It鈥檚 important to make sure you get as much 鈥榣ife from your money鈥� as is reasonable.
That was the basis of a presentation by Stephanie Holmes-Winton the CEO and founder of CacheFlo Inc., a software company that builds behaviour-based spending management applications for financial professionals & institutions to use with their clients when she spoke in Yorkton last week.
Holmes-Winton鈥檚 presentation was part of the FCC Young Farmer Summit, and looked at how people can manage their money in ways that work.
And people do need to manage their money. It鈥檚 important to make sure you get as much 鈥榣ife from your money鈥� as is reasonable.
Holmes-Winton noted a payroll survey from 2019 that 43 per cent of people would have trouble meeting their bills even after only one week without their paycheque.
Statistically 31 per cent don鈥檛 have enough to pay bills every month, added Holmes-Winton, and 47 per cent think they鈥檇 be in trouble if interest rates increased.
鈥淔ifty-three per cent of Canadians live paycheque to paycheque,鈥� said Holmes-Winton.
These realities create pressure on people.
鈥淓ighty-eight per cent admit to spending as many as 130 hours every year thinking about their personal finances while at work,鈥� said Holmes-Winton.
That impacts job performance.
鈥淲hat can you get done on your farm in 130 hours?鈥� asked Holmes-Winton.
If an operation has 10 workers that is 1300 hours 鈥渙f productivity you鈥檙e losing every single year,鈥� she said.
The first step is knowing just what sort of shape your finances are in. A good measure to begin with is to know how much per dollar earned we owe.
鈥淚t鈥檚 a really important number we should know,鈥� said Holmes-Winton, adding on average it鈥檚 about $1.78. The number tends to be higher for young people who are taking on more debt.
The next step many take is to set budgets, but Holmes-Winton said they are often ineffective because people have a difficult time following something because budgets are often seen as controlling, that people must sacrifice, feel restricted and unhappy.
鈥淭he focus is on what I can鈥檛 have and have to give up,鈥� said Holmes-Winton.
Those elements can lead to stress, and stress can impact how we deal with our money.
鈥淭he more stressed we are the more we tend to make bad decisions,鈥� offered Holmes-Winton.
That is not to say a budget can鈥檛 be a tool. Holmes-Winton said, 鈥淏udgets with a beginning and end ... a time-boxed plan ... work well,鈥� for example a renovation project, or vacation plan.
But you do need to track spending in a way that goes beyond keeping it in your head.
鈥淜eeping track of money in our heads is very, very difficult,鈥� said Holmes-Winton, adding it gets 鈥渉arder with all the distractions鈥� we have.
Some things, such as rent, mortgages and gas have a low risk of overspending on because they tend to be rather fixed costs, said Holmes-Winton.
Others, such as eating out, the grocery cart, daily expenses, have greater risk of overspending.
It helps too to manage the debt one takes on, said Holmes-Winton.
For example there is more to borrowing than interest rates. The term of the debt influences the end cost to a person in a greater way.
鈥淲hen you borrow don鈥檛 ask about rates, ask about cost,鈥� said Holmes-Winton.
Another is to 鈥渓imit debt to as few accounts as possible,鈥� she said, adding of course it鈥檚 a good idea 鈥渢o pay the principle down as quickly as possible.鈥�
