By Sheryl Smolkin

Late August is one of the most expensive times of the year for families with young children. Kids seem to grow like weeds in the summer and often have to be outfitted from head to toe. And expensive computers, tablets, smart phones and sports equipment are now on many back-to-school lists list along with low tech supplies like pencils, pens, binders and post-it notes.

Here are some ideas I have gleaned from other bloggers to help save you money:

1. Check with the school: Find out from your child’s school what exactly you are expected to provide. There is no sense buying all sorts of notebooks, binders and pens if the basics are already handed out to students.  And teachers often have strong preferences about how they want students to complete and organize their work.
2. Make a list: Before heading out on a shopping trip for school supplies, check what items from previous years are unused and which binders and back packs can be re-used because they are still in good condition. Then make a list and stick to it.
3. Take inventory: Try on coats, boots and other clothing items to see if anything still fits. Where you have several children close in age, determine what can be handed down. Consider a clothing swap of gently used items with friends and neighbours.
4. Spread it out: While you may feel pressured to buy everything at once before school starts, you won’t need snowsuits and boots until November. Spreading out necessary purchases over the next few months until you see great sales will take the pressure off your budget.
5. Online deals: Major retailers with bricks and mortar stores often offer deals online. In addition to using coupon sites, like RetailMeNot, there are a number of price comparison sites, including shopbot.ca and ShopToIt.ca, that list how much an item costs at various retailers. When shopping online, choose retailers that offer deals such as free shipping, promo codes and discounts.
6. Buy generic: Pre-teens and teens in particular may be into “name brands” that can cost hundreds of dollars more than generic equivalents of similar quality. Giving your children a limited clothing budget or telling them they have to earn the money to buy trendy items will help them to better understand the value of a dollar and keep your overall costs down.
7. Shop alone: This may or may not work depending on the age of your child and what you are shopping for. However, the easiest way to avoid arguments about buying more expensive school supplies and clothes with the latest Disney characters may be to shop without your kids so they won’t distract you from your mission of finding and buying items that are the best value.
8. Used sports equipment: Children grow out of skates and skis every year. Outfitting a minor hockey player can cost hundreds or even thousands of dollars a year. Some sports stores sell hockey equipment starter kits for better prices than if you buy each item individually. You may find gently used equipment on sites like Kijiji. Craigslist, Ebay or a local classified website. Some arenas have sports exchanges or you can talk to parents of older hockey players.
9. Last year’s model: Contrary to what your kids may tell you, they don’t need the latest iPhone or iPad. The odds of mobile devices being lost or broken are very high. Earlier models may be offered by carriers for under $100 and you can often share minutes on a family plan. Also, kids typically text as opposed to sending emails so a costly data plan may be unnecessary.
10. Extra-curricular activities: Extra-curricular activities like dancing, swimming, sports and music lessons are an important part of every child’s education but they can add up. Don’t fall in to the trap of signing your children up for more activities than the family schedule can mange for more money than you can afford. Go over the brochure for the local community centre with each child and pick one or two convenient activities that are offered at a price that fits within your budget.

Also see:

Back-To-School Costs: How To Avoid Blowing Your Budget
How to Save Money on School Supplies
Back-To-School Shopping: Five Money Saving Tips
Back-to-School Shopping on a Budget | MintLife Blog
Back to School Tips – How to Balance Your Budget with Needs and Wants

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By Sheryl Smolkin

My husband and I are both looking at age 65 in the rear view mirror and we are helping to manage my elderly mother’s affairs. I think we have a pretty good grasp of what retirement costs and how easy it would be to eat through our nest egg if we are not careful.

That’s why I can’t help but be surprised by the results of the recently released Morneau Shepell study Forgotten Decisions: the disconnect between the plan and reality of Canadians regarding health and finances in retirement. The survey discovered many people make unrealistic plans based on the amount of income they are actually contributing to a retirement fund versus their expected annual withdrawal.

Expected withdrawal rate unreasonable

More than one-third (35%) of employee respondents report they are saving 10% or less of their current salary for retirement. Even more concerning is that, on average, employee respondents plan to withdraw 15% of their total savings a year following retirement – four times the rate that is typically recommended.

“More than 70% of respondents are planning to withdraw more than the recommended amount annually,” says Paula Allen, Vice President, Research and Integrative Solutions, Morneau Shepell. “There is an evident disconnect between how long retirement income typically needs to last, the savings pattern of many, and the withdrawal plans of most.”

The survey also found that responsibilities in retirement may include the need to support dependants. Seventeen percent of respondents indicated that supporting dependants was among the most important financial issues. Thirteen percent indicated concern regarding their support of dependent children and 14% indicated concern about the support of elderly parents.

Under-planning for health costs

The survey found that nearly two-thirds of employees age 50 and over (61%) are currently suffering from one or more chronic health conditions. Despite this, 97$ of survey respondents described their current level of health as being good, very good, or excellent and a large number of employees (86%) are expecting to retire in good health.

“Chronic health issues are so commonplace that sometimes they are accepted as the norm. Unfortunately, this can lead to complacency and lack of investment in one’s own health and lack of preparation for health costs,” said Allen. “The cost of chronic health issues, which often increase with age, can be a big shock during retirement, as employer health benefits may no longer be available for medication and other health-related support. As well, the public drug plan covers much fewer medications than most employer-sponsored plans.”

The most common chronic conditions affecting survey respondents include hypertension (25%), arthritis (24%), high cholesterol (18%), diabetes (12%), and depression, anxiety or other mental health problems (9%).

“Health is one of the most important factors to consider when preparing for retirement,” noted Allen. The majority of respondents (59% ) indicated they will not have access to an employer-sponsored health benefits plan after they retire. Two-thirds indicated health costs as one of their top concerns in retirement.

Employer/employee perceptions differ

Of the employees surveyed, one in four (24%) indicated that when they choose to retire, they will not be financially prepared. Twenty three percent of employee respondents plan to rely on government pension programs as a primary source of retirement income.

On average, however, more than half (51%) of employer respondents indicate that their employees will not be financially prepared when they retire. Furthermore, employers believe that one-third of their employees will not be financially prepared to deal with a health crisis when they retire.

Almost all employer respondents (96 %) indicated that it is important for employees to know that health costs will impact retirement income. Despite this, a large proportion of employers (29%) reported that they do not provide retirement-related financial information.

“Employers clearly see risk in the retirement preparedness of employees, but often do not have the systems in place to offer the necessary support and education,” said Allen. “Providing employees with more knowledge on the facts and options for personal financial management and health cost issues in retirement is crucial to adequately prepare employees for their transition to retirement.”

By Sheryl Smolkin

This week we have a pot pourri of stories from some of our favourite bloggers who have continued to write compelling copy through the now waning, long hot days of summer.

Are you a techno-phobe or an early adopter? Alan Whitton aka Bigcajunman writes about how old financial technology habits die hard on the Canadian Personal Finance Blog. Despite some lingering security paranoia, he now deposits cheques by photographing them with his cell phone.

One of the primary changes personal finance advisors suggest that clients make to save money is to put away their credit cards and start spending cash. On Money We Have, Barry Choi explores what happens if you decide to use cash and debit more. He says that depending on your personal situation, this may affect your credit score, you will forgo travel reward points and you also can lose out on other standard benefits like travel insurance and auto insurance covering car rentals.

Mark Seed on My Own Advisor answers a reader’s question, How would you manage a $1 million portfolio? His bias is to own stocks indirectly via passively managed Exchange Traded Funds for the foreseeable future to get exposure to U.S. and international equity markets.  However, he says his selection of investments will likely differ after age 65 and in future he might hire a fee-only financial advisor or use a robo-advisor to manage his portfolio.

I recently helped my son find an apartment in Toronto so I thought Kendra Mangione’s article From a house to a bedroom: What $1,000 a month can rent across Canada was particularly interesting. She says you will pay $950 for a single bedroom with an ensuite bathroom in a Vancouver suburb but $950 will get you a two-bedroom, 864 sq. ft. townhouse close to downtown Regina and the university.

And whether you have children who are new graduates or you are only beginning to help pay for your kids’ post-secondary education, check out Parents Deserve a College Graduation Present, Too in the New York Times. This piece explores a Korean-American tradition for former students to give parents sometimes lavish gifts, once they have their diplomas in hand.

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Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

You have an accident and your car is totaled. A parent or close friend is very ill and you need to fly to her side. You lose your job. Your furnace conks out in the middle of a Canadian winter. These are genuine emergencies when a little spare cash will go a long way to making your life easier.

That’s why along with paying yourself first and paying off debt, having an emergency fund of three to six months pay is part of the “holy trinity” of personal financial advice.  But if you are like almost half of Canadians polled late last year who said they are living paycheque to paycheque and would find it difficult to meet their financial obligations if their pay was delayed by just a week, where are you going to find the money to build up an emergency fund?

Here are some ideas:

1. Take baby steps: Set low initial targets like $500 or $1000 and save $50 from each paycheck. You will have over $2,500 in a year.
2. Automatic withdrawal: Have the savings you commit to automatically transferred into a separate account. You’ll never miss it.
3. Extra money: If you have a good month and there are still a few dollars in the bank before your next pay cheque is deposited, transfer it to your emergency account.
4. Review your budget: Few of us have cut all the fat out of our budgets or our spending habits. Whether it is forgoing your morning latte or packing a lunch a few days a week there are always ways to reduce expenses. Where feasible walking instead of driving is good for your health and your wallet.
5. Better rates: When is the last time you checked to see if the amounts you are paying for car or house insurance are competitive? Can you live with higher deductibles? If you don’t do the research you could be leaving hundreds of dollars that belong in your emergency fund on the table.
6. Quit smoking: If the average cost of a package of cigarettes is $12 and you smoke a pack a day you are burning up $4,380 a year. Save your health and save your money by quitting – not an easy task, but a worthwhile challenge.
7. Save loonies and toonies: If you get one and two dollar coins in change when you break a larger bill, don’t spend them. When you get home put the money in an envelope and take it to the bank at regular intervals.
8. Freelance: What are you good at? What do you enjoy doing? Think about how you can boost your emergency savings by doing something you love after work.
9. Sell stuff: Clean out your closets. Have a garage sale or sell your oldies but goodies online. You will have less clutter and more money in the bank.
10. Rent a room: Do you live near a university or college campus? If you are an empty nester, consider renting out a to a student room to help generate savings to top up your emergency account.

Whatever it takes to reach your goal of three to six months net pay in the bank, remember it is for a true emergency. That probably doesn’t include a new dress for an upcoming wedding when you have a close full of clothes or upgrading to the latest and greatest iPhone. When disaster hits, you will be glad you did.

By Sheryl Smolkin

The Olympics may be highly politicized but when the rubber hits the road, the most important thing is the fantastic performances put on by athletes at their peak who are fulfilling the dream of a lifetime. As I write this, Canada has been awarded 12 medals, but by the time you read it, there will no doubt be lots more (see current medal count here).

A first for many of us will be how we follow this Olympics on multiple devices. Although I have watched video replays online for years and monitored results on my smart phone, as we were visiting my daughter in Ottawa and she no longer has cable, for the first time this year we watched the opening ceremonies streamed live and projected on a big TV screen.

Here are 30 Canadian athletes to watch for, led by Rosie MacLennan, our flag bearer in the opening ceremonies. In 2013 Rosie won Canada’s only gold medal in London for her 10-bounce trampoline routine and she won a second gold medal just last week.

But in many cases it’s the narrative behind the people that engages us. In the first week 16-year old swimmer Penny Oleksiak collected a gold, a silver and two bronze medals, capturing hearts from coast to coast.

And certainly the refugee athletes who cannot represent their homeland but are competing under the Olympic flag are a heartwarming story that everyone is following.

Here are some of the other dramatic Olympic story lines that Sam Laird on Mashable predicted will be “utterly irresistible.”

1. Jamaican sprinter Usain Bolt is aiming to sweep the 100-meter, 200-meter and 4×100 meter relay for the third Olympics in a row, although he has had some injuries this year.
2. Men’s soccer is not usually a big deal at the Olympics, but soccer is red hot in Brazil and after being defeated in the 2014 World Cup the team wants to redeem itself on home ground.
3. A mother and son target-shooting team (Tsotne Machavariani and Nino Salukvadze) from Georgia (the former Soviet territory), are an Olympic first.
4. Triplets Leila, Liina, and Lily Luik are 30-year-old sisters from Estonia. They are all scheduled to run in the women’s marathon. It’s believed to be the first time triplets have qualified for the same Olympics.
5. Michael Phelps has come out of retirement and  has won 23 gold medals over the five Olympic Games he’s been part of.

You may opt to watch whole events or simply check out summaries on the evening news. But keep an eye out for little known favourites, who by next week may be the latest medalists and media darlings!

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By Sheryl Smolkin

Well, the earth moved and in late June at a meeting of provincial/federal finance ministers, Bill Morneau got the consensus he needed from eight provinces including Saskatchewan for the phase in of modest enhancements to the Canada Pension Plan. As a result Ontario has agreed to shelve its plans for a home-grown Ontario Registered Pension Plan.

The feds plan to start collecting higher premiums beginning January 1, 2019. Many details still have to be ironed out, but here are 10 things you need to know about how enhanced CPP benefits will impact both employers and employees.

1. The Canada Pension Plan Act says that once a sufficient number of provincial governments have indicated support, the federal government can move forward and lock in the reform with an Order in Council—no new Parliamentary debate or legislation is required. From that point forward, the expansion will be fixed in place unless amended through a subsequent agreement of two-thirds of provinces to reverse the expansion—which is very unlikely.
2. If you are already retired or close to retirement you will not benefit from the changes. Someone retiring in 2020 who made one year of the increased contribution would get a tiny amount. Someone retiring in 2030 would have 10 years of extra contributions.
3. Canadians who work a full 40 years will see their benefits increase (in 2016 dollars) to a maximum of $17,478 instead of $13,000. Therefore the replacement rate will inch up from 25% of the Year’s Maximum Pensionable Earnings (YMPE) to one-third.
4. The maximum amount of income subject to CPP will increase 14%  from $54,900 this year to $82,700.
5. Increased premiums of one percent will be phased in over seven years beginning in 2019. That means depending on the income levels of individual Canadians, up to $408 will come off their pay cheques.
6. The refundable tax credit known as the federal working income tax credit will be expanded to help low-income Canadians offset the increase in premiums.
7. Changes will not impact RRSP (and SPP) contribution room.
8. To avoid increasing the after-tax cost of the added premiums, Ottawa will provide a tax deduction for the additional contributions rather than a tax credit.
9. Company pension plans are not always offered – particularly Defined Benefit plans. Therefore it makes sense that young people and mid-career employees will benefit.
10. Participation is mandatory and from the limited information released to date, it appears that even companies that do have a pension plan will have to make additional contributions and their employees will not be exempt.

Hello Readers,

We are changing  our webhost for savewithspp.com on Wednesday, August 10, 2016.  It shouldn’t be a big change, however we wanted to let you know.

Why are we doing this?

To make security enhancements and allow us to have a more mobile friendly layout.

What will change?

Not much, other than the layout. We will still be posting blogs on Monday and Thursday, Saskatchewan Pension Plan will still be managing the blog and Sheryl Smolkin will still be our writer.

What does this mean for you?

Nothing! We hope…. You won’t need to follow us again to keep up with this blog and you can still access our blog at http://savewithspp.com.

If you have any questions please email us at so*********@sa*********.com.

And, as always, thanks for reading.

Thanks
Stephen Neiszner
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By Sheryl Smolkin

And just like that, it’s August! The days are getting shorter and families are starting to think about getting the kids back to school and getting serious about the upcoming round of fall activities.

Those of you sending your kids off to college or university will be interested in The Business of University Fees by Big Cajun Man aka Alan Whitton on the Canadian Personal Finance blog. Did you know if your child is still in school he/she is probably still covered under your group medical plan at work and most universities will allow you to opt out of the university’s plan?

If you have received your first child benefit cheques and haven’t already spent them on back-to-school supplies, here are 3 Great Ways to Use Your Canada Child Benefit Payment  by Craig Sebastiano on RateHub. RESP contributions, TFSA deposits or charitable donations, anyone?

And talking about TFSAs, take a look at Robb Engen’s TFSA Dilemma and Solution on Boomer & Echo. Like many of us Robb has a ton of TFSA contribution room ($50,500) He plans to turn his $825 monthly car payment – which ends in October – into future TFSA contributions, starting in January 2017. That’s $10,000 per year to stash in his TFSA, which at that rate would catch-up all of his unused room by 2027.

Have you reviewed your life insurance lately? Are you and your partner adequately covered so if one of you dies, the other can continue to pay the family bills? Bridget Eastgaard from Money after Graduation says Cash-Value Life Insurance Is For Suckers, Buy Term Instead.

And finally, Should you work part-time in retirement? by Jonathan Chevreau on moneysense.ca includes an analysis commissioned by Larry Berman, host of BNN’s Berman Call and Chief Investment Officer of ETF Capital Management. It illustrates the powerful impact of earning just $1,000 in part-time income each month between the age of 65 and 75; or in the case of couples $2,000 a month between them.

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Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Staying on budget can be a challenge at any time of year. But when souvenirs and snacks beckon on vacation or the hotel you booked ends up being much more than you expected, your bottom line may suffer an unexpected hit.

A recent BMO Report quantifies how Canadians’ savings are affected by summer spending habits. The study reports that as temperatures soar so does our spending, and while many don’t feel guilty about enjoying the season, half (52%) admit that their summer habits have negative long-term effects on their savings.

One quarter (28%) of Canadians say they go into debt during the summer due to their spending. Another 27% dip into their savings to support their spending and 13% forego saving and paying off debt altogether to enjoy the season.

Still, the BMO summer spending report, conducted by Pollara, reveals that Canadians are aware of their tendency to over-spend in summer and are taking steps to counter it:

• Compared to last year, fewer Canadians plan to increase their spending this summer (down to 32% from 45%);
• 25% of Canadians will hold off on travel, for budgetary reasons, this summer; and
• 15% feel they have too many other financial commitments to travel at all this summer.

Further, the BMO report found that 47% will restrict their travel to domestic trips to avoid fluctuating foreign exchange rates, or opt for a staycation (14 per cent), to get the most bang out of the Canadian buck.

“We’re noticing disparities across regions right now, with B.C. and Ontario continuing to drive Canadian consumer spending, thanks to strong demographic trends, low interest rates and favourable labour market conditions, “ says Robert Kavcic, Senior Economist, BMO Bank of Montreal “On the flip side, oil-producing provinces-Alberta, Saskatchewan and Newfoundland & Labrador-are seeing spending track below year-ago levels as those economies grapple with recession and the fallout from lower oil prices.”

Canadians and their Credit Cards

Almost half of Canadians (48%) admitted to paying off less of their credit card balance during the summer months than they normally would. For the 41% who carry a balance, which sits at an average of almost $3,000, enjoying the season can have longer term implications.

Summer Spending at a Glance
	Nat’l	Atl	Que	Ont	Pra	Alb	BC
Will use credit to pay for summer spending	28%	43%	34%	30%	27%	24%	26%
Find it difficult to get back on track after higher summer spending	35%	43%	29%	37%	40%	35%	35%
Will incur a small amount of debt as a result of summer spending	35%	51%	36%	29%	37%	39%	35%
Will pay off their credit card balance from summer spending ‘when they can’	56%	79%	45%	54%	68%	65%	59%

Nick Mastromarco, Managing Director of Loyalty and Partnerships, BMO Bank of Montreal, encourages those who plan to use a credit card for summer spending to take advantage of credit card rewards programs that many cards offer to help offset their costs.

“While setting a budget is important year round, seasonal spikes in spending are common for Canadians, and those who gravitate towards reward programs when considering how to pay for purchases are wise to do so,” said Mr. Mastromarco. “Cash rewards, for example, can be used flexibly at any time, regardless if summer plans include travel. In essence, redeeming rewards can help smooth out any spikes in spending, enabling you to get the most out of the summer season.”