Money management is no easy task. Small decisions can leave a lasting impression, so it’s important to try and get on the right track as soon as you can. This of course is easier said than done, so what you want to do is look out for the life events that will force you to think more about your money.
A new job, marriage, or even inheritances are some obvious times when you need to stop and think about what you’re going to do with your money. Sometimes it’s an easy decision, but quite often we struggle with what to do next. Here are a few situations where money was a concern and how I handled it.
When I landed my first part-time job
I started working when I was 17 at a computer store doing retail sales. I was paid minimum wage, but my knack for sales meant I made an extra $20 commission every time I got paid. That was a big deal when my average paycheque was between $150 and $200. My parents encouraged me to start saving for my retirement and in a rare teenage move, I listened to them. I had no idea what compound interest was back then, but the thought of getting a tax refund was appealing.
When I got my first full-time job
When I landed my first full-time job, it came with a huge salary increase (about three times more than what I was making before working retail). I increased my spending by eating out more and buying new things, but I was smart enough to increase my retirement contributions too. Eventually, I was promoted and earned more money but I decided to avoid lifestyle inflation. With each raise instead of spending more, I just increased my savings. Living within my means has made saving more money easy.
When I was offered a payout
I always had this dream of taking a year off work and being paid to do so. This was possible since my employer allowed us to bank all our vacation days. When my company was bought, the new owners would have none of that so they decided to pay out all outstanding vacation time. I had a choice of taking a cash payout of two months’ pay (which is the amount of time I had banked) or to take the same amount as an RRSP contribution. Taking the two months’ pay was very appealing, but I decided to take the RRSP contribution since it had so many obvious tax advantages.
Getting ready to propose
By now it may sound like I was some kind of money saving machine, but it really wasn’t that simple. I had been dating my then girlfriend for a few years and I knew I wanted to propose so I started to think about money even more. I already had the money saved for the ring, but when I started to calculate the cost of a wedding and the cost to live together, I realized I needed to do a better job at saving. I cut my spending even more and made sure the wedding wouldn’t put us into debt.
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Combining our finances
When you get married, there are financial decisions to consider. It’s no longer about individual circumstances, it’s really about combining your finances. My wife and I had semi-regular talks before we got married so when it came time to combine our finances, there really weren’t many surprises. The talks revealed that we had different views and goals about money so we were able to come to a mutual understanding, which is paramount in any healthy relationship.
You would think that getting married would make money management easier due to having two income, but it’s presented new challenges that we couldn’t have predicted. What I do know is that any major money decision will be made after thinking things through.
If you’re looking for places to stash your money, check out the best GIC rates and the best high-interest savings accounts.
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- How My Wife and I Saved a 50% Down Payment
Flickr: KMR Photography