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Budgeting for Back to School

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The global pandemic has already transformed schooling in Canada and around the world. Boards, teachers, children, and parents prepare for a different school year during which they either stay home or attend classes every other day. Budgeting for back to school has also become important as many parents face financial hardship and challenging times ahead.

How Spending Patterns Have Changed

It does not come as a surprise that Canadian parents spend less on back-to-school supplies this year. A survey by the Retail Council of Canada shows that the percentage of shoppers who spent more than $0 dropped across different categories in 2020 – 81 percent for supplies compared to 86 percent in 2019, 69 percent for apparel compared to 78 percent, and 33 percent for books and movies, down from 35 percent. According to Suzan Krecsy, executive director of the St. Albert Food Bank, parents need about $1,000 to prepare kids for the new school year which is a lot of money for those who are unemployed or have low incomes.

Save Money on Back-to-School Supplies

A new Deloitte survey asked parents how much they would spend on supplies and other items that kids need in grade K-12 this year. On average, parents said that they would spend $316 on online subscriptions and electronic gadgets, $395 on hardware and computers, $216 on clothing and apparel, and $102 on supplies. This is a lot of money. On top of this, parents are stocking on wide-mouth water bottles, facemasks, hand sanitizers, and other items they would have never thought of buying before the pandemic.

Obviously, supplies can be expensive when all purchases add up, from new uniforms and clothes to pencils, erasers, highlighters, and index cards. Shopping out of season is one way to save money as once the new school year starts, retail stores discount all the folders, notebooks, pencil sharpeners, and markers.

To save money on back-to-school supplies, it also pays to shop around, check flyers, use coupons, and make a list of stores to visit and benefit from the best deals they have on offer. Sales are also posted daily online.

If your children need big-ticket items such as a laptop or tablet to do their homework, it also pays to ask the principal if they have a budget for this or electronics that you can borrow. If this is not the case, visit stores that advertise educational discounts or offer refurbished devices.

 Include Your Kids in Back to School Budget Planning

Ask your children to go through what they have from last year as some items can be reused, whether markers, erasers, or pencil cases. Sit together and make a list of all the items they will need, depending on age and grade. In kindergarten, for example, your kids will need things like glue sticks, colored pencils, crayons, and assorted construction paper. Children in grades 1 – 3 use index cards, rulers, pencil grips, pencils, and washable markers. The list is quite long for students in high school and middle school. They need graph paper, loose-leaf paper, highlighters, plastic folders, book socks, etc. Go through all the items that you have at home to find out if they can be reused. If you have children in different grades, you probably have plenty of stuff that younger kids can reuse.

Asking children what they find important can also save a lot of money. They might be more than happy to reuse their backpack or lunch box from last year. This is also a good way to teach them how to budget and handle money. Learning about budgeting, spending, and saving early in life helps children to make informed financial decisions later on. They have the skills for successful financial interactions.

Teach Kids to Manage Finances

Involving children in back-to-school shopping is also a good way to teach them how to manage personal finances. Many Canadians lost their jobs and live with uncertainty but this is not the main lesson that you want to teach your children. Making responsible choices and spending decisions is the lesson that you would like to stick with school-aged children. This is also a way to encourage kids to distinguish between wants and needs.

Teaching children to manage finances also helps them to learn how to delay gratification and wait to buy the things they want. In fact, this concept is difficult not only for kids but for grown-ups of all ages. It pays to start early, and back-to-school shopping definitely helps parents teach kids important money lessons. When going to the store together, only pick things that you have on your list. This helps children learn not to buy things for the sake of buying which is basically splurging. When going to a store to buy a gift for someone, tell your kids that you are not there to buy things that they just spotted but only that gift.

Other ways to teach children about finances are to ask them to set goals, create sharing, spending, and saving jars, and involve children in money decisions and your family budget. Always tell them how much you have for leisure activities and entertainment, be it board games, toys, movies, or anything else. You can also try to come up with a family goal that they like and keep track of how close you are to achieving this goal. You may want to create a progress chart and ask kids to color in so that you can all check where you stand.

Save for Your Child’s Postsecondary Education

Budgeting for back to school also helps save for university or college, provided that you plan to fund your child’s postsecondary education. Unless you run a successful business or are really well paid, you have to give up on something, be it your retirement savings or things that are not worth splurging on. Saving on supplies can also help fund college education, especially if done on a year-to-year basis. To this, it is a good idea to create a back to school budget and compare what you spend and save each year. The first step is to list all essential items and decide what you can buy later and what is a must. You can buy non-essential items when you find good deals /for example, off season/. Next, you should check how much money you have. Add up your monthly income and expenses such as utility bills, rent, grocery shopping, loan and credit card balances, etc. Look at how much you have left after you deduct all expenses and compare this figure to the total cost of school supplies on your list. This will show you whether you might have to put any items on your credit card. If so, go through your shopping list once again to decide which items are must-haves. If you need extra money to buy back-to-school supplies, this shows that you might have to start saving for next year early on.

How to Afford a Summer Vacation When Money is Tight

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Saving for a summer vacation can be difficult when money is tight. Many Canadians admit that they cannot afford it, and many leave vacation days unused. Going on vacation on a tight budget requires careful planning and smart choices to save money and enjoy time off. Here are some simple things to do to cut expenses and keep spending under control.

What Expenses Can You Trim?

Expenses fall in two categories – essential and non-essential. The category of non-essential expenses includes rented appliances, lottery, hairdressing, alcohol, and cigarettes. Essential expenses include things like baby items, car insurance, and property taxes. Non-essential costs are expenses that you can trim, whether dry cleaning, taxis, or pet insurance.

To save money for your summer vacation, you may need to cut down on expenses such as magazine and newspaper subscriptions, club memberships, dining out, and entertainment. Other leisure expenses that may ruin your budget include sports activity and leisure supplies, fine dining events, movie streaming subscriptions, and season passes and tickets.

Some habits are not only unhealthy but can be a real drain on your budget, be it drinking or smoking. Quitting smoking will help you to save a lot of money and get in good shape. There are other ways to save money such as shopping at farmers markets and discount grocery stores, using coupons, and collecting credit card rewards points to redeem for flights, room upgrades, etc.

Create a Spending Plan

The next step is to create a spending plan by looking at your disposable income and expenses. This is also a way to find out whether you need to cut down on expenses to stay on budget and to identify your priorities. The easiest way to create a spending plan is to list all of your monthly expenses, including childcare, grocery shopping, loan and credit card payments, mortgage or rent, and health and auto insurance. Other expenses to list include your phone, electricity, and water bills, car payments, subscriptions, and household maintenance. Make a list of your sources of income to find out what your gross income is. Sources of income include your salary, wages, and bonuses, investment and interest income, and alimony and child support. Once you know how much you earn and spend, you will be able to figure out how much you can save for your summer vacation.

It is also a good idea to divide your expenses into irregular and fixed expenses. The latter include debt payments, bank fees, utility bills, and rent. These are expenses that will not change on a monthly basis and are easy to budget for. The category of irregular expenses includes vehicle maintenance and insurance, health expenses, pest control, school supplies, and weddings and birthdays. In general, irregular expenses come up once or twice a year, and it is important to budget properly and save enough to meet them when they come up. There are also variable expenses such as recreation and sports, work lunches, personal care items, and groceries. This is the category to look into and identify expenses that you can cut back on to save for your holiday.

Go on a “Staycation”

Going on staycation is a cheap option when money is tight. Staying home, relaxing, spending time together, and going on day trips is one way to get a break and save money. What you can do is visit local water and amusement parks, visit science or history museums, and join free events, fairs, and festivals. There are plenty of sports and other outdoor recreational activities to try, be it canoeing, kayaking, tennis, or handball. Another idea is to sign up for a class or course to master some new skill. Depending on where you live, you can take a creative writing course, yoga class, or cooking class. This is also a good time to try a new hobby such as woodworking, sewing, candle making, or ice skating.

Go Camping

Going camping is also a way to spend time together and escape from your daily routine. Just pick a campsite and pack essentials such as utensils and cookware, navigational tools, personal items, sleeping bag, tent, folding chairs, and other camp essentials. Don’t forget to bring entertainment items to maximize fun and spend quality time together. Pack things such as kayaking or biking gear, playing cards, board games, camera, and binoculars.

When choosing a camping site, there are two options to look into – free and private. If your budget is tight, you are probably looking for a public campground where you don’t have to pay a fee. On the downside, public campgrounds may lack cooking facilities, bathrooms, and hookups. If you are more of an adventurous type, however, you may actually enjoy it. Look for areas that are designated as Crown Land. Remember that you are allowed to stay up to 21 days at the site that you choose, and then you have to move your camping equipment and gear at least 100 meters away from where you stayed.

There are plenty of camping sites in Canada’s national parks but you will have to pay a fee. These include the Berg Lake Campground in the Mount Robson Provincial Park, Main Campground in the Alice Lake Provincial Park, and Point Campground in the Peter Lougheed Provincial Park. Recreational activities abound, from fishing, hiking, and bicycling to swimming and canoeing.

Rent a Cottage for the Weekend

Renting a cottage is also a good idea when money is tight. One option is to rent off-season and not in peak months such as August and July. Many people rent via popular platforms such as CanadaStays and Airbnb, but it pays to contact owners directly and inquire about prices and availability. A third idea is to join a mailing list and check for special offers. Many rental agencies feature such lists and offer good deals on new properties, and it always pays to check for last minute deals.

Staying at new resorts and hotels is another way to save money when going on vacation. Look for newly renovated and constructed resorts and hotels that offer deals to attract customers.

Budgeting for Vacation Expenses

There are other things to do before going on vacation, including budgeting for costs such as public transportation, rental car fees, gas, and train and airfare tickets. Some travel expenses are easy to miss when planning a vacation, for example, vaccinations, foreign transaction fees, emergency expenses, and mobile phone charges. If you already have attractions on your must-see list, you may want to budget for tickets and passes for concerts, museums, and attractions. How much it will cost you to go on vacation also depends on the destination, whether you are staying at a hotel or campsite, whether you are eating out or packing your own food, and other factors. Other travel expenses to include in your budget are exchange rates, travel insurance, visa costs, baggage fees, and onboard food and beverage purchases.

If you are unsure how much it will cost you, you may use a vacation calculator to create a travel budget. You just need to enter details such as number of children and adults, number of travel days and lodging, number of fun days, and amount of money saved for the trip. You also need to enter details such as number of miles, cost per gallon, and your car’s miles per gallon rating. If you are travelling abroad, you can use a calculator that displays travel costs at your destination of choice.

Final Words

Going on vacation on a tight budget may look like a challenge but there are plenty of ways to save money to get the most out of your journey. Creating a spending plan and cutting down on expenses will help you to set money aside and see how much you can save to go on vacation. If money is tight, a staycation, long weekend in a cottage, or going camping are ways to spend quality time and enjoy life. Going on vacation is a good way to take a break from daily routine, stress, and work and family responsibilities. A summer vacation not only helps prevent burnout but also helps connect with your inner self. It is also something to look forward to, offering ample opportunities to meet new people, make new friends, and just have fun, relax, travel, explore new places, and try new things. Whether you are going on vacation or taking a city break, spending time away from home will boost your energy so that you return to the office refueled and with a smile.

motusbank – Meridian Credit Union Creates a New National Bank

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A subsidiary of Meridian Credit Union, Motus Bank features a suite of financial products, including mortgages, personal loans, investment solutions, and savings and checking accounts. As a full-service digital bank, it will soon introduce banking services tailored to the needs of business customers. Motusbank is a Canadian federally chartered bank that opened doors in 2018 and is headquartered in Toronto, Ontario. It is also a member institution of the Canadian Deposit Insurance Corporation.

The idea behind the new bank is to offer customers across Canada the opportunity to access all services and products and to manage accounts online. In fact, virtually everything can be done by phone, mobile app, and online. The new bank is customer-oriented and offers checking and savings accounts with no monthly fees.

Meridian Credit Union

As Canada’s third largest credit union, Meridian offers personal and business financial products and online banking services. Individual customers are offered a selection of checking accounts, including U.S. dollar, senior, electronic, and limitless. Meridian also features youth, advantage, and high-interest savings accounts. There is an array of credit cards to choose from, with cash back, U.S., travel, and Visa benefits. Lines of credit, personal loans, and fixed and variable rate mortgages are also available. Travel insurance and mortgage protection are also offered as well as investment solutions such as registered retirement income funds and tax-free savings accounts. Business customers also benefit from a wealth of financial products, including business U.S. dollar checking and small business checking accounts. In addition to cashback credit cards, customers are offered business lines of credit, loans, and mortgages, and equipment financing and leasing. Meridian also features cash management and investment solutions and business planning assistance.

Competitors

Unlike financial institutions that have shareholders and pay profits, motusbank has members and the main goal is to offer personalized service, competitive rates and pricing, and the option to access all products online, including mortgages, investment solutions, lines of credit, and more.

Why Choose motusbank

This new full-service digital bank features a selection of investment, borrowing, and savings solutions with competitive rates. Given that Motus has no physical branches and associated overhead costs, customers enjoy affordable interest rates on mortgages and personal loans. Another benefit is the fact that decisions on applications for loans, mortgages, and other products are made quickly.

Personal Loans and Other Borrowing Solutions

Personal loans come with low interest rates that can be as low as 5.15 percent, and members can borrow up to $35,000. Secured lines of credit feature even lower interest rates (3.75 percent) to help customers secure financing for major purchases. It is quick and easy to apply, and customers only need to provide their social insurance number and information such as housing and family status and employment type. They are also asked about the amount required and the loan purpose, i.e. vacation, investment, home repairs, debt consolidation, or recreational vehicle, boat, or vehicle purchase. Motusbank also features fixed and variable rate mortgages with affordable interest rates that can be as low as 2.90 percent. 5-year fixed rate mortgages come with an interest rate of 3.09 percent. In comparison, Scotiabank offers an interest rate of 5.34 percent on the same type of mortgage, and the Bank of Montreal offers 3.54 percent. Secured home equity lines of credit also feature a low rate of just 3.75 percent. CIBC, for example, offers a rate of 3.95 percent on secured credit lines.

Savings and Checking Accounts

Motusbank also features a selection of checking and savings accounts, including RRSP, TFSA, and high interest savings accounts. Customers who choose to open high interest savings accounts can enjoy a rate of 2.25 percent. Savings accounts offer multiple benefits such as the option to make unlimited withdrawals and purchases, free-of-charge access to ATMs, no banking fees, no minimum balance requirements, and no monthly account charges. Motusbank also features checking accounts with no monthly fees, and customers enjoy unlimited Interac e-transfers. There are plenty of reasons to choose this type of account over products offered by other banks. The account has no minimum balance requirement and allows for unlimited bill payments and debit purchases. Another benefit is that every dollar earns 0.50 percent interest. Customers are free to make mobile check deposits and are offered 25 checks free of charge. Those who are travelling to the U.S. can access cash through the Cirrus or Accel ATM networks.

Investment Products

Motusbank also features investment solutions such as 5-year RRSP guaranteed investment certificates, 18-month TFSA GICs, and 18-month GICs. The 5-year RRSP GIC, for example, comes with a competitive interest rate of 3.25 percent, which makes it a good addition to a balanced investment portfolio. In comparison, CIBC offers non-redeemable 5-year RRSP GICs with an interest rate of 1.25 percent. Opening an account is quick and easy, and customers are asked to provide details such as personal information, term and length, and renewal option, i.e. reinvest in the same term or payout to the account. The bank features additional benefits such as tax free options, choice of non-registered and registered plans, and a low minimum investment of just $100. Terms vary from 1 month to 5 years.

Online Banking and Features

The online banking platform of motusbank offers convenient features to access and monitor investment accounts and view e-statements. Customers are free to download deposit forms and transactions and filter and sort accounts. Notifications, alerts, and secure messaging are also available. Depositing checks is also quick and easy and can be done from the customer’s phone. There is also an option to set up mobile alerts. The mobile app offers convenient features that allow customers to transfer money, make bill payments, and check account balances, including savings and checking accounts and tax free savings accounts. Mobile Bill Pay is a convenient feature that allows users to make bill payments and access more than 10,000 payees. The app can be used on Android and iOS devices.

The Money Mover service featured by motusbank offers customers the option to transfer large amounts of up to $10,000 daily and is free to use. Money is transferred within 3 business days. Users are also free to set up recurring and future transfers through the mobile app or online. Motusbank also features Interac payments to transfer amounts of up to $3,000 a day, and money is deposited immediately. Customers can make an unlimited number of transactions up to $10,000 a month.

The bank’s contact centre offers assistance to members and can be reached by dialing its international or toll free number. While the bank is fully digital, the fact that it is customer-centric means that the emphasis is on customer service. Motusbank also places an emphasis on safety and security, and all deposits are insured by the Canada Deposit Insurance Corporation.

Finally, the new bank also offers advice and practical information across a host of different topics related to borrowing, investing, and saving. The goal is to help customers learn more about dealing with debt, planning for retirement, preparing financially for a new child, and choosing the best investment solution. Other topics include home improvement loans, choosing between variable and fixed rate mortgages, down payments. The bank also features handy online tools such as mortgage prepayment calculator, savings calculator, retirement planning calculator, and loan and line of credit calculator. These online tools help customers figure out what size of mortgage to apply for, whether their monthly payments are affordable, and other important issues.

If You Have $10,000 Would You Put Them in a TFSA

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A tax-free savings account is a flexible and convenient savings solution that helps Canadians to earn tax-free income. This product can be used together with other investment vehicles such as registered education and registered retirement savings plans.

The Basics

There are multiple benefits to opening a TFSA, one being that consumers’ savings grow in a tax-free way while withdrawals and investment income are also tax-free. The fact that TFSAs allow flexible withdrawals is a further benefit for individuals. Another benefit is that there are no lifetime contribution limits to worry about provided that you are eligible. Finally, contributions to your TFSA account will have no effect on other government-provided benefits such as the Goods and Services Tax credit, Old Age Security, and others. With lifelong eligibility, this investment solution can be used at any age, whether you are a young professional or close to retirement.

What if You Are in the Middle Tax Bracket

Canadians with a high income level benefit from the new threshold or contribution limit ($10,000). Those who contribute the maximum will save about $3,800 in taxes over a 10-year period. With savings of about $5,000, those who fall in the middle tax bracket are making contributions of about 1/5 of their pre-tax income. At the same time, finance and tax experts point to the fact that the new contribution limit offers more flexibility, whether you are in the middle income bracket or have a more limited income. Even an income of $50,000 or lower makes the tax-free savings account a better alternative to the RRSP because TFSAs help save on taxes. Canadians who are about to retire may want to look into this option as well provided that they trim other investment solutions such as RRSPs and RRIFs.

In fact, the new limit is designed to benefit middle class couples. A couple in their early 40s, for example, is expected to accumulate savings of over $1 million over their lifetime, plus estate worth over $650,000. This is provided that both partners have an annual income of about $80,000 and aim to retire at the age of 58. Finance expects base estimates on a 3.5-percent real estate growth and 2.2-percent inflation. In general, a tax-free savings account is a good solution for young couples and professional in their early 30s if they are saving toward retirement or big-ticket items and other major purchases. Upper-class individuals will obviously benefit from the new limit, but the new measure is also designed for public service employees and teachers with defined benefit pensions and contributions they rely on. Young adults, on the other hand, may choose not to use RRSPs to save toward retirement altogether because of the tax issues associated with RRIF and RRSP withdrawals.

Is This Good News for Retirees?

Statements by the federal government indicate that retirees will be the major beneficiaries of the new contribution limit. To this, seniors may want to move cash from their RRSP or registered retirement income fund to a tax-free savings account. There are multiple benefits to doing this, one being that higher contributions reduce income tax. While many Canadians believe that it is not advisable to make RRIF withdrawals before the age of 71, this is not the case, especially for consumers with a registered retirement income fund. The fact is that individuals may benefit from early withdrawals by reducing their tax bill. In addition, there are estate planning benefits.

Some people are concerned that additional income will trim the benefits because they will be left with more taxes to pay. The good news is that this would be so only during the first couple of years once they retire. Then their taxable income becomes lower. The reason is that less cash in a registered retirement income fund means less money to which the minimum withdrawal applies. And while retirees pay more in taxes during the first couple of years, experts point out that there are several mitigating factors to take into account. One is that account holders pay at a 31-percent marginal tax rate which is lower compared to contributions from previous years. Thus Canadians benefit from the fact that they pay less in taxes on withdrawals.

Conclusion

There are plenty of benefits to opening a TFSA now that the contribution limit is set higher. All Canadians who are at least 18 years of age are allowed to contribute up to the limit and thus accumulate significant balances. These balances are not only conserved in a tax-free way but grow with time. Finance experts also point to the significant estate planning benefits offered by TFSAs. If one of the spouses was a RRIF holder and passed away, then the other spouse would suffer a major tax hit if they made RRIF withdrawals. With tax-free savings accounts, holders face less risk even if they make withdrawals early in retirement. And if you have $10,000, it is worth opening a TFSA and contributing up to the limit because this is a sheltered account. Some finance experts even advice customers to contribute to their grandchildren’s and children’s TFSAs in case they’ve already maxed out their own accounts. This is perfectly legal to do and yet another way to maximize your savings.