September 2009

Provided by Brian Marling, Accredited Mortgage Professional, Neighbourhood Dominion Lending Centres, Cobourg 905.372.7222

If you are like many of my clients you have probably never had any formal (or informal for that matter) training/education in the area of Personal Financial Management. And what does that even mean?! Well, unless you were an accounting or commerce major in school, or your parents were Ward & June Cleaver (for all you Leave it to Beaver fans), you probably have arrived at your current financial state (good or bad) more or less by trial & error. And hopefully you are on the positive side of the net-worth equation.

However, the statistics would suggest that the opposite is likely true. The sad reality is that personal finances is still a “taboo” subject in most circles and unfortunately this only serves to exacerbate the problem of having large numbers of people quietly living lives of financial desperation! And the assumption by many is that no one else seems to be going thru this and therefore – shame on me. Nothing could be further from the truth. Perhaps you just haven’t had the proper coaching in the area of Personal Finance.  And as I like to say, “You don’t know what you don’t know” – or translated “Quit beating yourself up”.

It is my firm belief that financial stress is the number one cause of marital and family break-up. This is supported by the fact that Financial Difficulties, and the stress that accompanies them, are still reported as the leading cause of divorce. Nearly every marriage goes through times of  monetary trouble, but with a sound financial plan much of the stress & strain can be alleviated.

The trouble is, many couples don’t even discuss money issues, plan a budget, or set savings aside. And in this society of instant gratification, money problems can quickly escalate. I like to talk to clients about making a Spending Plan as opposed to using that B-word (above) which nobody likes!! And doesn’t a Spending Plan sound more fun than making a B…?! A Spending Plan is simply deciding how you are going to spend the money you make – as opposed to over-spending money you haven’t even earned yet. What most people do not realize is that one day they are going to be a CEO of their own life and probably their family as well and without sound advise…well, good luck with that.

The key is to work together on a realistic spending plan based on your goals. Track your spending and make your dollars go further by sticking to your plan once it’s in place. A Plan offers a step-by-step formula for figuring out how to best use your hard-earned money. Although one of you may be better at spending than the other (is my wife reading this-just kidding), make sure you both offer input.

When you’re sitting down and setting your plan together, make sure you’re not going to be distracted. If you need to drop the kids off at a friend or family member’s house, then plan around that as well. Or, set some time aside after the kids are in bed. Sadly, most people spend more time programming their VCR then they do on planning their Life.

Start by listing your household income, then your household expenses, and review your spending habits. All of this can be done on a pad of paper or on a computer spreadsheet.

Keeping receipts for everything that you spend will enable you to accurately keep track of where your money is going each month so that you can review your plan on an ongoing basis. A critical analysis of your cheque book & the past 6 months credit card statements will be a revealing exercise.

Look at all the areas of your life from entertainment to the type of food you buy, where you buy your food and clothes, and how and where you travel. Also examine your spending personality and adjust if necessary. Are you a saver, a splurger, a spontaneous shopper or a hoarder? Become smarter with your money and avoid impulse buying.

If you find you’re spending a lot of money in one area, such as entertainment for instance, set aside a reasonable amount each month and prepare as a couple to stop spending money in this area once your planned spending has been exhausted.

Planning provides you with the opportunity to re-evaluate your needs and wants. Do you really need the magazine subscriptions, the gym memberships and all the other things you might be involved in as an individual? Although everyone needs some “me time” to wind down, could you not get that by taking a walk or reading a good book you borrowed from the library etc., – get creative.

Following are some tips for addressing common financial issues:

1. If you have built up equity in your home, consider refinancing your mortgage to pay off your debts and start fresh. You will feel much better starting over with a fresh slate, and your plan will help keep you debt free. As Your Mortgage Professional  I will be able to show you exactly how much you will be able to save each month by consolidating your debt. Those savings then go into the Spending Plan.Decide together how you can cut costs and pay down your debts.

1. where you can place a predetermined amount each pay period that you will not touch unless it’s absolutely necessary. This will enable you to put money aside for a rainy day, which should help ease your worries. The goal is to accumulate 6 months of living expenses.Set up a savings account

1. Don’t panic over financial stresses. Sit down together, take a deep breath, and grab a pad of paper to put the issues in writing. To ascertain your needs, visualize your situation. If your financial problems are severe, contact a professional, such as myself, a financial planner, a credit counsellor or bankruptcy trustee to consider your options. Many of these professionals will be able to point you in the right direction when it comes to clearing up your debts. The worst thing you can do is sit back while your debts spiral out of control and your credit score suffers.Contact a professional.

1. Once your financial situation is in order, start planning for the long-term, including sending your children to school and retirement.Set long-term goals.

1. As you accumulate money in your rainy-day account, you will be able to also save for specific purchases – avoiding the buy now, pay later mentality.Save up for big-ticket items.

One of the great joys in my business is assisting my clients in turning around stressful financial situations. These are the kinds of things we discuss on a daily basis with our clients – hopefully before mistakes are made. As Mortgage Professionals we care about your entire financial picture and offer expert advise designed to help you become debt-free as soon as possible and on your way to creating real wealth.

Because Neighbourhood DLC is one of Canada’s largest mortgage teams, we can offer you the absolute best products, service, advice & pricing. Call me today, Brian Marling 905-372-7222 for a Personal & Private consultation.