paper statements to stay on track.
“I think
we have very similar viewpoints with regards to investing,” said Boomer. “I
obviously have had more experience with the ups and downs of the market and our
day to day lifestyles have resulted in different choices.”
“At the
core, I think we share similar views on money,” Echo explained. “The landscape
has certainly changed from 25 years ago where my parents were dealing with 18%
interest rates, and fewer choices for saving and investing their money.”
 One of
the money-related details that Boomer and Echo said they still largely disagree
on, and one that has likely been the route of more than a few debates between
people of different generations, is whether or not to use a credit card to pay
for the vast majority of your purchases. While Boomer would rather limit credit
card use, Echo pays for most things with his credit card so that he can collect
reward points.
When
asked what it is that his mother taught him that has made the biggest
impression upon his financial actions today, Echo said she got him started on
the right foot, financially speaking, which fostered a desire to learn more
about personal finance.
“There are so many things that
I’ve learned from my mom that it’s tough to come up with just one,” he said.
“She got me to start investing at an early age and to understand the types of
investments that were available, which really motivated me to learn more about
my finances.”
Considering
the mother-son dynamic of this writing duo, and the fact that Echo now has a
family of his own, I asked both Boomer and Echo whose responsibility it is to
teach children about money:
“I think
that parents play a large role in educating their kids about money and shaping
the way they value money and hard work,” Echo said. “Schools need to play a
role as well to help kids understand some basic personal finance concepts, like
budgeting, investing and using credit responsibly. It’s hard to generalize what
all of today’s youth know about money, but I think that the majority of our
youth need to learn to separate their wants from their needs.”
“Parents
should be responsible for educating their children about money and starting at
a young age,” said Boomer. “In most homes the finances are a taboo subject. Schools
should also have a money management course, at least in high school to give different
approaches so they can make good decisions in the future. A lot of young people
squander their earnings for several years before they start becoming aware of
debt, credit, savings and different investment options.”
Often,
it’s the things that we regret most that become the most valuable lessons we
learn and, while I don’t have children yet, I can only imagine that some of the
things I regret, like taking on more student debt than I needed to or not
seeing the merits in frugal living earlier, will be some of the most important
lessons I teach my children.
When
I asked Boomer and Echo if they had any financial regrets, their answers were
opposite one another; she said she wished she hadn’t always played it safe,
while Echo said he regretted taking too many risks with his money when he first
started investing.
Hindsight
is 20/20 but that’s why a blog like Boomer
& Echo, that shows people different ways of financially navigating
through the stages in which they currently reside as well as those to which
they’re headed, is a personal finance or frugal living enthusiast’s dream come
true.
More
than anything, Boomer and Echo hope to add a new perspective, or rather
perspectives, to the discourse on personal finance:
“I've read a lot of financial
books and articles that basically say the same thing,” Boomer said. “Also,
working for a bank reinforced the same types of beliefs (which mainly benefit
the financial institutions) and are mass marketed. With our blog I hope to
give some alternative ideas and get people thinking about what's best for their
own individual situations.”
“Like
Boomer, I don’t believe in one standard approach to managing your finances,”
Echo explained. “As a 30-something trying to balance my savings and investing
while raising a family on a single income, I want to share my personal finance
experiences with our readers and hopefully offer something of value while
keeping them engaged in our journey.”
If
nothing else, you’re sure to find some new financial topics to debate over
dinner with your loved ones.
*Photos from Flickr, courtesy of: yosoyelmo1, tao_zhyn
As a kid,
her parents gave her $2 each week for allowance, stipulating that she could
spend $1 and put the other into a savings account. Learning the value of a
dollar from such a young age meant that this 20-something, who blogs by the
name Money Rabbit (MR), was on the right track financially when she started
university.
Even though
she knew enough about saving and how to budget for her expenses, which
 undoubtedly put her further ahead of many of her peers, MR still got swept up
by the excitement of being on her own and being in complete control of where
her money was going and went into debt her second year of university.
But, unlike
some of the other people her age who go into the red and then take their debt
further, MR said she was not about to shrug her shoulders and continue on the
way she was headed. That, in just her second year of university, was the turning
point for MR, that moment where she decided she wanted to become savvier in
personal finance and frugal living.
“…when I got into debt in my second year of university I felt sick to my
stomach, so I made a promise to learn everything that I could about money to
begin laying the foundation for wealth and freedom later in my life,” she
explained. “I was never afraid to ask for advice from people who I respected
and who I could see understood the principles of money - my grandfather retired
at age 55, and so he was the first person I asked about investing in the
stock market.”
Since that
financial epiphany, MR has been doing all that she can to better educate
herself about saving and investing to meet her ultimate goal, financial
freedom. Having recognized that people her age could use a resource or outlet
that could help them become more responsible money managers, she created a
personal finance blog, Money Rabbit.
Money Rabbit has a lot to offer anyone who is
starting out in their career or living on their own for the first time, just
starting to think about saving for retirement, or even how to balance a social
life and travel and still stick to a budget. From DIY, at-home workouts and building
your net worth, to putting money into RRSP’s and decorating on a budget, MR
blogs about finding balance through frugal living and fiscal prudence, while
still living the life and doing the things that matter most to 20-somethings.
MR said she
doesn’t agree with the stereotype that most people in their 20’s have little
interest in being financially responsible. In fact, she said she thinks that
most 20-somethings want to be better money managers but they have yet to learn
how.
“I do think 20-somethings need to learn about good money management, and
I also think that the majority of them are hungry to have a better grasp on
their finances,” she said. “I've noticed lately that a lot of people seem
to have given up on my generation, calling Generation Y a self-entitled group
who only want instant gratification. Sure, maybe there are some bad
examples of that, but I also know a ton of 20-somethings who work hard, and are
striving for higher self development.”
She’s
optimistic that, given the chance and the right information, people her age
will nip their bad habits in the bud. That’s why a personal finance blog, like Money Rabbit, makes perfect sense as a
tool for teaching her tech-savvy generation about money.
“Blogs are great because they're accessible and you can find the finance
writer who speaks most to you and your life,” MR said. “They're also great
because it opens the door for learning, and connects you to a broader world of
finance, and so if I am able in any way to help direct people towards a
brighter financial future simply because my blog shows up in a
Google search, then I'm happy.”
While MR has some friends who live modestly but are, in fact, self-made
millionaires who started online businesses or own rental properties, she said
she hopes her site will appeal to people, like some of her other friends, who
have yet to fully understand that debt freedom is in and of itself a reward
that is far greater than that which can come from any material object.
“It's the ostrich-head-in-the-sand syndrome, basically
the equivalent of putting your fingers in your ears and going ‘la la la’
and hoping it'll go away,” MR explained. “And it's these people who tend to get
mad at me when I say, ‘I'm sorry, I can't afford to do (insert
activity) at this time.’ Strangely, it's the friends who are
financially stable who understand completely when I bow out due to financial
constraints.”
MR was lucky enough to have been raised by parents who realized that
educating their daughter about saving and investing was a very important part
of their role as parents. Starting them off on the right financial foot is one
of the best things you can do for your children, without a doubt. That’s why
it’s sad that those kids, who grew up in households where the only money talk
that went on consisted of their parents whispering about credit card debt,
can’t even rely on their schools to teach them about money.
This is something that, MR said, could be easily implemented and added
into regular school curriculum; learning how to file taxes in the schools’
computer labs or about investing in the stock market, how to identify and set
financial goals, or reading books like the Wealthy
Barber would put young people leaps and bounds ahead of where the majority
measure up in terms of money skills today. But, as MR explained, maybe there’s
a reason money talk has been left out of school curriculum:
“If we put just a little bit of effort into instructing the next
generation at a young age, we wouldn't be experiencing the kinds of credit
crunches that we've been experiencing, due to greedy financial institutions and
even greedier consumers,” MR said. “However, I believe that to a certain
degree, the government doesn't mind cultivating financial ignorance, since that
means fewer people understand and question financial decisions made in
Parliament and at Queen's Park. However, that's just my opinion...maybe things
have changed since I was in school, but I didn't learn a damn thing in the
classroom, it was all on my own time.”
While the education system lags behind and fails to give young people the
tools and resources they need to make smarter and more responsible
contributions to society, MR said at least others are working to bring money
talk out into the open.
She credits the huge number of personal finance and frugal living blogs
for providing a space where people can offer advice and information or ask
money-related questions. Apart from individuals, the Toronto Star’s site, Moneyville.ca, and the ING coffee shop where people talk to
financial advisors about money, without obligation, over a cup of coffee, are
helping to shake off the long-held notion that money is a topic best kept
quiet.
It’s true, the efforts of individuals and businesses to change the way
we, as a society, think about and talk about money has great promise and couldn’t
have come at a better time, especially when you consider many of the world’s
economies’ current juncture.
It’s going to have to be a collective effort if we want to see real,
positive change, and I can’t help but think that young people, like MR, who
talk about updating their net worth and monthly budgets with such enthusiasm
and pride, that they hold the key to a brighter financial future.
“I LOVE updating my net worth on the first of every month. Even if
my worth only goes up by $100, it still means I'm making progress,” she said. “There's
also the satisfaction of feeling completely in control. When I stick to my
budget that means I've managed to beat back my temptations and emerge as a
more financial stable and independent person. That is what allows me to
sleep at night.”
Going forward, MR dreams big about what she can achieve with her frugal
living lifestyle, a persevering attitude and continuing to educate herself about
the best financial practices.
“…my hope is that I'll reach a point in my early to late thirties where
working is an option, not a necessity,” MR said. “I have many things I want to
do in my life, many goals I want to accomplish (writing a novel, traveling the
world, buying a property) that I need a strong financial foundation in order to
achieve. I set a goal on my blog that I want to be a millionaire by the age of
30; so far, it's slow progress, but I refuse to give up on that simply because
time is ticking on. You know what they say, shoot for the stars and, if you
don't make it, well, you may wind up on the moon instead.”
Everyone
has heard the old saying, ignorance is bliss. I remember back in 2008, when the
economy was spiralling downward, bailouts were given out like free samples at
Costco on a Saturday, and production started to slow, and yet few of my friends
and even my acquaintances were very, if at all, concerned about what these
events meant.
I remember
being amazed by the fact that people carried on like it was business as usual,
oblivious to what was happening. It seemed that unless the recession prevented
them from keeping up their daily routine or affected their plans for the
weekend, they really didn’t care. After all, at that very moment, they still
had their jobs and their steady sources of income.
Surprisingly,
however, even the people I know who were laid off because of the slowing
 economy didn’t seem to make the connection between what was happening in the
global economy and the fact that they’d lost their job. Or, if they did, they
didn’t seem too concerned. After all, unemployment payments allowed them to
keep buying, living their life with few if any changes.
Now this
isn’t to say that my experience was the norm. I’m sure these economic events
were a wake-up call for a lot of people, both in Canada and the U.S., and that a lot of belt-tightening
happened as a result. Still, I couldn’t help but wonder, is ignorance really
bliss or is it just, well, ignorance?
Kevin is a fairly recent university graduate who works in
software development and spends his spare time learning and writing about all
things personal finance. His blog, Invest It Wisely, is full of informative and interesting articles, that span many
different personal finance topics from investing, saving, frugal living and
smart spending, yet all focus on the bigger picture with the same message:
those who look and plan ahead while taking careful consideration of the factors
and events that are beyond the realm of their immediate day to day life, will
prosper. Yes, the financial approach that Kevin imparts to his readers is the
antithesis to the popular bury-your-head-in-the-sand tactic.
It was back
during the 2008 credit crunch that Kevin became increasingly interested in
personal finance. He says he realized just how wrong his financial approach had
been when he was younger, namely getting in over his head and racking up debt,
and he saw just how much there was to learn about managing money.
“I think
there's some truth to the saying that youth is wasted on the young,” Kevin
said. “I don't really have any major regrets, but I definitely spent too much
money and made some unwise financial choices. If I could go back in time, I
would tell my younger self to focus more on the future and not only the
present.”
With all
that he has learned over the last three years, I asked Kevin if this greater
knowledge makes him at all concerned going ahead, in light of the fact that
recession fears have started to resurface. On this, Kevin said he’s optimistic
that what he has done over the last few years to prepare himself by upping his
savings and being more prudent with regards to spending, will allow him to take
advantage of market dips and potentially make money.
An example
of one of the ways Kevin has planned to secure more savings is that he set a
goal, back in January, to save 50% of his net income by the end of 2011. With
just 10% left to put towards his savings goal, Kevin had this to say about why it’s
worth it to make a few sacrifices now, for the future:
“The beauty of this is that your life really
doesn't suffer at all, because you'll end up having the same amount of
enjoyment because you'll still spend money on the things which are most valuable
to you and you'll only be giving up the marginal things which you decided were
not worth it in the end,” he said. “At the same time, you'll feel much better
off knowing that you don't have a noose of debt around your neck and that your
balances are growing with every month. There is a great feeling in knowing that
you are building up a nest egg for the future.”
And, just
like a personal finance or frugal living goal like this helps to keep you
thinking about your financial future, Kevin said it also requires you to carve
out a long-term spending plan, so that you’ve made decisions with regards to
what you will spend your money on even before the opportunity arises.
“The
biggest mental shift is that it forces you to make a decision now, as opposed to
some point in the future,” said Kevin. “You need to decide now what you're
going to buy, because you can't buy everything you possibly want without
busting your savings goal. You'll need to decide what's most important to have
right now, and what you can wait for. This isn't something that our generation
is used to having to do.”
Unfortunately,
the credit crunch of 2008 didn’t foster an ‘aha!’ moment for every North
American like it did for Kevin. Instead of learning that debt isn’t desirable
or conducive to a secure financial future, many in Canada and the U.S. continue to spend on big ticket
items, beyond that which they could realistically afford, even after witnessing
the fallout of such actions back from 2008 and on.
“I look at
friends and family and most of them are basing major financial decisions on the
current rock-bottom interest rates,” Kevin said. “They are fine with spending
very large sums on homes and cars because they look at the monthly payments,
and they are affordable at the current rates. These people are already carrying
large payments around, so imagine what the burden will be like if the rates
start going back up.”
So instead
of going down the same path, the one that put a lot of people in a pretty tight
situation just three years ago, let’s learn from our past and commit to never
making the same mistakes again. Start by reading posts like, How Important is Financial Balance to You,
and, Savings=Freedom, or, How to Organize your Finances for a Wealthy
Future, at Invest It Wisely and
start a new chapter for the sake of your financial future.
What I love
most about Kevin’s site and the posts he writes is that they all pertain to
finding a balance. Kevin won’t teach you to scrimp and save in every way
possible just to save a few bucks, but he will teach you how to make smart
decisions with your money so that you allow yourself the freedom to get what
you want from life.
 “I believe
that it's important to have room and flexibility in your budget so you have the
ability to find a balance,” he explained. “If you require two salaries to cover
your mortgage and tax payments, you have a lot less freedom to make major
decisions, such as having a parent stay home when the baby arrives, or even
minor decisions like taking a vacation in the summer.”
Here are
Kevin’s top three tips for finding financial balance—pay particular attention
to number three:
1) Spend no
more than 33% of net income on total housing costs.
2) Save a
significant amount of net income on the side, 30% to 50%.
3) Enjoy the
remaining money and don't feel guilty about how you spend it, so long as you
stick to your savings goals.
With a
solid understanding of where you’re going or what you’re doing with your money,
you will reap rewards that extend far beyond financial security. Kevin said,
for him, learning about personal finance has motivated him in many other areas
of his life and encouraged him to not only save his money but to also find new
ways to grow his wealth.
“You also
start to think more about how you can make more money, because when you're
saving so much of it away, you're forced to make choices on how to spend your
money, and that's a little uncomfortable,” Kevin explained. “You then start to
think about how you can advance your career, education, and build up side
income -- you start to think a lot more about yourself and where you're going,
and your future, instead of just living the days as they come. This was the
biggest benefit for me personally.”
Kevin said Invest It Wisely has become a forum
through which both he and his readers can learn from the personal finance savvy
of the other and he hopes the blog can continue to be a valuable tool for
people wanting to learn more about how to best use their money and their time.
Going
ahead, we can only hope that there will be more people who, like Kevin, have
one of those life-changing ‘aha!’ moments where the blinders are lifted and
they can see just how dismal our financial future will be if we carry on as we
have.
Ignorance
may be bliss when it comes to some aspects of our lives, but I’d say real bliss
is only experienced by those who have broken out of the bubble and are using
their time, money and energy wisely.
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Thrifty Blogger of the Week
