I have been a huge fan of Gail for awhile now, so I was very excited about the opportunity to chat with her.
1. What comes first – establishing a good emergency fund or paying off existing debt?
You can’t do one at the expense of the other. Having a balanced financial life means you’re building a solid foundation. Even as you pay down your debt, you must be setting aside money for emergencies and building retirement savings. If you don’t think you have enough income to do it all, go over your expenses and trim out all the excess. Still not enough, find a way to make more money. But don’t skip saving.
2. Many people are overwhelmed when it comes to their finances because they don’t know where to start when it comes to turning their financial life around. What advice would you give those people?
The first place to start is by analyzing where your money has been going. This is the step people most often skip, and when their plans don’t work out they can’t understand why. It’s because you need to know what you have been doing with your finances before you can change to a better plan. Go over every bank statement, credit card statement, line of credit statement and count where your money has been going. What have you spent on groceries, in restaurants, on coffee? What have you spent on magazines, DVDs, books? How about your utilities, your gas, your car repairs, your rent or mortgage payment. Once you know where your money is going, the next step is to drop the averages you’ve come up with into a budget to see how you’ve been doing. From here, you can make changes.
3. How do you determine how much you should be putting away for retirement?
How much you stash for the future depends on a number of factors: your age (so how long your money has to grow), when you plan to retire, and whether you belong to a company pension plan at work. Assuming you’re doing it for yourself, if you’re in your 20′s saving 6% a year will do it. If you wait until you’re in your 30′s to start, you’ll need to sock away 10%. Wait until you’re in your 40s and you’re looking at 18%… which is the RRSP contribution limit.
4. My single readers would like to know – do you have any tips for budgeting for single folks?
Y’know, I don’t get the single money versus married money thing. I’ve been married (three times) and single (right now) and nothing changes about how I manage my money. (Maybe that’s why I’ve survived.)
5. Are there any work from home opportunities you can recommend to those who are looking to earn an income from home?
I don’t know enough about these to comment.
6. Do you recommend financial advisors? If so, what should you look for when you are searching for one?
I most certainly do recommend financial advisors who are smart and focused on helping you meet YOUR needs as opposed to their quotas. I’d never buy insurance without an insurance specialist at my side. And I have an investment person to help guide me through the investment options and keep my portfolio on track. Here are links to two blogs Finding Help with Your Money part 1 and part 2.
7. What would be your top 3 saving tips that most people don’t think of?
Three great ways to save people often skip include 1) raising the deductible on your insurance to pay a lower premium (while you’re at it, consolidate all your insurance for a discount) 2) Never shop without a list so you eliminate the impulse purchases (and don’t put your groceries on a credit card because you’ll spend more) and 3) maintain your car properly for better mileage and longer life (you should be able to get 300,000 – 500,000 km out of a well-maintained car!)
8. Where do you put your money when your TFSA is maxed out and you have a pension?
A high interest savings account, if you want to keep it liquid. The index if you want to invest in equities. Strips if you’re into bonds. Or some combo of the three.
9. Many people seem to have problems creating and sticking to a budget. Do you have any tips for creating a budget that is easy to stick with?
The only way to stick with a budget is to actually track what you’re spending against your budget categories as you go. If you’re using the Magic Jars you can see when the money is running out, so you spend more carefully. You want to do the same thing with your budget… track what you’re spending… so you can see when you’ve reached your limit on a category.
10. Can you tell us about your new book, Money Smart Kids?
Oh, yes. This is an easy to follow, short and straightforward guide to teaching kids about money. It will help you see what should be taught when, and how to open up those conversations. It’s in ebook format so it’s really affordable, and you can buy it for a e-reader or for your smart phone, or read it on your computer. Parents need to start helping their kids learn about money and how it works. I know it’s all the rage to try and offload this onto teachers, but they’re not the right people. Your kids are going to learn from YOU as you go about your daily life, whether you’re teaching good lessons or just flying by the seat of your pants. If you want them to be smart (and, perhaps, smarter than you’ve been up until now), figure out how money works and get busy teaching it to your children.
Thank you so much to Gail for answering these personal finance questions for us!
Gail also has a new Facebook page, School Lenders – check that out as well!