How I managed my finances in my 20s

Posted by mapetitechou on Jul 22, 2015 in financial planning, lifestyle

I was suggested to do a post on this topic, which is a great topic. I always get questions from people on whether or not I was financially “savvy” — so to speak — when I was younger. You know what, I wasn’t. Besides the advice that I got from my parents, work hard and save your money, I didn’t know anything about investing and I didn’t know anything about financial freedom.

To our conventional standards, you could say I was a good kid in my 20s. I was good at my job. I lived below my means and saved my money. I always maxed out my contribution room for my RRSP. I was very religious about that. And I always had a good size emergency fund. I bought my first car (a used Mazda Protege) with cash. I remember one time when I was banking at CIBC, this older teller lady took a look at my balance in my chequeing account and said “why do you have so much cash in your account?” I said “I’m saving it to buy a car soon.” She was like “Good for you. You don’t see many young people with a good size balance their bank accounts anymore these days.” Because I come from an immigrant family, it was just second nature to be a saver. I thank my parents for that. When I graduated university and started working, I did not inflate my lifestyle as much as other young professionals. Don’t get me wrong, I was not deprived. I went out with friends, I went on vacations. But I was always mindful about not to live it up so much so that I lost track of savings. I always put my bonuses into savings.

It’s interesting that a lot of people it felt like people didn’t want to see me saving my money. One time my parents’ accountant was doing taxes for us, he saw how much I was saving for my car, he said “you don’t need to save so much cash for a car. Just finance. You live in Canada, you should live like a Canadian person. It’s totally normal to borrow money.” Mind you, the accountant himself was Chinese, maybe he was speaking from his own personal experience. Maybe he went from being a saver to a spender in a process of assimilating himself into Canadian society. I think I mumbled something about not wanting to be in debt. Now looking back, it is kind of shocking to hear that from a financial professional.

My then-boyfriend (now hubby) and I lived in an apartment until we got married, then we bought house together. He wasn’t as big of a saver as I was. So I had to kick his ass a little bit on that. Fortunately we got on the same page. Because we had both been diligent about saving for a house, we were able to use our RRSPs plus savings to put down a 25% down payment.

So throughout my 20s, I was a very good saver, but I did not take full advantage of putting my savings to work. I wish I had known what I know now and had started investing in index funds as soon as I started working. But I had a complete lack of understanding in investing. I thought investing meant buying stocks and I was scared of stocks. I thought “I don’t understand stocks so I’m not going to touch that.” And because of it, I concluded that I had very low tolerance for any kind of risk. I put my money in GICs and mutual funds (little did I know, the mutual funds that I was buying carried a lot of risk, and they had huge fees). I didn’t get into index fund investing until I was almost 30 when I had my first baby and I was on my mat leave. I finally decided that I should no longer stay ignorant and started learning as much as I could about investing.

Still, I’m pretty happy that I had some really good habits that helped me to be financially stable in my 20s. They helped me greatly in terms of saving and staying out of debt, which is a positive aspect in wealth building considering a lot of people my age are in a lot of debt that they can’t seem to get out of. I think for young people, saving and accumulation of cash is so much more important than trying to figure out which ETF fund you to buy. If you are in your 20s and you still have some debt aside from a mortgage, you should try to get rid of the debt as fast you can. Don’t inflate your lifestyle. Live below your means. This is your accumulation stage. Then learn as much as you can about investing and put your money to work for you.

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Friends who are more frugal than us

Posted by mapetitechou on Jun 3, 2015 in lifestyle, philosophy, traveling

If you think my husband and I are very frugal, you should meet our friends Sophie and Gary. They also work in the high tech industry. Gary is a software architect and Sophie is a senior software engineer. As you can imagine, they make very good money. I’d wager it’s upwards of $250,000 a year between the two of them. But they are probably the most frugal couple I know. They live in a modest 2000 square foot house. There are people we know who make way less than that live in much bigger houses. They drive two old Toyota Corolla and VW Golf. The Golf has over 300,000KM on it already. I don’t think they have any plans of upgrading to new vehicles anytime soon. Their two boys, age 5 and 7, are so well-behaved and not spoiled with fancy toys or iPads or gaming consoles.

Gary doesn’t seem to have any expensive hobbies. He’s learning to play the saxophone, which I think is fantastic. Any musical endeavors are a plus in my book and I totally support that in my family too. My husband plays the guitar and my son’s learning to play the piano. Gary and Sophie are just not materialistic people. Sophie isn’t a shopaholic like me when it comes to buying clothes and shoes. She tells me she doesn’t like going to the mall at all. Although I feel justified about my spending on my fashion somewhat because I have a fashion blog which is my main hobby that I completely love.

As for vacationing, they tend to stick with the low cost kind like camping. That’s where we differ the most from them I think. Because I’m a travel bug, I am willing to spend a substantial amount on traveling to faraway places. We go to China every couple of years because I still have family there. We’ve also traveled to Europe and South America quite a few times. So there’s usually one major vacation in a year, plus a few smaller vacations like going to Mexico for a week, or going away for a long weekend. Gary and Sophie’s traveling is much more cost-efficient. They just pack up the kids and drive. When you don’t have to pay for airfare and hotel for 4 people for a week or two, you definitely can save a lot of money. We just got back from a week of cruise to the Caribbeans. Sophie was asking how it was and if it was worth it. They have never been on a cruise so she was curious. I told her it was awesome. But I think she is skeptical about spending that much money in a week. In the same vein, they are also skeptical about tropical vacations in Mexico and similar places. We totally love beach vacations.

I was talking about how it’s hard for us to save money in the summer in my previous post because we tend to travel quite a bit in the summer. We love it and don’t regret any of it. But if you are like my friends Gary and Sophie, you know this is an area where you can either spend a lot or save a lot.

They are great friends and such simple people that they serve a good example to me on being frugal and finding little pleasures in simple things. I think they must be socking away so much that they can probably retire early, which is pretty inspiring because that’s my goal.

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Summer’s hard on the dollar

Posted by mapetitechou on May 9, 2015 in lifestyle, spending

Now that the summer’s here, I find it’s not as easy to save money in the summer. I’m not complaining or making excuses for myself here. I’m still keeping my eye on our financial goals. I’m just sharing what our spending usually looks life in the summer. I find my saving rate dips quite a bit in the summer.

We definitely like to be out and about, do all kinds of activities in the summer. And we usually have at least one getaway trip. This month we are going on a Caribbean cruise for week in May (Norwegian Getaway here we come!). And in July, we are going to Newfoundland for my sister-in-law’s son’s wedding for 8 days. Believe it or not, it’s quite expensive to travel to Newfoundland from Ontario even though it’s only a 3-hour plane ride away. Airfare, car rental, hotel, wedding expenses, it all adds up. It’s actually going to be expensive our cruise trip. Traveling is not cheap generally speaking. For the last couple months, our expenses seemed to have gone twice as much.

Also in the summer, I’d like to fill the weekends with fun activities for the kids and adults. We don’t usually do anything overly expensive, but it still adds up. We like going to African Lion Safari at least twice. The kids love that zoo. Just admissions alone set me back $200 each time. And we like to go to amusement parks and water parks. And we love going to the beach with friends. That’s usually a day trip. We’ll bring a portable BBQ and lots of good eats.

We also like to host dinner parties and BBQs for our family and friends. Now we don’t go crazy and pull out all the stops, but to throw a good party, I need to spend some money. That kind of expenses add up too.

This summer we also want to take the kids camping for the first time. That’ll be a long weekend trip. We’ll need to get some camping equipment.

Do you find yourself in similar situations in the summer? I mean I’m not wasting money. I think things like traveling and getting together with friends is time and money well-spent. I am willing to sacrifice my saving rate a little bit to have a lot of fun.

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