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Archive for October, 2013

Bringing up Kids on a Budget – Advice for Canadian Families

Here’s another great article from our friends at brighterlife.ca on raising kids on a budget.

Five Money-Smart Tips for Raising Kids on a Budget
Originally posted on brighterlife.ca on Aug 6, 2013

From diapers to driving lessons, raising kids costs a lot. To help manage your family finances, consider these simple ideas.

Cute as they are, kids are costly.

The total bill for raising a child in Canada from birth to age 18 is, on average, about $244,000 — that’s around $13,500 a year — according to some comprehensive number-crunching by MoneySense in 2011. (And that doesn’t include the cost of post-secondary education.)

From clothing and school supplies to childcare and extracurricular activities, spending on your kids can skyrocket quickly if you’re not careful.

Just ask Josée Pharand. The Ottawa mother of two ran a website, Frugal Fun Ottawa, for three years as a way to help other families with their finances by highlighting free family activities in the city. Pharand says it’s simply a question of smart money management.

“With kids, you never know how it’s going to go. You could go to the latest, greatest show and spend $100 in one afternoon by the time you pay for the tickets, food and drink, the merchandise and maybe parking,” she says. “Then you get there and maybe your kids are having a bad day — they’re tired or not feeling well. In that situation, they’re just not going to enjoy it. And personally, I hate feeling like I’ve wasted money.”

If you want to become a money-smart parent, consider these five simple ideas:

1. Hunt for frugal fun

All parents want to provide for their children as well as possible, but overloading their schedules with expensive extracurricular activities doesn’t guarantee success.

Pharand says her young daughter and son don’t run around doing 100 things each season. Instead, they’re each allowed to pick one or two. And Pharand often looks to city-run programs for a better deal than private set-ups.

“My daughter loves to dance, but she’s not a prima ballerina, and the private dance schools can be quite expensive. If that changes in the future, sure, we’ll splurge. But for now, she just likes going to the city-run ballet class and having a good time.”

Pharand also suggests cost-conscious parents check out local malls, community centres and libraries for other great programs. For example, many hardware stores run do-it-yourself workshops for children a couple of times a month.

In fact, frugal fun doesn’t have to cost a thing if you think creatively and keep it simple.

“My kids’ favourite activity is feeding the ducks. It’s totally free, totally easy and they’re always entertained,” says Pharand. “You don’t have to spend a single penny if you’re smart.”

2. Partner with friends

Chances are you know at least one other family looking to infuse a little thrift into their own lives. Why not partner up and share on the savings?

By co-ordinating your schedule with a friend, relative or neighbour, you can cut down on the cost of childcare by splitting after-school sitting. And if your kids are of similar ages, you’ll get the added benefit of having them make a friend or two. You can also offer to take a friend’s child for one night a month if your friend does the same for you. And arranging car-pooling for after-school or weekend activities will save something even more valuable than money: time and stress.

Since we each have our own talents and hobbies, why not put that diversity to good use by gathering a group of parents or friends to organize some kid-friendly workshops on a rotating schedule? Are you a kitchen queen? Teach a cooking class. Speak another language? Give a mini-lesson of basic words and phrases. Love to dance? Learn a new step on YouTube and boogie in the basement. Doing these activities in a small group will give the workshops a summer-camp feel.

3. Swap clothes

An eco-friendly and economical option, clothing swaps have grown in popularity in recent years. Trading unwanted clothing within a small group works especially well for children’s clothes, since kids often outgrow their clothes before they wear them out. To arrange a swap, give your friends a couple of weeks’ notice to clean out their closets, so they can assess both what they’ll be bringing and what they’ll be looking for.

Consignment and second-hand stores also often have a wealth of new or gently used kids’ clothing. Many of these shops will split the profits or pay you outright for your things, including toys — which will bring in money to buy new things as your child grows.

Online sites, like Kijiji and Freecycle, are another source for low-cost clothing, as many sellers offer clothing by the bag. Exactly what you get tends to be luck of the draw. “Even if you spend $10 for the whole bag, if you can pull four items, it’s still worth it,” says Pharand.

4. Shop smart

Smart money management is more than just budgeting; it’s also about making certain you stick to that budget.

Before you head out to make any big purchases, whether you’re back-to-school shopping or buying groceries for the week, make a list to avoid impulse-buying. It’s also a good idea to avoid towing along tired, cranky kids, since you could spend more than you bargained for by buying them unnecessary treats just to quiet them down.

Finally, think about buying in bulk wherever it makes sense, whether that means stocking up on essentials like socks or underwear, or grabbing the bigger bags of pasta if that’s a staple food for your family. And scouring the aisles for non-perishable sale items you’ll always use — such as toothpaste — is another way to stretch your dollars over the long term.

5. Teach your kids the value of money

Educating your children early about the value of money will help prepare them for the future, but it can also work in your favour if you’re trying to save money.

If you make it a daily habit to talk to your kids about money, you can teach them the difference between needs and wants. Setting your children up with allowances and savings accounts is an easy first step. You’ll get them thinking about the future and they’ll be less likely to complain about chores.

When Pharand started her daughter on an allowance at age five, she soon noticed that requests for special treats were less frequent. She realized how much things cost, Pharand says. She began to learn the value of money, and became suddenly much pickier about her wants.

Working together with your kids on a family budget that allows you to save for the things that really matter will help ensure your family stays on track for a sound financial future.

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Budgeting Tips for Canadian Students

This article on student budgeting by Talbot Boggs was originally posted on money.ca.msn.com in October, 2011. It’s October — a time of cooling temperatures, autumn-coloured leaves, and calls or letters from students at university asking for a little money to see them through the remainder of the year. A post-secondary education is a costly affair in Canada. The average four-year program at a Canadian university now costs about $60,000. Only about one in five parents with children under the age of 18 are confident they can pay off the costs to send their children to university and students themselves believe they will struggle to pay off the cost of getting a post-secondary education and expect to be in debt for years to come. The Canadian Council of Learning reports that the average debt for a university graduate had risen to $26,680 in 2009 from $24,706 in 2000 and $12,271 in 1990. Forty-five per cent of college graduates and six in 10 university graduates have taken out student loans while in school. No matter who is paying the bills, every student needs to create a budget and stick to it, says the Investor Education Fund. The obvious costs of getting an education — tuition, books and supplies — are just the tip of the iceberg. There are a whole raft of other costs that should be itemized such as residence or rent, insurance, electricity, gas, water, telephone, cable, Internet, clothing, food, transportation and personal items. Many students may think that there’s no room for any fun in a budget. But that’s not the case. They just have to budget for their entertainment and stick to it. More and more students are working during the school year to help pay the costs and should include all income in their budgets, including wages, education savings plans, scholarships, gifts, family contributions and any other sources of income such as bursaries. Each year, thousands of students turn to government loans to help them. These loans often have certain advantages over other ways to borrow, such as bank loans and credit cards. For example, students don’t have to repay the loan as long as they are in school. Most student loan programs offer a grace period of several months after post-secondary studies end before repayments begin. And students don’t pay interest on the money they borrow until after they graduate compared to a credit card which can charge interest of more than 20 per cent a year or more. It’s important for students and parents to remember that government loans are meant to lend a helping hand, not to pay the entire cost of a post-secondary education. Students and their families are still expected to contribute some money. Many students begin their working lives after school with a debt that they will have trouble paying off. The Canadian Federation of Students reports many students finish school with more than $20,000 of debt and about one in every five students who graduate with a student loan are unable to pay it back. Many students get into financial trouble using credit cards. The IEF suggests students should never use a credit card to pay big bills such as tuition or housing. The best plan is to pay cash for most things, and if you do use a credit card, pay it off at the end of each month and avoid the high interest charges. Remember that credit card companies like to sign up students because they will tend to stick with that card over time and students often will run up balances before they really understand how the card works and how much interest they will end up paying. Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. [end of article] blog-ad-PP

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