by Hannah Johnson | Jul 8, 2022 | Financial Literacy
RATE HIKES/COST OF LIVING – SURVIVAL TIPS FOR MANAGING RAPID PRICE INCREASE AND DEFLATION
Friday, July 8, 2022
It is no secret that the cost of living has drastically gone up in the last few years. Prices have gone up in every aspect from groceries to the skyrocketing price of gas to interest rate hikes. This has caused a lot of alarm and concern for Canadians who are struggling to keep themselves financially stable. At YNCU, we know that you may be looking for advice on how to manage your money during times of rising costs. First, let’s look at the definitions of inflation and deflation:
Inflation: Inflation is essentially when the cost of living rises. Typically it is due to supply; if there is little supply and a high demand, prices go up. Inflation means your money will be able to provide you with fewer goods and services than before. Inflation rates in Canada have risen about 5.1% since 1991.
Deflation: Deflation is when the cost of living goes down. What happens is, as prices start to come down from inflation, customers hold off on buying items in the hopes of the prices decreasing even more. This increases consumer purchasing power as companies want business from the customer to avoid losing profits. Deflation can lead to unemployment as companies are not making enough profit from customers. Many economists are concerned about a deflation that is certain to follow the current inflation.
As inflation continues in Canada, we know it can be stressful waiting for prices to drop. Here are four survival tips for managing rapid price increase and deflation:
Build new spending habits
As the prices of everyday items go up and your monthly income stays the same, it is important to keep track of where your money is going. You need to examine your personal financial goals and your current financial situation. You must ensure your budget is realistic and takes into consideration the skyrocketing price of everyday goods. Keeping a budget helps keep you accountable for reaching your financial goals. Read more on the Budgeting Basics!
Look for deals
A great way to keep within your budget and to stay on track with your financial goals is to look for deals and sales. Taking the extra time to do research and learn where the lowest prices are can save you a lot of money in the long run. For example, if you are making a big purchase for a television, consider waiting until after the holidays when the prices will be marked down. These small changes to the way you spend your money can make a huge impact.
Start saving
We know saving money may be difficult with the massive increase in cost of living but working savings into your financial plan will keep you financially secure. Setting aside even a little money every month will ensure you have savings in case of an emergency. You never know when something will happen and it is always best to be prepared. Including savings into your monthly budget can protect you and keep you financially stable through unforeseen circumstances.
Find the best rates by becoming a member
As interest rates rise, along with cost of living, it is critical that you use a financial institution that provides you with the best rates possible. At YNCU, we put our members first. We believe in honest financial services that the big financial institutions simply can’t deliver on. We understand how concerning the rising cost of living can be and we want to help our members be secure in their financial situation. If you are looking for a financial institution that puts you first and offers the best rates, become a member online!
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by Hannah Johnson | May 6, 2022 | Financial Literacy
HOW TO TEACH YOUR KIDS ABOUT MONEY
Friday, May 6, 2022
Providing your kids with a solid sense of financial literacy can help develop their skills and secure a stable financial future in adulthood. Teaching basic skills around saving, spending and earning can go a long way when it comes to establishing good money habits. There are many different ways to build on your children’s financial knowledge as they grow, and the earlier you start the better.
Here are 5 tips to educate your kids about money:
Talk about money regularly
Normalize talking about money with your children. For many people, money is viewed as a sensitive subject that shouldn’t be discussed in front of children. But instead of allowing your children to draw on their own conclusions surrounding money, why not be open and honest with them about what to expect? By comfortably discussing finances with them, you help them develop a healthy relationship with money.
Set savings goals
Talk to your child about short-term and long-term savings goals. Setting and tracking goals is a great way to develop financial independence and learn the importance of budgeting. For example, when your children ask for a new video game, instead of saying yes right away, encourage them to save for it. This will help them learn the relationship between work and money, and help translate into more long-term goals such as saving for post-secondary.
Discuss needs vs wants
Help children distinguish between wants and needs. This will show them the value of saving and making good financial decisions. Needs might include the basics, such as food, housing, clothing and education; wants include the expenses you can afford with the money left over, such as restaurant meals or movie tickets. Knowing the difference between wants and needs will help your children prioritize their spending and live within their means.
Let them earn their own money
Encourage your children to earn their own money by doing chores, like taking out the trash or cleaning their room. This gives them the opportunity to be responsible while demonstrating the value of hard work and that money is earned. To get your child in the practice of saving the money they earn, try setting them up with a clear piggy bank jar. When you use a clear jar, this allows them to visually see their money grow over time.
Involve your children when discussing your finances
When they are old enough to understand, transparency is important when teaching your children about money. It allows them to see first-hand the process behind planning a budget, shopping smart or paying bills. By including your children in discussions surrounding finances or creating a budget, it helps them become financially literate and prepared for real life money situations when they’re older.
Money is a fundamental part of our society. If you want your children to excel at handling their finances one day, it’s important to teach them healthy money habits now.
YNCUniversity is here for all your financial literacy needs. Need one-on-one help? We got you! Reach out to our advisors HERE.
Don’t forget to follow us on Instagram and Tik Tok for more Honest Money Talk tips!
by Hannah Johnson | Dec 3, 2021 | Saving
HOW YOU CAN SAVE MONEY DURING THE HOLIDAYS
Friday, December 3, 2021
They call it the most wonderful time of the year for a reason! The holidays are for reconnecting with loved ones, celebrating the beauty of the season and gathering to enjoy holiday treats. However, when it comes to gift giving and other holiday-related expenses, the holidays can be a major source of financial stress for some.
Between the purchasing of presents, unexpected costs associated with holiday parties and the multitude of social events, it can seem impossible to save during one of the most expensive times of the year.
While spending money during the holidays should never be necessary, we understand that everyone wants to be able to balance their financial goals with their holiday spending.
Luckily, it is very possible to stay on track during the holidays. You just need to be strict with your budget, realistic with your holiday expenses and willing to plan ahead for those unexpected costs that tend to creep up.
Here are our top tips on how you can still save money during the holidays:
1. Set a strict budget ahead of time
Carefully planning out exactly what you will buy for each person on your shopping list and setting a strict budget for each item is critical to ensuring you don’t overspend.
Shopping without a plan could mean losing track of how much you have spent in a short period of time, not leaving enough money for monthly expenses or dipping into your emergency savings.
Instead of leaving your spending to chance, set your budget well before the holidays and make sure you keep yourself accountable. If you tend to overspend beyond a set budget, try taking out cash and leave your cards at home. This is a simple and effective method to keep your spending in check while removing any possible temptations of spending above your limits.
2. Keep your automatic transfers on
With all of the spending that takes place around the holidays, many people tend to assume they can’t save any extra cash. As a precaution, they may turn off their automatic transfers to their savings accounts to ensure they have enough cash for holiday spending — but this may be an unnecessary precaution.
Make sure you crunch the numbers ahead of time, and if there is room in your budget to keep your automatic transfers on, then do not turn them off. If you know you can’t save at the same rate as other times of the year, then simply lower your automatic transfer to a more manageable amount. You may not save as much for a month or two, but it’s better to tuck some money aside than nothing at all.
Once the holidays are over, we recommend setting a notification on your phone, computer or even making a note on your calendar to increase your automatic transfers back to their regular contribution amount.
3. Use debit over credit
As online shopping for the holidays continues to grow in popularity (thanks Black Friday and Cyber Monday sales!) it’s becoming easier than ever before to charge all of your holiday spending to your credit card. While this can alleviate the movement of cash out of your chequing account for the short-term, this can lead to a shockingly high credit card bill 30 days later.
Last year, one quarter of respondents to an online survey reported they spent more than they intended to over the holidays. 16% of those same respondents also estimated they likely wouldn’t be able to pay off their credit card debt from the holidays for at least two more months.
This is incredibly costly, as the monthly interest and ongoing expenses will continue to increase the debt owed. With time, it will only get harder to pay off and your credit score may drop.
To avoid this, we recommend using your debit card as much as possible. If you must make a purchase with credit, pay it off immediately before additional expenses come up.
4. Remember that it’s okay to say “no”
We understand that FOMO (fear of missing out) around the holidays can be real. We want to be able to see everyone, give a gift wherever we go and pay for that extra bottle of champagne — but we don’t have to do it all.
If it’s all becoming too much, your budget is at its limit and money is flying out of your bank account faster than it’s coming in, it’s time to call it quits.
There is nothing wrong with politely declining extra expenses and letting those in your life know that you’re on a strict budget this year. Everyone will understand and if anything, they may be relieved as they are probably hoping to save a bit more cash this time of year too.
Having open and honest money conversations with those in your life around the holidays is an important step to staying on budget and keeping more money in your savings account.
5. For next year, start shopping as early as possible
Spending is very much attached to psychology. There is something about shopping with the holiday music blasting above you, the glistening lights in the storefronts and the hustle and bustle of the other shoppers that make you more likely to overspend.
To keep a level head, we recommend hitting the stores as early as possible to avoid crowds and the temptation of going overboard.
Starting early can also mean capitalizing on some end of season sales and snagging the must-have items before supply drops and prices start rising.
6. Track your spending this year to help plan for next year
If you want to get a head start on your holiday finances for next year, we recommend tracking all of your spending this year and dividing the total by 11. Whatever your resulting calculation comes to, we recommend setting up a special holiday savings account and automatically transferring that total into your holiday account each month until the end of next year. This is a simple and effective method to ensure you have enough saved by the time the holidays roll around next year.
Despite all of these tips, it’s important to remember the holidays are about so much more than gift-giving. They are a time to reconnect, spend time with those you love and make memories that will last a lifetime.
We encourage everyone to focus on the true reason for the season and look beyond materialistic traditions when it comes to celebrating the holidays. Making a handmade card, baking a special treat or simply sharing your time with others are the best ways to connect and spread joy this season.
For those who want to balance their budgeting goals while giving gifts this season, it is very possible to save your money, so long as you keep a level head and are realistic about what you can or can’t afford.
YNCUniversity is here for all your financial literacy needs. Need one-on-one help? We got you! Reach out to our advisors HERE.
Don’t forget to follow us on Instagram and Tik Tok for more Honest Money Talk tips!
by Hannah Johnson | Oct 19, 2021 | Financial Literacy
THE TOP FINANCIAL TOOLS OUR ADVISORS ARE THANKFUL FOR THIS YEAR
Monday, October 19, 2021
Managing your money, whether it be saving for a dream vacation, your first home or investing for the future, can seem daunting at first. Luckily, personal finance tools such as apps, spreadsheets and software can take some of the guesswork out of managing your money on a daily basis.
We asked our advisors to share the financial tools they are most thankful for and tend to recommend to their Members.
Whether you are brand new to personal finance or have been managing your money with ease for a while, using the following financial tools can make a world of a difference in your saving, budgeting and planning for the future.
1. Budgeting Apps
When it comes to tracking a budget, some people prefer good old-fashioned pen and paper or spreadsheets to manage their income and spending. For others, being able to set-it-and-forget-it when it comes to allocating funds to different expenses and savings funds is critical for success.
For those who want automation and to leave the calculations to someone else, our advisors recommend downloading a budgeting app. With so many on the market, it’s easy to find the best app to suit your needs and lifestyle. Here’s a few of the most popular budgeting apps:
EveryDollar – This zero-based budgeting app encourages you to enter your income and all transactions, allowing you to track your spending and plan for upcoming purchases with ease.
You Need a Budget (YNAB) – YNAB is based on a zero-based budgeting system, meaning you must allocate every dollar you earn to a specific goal, whether it be saving, investing or creating budgets for certain spending categories.
Goodbudget – Using the “envelope” budgeting method, this app will help you allocate funds to specific categories of spending each month and allows you to track spending with others in your household.
Apps can make it easier to track your income and spending, and oftentimes will send you notifications when you get close to reaching your spending limit.
Budgeting, like any habit, gets easier with time. Budgeting apps can be a helpful tool in getting your spending and saving under control with little effort on your part.
2. Anti-fraud notifications
October is Cybersecurity Awareness Month. While we always recommend you frequently review your bank statements and regularly change your passwords to prevent financial fraud, you can never be too careful.
Our advisors recommend setting up anti-fraud notifications through YNCU, so you can remain confident we have your privacy and safety in mind.
If any large or suspicious spending is detected, you will receive a notification through a text, email or phone call letting you know that there may be a potential fraudulent transaction made on your behalf.
If you tend to make small transactions, you can set your notifications to alert you if a purchase was made over a certain amount. Notifications can even be set if a purchase was made in another country, allowing you to catch financial fraud as soon as it happens.
Anti-fraud software and notifications can be an essential tool to keeping you aware of all activities related to your finances and keep your money safe.
3. Mortgage Calculators
Buying a new home can be a very exciting experience, but also comes with stress and unknowns, especially if you’re a first time home buyer.
When it’s time for you to start looking for a new home, our advisors recommend you first calculate your estimated mortgage to ensure you can afford the monthly payment. This is a critical first step that will guide you in setting a budget for what purchase price you can afford and will dictate how and where you shop for your home.
Interested to see what you can afford? Try out our free mortgage calculator.
4. Amortization Schedule
For those who have already qualified for their mortgage and are an existing home owner, an amortization schedule can be a helpful tool. An amortization schedule is a table that includes the amount of principal and the amount of interest owed in each monthly mortgage payment until the loan is completely paid off.
This is an essential tool, as it allows you to understand what you owe each month and the due date of each payment. For those who are budgeting, this can be a great method of tracking housing expenses and managing how much money to allocate to your mortgage each month.
To create your own amortization schedule, follow this free, helpful resource.
5. Investment Calculators
A common misconception of investing is needing to invest lots of money each month to make a substantial return. Luckily, this couldn’t be farther from the truth.
When it comes to investing, there is no better time to start than now and any little contribution can make a big difference in the future.
For those who are unsure how much they can expect to make in five, ten or even twenty years by investing, our advisors recommend using an investment calculator. This will help prospective investors estimate what their return could be based on their monthly contribution amount, the amount of time they expect to leave their money in the investment market and the average annual return rate.
Your YNCU advisor will also work closely with you to understand your short and long-term goals, risk tolerance levels and budget, to ensure you are making the best investment decision possible.
To see what you can have saved in the future by investing today, try out this free investment calculator.
Becoming savvy with your savings and spending can seem overwhelming. At YNCU, our local advisors work closely with you to learn your current finances and future goals to ensure you’re set up for success.
Looking to speak to someone about your personal finance goals? Find your local branch.
Learn how to become a YNCU member and experience the difference that Your Neighbourhood Credit Union can make.
