Date Posted: September 01 2021
Do you have school aged children? I do! My daughter is 14.5 years old and has started her first year or high school, my son will be 11 years old in November and he is now in grade 6. Raise your hand if you’re praying to any being who will listen, that they will be able to do a full year of in-person school…mine is up high in the air.
With September now here and the children in school, it’s time to ramp up and…Git ‘er done! My son recently told me a quote that he heard, which I later looked up and found out it was from Bill Gates, “If you are born poor, it’s not your fault, but if you die poor, it’s your fault.”
Now, I’m not exactly a Bill Gates fan, however the quote resonated with me and here’s why…I was poor growing up, although I didn’t know it back then. I am not poor now, however my husband and I were in a bit of financial bind before COVID hit as we had many debts looming over us and by the time December 2020 came around, we had cleared a number of them and had a savings.
Here are 5 Tips to teach ourselves, and our children, to be financially responsible.
- Credit is good, debt is bad. Carrying a balance on a credit card is not a good habit to start, in fact, I have been known in my past to carry multiple balances on a credit cards and taking from one to pay the other…this gets you nowhere. What I have learned is this, it’s okay to have a use a credit card as long as you pay the balance down on your next statement. We purchased a couch last summer and bought it on credit, however we were allowed to pay it off in 24 months with zero interest, so I pay exactly the same amount every month and it’s not considered bad debt, in fact, it’s helping me build my credit back up.
- Don’t bank on it. A few summers ago I had committed to getting our driveway repaved and it was supposed to get completed in the fall, however due to a few things including a loss of a client, I pushed it to the spring of last year and again until the fall simply because I had thought I would have the money by the time they were ready to go and I came up short. This summer we committed to getting our front exterior landscaped and we have the full amount ready to pay the landscaper because we learned from our mistake. Plan everything out and don’t over extend yourself and commit to too much at once.
- Always remember stuff happens. Whether it is a car that breaks down and needs repairs, or a washer or dryer that quits on you, always remember stuff happens and most likely when you are not prepared for it. It would be ideal to have a money put away in a savings account for these types of emergencies, at least one to two months’ worth of expenses, both business and personal to ensure you can cover you for that amount of time just in case something happens, like another lockdown perhaps.
- Put your HST away and don’t touch it. If you are a business owner like me and collect HST, you may have treated your HST as additional income, but it’s not. You are collecting it for the Government and you will need to pay it back. Instead of using it each month for expenses and then using your monthly income to pay back what you owe, set it aside and forget about it until you need to pay it back, chances are you will have a bit extra left over and you can roll that over after you pay what you owe.
- Be proactive and set aside your income tax. This one I’m still working on! If you are unsure how much to put away each month, check with your Accountant as they will likely base it on your last year’s income tax amount. This is important to do as it will help you to maintain your cashflow around tax time. If you treat it as a monthly expense it will not feel as harsh as it will when you have to pay thousands of dollars for your income tax. Think of it this way, 9-5 employees don’t see their taxes as it’s taken from every pay cheque. Do the same and you will feel better about your financial responsibilities.
These are tips that I have learned over my adult years. In fact, it’s only since I started my business that I really learned these techniques. Unfortunately my parents didn’t teach me about financial responsibility and even more so, I didn’t learn it in school either. I am determined to teach my children as I want to prevent the struggles that I have gone through. My son is particularly good with money and has a bank account that outshines mine right now. My daughter is a spender and we are doing our best to curb this action as I know that she doesn’t realize how much money she actually spends and currently she doesn’t have a job to understand how much work it takes to make that money that she is spending.
We as parents need to lead by example and help our children learn from our mistakes as best as we can. They will make their own mistakes, which is fine, but hopefully they will not make the same ones we did.