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.”

SNOWBIRDS SERIES
By Sheryl Smolkin

For many seniors, no longer having time constraints on when or how long they travel can travel for is a very big bonus of being retired. And winter is a prime period for travelling snowbirds who want to get away from the frigid weather in most parts of Canada. A few weeks or more in Florida or Arizona are typical destinations for many older Canadians. But others seeking more adventurous and less costly vacations are planning to visit a myriad of more exotic locations like Ecuador, Uruguay, Panama, Mexico, Malaysia and Thailand.

Whether you are planning to travel across the continent or around the world, the 10 safety tips below will help to ensure you get to your destination and back without any unnecessary delays or nasty surprises.

1. Check your visa: Find out if you need a visa, how to get it and how long it is good for. When my husband and I planned a trip to Russia and Ukraine with a synagogue group, I didn’t carefully check the dates when I picked up our visas. We were planning to travel in May and the date on my visa was correct, but my husband’s said March. We could not get on the plane to Moscow from our stop-over in Munich and the problem couldn’t be fixed, so we lost a week’s vacation and thousands of dollars. Visa problems are not covered by trip interruption insurance.
2. Credit cards: Take several credit cards and keep them in different places so you have backup if your card or your wallet is stolen. Make sure to call your bank and credit card companies before you leave. Otherwise if they see an unusual spending pattern on your card, it may be refused. Also take photocopies of your cards and record the telephone numbers you have to call if they are lost or stolen so you can move quickly if necessary.
3. Travel insurance: Review any travel insurance you have on credit cards, through work or other groups to ensure it covers the duration of your trip and the kinds of activities you are planning. Otherwise you may need additional coverage. Complete all medical information accurately or coverage may be denied. Understand the “pre-existing conditions” exemptions under the policy.
4. Pack light: This is definitely a case of “do as I say, not as I do.” I always take far too much! The ideal of course, is to take one small bag so you don’t have to spend hours waiting for checked baggage or risk that your bags don’t arrive when you do. Also if you have large heavy bags you are much less mobile and you run a greater risk of straining muscles or falling.
5. Check with your doctor: Schedule a doctor’s appointment before you leave. Renew your prescriptions for the length of time you will be away and pack them in the original container. Take enough for a few days in your carry-on luggage in case your bags are lost. Ask if you need any additional vaccinations before you go. Depending on your destination, your doctor may refer you to a travel clinic.
6. Avoid pick pockets: Be really alert and aware of your purse or wallet at all times. Ideally women should wear a cross-body purse that cannot be snatched off your shoulder. Men, do not put your wallet in your back pocket. Travel clothing has lots of hidden pockets with velcro flaps where you can safely hide your valuables. Don’t ever put your wallet down on a counter and take your eyes off it when you are making a purchase.
7. Other valuables: Leave your diamond rings and other flashy, expensive jewelry at home. I feel really peculiar without a wedding ring and there are often formal nights on cruises so I bought some glitzy fakes that I travel with instead. But thieves often don’t know the difference so don’t wear anything too sparkly in dangerous areas. And always use the safe in your room for extra cash, credit cards, your passports and small electronics.
8. Ask for special services: Airports are vast and travelers typically have to walk very long distances to get from the entrance to check-in, through security and then to the gates. Ask for wheelchair service if you need it. If the airline provides the service there is typically no charge.
9. Be realistic: If you haven’t skied in 30 years, don’t plan a vacation skiing in the Alps. Unless you are an experienced scuba diver and you are in excellent health, age 80 is probably not a good time to do a deep dive on the Great Barrier Reef. A bus trip to 15 cities in 20 days will leave you exhausted and the only thing you will remember about your holiday is the pictures.
10. Leave contact information: Make sure family members have a copy of your itinerary and telephone numbers for your hotels, tour operators etc. who can reach you. These days the texting, data and calling features of your smart phone can be activated all over the world, but unless you get a roaming package before you leave or buy a local SIM card for your unlocked phone, it can be very expensive. While you may want to “get off the grid” and turn off your electronics, there are definite advantages to having connectivity in a health or travel emergency.

 

Also read:
Martin Firestone: What Snowbirds Need to Know About Travel Insurance

By Sheryl Smolkin

As a card-carrying member of the sandwich generation, I can attest to the fact that financially literate children are one of the best investments you can make in a comfortable retirement.

If you are lucky, your kids will help to take care of you and your money when age or infirmity makes it difficult for you to manage on your own.

Yet an August 2013 ING survey revealed that although kids 11 to 14 generally rate Mom and Dad as good financial role models, many want their parents to better educate them about the following financial issues:

• 38%: How bank and credit cards work
• 36%: What things cost and why
• 27%: How to save their money
• 26%: How to manage their money.

Exactly what you need to teach kids about money depends on the ages of the children. The Financial Consumer Agency of Canada offers the following suggestions on what financial lessons are appropriate for different age groups:

Ages 4 to 8:

• Understand that people have a limited amount of money to spend.
• Use money to buy basic goods and services for simple transactions.
• Divide allowances or other money received among the financial goals of saving, spending and sharing.
• Understand that there are choices when it comes to money, and that money spent on one thing means that there is less money available for something else.

Ages 9 to 14:

• Recognize the difference between needs and wants.
• Understand the importance of saving a portion (for example, 10%) of all money received and the value of an emergency fund.
• Create a savings plan for short-term and long-term financial goals.
• Identify regular family financial commitments and know that families use household income to meet those commitments.
• Create a simple budget for an activity or event.

Ages 15 to 18:

• Understand the pros and cons of different payment options such as cash, debit cards and credit cards.
• Understand different kinds of investments (GICs, stocks, bonds and mutual funds).
• Understand the time-value of money (for example, past, present and future worth of money) and opportunity costs.
• Understand the concept of “living within your means” and why it is important.

I think much of what my offspring learned about budgeting and saving came through osmosis and the school of hard knocks. But my husband and I did one thing that helped our children understand the value of a dollar at a young age.

Paying them weekly allowances was a real nuisance because I never had the right change. It was also very tempting to withhold the money for minor misdemeanours which did little to promote family harmony.

So we started giving them monthly cheques instead. We opened accounts for them at the Royal Bank because they had a low-fee ATM in the convenience store at the end of our street. The kids also got their own bank cards so they could easily make deposits and withdrawals.

The deal was that they had to pay with their own money for specific things like movies, school lunches and bus fare (in the case of my daughter who was older).

I knew it was working the day my son – who was 10 or 11 at the time – missed the school bus for the second or third time. Instead of expecting me or his Dad to bail him out, he called a taxi and had the driver stop by the ATM on the way so he could take out enough money to pay the fare.

I can’t remember if he gave the driver a tip, I guess that was a story for another day.

Do you have tips for parents about kids’ allowances?  Share your tips with us at http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card. And remember to put a dollar in the retirement savings jar every time you use one of our money-saving ideas.

If you would like to send us other money saving ideas, here are the themes for the next three weeks:

19-Sept	Extracurricular activities	How many and how much?
26-Sept	Employee benefits	Getting value for your employee benefits
06-Oct	Seniors	Colleges, universities offer free tuition for seniors