Get your financial act together by SHELLEY BOETTCHER CALGARY HERALD

Perhaps you lie awake at night, wondering if you’ll have to live off cat food when you’re 70. Maybe you ignore your money problems, hoping they’ll magically go away. Maybe you fantasize about marrying for money, even though you tied the knot 20 years ago and neither of you is rolling in dough.

Or maybe you’re better off than you think — but you can’t tell because you have 10 bank accounts, nine RRSP accounts and 20 years of unopened bank statements.

Time to get your financial act together.

The first step: figure out what you owe, what you own and where you want to go.

Don’t think of the process as setting up a budget, says Tracy Watson, communications director for Money Mentors, a division of Credit Counselling Services of Alberta.

Think of it as “a spending plan.”

Apparently, the b-word (as in budget) is a bit like a diet, she says. “People restrict themselves, and then they go on a spending binge.”

And how. Canada has a negative savings rate, meaning Canadians spend more than we save, Watson says, and fighting about money is one of the top five reasons that marriages in this country fail.

The average Albertan owes $18,000 in credit card and loan debt — and that’s not including mortgages, she adds. According to Statistics Canada, 40 per cent of us pay interest on our monthly credit card balances, and 35 per cent of us will carry up to $100,000 of debt into retirement, according to an Investors Group survey.

Yikes. Does that scenario sound familiar? You can try to get your finances under control with a good book.

Check out American author David Bach’s many titles, including Smart Women Finish Rich, and The Automatic Millionaire; or read The Wealthy Barber by Canada’s David Chilton.

Or surf the Internet; one excellent place to start is Calgary’s own Money Mentors site (moneymentors.ca).

For many of us, though, a book or website isn’t enough to conquer our money fears and foibles. That’s when a certified financial planner comes in handy. (Check out cfp-ca.org for a list.) They’ll help you nail down — and then meet — your goals.

People who need financial help are at many stages in their lives. Some are retired emptynesters who want to maximize their savings; others are approaching retirement. Some are self-employed; many are parents. Still others are young, but making a ton, part of the boom that’s swept the province.

“They can blow it or they can set themselves up for life,” says Sterling Rempel, a Calgary-based certified financial planner with Future Values Estate and Financial Planning.

When you meet with a certified financial planner, be expected to know your hopes and dreams. When do you want to retire? How much money do you currently make? What is your debt load? What is your risk tolerance? Do you have a will?

Rempel, whose clients span Alberta, Saskatchewan and Manitoba, says that even if you don’t have kids, you should have a will — or your estate will be in the hands of the government, not your in-laws.

He’s quick to clarify that a certified financial planner is neither a lawyer nor a tax expert. But they can help people figure out how much money they’ll need to save — and they can suggest ways to save it — so that when their clients retire, they’ll have enough to fulfil those goals.

What kind of spender are you?

Everyone’s goals are different and everyone spends money differently.

And boy, do we spend it. Both Watson and Rempel say our city is full of people who blow huge amounts on bigticket items, such as houses and high-end cars.

“It’s that whole ‘keeping up with the Joneses’ thing,” Watson says.

We’re coming home with stuff we can’t afford and we’re paying massive amounts of interest.

Your wealthy neighbours may live the same way. They may look like they’re living the good life, but “you have no idea what their credit rating is, how much debt they’re carrying, and what their relationship is like,” Watson says.

Speaking of relationships, having kids can add an extra bump — more than just day care and hockey — into a couple’s financial equation.

“We’re not only dealing with our own debts,” Watson says. “We’re dealing with our kids, who want Lululemon, Wiis, that sort of thing.”

But if we want our kids to learn how to handle cash responsibly, they need to learn to wait until they have the money to pay cash. And we, as adults, are the same way.

“The ability to delay gratification is one of the key indicators of future financial success,” says Rempel.

In the Money Mentors Money Personalities and Attitudes class (offered periodically through the Credit Counselling Services of Alberta), participants determine what kind of spender they are partly through a quick card game, which sells for about $10 at the Money Mentors office.

Some of us are free spirits, who don’t worry much about money, says Watson. Others are status-based; money makes us look good in the eyes of others. Still others want to do good with their cash, not just spend it on themselves. And sometimes we straddle several different approaches.

Once you know what kind of spender you are, you need to develop savings strategies so you can achieve your financial goals. If you’re a free spirit, for instance, allow yourself a certain amount of cash every month that you can blow on whatever strikes your fancy.

If you want to support more charitable causes, maybe find ways to cut back on unnecessary expenses so you have more money to give away.

Rempel says when he’s older, he wants to ensure he has money and time for his favourite charities, and he wants to travel more.

For others, a financial goal may be as simple as being able to always afford a pet. In that case, your budget should include a pet’s needs, as well as your own.

“It’s not for me as a financial planner to set those values,” Rempel says.

“It’s a matter of choices. If I were to say to my clients, ‘You spend a lot of money on vet bills,’ that would be horrifying to my clients who are veterinarians and to my clients who really value their pets.”

Once you’ve determined your goals and values, you may need to tackle your debts. Some consolidate all their debts into one large debt, so they can make one payment each month. This can work — as long as you don’t rebuild debt on your credit cards while paying off the consolidated debt.

Rempel, on the other hand, prefers the “bully” method.

“Beat up on the littlest debt first,” he says with a laugh. “That will free up some cash to pay off the next smallest debt and so on.”

Your debts are under control? Start saving. One method is to get the bank to take your savings — RRSPs, etc. — taken automatically out of your account each month or each paycheque.

Then, divide a certain amount of “mad” money into envelopes; mark each envelope according to what it’s for (entertainment, work lunches, groceries etc.). Spend only what’s in each envelope and you’ll know exactly how much you have for entertainment each month.

But what should you contribute to your RRSPs? Depending on your age, try to follow the 10 per cent rule. Save 10 per cent of your income every year, and, if it’s invested properly, you should have enough to maintain your current lifestyle.

Ten per cent can seem like a massive amount to someone that has never saved before. But start small, perhaps $50 or $100 a month, says Watson, who also recommends getting your bank to deduct your savings automatically every paycheque.

Then, as you get used to the $50 or $100, increase the amount by $10 or $20. Or double the amount.

“Pay yourself first. Get it taken out automatically,” she says. “Then it’s done and you don’t have to worry about it.”

In an ideal world, Rempel says, you’d put a portion of your savings into three categories:

Short-term savings: a smaller fund for smallish expenses, such as a vacation. Most financial experts recommend having three months’ worth of savings set aside, in case you lose your job unexpectedly or face other unexpected expenses.

Medium-term savings: “A young person might be saving toward buying a house or education,” Rempel says.

Long-term savings: “Serious money. This is money for retirement, that kind of thing,” he says.

No matter what kind of shape you’re in, don’t beat yourself up about it. Just find help. Make a plan. Stick with it.

And eventually, you’ll achieve your financial goals.

“We’re all human. We blow money on whatever shiny objects catch our attention,” Rempel quips.

“It’s a matter of knowing what one’s limits are, and what might be prudent for our lifestyle.”