Archive for May 2023

Unlocking the Hidden Financial Potential of Credit Card Rewards: Optimize Points for Long-Term Gain and Maximize Cashback

I think it is no secret that majority of people use their credit card rewards for travel and that is generally a good usage of these loyalty rewards. But a lot of people ignore or even fail to realize that, depending on their reward system, they can use their cashback to get ahead financially, be it to save money, pay down debt or buy registered products.

Let us use my RBC Avion Visa Infinite Card as an example: you get 1 point for each dollar spent, not including the occasional promotions where you get extra bonus points. You can then use these points to buy travel products at the rate of 1 for 1: or 100 points for $1 in travel money. You can also use your points to buy other products, including financial rewards, electronics etc, but at a lower rate of 120 points for $1.

With the math above, it makes sense to use your Avion rewards to buy vacation packages and other related products (flying, care rental, hotels etc) . But if you want to get ahead financially and don’t care for travelling that much, then you can use your points to buy RRSP, TFSA, and other financial products. For example, at the moment, I have enough points to buy $500 in TFSA or RRSP savings which goes along way these days.

In addition to my Avion Visa card, I have a Master Card from Tangerine Bank, which allows me to earn 2% in cashback in two categories of my choice, from a list of nine categories ( mine are Bills and Gas) and 0.5% for all other purchases. Despite not using it as much as I use my Visa, I still manage to accumulate close to $10-15 a month in cashback, or around $130-150 a year, paid to me on a monthly basis. I save this money and use it at the end of the year to make a big purchase, pay it towards credit card balance, or use it to purchase Christmas presents for family and friends.

As you can see, these credit card reward systems make using them more fun and rewarding. But at the end of the day, it is not useful if you are accumulating points and getting cashback at the expense of having a big balance which cost you a lot more interest every month. Take the time to assess and compare which credit card would work best for you, based on their reward system, assuming all else being equal. But more importantly, earning rewards should be the second priority to the primary one of ensuring your credit card balance is always paid in full. When you do that, these rewards become even sweeter and you actually beat the bank at their game!

Mastering Mistakes: Building an Effective Feedback System for Continuous Financial Improvement

Often times, we make mistakes in life but fail to learn from them or take any lessons. While making mistakes is not the end of the world, the bigger mistake is when we don’t take any lessons or learn from these mistakes. For example, financially speaking, if you took a credit card in your younger years and maxed it out, and took you years to pay it off, there should have been a powerful lesson to take from this: that it is much easier to spend money than it is to pay back it, so much easier to avoid debt at all costs.

Developing a good feedback system to learn from these mistakes is a must, if we want to learn and not repeat them again and again. How do you design such a system and what does it involve? To simplify things, this is a mental model and not something you have to jot down on a paper or in a computer; unless you are a big corporation. Here are some steps to consider when establishing such a system:

  1. Establish clear performance metrics: Define clear and measurable performance metrics or goals that serve as benchmarks for evaluating success. These metrics can help identify deviations or errors when performance falls short of expectations.
  2. Conduct thorough analysis: When a mistake or error is noticed, conduct a comprehensive analysis to understand its root causes. This can involve gathering relevant data, examining the sequence of events, and involving others if needed, such as family members.
  3. Promote learning and improvement: Once the analysis is complete, focus on extracting meaningful insights and lessons from the mistake. Reflect and engage in brainstorming sessions to generate ideas for preventing similar errors in the future. Develop action plans and strategies to address identified issues and improve processes
  4. Monitor and evaluate progress: Continuously monitor the effectiveness of the feedback system you have developed and the implemented improvements. Assess whether the changes have resulted in a reduction in mistakes or errors and whether there has been a positive impact on overall performance. Make adjustments to the system as necessary based on the feedback received.

In conclusion, learning from our mistakes is an essential part of personal and professional growth. It is not enough to simply acknowledge our errors; we must actively seek to extract valuable lessons from them. By establishing a feedback system that incorporates clear performance metrics, thorough analysis, promotion of learning and improvement, and ongoing monitoring and evaluation, we can create a framework for continuous learning and development. Remember, mistakes are not meant to define us, but rather to guide us toward better choices and actions. Embrace the opportunity to learn from your missteps, and let them propel you toward a future filled with progress and success.

The Smart Way to Save for Big Purchases: Strategies for Success

You’re cruising along with your trusty car, and everything seems fine. But let’s face it: in 5 years, you’ll eventually need to replace it. It may seem daunting to start saving for such a big purchase so far in advance, but here’s where you’re mistaken. Now is actually the best time to kickstart your savings plan.

But what about those smaller yet significant expenses looming just a few months away? Take, for example, a dream family vacation to the Caribbean, costing a few thousand dollars. With exactly 5 months to save up $5,000, how can you effectively budget and save for such an adventure?

Break It Down into Manageable Pieces

One effective strategy, commonly used in goal-setting and project management, is to break things down into smaller, more achievable targets. For your upcoming vacation, instead of fixating on the $5,000 price tag, focus on saving $1,000 per month over the next 5 months. By shifting your perspective, you’ll find it easier to grasp and rally around these more digestible milestones.

Create a Dedicated Bank Account

Given the substantial amount you’re saving, it’s crucial to establish a separate bank account exclusively for your vacation fund. This separation sends a clear message that this is a special project requiring your utmost attention. By compartmentalizing your finances, you’ll maintain a laser-like focus on the bigger picture without distractions from day-to-day expenses, debts, or other financial commitments. In other words, no matter what’s happening elsewhere, this account will be your unwavering resource for funding your dream vacation.

Explore Multiple Income Streams

Unless you have a substantial income with zero financial obligations, you’ll likely need to tap into additional revenue streams to achieve your savings goal. Begin by calculating how much money you can contribute each month from your current job, and then brainstorm ways to secure the remaining funds. Can other family members chip in? Are there upcoming bonuses or windfalls that can be allocated entirely or partially to your vacation fund? Consider taking on a side gig or part-time job. You can even explore opportunities for extra hours at your current workplace by discussing the possibility with your manager. Lastly, declutter your home and sell any items you no longer need online. Remember, the more income streams you can generate, the easier it becomes to save for your eagerly anticipated getaway.

Remember, the key to success lies in starting early and planning ahead. By giving yourself ample time and diversifying your income sources, you’ll significantly increase your chances of reaching your savings goal. Let’s embark on this journey together and make your dream vacation a reality!

Combatting Inflation at the Grocery Store: Tips and Tricks to Save on Your Monthly Bill

Inflation has become a reality in every facet of life in the last 12 months or more, but it is nowhere as evident than at the grocery store. It is almost depressing to know that for the same budget, you are getting much less than what you used to do back in 2021 or beyond.

With that being the case, saving money on groceries is more important than ever, while still trying to get healthy and good quality food. A delicate balance that requires some research and effort. Groceries can make up a significant portion of one’s monthly budget, but there are ways to reduce these expenses without sacrificing the quality of food.

One of the first and most effective ways to save on groceries is do an an inventory on what you already have at home, be it in the fridge, pantry, cold room etc., and ensuring you are using those before you have to buy the same items again. You don’t want your food at home to expire before you buy the same item again. This has happened at our household before and we are careful to check and make sure we know what we have already. Another related tip which a lot of you have heard of is to eat before you go grocery shopping: feeling full while there will magically make you want to skip a lot things that you would otherwise put in your shopping cart without much thinking.

Another way to save on groceries is by using coupons and checking weekly flyers. . There are many sources for coupons, such as flyers, online coupons, and loyalty programs. By taking advantage of these offers, one can significantly reduce their grocery bill. It’s important to note that coupons should only be used for items that are already on the grocery list and are needed. Using coupons for unnecessary items can end up costing more money in the long run. However, I am one of the last people to suggest that you go to multiple stores to find deals and use your coupons as that is a waste of time and gas which defeats the purpose. Aim to go to max of two stores , preferably within 5 KM of each other or less.

Another approach that can help, if you don’t mind making trips to two different stores, is to buy the food items where quality matters (meats, fruits, vegetables) from one store, and buying other less essential items (cutlery, condiments, canned food, frozen food) from discount food stores. This approach will ensure you are balancing quality with lower prices.

Strategies such as taking food inventory, using coupons, and shopping at discount stores can help you save on groceries in today’s high inflation reality. By being mindful of spending and taking advantage of cost-saving opportunities, one can reduce their grocery bill without sacrificing the quality of food they eat.