Why? Each and every time you indulge in a “luxury” that has a less expensive alternative, you’re potentially delaying your financial independence. Sound dramatic? But that’s how it happens – one $6 peppermint mocha at a time.

This isn’t to say that you can’t enjoy an indulgence every once in a while. You gotta “treat yourself” sometimes, right? Just be sure that you’re sticking with your overall, long-term strategy. Your future self will thank you! A $6 daily habit becomes $190 per month. If you’re currently 20 years old, that equates to $1,000,000 by age 65 if invested at an 8% annual rate of return.

Here are 3 ways to shift from indulgence to independence:

1. Make beverages at home

Reducing your expenses can start as simply as making your morning coffee (or tea, or smoothie) at home. A quick Google search will yield numerous lists of specialty drinks that you can make at home.

2. Workout at home

How often have you gone to the gym in the last few months? If your answer is somewhere between “No” and “I’d rather not say,” then maybe it’s time to ditch the membership in favor of working out at home or taking a walk around your local park each day. If you love the gym, look into month-to-month membership options. But a hot tub, sauna, and an out-of-pocket juice bar? Maybe not. If you can get in a solid workout without a few of those pricey extras, your body and your wallet will thank you.

3. Ditch cable and use a video streaming service instead

I’m actually surprised at how many clients I have that still use cable. Plenty of streaming services offer free trial periods. Go ahead and give them a try.

In what areas do you think you can start indulging a little less today so that you can indulge much more in the future?

Finally, if scrimping and saving is just not an option for you, have you considered ways to earn more?

The post Switching from Indulgence to Independence appeared first on WeBC.

Have an Emergency Fund

Have 3-6 months of income needs set aside, out of sight but available within a week, to be used only (I repeat, only) in the event that you cannot earn an income. Temporary shortfalls are not emergencies. If you are regularly having temporary shortfalls, increase the minimum you keep in your chequing and consider it your ‘zero’ baseline.

A line of credit is not an emergency fund. It may be a way to cover a temporary shortfall, but should be paid off monthly and not allowed to accumulate. If it is accumulating, you need to reduce your living expenses.

Protect Your Income

I had a friend get a serious head injury from the hatch of a mini-van. Unfortunately, this head injury prevented her from working for several years due to a serious concussion. Things like this happen. Every day. An emergency fund can cover you for the 30-120 days before an employer disability policy kicks in (if you have one), as well as top up your needs beyond business-as-usual expenses (think domestic help, physio, and medical care). Please do not assume your workplace disability policy is adequate just because their benefit plan is generally good. Get an insurance advisor to read through your employee handbook and provide an evaluation of benefits. Ditto for life and critical illness insurance.

Asset Accumulation

I need to write an entire blog about this one, but suffice to say that your greatest ally (or enemy) is time. A dollar saved today is much more important than a dollar saved in a few years. The biggest mistake people make here is to think “I’ll save when I have more.” Get into the habit of saving 15-40% of what you earn, depending on how late you are starting.

In future blogs, we’ll take a closer look at #5 and #6, with tips for asset accumulation and the financial aspects of estate planning.

The post Own Your Financial Future (Part 3) appeared first on WeBC.

1. Cash Flow
2. Debt Management
3. Emergency Funds
4. Income Protection
5. Asset Accumulation
6. Estate Planning

Sometimes we are tempted (or led) to dive right into # 5, which is the most relevant for growing your money, and admittedly, the most fun! However, it’s the other five that can make or break your financial goals. In this and the next blog, I take a look at some ways to rock the first four.

Manage Your Cash Flow

Cash flow is “income” minus “expenses,” typically on a monthly basis. Sometimes I see people struggle to save for their goals from what is left after their expenses. A better approach is to turn that equation upside down; namely, set aside your monthly savings target first, and then spend what is left over. Warning: you may have to drastically reduce your lifestyle if you want to meet your goals. This takes real commitment to your future self.

Eliminate Debt

Yes, I said eliminate, not reduce, debt!  If you’ve watched The Rule of 72 you’ll know that if your debt is paid using compound interest, it can quickly snowball out of control. Even “good debt” that allows you to grow an asset at a higher rate or faster pace, may not be so good forever. Inevitably, interest rates rise, or a good investment turns bad. If you are paying hundreds of dollars servicing debt each month, speak to a planner or debt specialist to see if there are lower-cost options. Do not get comfortable with debt. It makes a terrible bedfellow.

Be sure to come back for the next part of this blog on how to manage “Emergency Funds” and “Income protection.”

The post Own Your Financial Future (Part 2) appeared first on WeBC.

The statement that “women are different,” seems obvious, but when we actually sit down and think about the differences, it’s surprising how much it affects our financial future. Women also take breaks from the workforce ‐ for maternity leave, caring for children or caring for aging parents. And we currently earn less than men by about 18%. These translate to smaller retirement savings and fewer earning years, as well as reduced government benefits. In Canada, the average Canada Pension Plan benefit for women is $408 per month, compared to $500 for men.

This means we need to make our money work harder for us. In Canada, women are 17% less financially literate than men, based on a five-question global survey. That is twice as large as the gender gap in major advanced economies, and over three times the worldwide average (take the same quiz at www.howmoneyworks.com/setton and test your literacy).

So, what can women do to get money working harder?

The first step is to reach out to a financial advisor who is willing and able to spend the time educating you on financial literacy. Make sure they take the time to find out about you and your goals and whose schedule works for you.

Once you have someone you trust, you’ll more likely follow the recommendations of a trusted financial adviser which leads to higher satisfaction with investment knowledge, greater optimism, and greater confidence.

Part 2 of my blog will explore the financial concepts that equate to financial literacy. Stay Tuned!

Note: Own Your Future is a title used by Franklin Templeton Investments as part of a series of educational presentations aimed at female investors.

The post Own Your Financial Future (Part 1) appeared first on WeBC.

In my last blog, I discussed how to protect your family and business with life insurance. Here are two more ideas for you to build a strong safety net.

Idea #2 Protect yourself with Disability and Critical Illness insurance

Disability Insurance (DI) and Critical Illness insurance (CI) are complementary types of coverage and are often confused.

DI is designed as an income replacement; CI policies pay out upon diagnosis of a specific condition, regardless of whether you are able to work or not.

With DI you may have to prove an income before you qualify for coverage. If you end up needing to go on disability, there is 100% reliance on your doctor to determine if you are unable to do your job/role. The devil really is in the details with a DI policy. Work with an advisor who is willing to spend the time understanding what you do and what your benefits would be under different disability scenarios.

CI pays out upon a doctor’s diagnosis of an industry-standardized list of conditions. You may use it for whatever costs you desire and can be working or not working.

Idea #3: Protect your Finances with Business Overhead Insurance

Business Overhead Insurance (BOE) is one of the most overlooked ideas, and yet it is so simple! It is designed to “keep the lights on” in the event, you cannot work due to illness or injury. Unlike disability, which covers your salary, BOE recognizes that it is the fixed expenses such as rent, utilities or admin staff that will drain your pockets if you are not there to generate revenue. And, it’s relatively inexpensive compared to DI.

Try to see these as a cost of doing business, not a luxury that you will build into your cash flow “when you can afford it.”

The post INSURING YOUR SUCCESS – Part 2 appeared first on WeBC.

An entrepreneur’s optimism is a key factor in her success. And yet, that same optimism can sometimes lead business owners to gloss over the troubling “What if…?” questions.

Despite our attempts to control our destiny, life happens. The difference between a successful, long-term business owner and financial ruin may just come down to having a financial safety net in place.

In this two-part blog series, I’ll discuss three ideas to build your safety net.

Protect your family and business with life insurance

Life Insurance is put in place first and foremost to protect those you care about. If you pass away, what do you want to happen with your business? If you are a sole proprietor, you may be fine with the business closure, in which case, you need to only establish the financial value of your future earnings and have the policy to reflect that.

If you are incorporated, you may want a business partner or successor to take over. However, your business shares may transfer to your spouse or children. Do you want them to run the business? Do they want to?

Business owners may therefore set up a crisscross agreement, whereby some or all of the life insurance money goes to a business partner who then buys the shares from the deceased partner’s spouse at a predetermined price.

If you have a key person in your business then you may want to have a key person life insurance policy on them, so that the business can backfill their role with the two or three people and the time it takes to replace them!

Finally, life insurance isn’t only about your business legacy. A permanent policy may be structured to decrease your corporate taxes and increase your cash flow in retirement and benefit you while you are alive!

Stay tuned for Part 2 of this blog where I discuss Disability Insurance, Critical Illness insurance and Business Overhead Insurance.

The post INSURING YOUR SUCCESS- Part 1 appeared first on WeBC.