Money Wise Mom

Published: 2026-10-09

It May Not Mean What You Think It Means

A few nights ago we had family over for dinner. It was really nice catching up. We chatted for quite a while and, eventually, over our post dinner coffees, the conversation turned to investing. It took a few beats for me to realize that, although we were all talking about investing, we were not all talking about the same thing.

There are two very different philosophies in the investing world. Active Investing and Passive Investing.

The disconnect in our dinner conversation is the inspiration for today’s post. To be clear, the investing approach I follow is passive, which is an entirely different beast than active investing.

Understanding Active vs Passive Investing

When most people hear the word investing, they picture some version of active investing. Active investing is picking stocks that are winners, tracking the latest news for hot tips, and, these days, probably buying and selling some crypto. When I hear people talk this way, I envision horse racing. Picking a winning stock is like picking a winning horse. The thrill of watching your stock portfolio rocket to the moon is not dissimilar to watching your horse cross the finish line in first place.

Passive investing is none of those things. Passive investing takes a long term, moderate view that it’s better to build wealth over time in a (somewhat) predictable way. If you are doing it right, it’s actually pretty boring!

Here are some hallmarks of Passive Investing

• Dollar cost averaging – This is the practice of investing the same amount of money regularly, regardless of how markets are behaving. For example, investing $200 every month no matter what. If markets are down, you get to buy products while they are on sale (yay!). If markets are up, you end up buying a little less, but at least you are still growing your nest egg. The important concept is that buying every month averages out in your favour over time.
  
• Investing in entire markets – Why pick one or two stocks when you can easily invest in 100s of the top performing companies in a market? This is the power of index funds. An index fund tracks the best performers in a group, for example the group of companies with stocks on the exchange. An index fund might track the top 100 companies with stocks on the Toronto Stock Exchange (TSX). If one company’s stock value falls to spot 101, another company automatically graduates to spot 100. As an investor, you pick your index fund(s) and just keep investing in that fund, which automatically means your investing in the best 100 of the TSX. You don’t buy and sell specific company stocks. You don’t have to spend ANY mental bandwidth guessing which companies are winners and losers or worrying that you’ve held a looser for too long.
  
• Holding a mix of Stocks/Equity and Bonds – one of our rules of thumb is that when stocks go up, typically bonds are worth less. And when stocks go down, bonds are typically worth more. Stock values can vary a lot, bond values tend to vary a little over time. For this reason, to protect us from big swings in the stock market bouncing up and down, we invest in both stocks and bonds. A popular ratio is investing in 60% stock and 40% bonds. This is common practice considered to be pretty moderate to low risk. Of course, as an investor you can choose to hold more stocks (i.e. 70% stocks, 30% bonds) if you are fine exposing yourself more to stock market swings.
  
• Investing across markets in Canada, US, and International – We don’t want to tie ourselves to just one market in just one economy. There could be a recession in Canada, but the States might be booming. For this reason, we want to choose index funds with a healthy mix of financial markets from around the globe. With this strategy we get the best of what’s happening in Canada, the US, Asia, etc.
  
• Low Cost Investing – we want to protect our gains and we don’t want to lose more than we have to in upfront or hidden fees. The best ways to keep fees low is to manage your own investments via a no fee brokerage (like Wealthsimple) and to buy investment products with a low MER. You can read my post MER the Silent Wealth Killer if you would like a deeper dive into why.

When you are just learning, passive investing sounds like a lot. There are so many terms and concepts. But here are the stripped down basics to understand:

1. Buy Low Cost (ETFs with MER below 0.2%)
2. Buy On a Schedule (Invest Monthly)
3. Invest in Markets, not individual Companies (Index Funds)
4. Diversify (Stocks & Bonds, Domestic and International)

The Really Good News

The really good news is that some very smart people have created model portfolios that ticks all four of the passive investing boxes above! And, thanks to some other very smart people, you can achieve it all by buying one investment product. Yes, one product you can just keep buying and never have to think about it.

I’m referring to the Canadian Couch Potato model portfolio.

I have been following the Canadian Couch Potato (CCP) model portfolios for over twenty years. It has evolved over time as newer and better products have been created.

In the good old days, my portfolio was a mix of three products: ZAG, VCN, and XAW.

Nowadays, we can achieve the same diversification by picking one product, like VBAL, XBAL, or ZBAL. These funds are all pretty much the same thing. The “BAL” stands for “balanced”. The V, X, or Z is just indicating if you are buying your investment from Vanguard, iShares, or BMO.

If you check out the performance of these funds against each other, you will see they all perform essentially the same. That’s because they are all selling you the same groups (aka indexes) of products.

As you can see from the nice CCP chart below, the “BAL” holds 60% stocks and 40% bonds. If you want a slightly more spicy portfolio, you might pick VGRO instead of VBAL, which gives you 80% stocks and 20% bonds.

Since passive investing is “so easy”, you might expect that you are giving up growth in exchange for simplicity. You might assume that active investing is worth all the hassle, cuz that’s how you get rich, right?

Not according to what these guys, or these guys, or these guys have found.

It’s consistently reported that professional money managers have not been able to consistently out perform basic index funds that simply track the stock market automatically.

So why do so many people still bother with active investing? I can only imagine that it’s a big case of FOMO or a big case of not knowing a better way.

Compare and Contrast

Let’s illustrate my point with two fictional investors. Mia is an active investor. Chloe is a passive investor.

At 8:59 a.m., Mia opens her laptop and launches six websites. The stock market opens in one minute. She has three tabs for charts, two for breaking news, and one for “Is This CEO’s Tweet Bad?”

Meanwhile, Chloe opens her fridge to forage for breakfast.

At 9:13, Mia’s stocks in company XYZ dips by 3.2%. The line on her stock tracking chart keeps trending down, down, down. It’s dipped so much, company XYZ’s poor performance is now featured on the ticker feed of her favourite breaking news site. She starts to sweat. She refreshes her browser, muttering “I knew that earnings call had weird vibes.” She rushes to sell the stock before she looses any more money… only to see the stock price bounce back up, for no discernible reason. Grrr.

Chloe pours herself a coffee and scrolls her Insta feed.

By lunch, Mia has read twelve predictions, made nine trades, and developed a personal feud with a candlestick chart. “This market is irrational,” she says, while trying to predict what millions of other people would do next. Mia cranks her neck, which is feeling oddly tight.

Chloe’s investment plan is to own a diversified fund, add money regularly, and avoid checking it every hour. It happens to be the 15th of the month, Chloe’s money management day, so she checks her portfolio once on her lunch break. Yup, still looks about the same. Her automatic transfers and investment purchases are still working. She sees transfers in the day after her pay day and autonomic purchases the following day; several months of activity, all just as planned. Chloe goes outside for a walk in the sun.

At 3:57, Mia’s portfolio has moved up, down, sideways, and emotionally through all five stages of grief. She celebrated a winning trade, then discovered the fees. All in all, she figures she’s down about $2.75 from this morning.

Chloe has no idea how her portfolio did today. She’s heading out to catch up with an old friend for a drink.

At the end of the day, Mia announced, “I’m taking a break from investing.” Six minutes later, she pulls out her phone to check how the market is doing after hours.

Active investing can involve more research, trading, and stress; passive investing generally aims to track a broad market with fewer decisions. Neither guarantees a profit but, over time, Chloe should have a nice little nest egg that didn’t cause her to loose sleep at night.

—

This Investing ABCs series is for anyone who wants to start investing but doesn’t know the first thing about how to begin. You don’t need to read this series in order, but you should read and learn all the ABCs before venturing forth to buy investment products.

Thanks for reading!

Published: 2026-09-18

We travelled a lot this year. So far, I’ve taken eleven trips. These have all been within the province and the budget for each has varied. I have one more local trip I’m taking this weekend and then we will end our year with la pièce de résistance: a trip to Sweden where we will watch the WFTDA roller derby championships!

As I am writing this, thirteen trips sounds extreme to me. It’s certainly the most I’ve ever travelled in one year for personal entertainment. I suspect we will calm down our travel plans next year, but who knows! This year we focused on doing a lot of roller derby activities which kept us busy most weekends over the summer season.

How to Think About Vacations

Vacations shouldn’t take you by surprise and you shouldn’t take on debt for travel. You are in charge of deciding how many trips you take, where you go, and how much you will spend.

Here is how we approach vacation spending.

1. We allocate vacation spending in our monthly budget This has been our system for the past 30 years. In our traditional earning years, we would move a budgeted amount, for example $200 a month, to a separate account that I lovingly referred to as our “slush fund”. Now a days, we work a little differently, but for most people, I highly recommend a separate spot to stash earmarked cash. Our slush-fund account held house money intended to pool over time for large expenses like vacations, annual insurance bills, and Christmas. How much we had sitting in each “pot” of our slush fund was tracked within our budget. This system gave us predictability, stability, and an upper limit to what we could spend.
   
   Predictability: We transferred money every month, without fail from our joint daily spending account to our slush fund account. It was a “bill” that we paid ourselves. If we didn’t spend it all in one year, it would roll into the next year to give us a bit more spending power, if we wanted it. Our system kept our money management simple and boring (which is the goal!).
   
   Stability: Our monthly transfer meant a slow and steady drip of money into our pool. The monthly amount was decided once a year, during a money talk. We reviewed our income and expenses and set out all our planned spending for the upcoming year. The amount we allocated to vacation was based on what our household could afford monthly and it fit within on our total life expenses of 25% net income.
   
   A Ceiling: Our system made it very easy to know when we could afford a trip, if ever. Instead of making life “exciting” and just deciding we deserved a vacation as we felt like it, our system insulated us from making choices based on FOMO. We did not “stretch ourselves” and there was no “we will figure it out later” mental gymnastics. We had the money that we had and it would only go so far. If we could afford $200 a month for vacations, the math was simple, that’s a max of $2400 a year for vacation spending.
   
2. We set special budgets for special occasions At a monthly money talk last last year, well before the travel season was upon us, we decided together that we wanted to dedicate more to travel this year. It was our first year together as retired and we wanted to spend more time focusing on roller derby events. So we looked at what we felt we could afford and allocated two extra pots of money. These are considered one time “special spending” budgets. The money was from surplus cash, rather than our monthly budgeted vacation amount.
   
   Pot 1: France Trip Local Derby Travel
   
   I wanted to attend MRDA championships in France. It ticked the box in which we like to double up derby destination travel with fun experiences and going to France is on my bucket list. So, I pencilled a special budget line item for a trip. However, as we approached the travel season and during one of our monthly money talks, my husband had a counter proposal: rather then blow so much money on one trip, we should spread our budget over a lot more short and local trips, giving us a heck of a lot more derby experiences. I came around to the plan and I figure we are simply deferring a France trip to a future adventure.
   
   Pot 2: Sweden Trip
   
   This will be a ten day trip that we are both looking forward to! We are gong to the 2026 WFTDA Roller Derby Championships and padding a few extra days for sightseeing. Would I have thought to go to Sweden otherwise? Probably not, but that’s the fun of bundling travel with derby. We see corners of the world we would not otherwise have visited. I had assumed that because we no longer had day jobs, it would be “easy” to spend several weeks overseas. But two things worked against us: 1) vacationing is not cheap! For a multi week trip, I think I would need to be more creative to try and live like a local rather than a tourist 2) somehow we are still really busy! We have life stuff happening at home which didn’t lend itself for us taking a longer trip.

The Best Vacation is One You’ve Already Paid For

I like planning stuff and we both really like tracking stuff.

1. Set your budget ceiling. Either from your pooled vacation money or from a special pot of “extra” funds that you already have on hand.
   
2. Build your budget! Planning the trip is (for me) the super fun part. I build a spreadsheet that lays out your itinerary, when you depart and return, which calculates your total days of travel.
   
   I always include a few standard categories:
   
   
   EV Charging (if driving) or Flights – based on how many times we figure we will need to supercharge our car or a google flight search
   
   Accommodations – I use a guesstimate rate for accommodations, based on a somewhat educated guess as to where we are going, and times it by the total days. In the example below, I assumed $100 per day for hotel or an airbnb.
   
   Food & Drink – Similar to accommodations, I assume a daily rate of $75
   
   Events & Attractions – For a short / targeted trip, you might only have one event you are attending. You can either build your budget around that (i.e. the cost of a pair of tickets to the event) or, if it’s a trip where we want to sight see, I’ll just set a daily rate of $50-$100 (best guess) to have something to stay within.
   
   Land Travel – Typically required for sightseeing trips. This might be a rental car, local transit, or ride services.
   
   

3. Decide if you can afford it. This is a big one and you must not skip it. At this point, we have not yet committed to taking the trip. Will the projected budget for the trip fit within our budget? For example, maybe flights are really expensive. If you are working from special budget of extra money, maybe you can allocate some of your vacation to cover the gap. Otherwise, the trip is probably a no go. And that’s okay! It’s far better to realize if you can afford a trip before you start booking stuff, rather than dealing with a debt hangover afterwards!

4. Book Stuff! Once you know you can afford it, you have the green light to book stuff! I like to copy past links and screen shots of my flight and accommodation booking into my spreadsheet so everything is in one place. As you pay for stuff, track your actual spending. Being over budget in one category is not a big deal, as long as it fits your total trip budget.

5. Let the count down begin! Now that everything is booked, you get to sit back and anticipate how much fun your next adventure will be!

6. Enjoy your fully funded guilt free trip! There is nothing as good as guilt free travel. Having everything paid for ahead of time means you will enjoy being in the moment, without a foreboding feeling of a looming debt hangover.

7. Post trip stuff – As I mentioned, we like to track stuff. So we do keep track of our travel spending. After a trip, we ensure the money we spent during travel is tracked in the Actual column of our budget sheet, so that we can keep ourselves accountable. Tracking our spending also helps us with our guesstimates for planning future trips.

Rinse and Repeat

And that’s how we plan all our trips! It’s a simple system and it’s easy to replicate. It also keeps us within a spending limit. And sometimes, it helps us feel good about turning down opportunities. Even with so much travel this year, I did turn down three other travel opportunities, solely because it wasn’t in our plan and I couldn’t afford it. And that’s totally okay! We all have limited funds and we all have the power to choose what we do with them.

Published: 2026-09-11

This Investing ABCs series is for anyone who wants to start investing, but doesn’t know the first thing about how to begin. You don’t need to read this series in order, but you should read and learn all the ABCs before venturing forth to buy investment products.

This is a continuation of my post Investing ABCs: Investment Accounts

Why This Stuff is Important

One of the biggest barriers to managing your own investments is all the acronyms floating around. All those letters (TFSA, RRSP, FHSA) are confusing, overwhelming, and intimidating. It’s not easy or intuitive to understand the different types of investment products or how they help you. I am here to tell you that it’s definitely not you, it’s the financial system.

I can’t say that the confusing nature of the financial system is by design, per say. However, it certainly keeps you dependent on “financial experts”. Unfortunately, there is a big lack of transparency from everybody. Most “experts” are actually salespeople who have incentives and an unspoken agenda that is not obvious or disclosed. Banks offer a service, but they also want to increase their profits. Financial platforms, like Robinhood , Questrade, and Wealthsimple, offer similar services as well as incentives, but they also want to sell you their products to increase their profits.

The best I can do is arm you with knowledge. A little bit of knowledge will help develop your “gut”. My mother used to tell me when I was growing up: “Always trust your gut!”. I think it was pretty sound advice.

And here is my advice to you: Never do anything with your money that you don’t understand!

A Quick Recap

Here’s a quick review the four types of investment accounts we’ve already introduced.

• TFSA – Tax Free Savings Account. You put in money you’ve already paid taxes on but you never pay income tax again on that money or the money earned inside your TFSA. You are only allowed to contribute when you are 18 or older and only up to your total contribution allowance, which increments annually and is tracked by the CRA.
  
• RRSP – Registered Retirement Savings Plan. You put in money you’ve already paid taxes but then the CRA gives you tax money back through your income tax return, so you have actually contributed pre-tax money. The total amount you can contribute each year is based on a percentage of your income and is tracked by the CRA. Every dollar you contribute reduces your taxable income for the current year. Money invested inside your RRSP ideally grows over time until you decide to retire and need to start withdrawing your money. Those withdrawals are taxable income. Typically you will be in a lower income tax bracket when you are retired. You no longer have employment income. Since you are making a lot less when retired, you should be in a lower tax bracket than when you were working. By contributing to an RRSP, you can reduce the total income tax you’ll have to pay over your life time while squirrelling away money for the future.
  
• RESP – Registered Education Savings Plan. You contribute to an RESP for someone else, typically your kid or a grandkid. The Canadian government will match a percentage of your contributions with grants. The withdrawn funds may only be used to pay for eligible education expenses.
  
• Non Registered Account – These accounts are not registered with CRA and have no contribution limits. They do not give you any tax advantages or refunds. You are always investing with after tax money. You typically only want to open a non registered account after leveraging registered accounts, as registered accounts provide financial benefits, each in their own special way.

Even More Investment Account Types

Yup, there are EVEN MORE Investment Account types. Many of these are less talked about but it’s beneficial to be familiar with them.

Remember, these are just account types. They are not investment products. After you open an investment account, for most of these, you still then need to buy investment products using your contributed money.

Clear as Mud

Congratulations on making it this far! I know it’s a lot.

Remember, your goal is not to be a financial expert (yet!). You do not need to memorize all this stuff. The first step is to just be familiar with the menu of different investment account types. Over time you will grow into a better understanding of what each account type is and how you can use them to boost your net worth over time.

We have now reviewed ten different investment account types. You won’t need to use them all. However, savvy Canadians will use a variety of these within their lifetime to reduce their income tax burden and increase their wealth.

I want to here from you

I want some honest feedback. Leave me a comment. Did you learn anything from this post? Or did it all fly over your head?

Published: 2026-08-07

This Investing ABCs series is for anyone who wants to start investing, but doesn’t know the first thing about how to begin. You don’t need to read this series in order, but you should read and learn all the ABCs before venturing forth to buy investment products.

When taking control of your financial future through self-directed passive investing, your approach should be to eliminate expensive middleman fees, invest globally across all major markets, and grow your wealth over time.

It’s important to understand that even if you skip the traditional financial advisor and buy ETFs online for “free”, you are still paying an underlying fee.

Enter the Management Expense Ratio (MER). MER is an annual fee you must pay to own Exchange-Traded Funds (ETFs) or mutual funds. All ETF and mutual fund investment products include MER fees. MER is expressed as an annual percentage of the fund’s total assets under management. A “high” MER will be 2% (or higher!) while a “low” MER is around 0.10%.

Even a “high” MER might seem like a tiny fractional percentage on a fund fact sheet, so why should you care? In truth, MER is arguably the single most important variable under your direct control as a passive investor.

Understanding what MER is, how it works, and why it drastically impacts long-term wealth accumulation will make you a wiser investor and help you win the money game.

MER is a hidden fee

MER is a silent wealth killer and it’s critical that you give it careful attention when building your portfolio.

Instead of sending you an annual invoice, fund providers deduct this fee automatically from each fund’s assets behind the scenes. This makes MER invisible unless you actively look for it.

MER is composed of two components:

1. Management Fee: The fee paid to the fund company to pay portfolio managers, analysts, and cover institutional administration.
   
2. Operating Expenses & Taxes: Administrative overhead, legal, auditing, regulatory filing fees, and applicable taxes (such as GST/HST in Canada).

Out performance is Rare; Fees Are Guaranteed

Active fund managers charge higher fees because they claim they will beat market performance through stock picking or market timing. However, historical data busts this as a myth and a fairy tale. Decades of data demonstrates that 80% to 90% of actively managed funds fail at their quest to beat their benchmark over a 10 to 15 year horizon. No one owns a crystal ball, so eventually managers get it wrong, plus high fees drag down performance. You always pay MER fees, regardless of how well the fund performed.

Passive investing aims to match market performance at the absolute lowest cost possible. You are not trying to beat the market (that is gambling!) you just want to ride the wave of average market returns. According to this guy, over the last 50 years Canada has posted a 10.3% nominal return and US has posted over 13%. That’s pretty darn great! As a passive investor with index funds, you accept these market returns as the growth you should see in your portfolio.

The primary factor determining whether your net returns beat some other investor holding the exact same index is what you are losing to in fees. This is why, when selecting the investment products to buy for your portfolio, the closer you can get your MER to zero, the more you guarantee that you keep virtually all of a market’s underlying return.

Fund Fees Vary, Buyer Beware

Not all funds are created equal. Knowing what constitutes a “good” MER helps you evaluate investment options:

The MER for all funds can be found on their fact sheet. You can easily find the fact sheet for most funds be searching in an internet browser with the fund’s ticker symbol with the words “fact sheet”.

For example, check out the fact sheet for ZBAL here or search for it yourself with “ZBAL fact sheet”. Do you see where the MER is listed?

The Anti-Compounding Effect

To understand the true impact of MER, you should understand the double-edged sword of compounding. Just as compound interest accelerates wealth creation, compound investment fees accelerate wealth destruction.

When a fund charges a 2.00% MER, you are not simply losing 2% of your money that year; you lose the future growth that 2% would have generated for decades to come.

A Tale of Two Investors

Consider two investors, Maya and Liam. Both invest a lump sum of $100,000 into equity funds that achieve an average gross market return of 7% per year over 30 years.

• Maya chooses low-cost, self-directed passive indexing ETFs with an average MER of 0.10%.
• Liam stays in traditional, actively managed equity mutual funds with an MER of 2.00%.

Maya's Net Annual Return: 7.00% - 0.10% = 6.90%
Liam's Net Annual Return: 7.00% - 2.00% = 5.00%

Here is how their initial $100,000 grows over 30 years:

Don’t be a Liam

Despite starting with the exact same principal and achieving the exact same market performance before fees:

• Maya ends up with $740,166.
• Liam ends up with $432,194.
• Liam surrendered over $307,000—or roughly 41% of his potential final wealth—solely to fees.

A seemingly small 1.90% difference in annual fees compounded into a life-changing financial loss. For a self-directed investor, reducing your MER from 2.00% down to 0.10% effectively buys you years of additional retirement freedom.

Top 3 Takeaways for Self-Directed Investors

1. MER is an Invisible Drain on Your Capital: Management Expense Ratios are subtracted daily behind the scenes before performance figures are reported. Check a fund’s fact sheet to know the exact percentage you are paying.
   
2. Compound Fees Destroy Wealth Exponentially: A fee that sounds small on paper (like 1.5% to 2.0%) can consume over 30% to 40% of your long-term wealth accumulation due to lost opportunity costs and missed compound growth.
   
3. Controlling Fees is Your Greatest Competitive Advantage: You cannot control global markets, inflation, or central bank interest rates. Controlling your MER by choosing broad-market, low-cost ETFs (targeting under 0.20% MER) is the single most reliable way to maximize your net investment returns.

Published: 2026-07-24

This Investing ABCs series is for anyone who wants to start investing, but doesn’t know the first thing about how to begin. You don’t need to read this series in order, but you should read and learn all the ABCs before venturing forth to buy investment products.

As I mentioned in my post You Can Manage Your Own Investments, if you can shop online, you have all the proficiency you need to open and use an account for investing. If you are totally new to investing, this primer is here to help you understand what a brokerage account is, what an investment account is, and a few of the most common types of investment accounts that you can open.

Brokerage Accounts

People who want to manage their own investments need a brokerage account.

There are many institutions that offer brokerage services where you can open an account. You might choose from online only providers like Questrade or Wealthsimple or one of the Canadian big 5 banks: Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), and The Bank of Nova Scotia (Scotiabank).

A brokerage account is an account that you open with a provider. Once you have your brokerage account, you open one or more different types of investment accounts inside your brokerage account.

Let’s compare this to bank accounts, which you may have had since you were a kid. When you want a savings account, you open a personal banking account with the bank and they add a savings account to your personal banking account. A savings account is simple; it only holds cash.

When you want an investment account, you open a brokerage account with a provider (a.k.a a broker, which might be a bank) and request that they add an investment account to your brokerage account. Investment accounts are structured a little differently from a chequing or savings account. An investment account includes a cash portion plus your investment holdings. Inside your investment account you buy investment products. Investment accounts come in different types. You might recognize their acronyms: RRSP, TFSA, FHSA, RESP, LiRA, etc.

Here is a visual representation of what holding different accounts looks like. In the example, “Heather McNeil” has some of the most common types of accounts with TD Bank: a savings account, a spending account, a TFSA, and an RRSP. Notice that the investment accounts include cash and the investment holdings that Heather has purchased.

Deep Dive Note: When opening an investment account, you must specify which type you want. You cannot change the type of investment account after you’ve requested it, just like you cannot change your savings account into a chequing account. You would need to open the new chequing account, transfer your funds, and then close the savings account. Different types of investment accounts exist because each one has different tax advantage and rules for their contribution limits. You cannot turn a TFSA into an RRSP, but you might have a strategy to migrate money overtime from one to another. You can hold the same holdings inside your investment accounts. For example, you can own ZBAL inside your TFSA, RRSP, and FHSA.

Just like a bank account, you can have brokerage accounts at as many institutions as you like. If you don’t like the service you are getting at one provider, you can take your business to another provider. Just be prepared to pay admin fees when you leave.

Important: Brokerage fees vary across providers. Before opening a brokerage account, read the provider’s website to understand if they charge a flat fee per trade and if it’s a set amount when you buy products or if they have a percentage based fee when you sell products. You should also know if there is a minimum balance at which they reduce or waive certain fees.

My experience working with traditional banks is that they are still fairly paper driven, move slow, are prone to administrative hiccups, and you will have to call them to get support. The experience may not be smooth or user friendly. We used TD as our brokerage for most of our adult life. We switched to Wealthsimple a year ago and have found the user experience to be head and shoulders above working with a bank. Wealthsimple even paid for the admin fees TD charge to migrate our investment accounts.

Investment Accounts

There are two main categories of investment accounts. They are either a registered account or a non registered account. A registered account gives you a tax advantage while a non registered account does not. The type of tax advantage a registered account gives you is based on it’s type. Common registered account types are FHSA, TFSA or RRSP.

Regardless of the category and type of investment accounts, once you’ve opened your investment account, they all operate the same in relation to purchasing and selling investment products. They all include a cash portion and your holdings.

A non registered account will not provide you any tax refund today or any direct tax break in the future. In a non registered account, you purchase investments with money that you’ve already paid income taxes against. When you want to cash out your non registered investments, the growth (a.k.a capital gains) is reported as income on your income taxes. If you lose money when sell your investments, you report the loss on your income taxes. A loss reduces your taxable income.

Registered accounts (a.k.a tax advantaged investment accounts) have the same structure as your standard investment account. They have a cash component which you use to buy your investment products (a.k.a holdings). Registered accounts give you special advantages, either by reducing your taxable income now or by eliminating income taxes on future gains. All registered investment accounts are subject to tracking by the CRA for tax purposes; the brokerage is responsible for submitting reports about your contributions to the CRA.

Two of the biggest hurdles to getting started with investing is

1) knowing which type of registered account to invest in first and
2) deciding which investment products to buy.

Investment Account Types

Investment Products

Investment products, referred to as your holdings, is the stuff that you buy inside your investment account. Ideally, it’s the stuff that pays you dividends and grows in value over time. Examples of investment products are ETFs (Exchange Traded Funds), Stocks, Bonds, Mutual Funds, and GICs (Government Income Certificates).

We will take a closer look at investment products in a future post. In the meantime, let me know where you are on the path to managing your investments. Do you already own investment accounts? Are they self-directed or managed by a provider? If you have investment accounts, do you know what you are holding in them?

Published: 2026-06-26

This is my second post in my foundational knowledge series for investing. This series is for anyone who wants to start investing, but doesn’t know the first thing about how to begin. You don’t need to read this series in order, but you should read and learn all the ABCs before venturing forth to buy investment products.

The Magic of Compound Interest

Money + Time = Magic

Ahhhh, the wonder of compound interest. When I first started saving in a simple savings account, I loved seeing “free money” roll into my account every month in the form of interest. Sure it was less than the cost of a cup of coffee, but it was money that I now had and I hadn’t had to show up to work to earn. This is most peoples first experience with interest. Interest earned on your savings account is money coming in, rather than those high interest charges on your credit cards which is money going out. In a way, interest is a money game of life. Earning interest is winning. Paying interest is losing (usually – read Learning to Think Like Rich People to understand more context).

Compound interest takes winning at money to another level. It is money earned on both your original money AND on the interest you have already earned. This is growth and it is the “magic” of compounding. Over time, your money begins to multiply your wealth exponentially instead of linearly. This is how you win the money game.

Here is a very simple example of compound interest.

You invest $100 at 10% interest and never add any more money.

• Year 1: You make 10% on your $100 = $10 interest. (Total: $110)
• Year 2: You make 10% on your new $110 = $11 interest. (Total: $121) <== Instead of earning the same $10 as year 1, your interest just earned you an extra dollar. Over time, that extra dollar snowballs.
• Year 3: 10% of $121.00 = $12.10 interest (Total: $133.10)
• Year 4: 10% of $133.10 = $13.31 interest (Total: $146.41)
• Year 5: 10% of $146.41 = $14.64 interest (Total: $161.05)
• Year 6: 10% of $161.05 = $16.11 interest (Total: $177.16)
• Year 7: 10% of $177.16 = $17.72 interest (Total: $194.87)
• Year 8: 10% of $194.87 = $19.49 interest (Total: $214.36)
• Year 9: 10% of $214.36 = $21.44 interest (Total: $235.79)
• Year 10: 10% of $235.79 = $23.58 interest (Total: $259.37)

Build a Money Engine

By the time I was 15, I was already keenly aware that my time was finite and that I would have to acquire money to live on by some means. If I just traded my labour for money, i.e. by earning a pay cheque for working 9-5 Monday through Friday, there would be a hard ceiling to how much money I could ever bring in. For example, if I made $37 an hour, for 40 hours a week, that’s a hard cap at $1480 weekly income (Yes, I am ignoring taxes and other stuff that get skimmed off the top of take home pay for simplicity!).

I also dreaded how much time I would have to spend sitting at a desk. Forty hours a week felt like a high price to pay. A better way to win at life would be to build a money engine that makes money for me 24/7/365 through growth, freeing up my time to do as I pleased. I didn’t know it when I was 15, but this is the concept of Financial Independence.

Enter compounding growth. The more you can feed your money engine, the harder compounding can work for you and the faster your wealth will grow.

It’s easiest to see what I mean with a few fun graphs.

Scenario 1: Go to Work Until you Die

Earn $1480 a week for 40 years, but without any savings and, therefore, no compound magic of any sort.

Weekly Earnings: $1,480
Annual Earnings (52 weeks): $1,480 x 52 = $76,960
Total Earnings after 40 Years: $76,960 x 40 = $3,078,400

Over $3 Million is a hefty amount. but, to be clear, this is not your net worth over time. This is not how much you would earn over 40 years at a $37/hr wage. It is how much you traded 4 decades of your life to bring in. Note that the line is straight. This is what not having a money engine looks like.

Scenario 2: Invest 10%

Now let’s add in the magic and assume that we are putting 10% of our earnings, $148 a week, into an investment that grows at 7% annually.

Total Income Earned: Over 40 years, your total gross income remains $3,078,400.
Cash Retained (90%): You keep $1,332 per week for regular spending or savings, which totals $2,770,560.00 over 40 years.
Principal Invested (10%): You contribute $148 per week into the investment, which amounts to a total out-of-pocket contribution of $307,840.00.

$3,078,400.00 (Income from wage) + $1,386,787.52 (Growth Earned) = $4,465,187.52

Notice that our wealth line is starting to curve up! The steeper you can make your line bend, the more growth you have. This is what a working money engine looks like!

Scenario 3: Invest 25%

Finally, let’s assume you follow the MWM Budget and are investing 25% of your take home pay.

Total Income Earned: Over 40 years, your total gross income remains $3,078,400.
Cash Retained (75%): You keep $1,110 per week for regular spending/savings, which totals $2,308,800.00 over 40 years.
Principal Invested (25%): You contribute $370 per week into the investment, which amounts to an out-of-pocket contribution of $769,600.00.

Total Portfolio Value: Compounding annually at 7%, your investment portfolio grows to an impressive $4,236,568.80

$3,078,400.00 (Income from wage) + $3,466,968.80 (Growth Earned) = $6,545,368.80

Now that is a money engine firing on all cylinders! We have effectively double our earnings over our working lifetime.

One fun thing to note from this chart. Take a look at year 34. Do you see what I see? It’s the point at which the investment portfolio value overtakes the value of your lifetime earned income. This is the moment your money engine is working harder than you are and is what we love to see! If you could invest more money sooner (which would bend your curve even steeper), you could pull that timeline forward and find financial independence sooner.

Comparison Summary

Here is how the three investment rates compare after 40 years:

• 0% Invested: Total earnings of $3,078,400
• 10% Invested: Total earnings of $4,465,187.52$ (Portfolio is $1.69 Million)
• 25% Invested: Total value of $6,545,368.80$ (Portfolio is $4.24 Million)

Why Not Win?

It’s wild to me that more people are not harnessing the power of compound growth through investing. Especially people just entering the workforce. I want to run up to every young person and shake them by the shoulders. They have so much time. They have so much potential. But, sadly, most people do not understand the magic of compounding. It’s not intuitive and honestly, even as someone who’s built a money engine and now depends on it 100% to live, it’s still wild to think about. It still feels like a fairy tale.

But it’s not fantasy, it’s math. And you don’t just have take my word for it; have some fun with an investment calculator and play with your own numbers. How big can you make your money engine?

Published: 2026-06-19

This is my first post in my foundational knowledge series for investing. This series is for anyone who wants to start investing, but doesn’t know the first thing about how to begin. You don’t need to read this series in order, but you should read and learn all the ABCs before venturing forth to buy investment products.

Our topic today is understanding your Net Worth, how to calculate it, and how to use it to build wealth. Figuring out your net worth is not complicated and should take you less than 15 minutes (you may need to log into some apps and grab some balances, if you want to be 100% accurate).

The Math

Net Worth = Total Assets – Total Liabilities

Start by downloading my Net Worth Tracker from my Resources page or create your own spreadsheet.

If you are building your own, make a new table and list all the assets that you own, like a primary residence, other property, vehicles, savings account balances, investment accounts, pensions, etc. In a column next to each asset, jot down its market value. Market value is what you could sell them for today. Make a Total Assets row at the bottom and sum up the value of all your assets.

In a second table, list all your liabilities, which is everything you owe. Those will be mortgages, student loans, car loans, credit card balances, store card balances, Buy Now Pay Later balances (i.e. Klarna), personal loans, pay day loans, etc. Make a Total Liabilities row at the bottom and sum up the value of all your liabilities.

Subtract you total liabilities (everything that you owe) from your total assets (everything that you have) and voila, you now know your Net Worth.

Why It Matters

Knowledge is power. Without it, you are just driving blind.

Everyone intuitively knows that to build wealth you will need to make more money than you spend. While technically correct, this is a narrow view of wealth building which locks people into a “paycheck to paycheck” mentality. People limited to this mindset are like someone driving a car while only looking 3 meters ahead of themselves the entire drive and no help from a navigation system. As your Money Wise Mom, I want you to have a longer view. I want you thinking BIG PICTURE. I want you looking down the road to clearly see where your choices are leading you.

Let’s do a thought experiment and chart your financial life line’s trajectory (a.k.a. your trend line). You don’t need to bust out another spreadsheet to follow along (unless you really want to). You can do this in your head.

Your ultimate goal is to identify your choices that have lead to your current net worth and what future choices you can make to build a better tomorrow.

Key Take Away: Your financial life line is your net worth mapped over the course of your life.

Envision your financial life as a graph line on a chart. The X axis is your age and the Y axis is your net worth. In Year 0 you were born. Fortunately, as a Canadian, you were born with a blank slate, financially speaking. Babies have no debt and, typically, no assets. We all start at coordinates “0,0” on our financial life charts.

Now picture your financial life line extending out from year 0 up to today.

For most of us, it’s a flat line in our youth. As babies, we have parents or guardians who provide food, shelter, and the necessities of life. Some of us are privileged with parents who save money on our behalf for our education. This would nudge your line upwards. We get our first job and we start having choices. We might spend or save our income. It may nudge our line upwards a tiny wee bit, but typically everyone stays pretty close to zero during their first 16 years of life. Things start to get more exciting as we enter our late teenage years. We get to make even more choices! Some of those choices nudge our financial life lines up and others push it down. Earn a scholarship? Your line bumps up. Take on student loans? Your line dips down. Apply for your first credit card but don’t pay it off? Your line dips some more. When you get your first “real” job, the line hopefully climbs up thanks to savings from more income and, perhaps, a pension plan. Other choices will drag your line down, like financing a car or taking on other debts to support yourself as a fully baked adult.

The point is, your financial life line trends up and down, depending on the choices that you make. What direction is your financial life line heading right now? Is it on an upwards trajectory? How steep is the line? Are there choices that you’ve made that are dragging it down?

The car you buy, the partner you pick, the career you choose, where you live, and the debt you choose to take on – these are the very big life decisions that significantly impact your financial life line. If we want to build wealth, these big choices have far bigger impact than the many small spending decisions you probably focus on day to day.

Living within a balanced budget is good for you, but focusing solely on your spending habits does not build your wealth. You need goals that increase your net worth over time. You need your financial life line to trend up.

Predicting Your Future

Let’s take our thought experiment a step further. Picture your financial life line extending out from today until the day you die.

What do you want it to look like? Is the trajectory of your financial past going to lead you to a future you want? If you make no changes today, is the line trending up or down? It’s not likely to be a flat line. Life is a constant churn of change.

Predicting your own future is actually really hard. No one knows how long we have on this earth and what fun surprises are coming our way. But we can all predict that we will die, one day. Nobody gets out of here alive. You probably don’t want to work until the day you die. Let’s assume you are lucky enough to live long enough to retire one day. At what age do you want to stop working? Are you happy with the traditional 65-70 years old or do you want to retire younger? Will your financial life line rise high enough to provide a comfortable lifestyle in your sunset years? How do you know how much is enough? Do you want to leave a financial legacy for others or do you want to spend you wealth down to zero? So many big questions!

I hope this little thought experiment has helped you think about your money a bit differently than before. Your Net Worth over time is really powerful concept to understand. If you can start thinking about your net worth over years and decades, rather than just your monthly budget, you gain the wisdom to make decisions that impact your wealth. You set your future self up for success by making choices now to point your trend line up.

A Penny For Your Thoughts

Did this post make you think differently about your money over time? Does your past financial life line look like mine (flat line until about age 16)? Is there anything in my post that was unclear or confusing? Drop me a comment below!

Published: 2026-06-05

My husband and I just topped up our TFSAs with our annual contribution and the “work” to complete the task took us less than 5 minutes. The process was literally “click, click, done”! Frankly, it’s so easy that it’s a little bit scary.

If you can shop online, you have the skills to buy and sell your own investments. Buying ETFs online is pretty much just loading up an online shopping cart. It’s not difficult and there are no fee options the make it basically free (minus MER, but we’ll save that topic for a deep dive post!). Managing your own portfolio is empowering and rewarding and it can boost your net worth by significant amounts. So why doesn’t everyone do it? Because lacking foundational knowledge is scary and uncomfortable. If you don’t know all the rules of the financial game, you can be frozen into inaction.

It’s fine for me to say how easy it is, now that I’ve done it for decades! I remember setting up my fist brokerage account and making my first purchase of ETFs though TD Waterhouse and it certainly didn’t feel easy, at the time. It felt terrifying! Hitting the “buy” button with my families life savings on the line made me sick to my stomach. I just didn’t want to mess it up.

Spoiler alert, I didn’t mess up my families finances. I actually did very well because I had done my homework by reading books and blogs to guide me through the process.

Taking your first step into the work of investments can feel like standing in a pitch dark room. You might be frozen with fear. As your eyes adjust to the darkness and your hands cautiously feel for the familiar, you eventually get a sense of the room around you, one small piece at a time, until it’s not scary anymore.

Allow me to turn on the lights for you. Over the next several weeks, I will do a deep dive on each of these topics to help you understand

Here’s a basic framework of what you need to know to manage your own investments.

Foundational knowledge you should understand about investing:

1. What is your Net Worth and how to track it
2. How investments grow through compound interest and dividends
3. The types of investment accounts that exist and when to use specific ones to be more efficient with your taxes (TFSA, RRSP, FHSA, RESP, Non Registered, LIRA)
4. Understanding the upfront and hidden fees, like MER, and how they can impact your net worth over time
5. The types of investment products you can buy inside your investment account like stocks, bonds, ETFS, and index funds
6. Recommended investment products for passive investments (diversified with low MER fees)
7. Common “Rules of thumb” like the 4% rule, the 25 times rule, the relationship between stocks and bonds, and the Money Wise Mom’s philosophy to “keep it boring”.

Systems you need to be prepared before you start investing:

1. An account at a no fee brokerage like Wealthsimple to create investment accounts in which you will buy and sell investment products.
2. A plan on how you will rebalance your portfolio

Also highly recommended:

1. A tracker spreadsheet to record your contributions to registered accounts (TFSA, FHSA, RRSP) so that you do not accidentally over contribute
2. Defined long term goals so you know what you are saving for (retirement, a house, or a kids educations)
3. Projections for when you will be debt free or how much your net worth will grow.
4. A plan to spend the money. You can’t take it with you. You can leave for others, but I’m assuming you want your money to cover your living expenses when you retire.

So yeah, the buying of products is simple. It’s as easy as click click done. Building up your foundational knowledge so that you have the CONFIDENCE to know that you’re not making mistakes is the hard part. But you can do it. And it’s worth doing. Your future self will thank you.

Published: 2026-05-22

You want your finances to be boring. Seriously. Exciting finances are chaotic. Exciting finances have no balance. Exciting finances give you sleepless nights. Big windfalls and surprise bills are two sides of the same coin. Put systems in place so that you know exactly where the money is going or coming from. Your future self will thank you!

More money in than planned is a great problem to have. If it’s more money from a raise or a new job, your system is to revisit your spending plan (see my Life of Pie series) and update your budget with your new amount. Evert dollar has a job. If it’s a windfall, you should have a goal in mind. Put most or all your windfall towards you primary goal. Congratulations, you have just moved the date forward to achieve your dreams!

On the flip side is a nasty surprise with an unexpected cost and the power to seriously interrupt your life. Your car breaks down. You need to fly somewhere in a hurry for family reasons. Your stove dies. Your furnace won’t start. Your water pipes freeze and burst. Life will throw so many things in your path! These are just a few unexpected examples from my life. Yours will be it’s own interesting list of events, I’m sure.

Enter the Emergency Fund.

“You’ve left me with nothing, but I’ve worked with less.” — Ani Difranco

We all start with nothing when we’re born. No money in, but also no money out. Our parents/guardians look after all our needs until, eventually, we enter the adult world of income and bills. When I left home I was 18. I had a baby on my hip and $10,000 in my pocket (actually it was in a shoe box). I had saved up money working throughout my high school years at a pizza restaurant. I didn’t really know how I was going to make ends meet, but failure was not an option. Whatever I lacked in knowledge, I made up for with sheer determination.

If I could go back in time and teach my younger self, I would have told myself to put one to three months of my total monthly planned spend into an Emergency Fund. Having that money in hand was a golden opportunity to set myself up for success. I didn’t have that savvy at the time, and so, of course, the money got spent, as unplanned money always does! My next few years were chaotic, financially speaking. We lived in overdraft. We lived pay cheque to pay cheque. We had a sword dangling over our heads for years and any major emergency would have ended us at any moment.

Save yourself a lot of sleepless nights. Get your financial house in order and have an emergency fund!

The Magic of a Separate Account

There is power in having a separate bank account for your emergency fund.

Humans are funny creatures. We tell ourselves all sorts of stories, especially when it comes to our money. We also have a hard time feeling connected with the power of our money and making rational decisions. That is why we put systems in place. We want to make our finances boring and protect us from our own irrational feelings when it comes to money.

So here’s the system I recommend. Have your income (ie your pay cheque) direct deposit to your daily spending account. A day or two after you get paid, have an automatic transfer move your planned emergency savings amount to a separate high interest savings account that is ONLY for your emergency savings. Do not pool it with other money. Check out my Life of Pie: Future post for more details on how to allocate your future savings.

Why is this magical? There is no tracking required. You check the account balance on your emergency fund, and you know exactly how much you have to work with. During the good times, you can sleep at night know that you have bought yourself flexibility and financial resiliency. During the bad times, you don’t have to think about anything. You can tap your emergency fund at will.

The Magic of Goals

If you have no emergency fund at all, I recommend that you start out with whatever amount you can manage. The amount will scale based on your life situations. When I started, $20 a pay cheque was all we could muster. And that was fine. We were building our money muscles learning how to plan ahead rather than reactive spending. Our first goal was to save up enough to cover one pay cheque. Once we reached that, it was save up to cover one month of essential spending. And then we upped it to three months. Then six months, and then one year.

Splitting our emergency savings goals into manageable, bite sizes goals gave us the ability to celebrate each milestone. Saving money should be rewarding on its own. But humans are funny creatures. You need to find a way to stay excited about making your financial life boring. Goals are the magic.

How Much is Enough?

So how much do you need, anyway? A few things to think about

• You cannot predict the future, so you will never know how much is the “right” amount. Stop stressing over if you have enough. Save what you can in a balanced way and congratulate yourself for being awesome!
  
• Even the experts cannot agree. You will hear one month, three months, six months, even one year! As I just mentioned, there is no “correct” amount. Three months is pretty good and gives you some run way in case you lose your job. But, more run way is always better. If you have dependants, are the sole bread winner, work based on contracts, or may be laid off by your employer, you will want to pad your emergency more so that you can sustain periods of unemployment.
  
• A credit card is not an emergency fund. Yes, it should be in a separate high interest savings account. A credit card or a line of credit is not an emergency fund. Tapping any credit during the bad times, while it may be necessary, is dangerous. It makes you more vulnerable and pushes you towards a cliff. The last thing you need in a true emergency is the stress of more higher bills and a debt hangover.
  
• Never ever ever ever use a money lender. They are blood sucking vultures that will cost you a lot of money in the long run. Just don’t do it.
  
• You Emergency budget is less than your spending plan budget. When deciding how much you need in a month, go back to the Life of Pie spending plan. In an extended emergency, like loosing your job, you can hit pause on some items. A lot of your “Life” expenses are discretionary. Things like eating out, vacations, and gifts should all be paused until you are back on your feet. You might reduce your dept repayment plan to cover the minimums, just for the short term. Review your spending plan now. How much do you really need in a month if you are living your leanest? That’s the amount you should use to calculate a three or six month emergency fund.

Just Do It

If you are reading this post and you don’t have an emergency fund, I am challenging you to set one up today!

Step 1: Go online and search “free online high interest savings account” and you will find many options to choose from. Apply online; I’ve been able to open high interest savings accounts in less than 5 minutes without leaving my house.

Step 2: Setup your automatic transfer (either monthly or per pay cycle) to move money into your emergency fund every month.

That’s it! You’ve set yourself for a balanced and boring financial future. Well done! Now go play some video games.

Published: 2026-05-10

This is post #5 in my Life of Pie series. If you’ve new here, I recommend that you read two posts before jumping into this series. Building Your Financial House gives you a high level picture of healthy finances, and I’m Ready Now What? includes actions to prep you for the posts in this series. I recommend that you jump back to those posts once you’re ready to begin making positive changes in your life!

Here are my previous posts in this series:

• Life of Pie: Housing
• Life of Pie: Transportation
• Life of Pie: Debt
• Life of Pie: Future

We’ve come to our fifth and final slice of pie, which I call Life. The Life slice is everything not already accounted for in your spending plan. It includes food, alcohol, holiday spending, gifts, clothing, subscriptions, vacations, and everything else you spend money on.

If you’ve been keeping track of your portion sizes, you will already know that your Life slice target size is 25% of your total income. If you haven’t already, you should now update your spending plan and add a Life category. If you are using the MWM Budget Tracker the beginner and normal modes are there by default.

As I’ve mentioned before, your spending plan may not completely match our Money Wise Mom targets. However, here are some guidelines to help give you some perspective.

• Under 25% – It’s unlikely that you spend less than 25% on Life unless you’re doing it intentionally. We all need to live and we all like our creature comforts. We exist in a consumerist world and from the moment we open our eyes and check our phones to when our head hits the pillow at night, we are inundated with ads and nudges designed to make us spend, spend, spend!
  
  To be clear, spending your money on Life is a good thing. Everyone needs balance and this category has the power to bring you joy beyond the bare necessities. Spending under 25% is an indicator that you are restricting your budget.
  
  If you are in debt and motivated to bust it fast, you might restrict your life spending voluntarily for a set period of time. It’s okay to grind it out, as long as you have a clear debt repayment plan with a defined timeline. Typically I recommend creating a debt payment plan you can achieve in three years or less. If you want to grind, I feel that more than 12 months of restricted spending becomes unsustainable.
  
  There is one other situation that warrants intentionally reducing your Life spending. If you find yourself in a financial emergency, like losing your primary income, the Life category is the one with the most fat to trim. If you’re between jobs, you might shift from a normal spending plan to an emergency spending plan, which is designed to stretch your emergency fund for as long as possible. Cutting out gifts, holiday spending, vacations, and other optional things will give you more time to find another source of income.
  
• Over 25% – Overspending on Life may indicate that you are doing really well or that the roof of your financial house is on fire. We have to look to the other slices of your pie to get the full picture. If your housing and/or transportation spending is low and you have no debt, those slices will be reduced and you might redirect those dollars into Life. You should also have a healthy grasp on your Future slice and be saving and investing wisely. Do not screw over your future self so that you can eat out every day. Remember, you are looking for balance.
  
  Alternatively, if you spend over 25% on Life and you have debt or your Future slice is missing, your financial house is on fire! It’s time for action. You need to get your budget in order and you must change your spending habits. Failing to do this means you cannot not have a happy, balanced, financial life.
  

To Track or Not To Track

You probably will not be surprised when I tell you that I am a tracker. I like spreadsheets and goals and projections. Since I was a teenager I’ve tracked my spending. If you are like me, you will want an app or a spreadsheet and you will enjoy taking the time categorize where all your money goes every month.

However, maybe you are not like me. Perhaps tracking your spending is a habit that just doesn’t work for you. If that’s the case, I recommend you simplify your spending system.

For me and my husband, we buy all our life stuff on a credit card that gives us 2% cash back. We always pay our monthly balance in full. We do not pay credit card interest.

Note: If you are beginner level, this method is not for you. Even I, who’s been tracking money closely for over 30 years, can get surprised at how big the credit card bill is when it arrives.

We host our own budget tracking software called Actual Budget (we’ve used simple spreadsheets and other apps in the past) which is not perfect but it allows us to categorize every transaction and all the data is stored locally. We pay a small annual fee for a third party service called SimpleFIN which acts as a bridge between our budget software and our credit and bank accounts. SimpleFIN allows us to import every transaction into Actual Budget on demand. We don’t need to use SimpleFIN, as we could manually import all our transactions, however, theoretically, it’s saving us time and hassle. Honestly though, how much time and hassle saved is debatable – all our financial accounts have multi factor authentication enabled which SimpleFIN cannot bypass which IS a hassle and takes time.

Anyways, if you are not into tracking every transaction there is an incredibly simple and fool proof method to ensure you do not overspend. Some people call it the jar method and some people call it the envelope method.

The Jar Method

When we were in our debt busting years, we followed the Jar Method. It’s a simple system where you live on cash. It is impossible to overspend if you follow this method correctly. The basic approach is this

1. When you get paid, you withdraw the 25% that you are planning to spend on Life
2. Put the money in a jar on top of your fridge
3. Spend this money for life stuff
   • If you spend all the money, you have to wait until next month!
   • If you have money left over, you can leave it to accumulate and spend it in the future

You only need one jar but I recommend that you have a few to balance your spending. Our big categories are Vacations, Food, Clothing, Gifts, Christmas, Roller Derby, Entertainment (his and hers), and Misc Spending. We do not take a vacation every month, however we allocate money to this category every month until it’s pooled up enough to use.

If you want to go above and beyond, place receipts spent into the jar. Then once a month, before you replenish the cash, take out all your receipts and jot down in your budget tracker where the money went. This is a simple step if you want to start tracking your spending. You may also be amazed at how quickly you forget what you bought over the past four weeks!

If you are not a fan of living on cash, you could simulate the jar method by moving 25% of your pay to a separate bank account and spend it from there. Some institutions allow you to have multiple accounts or allow you to “earmark” money into categories inside one savings account. The key is that you move only the 25% amount that you plan to spend down over the next 30 days.

How Rich Do You Feel?

How you feel about your money is a shifty thing. Feeling like you don’t have enough money sucks. The Life slice can get pretty emotional. The key is to be intentional with your spending. Want to know a trick that’s served us well over the years? Any time we adjust our Life budget, we ask ourselves “What would make us feel rich?”. Once upon a time, we had debt to pay off and low income and therefore, no room for alcohol in our budget. Eventually we busted our debt and earned more. We then got to sit down together and decide where to up our spending. Yeehaw! Going from nothing to something felt luxurious!

We also periodically trim back on spending that we no longer care about. At some point, we agreed that eating out didn’t really bring us joy. So we ditched planning to spend on that but planned a good sized food budget so that we could eat out once in a blue moon but make yummy meals at home together, which we loved.

Your spending habits and priorities will change over time. Your spending plan should be updated as well to put more money towards things that bring you joy and limit or remove spending that you no longer care about.