10 ways to master your money in 2019

10 ways to master your money in 2019

Regardless if we’re talking personal finances or not, I believe true success usually comes from taking meaningful action based on any lessons learned – and trying again.

Life-long lessons don’t always stick unless you make a few missteps along the way.

When it comes to our personal finances, we’d like to think we’ve learned from what’s working well and what hasn’t over the years.  Here are some examples:

Here are some dumbass financial moves.  Don’t make these ones either 🙂

Here are six big retirement mistakes to avoid.

These are some of my lessons learned – so you don’t have to make the same mistakes I have.

“Success consists of going from failure to failure without loss of enthusiasm.” – Winston Churchill.

MoneySense recently offered a few ways to master your money.

With a new year around the corner, leveraging that article, here are my 10 ways to master your money in 2019.

  1. Make a plan

What should your financial plan cover?  Lots!

Financial Goals Update

Financial plans go far beyond what funds or stocks or bonds to own where – although that’s important stuff too.

Here are some ideas on what your financial plan should cover.

As we march into 2019, here are our key focus areas for the coming years:

  • Kill debt to become debt free. In doing so it will provide some significant financial flexibility – income earned will be ours to enjoy.
  • Continue to generate (retirement) income security. We continue to save and invest for our financial future by striving to maximize contributions to our TFSAs and RRSPs every year.  We do so even though we have some small workplace pensions in our future.  Our TFSAs should be maxed out of contribution room again in early January 2019.  My RRSP is almost full of contribution room, it will be maxed out by March 2019.  We believe my wife’s RRSP contribution room could be maxed out by early 2020.
  • Worry less about money. With a modest emergency fund in place – we have money available to us for a few months if we need it.
  • Have fun.We set aside money every year for international travel and long weekend experiences.  I suspect if our debt plans keep coming together, there will be more travel together in 2019 and 2020.

While no financial plan is perfect, at least having a plan will guide your decision making.

  1. Track your expenses

Blah, blah, blah right?

Wrong.

Just like my workplace wonders from time-to-time, why some work takes so long; why some work can be so expensive – you can’t manage what you don’t measure folks.  It’s that simple.

When it comes to personal finances, most of us spend more than we think – a lot more!

Given that, try tracking your expenses in 2019.

Not sure how?  Email me and I can provide some help or maybe I can write a post about your situation and give you some pointers in the process.  Ultimately, tracking your expenses doesn’t have to be about saving either.

It can also be about spending money on things and experiences you really value.

Track your spending in 2019. See if it aligns with your values.

  1. Pay yourself first

Arguably the best and most popularized term in personal finance for long-term financial success – because it works.

Heard of the 50/30/20 rule?

Popularized by Harvard bankruptcy expert Elizabeth Warren, she suggests this approach will provide an appropriate level of balance with your money:

  • 50% needs include rent/mortgage, groceries, utilities, insurance and other essentials.
  • 30% wants may include travel, dinner out, events, festivals, other.
  • 20% savings and debt repayments also include emergency funds and retirement savings.

While a decent model we don’t subscribe to this advice ourselves.

To be honest, this is how we stash our cash since we believe this is a better way to budget.

Here are five ways you can try to stash more of your own cash in 2019.

  1. Earn more money in 2019

Yes, they say ‘mo money comes with potentially ‘mo problems but let’s be honest – it also provides a new world of opportunities.

Businesses excel because they make more money over time.  In that light, you should consider your household like a business too.

If you’re serious about financial independence sooner than most, you need to increase your income.  Otherwise, you’ll need to save more, work longer, or both.

How to increase your income in 2019?

  • Start a small side-business – earn income from your hobby or passion.
  • Work hard at work – get a promotion.
  • Invest in you – further your formal education in a skill or service that’s in demand.
  • Sell crap stuff you no longer need.
  • Rent out your space, if you can.
  • Invest in income-producing stocks or securities.
  • The list goes on.
  1. Mind the debt

Debt, just like evil, is also a four-letter word.  Watch out for it.

Here’s my view on debt – it remains very relevant today.

While we still have debt, we’re working to slay the beast every week.  You could argue there is good debt and bad debt but at the end of the day, owing other people money first long-term is, for the majority of us, a wealth destroyer (not a wealth builder).

  • Got a credit card? Pay it off every month.
  • Got a mortgage? Make lump sum payments where you can.
  • Got a car loan? Bad idea (because you are borrowing money on a depreciating asset…) so kill it off too.

As long as you are doing these things above, one could argue that paying off your mortgage as fast as possible is not essential to financial success.  There can be a case made that in today’s lower interest-rate environment, you’re better off investing inside your registered accounts as much as possible while meeting your debt obligations.

Generally speaking, I think you should be debt-free in retirement but that’s a decision you need to make.

Once you figure out what you’re saving for, and how debt repayments are a part of that plan, the better off you’ll be.

  1. Watch the tax

We must all pay our fair share of taxes – such is life – but don’t pay any more than you should!

Here are some pro tips on tax management:

  • Take advantage of your RRSP account. Taxes deferred today and tax-deferred growth inside the account going forward.  Win-win!
  • Learn about available tax credits and deductions. Yes, our tax code is unnecessarily complex but knowing what you might be able to claim/deduct can save you a bundle.  Here are tax tips you can find on my site:

Tax tips for 2018 tax year.

Here’s a primer how to minimize taxes as you enter semi-retirement or full-on retirement.

Tax

  1. Avoid too much house

Buy a house you can afford long-term.  Sounds simple.  Hard in practice.

Nobody can predict the financial future with any accuracy.  Same goes for the real estate market.

Sure, looking at Toronto or Vancouver over the last decade, one could argue it’s like winning the lottery.  Folks owning homes in those cities have seen HUGE price appreciation gains.  Good on them!   Those gains might not last forever.  Compare those urban home prices with some folks that live down East.  Not only have some of their prices not appreciated very much, some house prices are regressing.

My take?

Buy a house first and foremost because it’s a great place to live and care for your family.

Here’s an article about why your house shouldn’t be your retirement nest egg.

  1. Invest long term

Burton Malkiel, the famous author of A Random Walk Down Wall Street, once said trying to pick winning (mutual) funds is like running an obstacle course through hell’s kitchen.

To make matters worse for flame-fearing investors, the stock market always appears volatile in the short-term.  When to buy?  When to sell?  When to stay in cash or gold or bonds?

Then you’ve got the former U.S. Chair of the Federal Reserve saying this dribble:  “run for cover”.

Dribble

I mean really?

This is why you need to take the long road if you want to grow your nest egg.

Here are some simple tips to avoid losing your shirt when the stock market sky seems to be falling:

  • Learn to celebrate falling stock prices. It means stocks will be on sale!
  • Avoid letting your emotions get the best of you. Make an investment plan and stick with it.
  • Don’t get swayed by the talking heads on TV, or Alan Greenspan or anyone else. Be mindful they need to put food on the table like you and me.
  • Consider passively managed, low-cost Exchange Traded Funds (ETFs) as the best way to invest. This way, you can achieve market-like returns and avoid major market under performance over time.
  • Consider dividend investing if the market noise is too much for you. This way, you can focus on the income your portfolio generates to assist your queasy stomach.

You can find out more details about how I invest in ETFs here.

You can find out my approach to dividend investing here.

Further reading?

These are three investing enemies you must absolutely avoid.

  1. Retire on your terms

I’m not a huge fan of the FIRE (Financially Independent, Retire Early) crowd.

Sure, I want to work on my terms sooner than later, but I can’t see myself becoming nor staying “retired” for long.  I far prefer my own term:  FIWOOT (Financially Independent, Work On Own Terms).

This is how we currently measure up – striving to hit these 10 goals in 10 years for semi-retirement.

How will your retirement measure up?  What’s your game plan?

For help check out these brilliant essays by readers and fans of this site to learn about what your retirement might look like – and just as importantly – how to get there.

Some additional tips and what I’m starting to think about:

Retirement is not a number.  What works for some at age 55 might not work for you at age 75.

10. Pay it forward

Exactly what it means.

Just like the story of a social studies teacher that asks his class to make things better for all, setting in motion of wave of goodness by one particular student to pay it forward, you too can help others.

You don’t need to run a blog.  You don’t need to write a book.  You don’t need to be an expert.  In fact, it’s better if you’re not.

Some boring money advice actually never goes out our style.

Learn the basics, practice them often, and you’re well on your way to help others do the same.

As you learn about what works, and what doesn’t for you, pay it forward.  Share what you know.  Be honest in what you don’t know.  Be open to new perspectives.  Be respectful in sharing your opinions.

Got kids?  Teach them about money including your mistakes.

Got aging parents?  Remind them life isn’t about material goods for your family – it’s about time and experiences.

We all have limited time and resources on this earth.  By helping others, we can make the most of it.

Summary

These 10 tips are not the only ways to master your money in 2019 but they’re a damn good start.

I hope your holiday plans are coming together fans – enjoy.

Mark

Mark Seed is the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I've grown our portfolio to over $500,000 - but there's more work to do! Our next big goal is to own a $1 million investment portfolio for an early retirement. Subscribe and join the journey!

14 Responses to "10 ways to master your money in 2019"

    1. I watched and I think his comments here taken out of context to be honest. But…that said, the idea you should “run for cover” when we know thinking and acting long-term is very important with investing is not helping to change the channel on the financial rhetoric.

      Thoughts?

      Reply
        1. I would agree. It was certainly clickbait for me. I guess I don’t like that garbage very much. How is that helping the average investor? We know the answer – but it’s more of a median cash grab/readership angle and I get that too.

          Reply
  1. Those are all great ways to help get your money under control. I consider myself fortunate that I have no debt and some savings and investments. Unfortunately I’ve never had a good paying job, I’ve never hit $20/hour, and I live in the Vancouver area so that 50/30/20 rule is something I can’t achieve. The reality is rent, groceries, insurance, gas, basic daily living is more like 80%. And for some people in this area it’s higher than that. I put aside 10% for savings. And that other 10% gets split between a travel fund and any other stuff that comes up that I might not have expected like dentist or vet bills. I track my spending and live really frugally, my eating out budget is $20/month and usually I don’t go over, sometimes I don’t even spend that. So far this month I went out with a group for dinner, ordered Greek salad, which wasn’t all that good, but the garlic toast that came with is was nice, and it came to just over $13.23 Last month I spent $11.29 eating out, and I don’t remember where! The good news is today at work I won a $100 gift card for the Keg! The bad news is I’m a vegetarian so there’s not much I can eat there but this will be a huge treat for me to eat someplace that I can’t consider on my budget.

    Reply
    1. No doubt with rent, groceries, insurance, gas, basic daily living…is very expensive in Van City. Cheryl, it sounds like you’re doing many things well to meet your financial goals. Well done.

      Reply
  2. I’m good at tracking my expense and I always have a budget plan ready to follow, that helps me not to have credit card debts. I got a raise for 2019 which I will totally direct it to kill my other debts of 65K ( 8K for car loan & 57K Mortgage ) hopefully, they will be gone forever by 2020. I did a few stupid crazy mistakes back in 2012 & 2014 where I had no plan nor a budget and I paid for those mistakes dearly for years. I’m wiser today and looking forward to becoming mortgage-free, debts free and hopefully start paying myself by investing long-term as you mentioned.
    I was a slave for debts for years, you’re absolutely right when you say debts just like the evil. I paid more than 20K of interest towards credit cards debts & line of credit (Overseas vacation-New car ) both not very well planned obviously.
    I’m grateful to what I have and we continue to learn from our mistakes until the end. I’m looking forward to living car & mortgage free for many many in the future and direct my income towards building me a comfortable retirement nest. Thank you Mark, you have been a great inspiration for me. Happy Holidays with your loved ones!.

    Reply
    1. Well done on the raise. I hope I get one in 2019 but it might not occur b/c I’m being a bit of a $hit disturber at work with some folks – pushing various project teams to deliver. Ah well, someone has to do the dirty work.

      I’ve made TONS of mistakes with money. Looking back, could have easily been semi-retired now. But you know what, life is about lessons and I honestly feel most folks don’t grow or learn unless they make a few and be open about them. Growing is a part of life. Sounds like you are doing that.

      Best wishes for 2019. Thanks for being a fan.

      Reply
  3. Great post Mark. Lots to chew on…you’ve put a lot of work in this and should be part of the Financial courses offered in classrooms…if it ever happens! All the best in the New Year!

    Reply
    1. Thanks Paul! I doubt that financial literacy will ever become mainstream in the schools. Too much drama over who should teach it, it is unbiased, etc. Gotta take matters into our own DIY hands and not rely on government to solve our problems – just me.

      Reply
  4. Mark, another great post. You covered a lot of ground on this one.

    There wasn’t valuable resources like this around when I was learning much of this stuff. I agree with you, we are all responsible to ourselves for our financial journey and future. Many people need to be a lot more engaged.

    I noted that killing debt was listed first on your 2019 key focus!

    Reply
    1. Yes, is it…since once our TFSAs and RRSPs are full – might as well kill debt for the guaranteed rate of return. TFSAs will be maxed in 2 weeks! My RRSP is almost full, will be by March 2019. Just my wife’s is outstanding. Her contribution room was >$50K 5-years ago. Now, closer to $20K and will be ideally $15K as of March 2019.

      Onwards and upwards.

      Reply
  5. Great article Mark.
    Just a comment on financial literacy in classrooms. The curriculum already exists in many provinces at the High school level. There is some work being done in Alberta to bring it into lower grades but who knows when it will actually be implemented. I actually taught some at grade nine level as an option. DIY is so much easier now and there is tons of great literature out there. One of the keys is becoming a critical thinker, separating the solid concepts from the sales tactics and developing your own strategies, especially as personal finances keeps evolving.

    Reply
    1. Wow, great stuff re: I actually taught some at grade nine level as an option.

      I guess I was commenting more about not having a national curriculum but if that exists – that is awesome. I never had such an introduction myself.

      You’re right about DIY – becoming easier all the time.

      Your skill point is a big one. If one does not have critical thinking or reasoning skills – all the financial books and blogs in the world will never help them.

      Reply

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