Budget Sense

You hear it all around you, cutbacks, austerity measures, new efficiency programs and other measures that are being implemented by companies and government worldwide.

It is the new world we live in. World economies and finances are in the worst shape they have been in decades. It all started in 2008 with the US sub-prime mortgage and credit crisis. Ever since, and despite having hints of a recovery, the situation is still dire and in fact turning worse in certain places like the European Union.

So if this is norm and the new world we live in, how can you be ready, immune from it all and stay relevant? As an employee, consumer, or someone responsible for a family, there are a few things you can do to protect yourself and even thrive in the face of these sweeping waves:

-As an employee: be as productive and indispensable as you can be. If there are cut-backs at your company, the last one to go should be those that are the most efficient and valuable to the company. Be sure you are one of them. Learn as many things as you can about your job and those related to you so that you are flexible and can transfer to other roles should yours become obsolete.  The new emphasis is on those who can multi-task and have various skills that are transferable to other roles.

-As a consumer: with the economy tanking, people are spending less which means prices are coming down. Whether it is low-priced items such as food and clothing or something as high as a new car, companies want your business and will compete for it. So be sure to shop around and negotiate. Case in point, when shopping around for my wedding recently, I made sure I look at many different vendors before making any final decisions. Hungry for business, companies are reducing their prices and more.  Did I mention ‘don’t pay the full price!‘?

-As a family: with so many job cuts happening, don’t take your job for granted no matter how safe it seems. Star networking now.  And should the worse happens and you lose your job, you have to have a plan of survival in place, until you find a new job. Most importantly, this is where an ’emergency fund’ comes very handy. This is not your RRSP money of course but something else like your regular savings or TFSA account. How much should this account hold? For the average family, anywhere from 1.5 to 3 times your gross monthly income. The more, the better. Also, ensure you have a budget in place and that you are not paying for things you don’t need around the house.

Heck even the Pentagon is completely overhauling the US military to make it it smaller, leaner and generally more efficient. So if the powerful and huge US military can go smaller, you probably can too.

In this new world, the old adage ‘Less is more…’ couldn’t be more accurate.

Are you lean and efficient enough for the new world?

Happy New Year!

Having cleared that out of the way and all the celebrations that come with a new year, let us get down to business. Yes, right here and now, on January 1st. We don’t have much time to waste. Not even having an extra day from this being a leap year is an excuse to waste any time getting serious.

So what am I calling for you to do? to start saving. Yes, start right now. It doesn’t matter if you are already saving, you can still do more to make this an even more serious plan. Being January 1st, you have a huge advantage. You are basically starting from zero and not missing on any day. In about one year from now, and as this year will be coming to an end-assuming the world doesn’t end on Dec 21, damned be the Mayans for their ambiguous calendar!-you will look back and be so thankful that you started saving from day 1.

Ok, so if you already are saving, go ahead and deposit something into your account today. I don’t care how much, as long as you deposit something. Minimum of 5 to 10 dollars. This is necessary as it signals to your brain that you intend to keep doing this for this year and on a consistent basis.

And if you are not a saver yet, get started now. Call your bank and schedule an appointment to open a saving account. If you prefer, and I highly recommend it, you may want to open a high-interest savings account with ING (you can get a referral bonus if you mention that you were referred by us: Ref# 17109393S1) , Ally or other online banks. Look in your wallet and see if you have any excess money and set it aside to be deposited into your new saving account.

And finally, for both those who are already saving or not, I recommend having a good old-fashion piggy bank where you will throw in all your coins-big or small-as well as some occasional small bills. Although your main saving account will be your one and primary saving source, this one will simply supplement it for an extra future income. The idea behind a piggy bank is that it will force you to save small change that you would otherwise end up spending on things you probably don’t need. It will also keep you more focused and committed to saving money.

If you have been following the news lately, you will have noticed that 2012 will be a tough year for economies worldwide, with no exception. It is the year of the unknown, one that is hard to predict. All of which means that you have to keep a tighter grip on your wallet and hard-earned money,  and to save rather than spend them.

And hey, it is not too late to have resolution for 2012: to save money and be serious about it through Dec 31st!