Family Finances

My three year-old was recently given a piggy bank by his grandmother and has taken great interest in putting money into it, taking it out and looking at it. He's interested in organizing the money and when we recently went to the store and bought two freezies with his saved-up change, he was proud of making the exchange with the store owner. Until now, my son has accumulated money by finding change my husband and I leave lying around on the kitchen counter and on our dressers. (No more coffee change for me). But seeing his early interest in money made me wonder when is a good age to introduce your child to the value of a dollar and how. I approached Canadian parenting expert and author Kathy Lynn and asked her to share some tips on introducing your little ones to the big world of money.

The First Step
You can show a toddler dollars and coins but wait until the preschool age before giving him his own money, Lynn advises. The first step? Lynn says simply let him pay for something and then talk about the transaction.

On the surface, it seems simple: Pay off your debt and keep it paid off. For anyone mired or wallowing in a debt hole though, such advice sounds trite, almost laughable and easily dismissed.

There are a number of ways people get stuck in this murk. Put aside for a minute that a huge amount of revolving credit is made readily available to virtually every member of society (it's not all that difficult to find stories about companies accidentally issuing platinum credit cards to babies, deceased grandmothers and the family dog). Sometimes it's the simple and unfortunate life events, those which can happen to just about anyone, that drive a lot of people into positions where they need help.

Given how widespread the problem is, it's not all that surprising to see a whole industry of debt settlement specialists springing up online, on the airways and in advertising just about everywhere you turn.

Some of these companies are legit but a lot of them are predatory too, promising to dispense with a would-be clients' debt in a very short time, usually for a fraction of what's owed.

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Although there are package deals to be had geared towards
getting away for a romantic night, not all of us are in the
position to jet off to Chicago with our mate on February 14th
for a night of good eating, theatre and a posh hotel.

Who really has the cash right now to pay for the airfare for two, a sitter for the kids and tipping a doorman several times all in recognition of one night?

But that's not to say Valentine's Day shouldn't be recognized -- I've always been a big believer in doing something special for your significant other on the 14th. Even if it is an appreciation that is somewhat forced, it does remind us not to take our partners for granted (at least for one day).

Here are a few ideas on how to treat your sweetheart without getting walloped with a big bill at the end of the night.

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Have you ever taken a drive into the ritziest neighbourhood in your city and wondered what people must have been doing to be able to afford a $20 million home? I have. And I've come to the following conclusions: It could be old money, it could be that someone took a good idea and turned it into a cash cow, or they could be street pharmacists. The truth is if you want to be wealthy, it doesn't matter how much money you earn, it's how much you keep that counts.

But why is no one saving anymore?

Sky-high student loan debt and easy access to high-interest credit cards are only part of the problem. At the other end of the spectrum, Canadians are struggling with the rising cost of living and low-paying jobs. Statistics Canada says that household net-worth has dropped 2.1 per cent to $180,100 in the third quarter from $184,700 in the second quarter.

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While visiting my banker, I happened to overhear a conversation about how an octogenarian of modest means managed to save what adds up to be an annual income of $30,000 a year for the rest of her retirement years. This amount doesn't include her company pension or money received from her Canada Pension Plan. That's pretty incredible for a single debt-free senior. Is she The Bionic Penny Pinching Woman? Nope. She's incredibly prudent with her finances and doesn't rely on credit.

Related links:

• Canada's Rich Are Getting Richer. So Who Are They?
• How to Find a Good Financial Expert
• Kevin O'Leary on How to Wake Up Rich & When 'Fire' the Government

Financial experts recommend that you save 80 per cent of your working salary for each year of your retirement. Are you on track? If not, follow the lead of high net-worth individuals. Here's how:

1. Have a plan

Unless they won the lottery, most millionaires and billionaires didn't become rich by chance. They developed a plan and a timeline to gradually grow their net worth. Part of this plan includes debt reduction and becoming asset rich. An important part of planning is dreaming. Visualize when you want to retire and the life you want to lead. Ask yourself how much money you will need to save to get there, and actively focus on that plan. To ensure that your plans come to fruition set out SMART objectives: Specific, Measureable, Attainable, Realistic, and Timely.

2. Create a budget

I know it's not exciting stuff, but budgets can work. Wealthy people are very disciplined about following their budgets. Check out (non-Canadian) actress Zooey Deschanel's monthly financial breakdown. Budgets weren't created to spoil your fun; they're a blueprint for tracking your income and expenses so you can reach your short- and long-term goals. If you're part of a couple or a family unit, include their input when creating your budget. Remember to pay yourself first and set aside cash for emergencies, fun and charitable donations. The goal is to minimize your credit dependency, save for purchases, and prepare yourself for life events.

3. Get good advice

The fact is wealthy people almost always use a financial advisor. Working with an advisor doesn't mean you are lazy or are financially impaired. Au contraire. Rich people hire financial advisors because they want to be successful, just like top athletes, corporate executives and entertainers do.

But don't just hire anyone. Look for professional distinctions, such as certified or chartered financial planner. Ask for references and referrals from family and friends. You need to get a sense of their experience, service level and availability. Lastly, don't underestimate the value of personal compatibility. You want to work with someone you can trust and who will become a true financial confidant.

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Maybe you've picked up the phone recently to hear the following recording or something like it:

"Are you more than $10,000 in debt? We can help! Press #1 now to get connected with one of our agents and they can help cut you're debt in half for only a quarter of the cost."

Well, unfortunately a lot of these debt reduction agencies are nowhere near who they claim to be and most end up costing you money instead of waiving your debts. This is why The Financial Consumer Agency of Canada has issued a consumer warning against those telemarketing calls and advertisements claiming to come from debt reduction agencies or anyone who claims to provide "debt reduction," "debt relief," "debt settlement" or "debt renegotiation."

"Unfortunately, people do not always see the benefits that debt reduction companies lead them to expect-and some people wind up even deeper in debt than they were before," says FCAC Commissioner Ursula Menke. "If an offer to reduce your debts seems too good to be true, it probably is."

The usual setup promises that the company can work out a deal with your creditors so that you're able to pay back only a small percentage of what you actually owe for "pennies on the dollar." It's quite the offer, but it may actually turn into a Faustian bargain.

Related Links:

• Debt Settlement or Credit Counseling?
• What is Debt Settlement?
• It's Never Too Late to Get On Top of Your Debt
• Debt Reduction: Five Steps to Freedom

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There may be a lot of economic uncertainty out there but it appears quite a few Canadians are sure of one thing -- they're still expecting to get their annual bonus.
A recent poll by BMO suggests that one third of Canadians in the workforce expect to get their year-end bonus which usually arrives between now and the end of February. It seems that those anticipating the reward also have high expectations when it comes to how much they'll receive -- 79 per cent of respondents who said they think they'll get a bonus said they expect it to be the same amount as last year or higher.

For more than 10 years I have owned two timeshare properties, paying roughly $11,000 for each of them. One of them, The Manhattan Club in New York, is under a class-action lawsuit because owners like myself are fed up with obscene maintenance fees and the inability to book when we want to stay. The second one, Silver Lake in Orlando, Fla., is a place that I've never visited, choosing instead to use the points for exchanges into other properties in the RCI timeshare network. Its maintenance fees have also increased every year since I've owned it. Many timeshare owners lament their purchases for one reason or another. If you've been invited to a timeshare presentation, here are five things to keep in mind when you're confronted with the hard sell that you will surely face.

Here's a list of dos and don'ts to follow when you've got yourself in debt. It comes your way courtesy the Financial Consumer Agency.

Here's where to start: create a list of all your current debts, including the minimum payments required and the interest rate for each loan.

And remember, there are two ways to pay off your debts.

This time of year tends to be the really stressful time of year when it comes to finance.

Are you contributing enough to your Registered Retirement Savings Plan (RRSP)? are you paying off that holiday debt and are you set to do your taxes? And finally, do you have enough money saved to retire in a few years?

It turns out that only 16 per cent of Canadians have some sort of idea about their retirement and 38 per cent of Canadians have some sort of retirement plan.

Yikes.

One of the interesting things is who's actually doing the saving. It's not who you think.

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The past couple of years have been tough on many Canadians and for a brief period of time, frugality was the financial buzz word. I'd like to add the adjective "intelligent" preceding frugality (being smart with your money) as a trend I hope will stay.

But then there are those individuals, you know the ones (maybe intimately), that are just plain cheap.

Take this test to find out if you're fantastically frugal, penny-wise and pound-foolish or a killjoy miser.

Question #1: Have you ever been out with friends for dinner and excused yourself just as the bill came to avoid chipping in?

A: Never; I can't stand people that do that
B: I'll be honest – I've thought about it
C: Yes, and I can't count how many times (is that wrong?)

Question #2: The last time the Girl Guides or Boy Scouts came to your door fundraising, you:

A: Bought one of what they were offering
B: Told them you bought at the office
C: Shut the blinds and turned off the lights when you saw them coming