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Show me the Money in 2015!

34% of New Year’s resolutions are money related, with saving money the #3 most common resolution.

Saving for a down payment may be one of your New Year’s Resolutions – either to buy your first home, your next home or even an investment property. As we all know many resolutions fail despite the good intentions. So how can saving thousands of dollars be obtained and actually accomplished?

Here are a few ‘real world’ money lessons that may just help:

Perspective: Understanding your position in society. Alphonse Karr, a European journalist in the 19th century said “Some people grumble that roses have thorns; I am grateful that thorns have roses.” It’s easy to look around and observe that there are people – perhaps your neighbours, or your colleagues at work, that appear to be more successful or have more money than you. One could easily grumble and be discouraged rather than be thankful. Challenge yourself to gain a new perspective on what you do have and how you can make those resources grow into something more. For instance the average hourly wage for an employee in Alberta aged 15-24 is $17.22/hour. Based on full-time hours that equals a salary of just under $36,000 annually. Someone may look at that and think that’s not much to work with but consider that this income places you in the top 2% of the richest people in the world. The average labourer in Ghana makes just $0.11 in the same hour. Certainly based on having the right perspective you can begin to chart a course to use whatever income you receive to accomplish your goals in 2015.

Income: It’s time to give yourself a raise. Who doesn’t like receiving the good news that your boss just acknowledged all your hard work and has approved you for a raise? While you may be due for that extra income the reality is waiting for that to happen could be a long-time coming. One way to earn more is to spend less. While you may have little control over the powers-that-be to give you a wage increase you can focus on spending less thereby giving you the extra funds needed for saving. Review your television, internet, and phone services to see if there is a bundles discount or if the extra add-ons can be scaled back. Review magazine subscriptions, and other monthly membership programs (i.e. Netflix, gym memberships, etc.) that are not being used and can be eliminated. These costs in and of themselves may seem insignificant but will certainly add-up.

Spending: It’s not how much you earn that matters most; it’s how much you keep. We all receive the e-coupons, or see ads online or in the newspaper tempting us to buy something because of the 10-25% off discounts. But you are not saving money when you buy something on sale. No matter how much the original price is reduced, know that you’re still spending your money and not saving it.

Restructure: It’s now or never. We often hear about businesses restructuring their workforce, or product offerings to strengthen their overall operations. Sometimes this restructuring even comes at a significant cost to their bottom line, but it is done in order to better position the firm for future growth and sustainability. Our personal finances should be no different. As an example we recently helped returning clients that had accumulated tons of unexpected expenses due to changing jobs. Between their mortgage and credit card debt their payments were $2,232.64/month, and they had no emergency fund. After the restructure their payments became $1394.56/month, that’s a monthly savings of $838.08/month (plus more savings based on the lower interest costs of their new financing). If they continue to live within their means this will allow them to have more than $10,000 in savings this time next year. This is money that can be used towards their children’s educational savings plan, or other investments.

So the question then becomes… This time next year (December 2015) would you rather be in the same financial position as you are now (by doing nothing) or would you rather restructure and have $10,000 in your bank account? The choice is an easy one – show me the money!