Why is saving money so important?  Why can’t we all just live paycheque to paycheque?

Its simple.  Because living paycheque to paycheque doesn’t give you the opportunity to dream.  When you live paycheque to paycheque you’re always worried about the future.  You worry so much about the future that you can’t think about what you want for yourself in the future.

Money doesn’t buy happiness but it does provide a way for you to fulfill your dreams, your goals, and your desires.  Cultivating your inner dreams are important because we don’t strive for achieving our goals and fulfilling our dreams, we may unintentionally go through the daily grind and wake up one day to realize we are depressed and unbalanced.  As humans we NEED to hope and dream.  Without dreams, our life may feel like it has no meaning.

I Want to Be ______ When I Grow Up

We all grew up dreaming- I dreamt I wanted to be an archaelogist to study dinosaurs and dig up fossil bones.  I also wanted to be a novelist (no, not a Harlequin romance novelist).

When we “grow up” we realize that these dreams could be achievable, but are they practical?  We lose touch of our dreams and desires.  We need to find meaning.

What gives me meaning now?  Traveling gives me meaning.  Traveling is my passion.  Experiencing new cultures, setting new goals for myself, and conquering difficult treks like the highest mountain in Africa is my passion.

Putting Savings into Action

I’m a big fan of saving a small amount of money to into a savings fund with a purpose.  These small monthly savings may seem insignificant month to month, but it adds up to fund my dream.  It gives me inspiration and hope that my dream can be achieved and it provides delayed gratification.  For example, it is my lifelong dream to climb the highest mountain in Africa and each month I set aside $100 to my Kilimanjaro fund in a high interest savings account.  The $100 has purpose and determination.  I am confident that I will enjoy this trip so much more because I have sacrificed the $100 a month (that could have been spent on material goods, lattes, or other daily indulgences) for this trip of a lifetime.

My other savings goal a few years back was to save enough for a down payment on a home.  I worked hard at it and sacrificed a lot, enough to come up with a 20% down payment (combined with my boyfriend’s down payment) on our current home.  It was a savings goal that we achieved.  Now that we’ve achieved this goal, we need to set our sight on other joint goals.

I once read in a book as a child (I think it was Obasan by Joy Kogawa but don’t quote me on that one)- that each decision in life represents a dot.  With time, these seemingly insignificant dots combine to form a picture that represents your life.  This quote often reinforces my thinking that we need to make good, conscious decisions in life or else it will pass you buy without you realizing it.  Most days I let life pass me by because I’m caught up in the daily grind of life.  Some days I let myself dream.  When I look at my savings account with money set aside for my hiking dream, I smile because I know I worked hard at making sure this dream is fully paid off before I started it.

Readers: Do you dream? What are your personal goals?  What gives you meaning?

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Instead of the usual food post, thought I’d post this for you for “food for thought” lol.  Sorry Sandy @ Yes I am Cheap I know you love my food posts!  I haven’t been out to eat very much so I don’t have anything new to share this month.  Sorry guys- no food porn today.

As many of you know, I had a huge Quicken Home and Business software usage FAIL in January (despite my attempts, I was unable to master it or intuitively understand it).  Don’t get me wrong, Quicken is great and there are so many people who swear by it.  I know Quicken is a powerful machine/beast but for a simple gal like me, I was looking for something that wasn’t so difficult to look at and worked on my Mac without me having to go to a windows interface.

(What can I say, I’m a total convert to the Mac)

One of my readers suggested I get YNAB.  What does it stand for?

You Need a Budget.

I was looking for something safer than Mint.com and et voila, the idea of YNAB was planted in my mind by a Y&T.ca reader.

It has apparently taken the personal finance world by storm unbeknownst to me… and I can see why.  It’s intuitive and it feels like “Quicken” but it is more aesthetically pleasing and user friendly.

For one, there are video instructions on how to get started.

Secondly, there are instructions that you can click on when you toggle it with your cursor.

I am a big fan of easy to read, to-the-point instructions.

Thirdly, they seem to truly care your budget because of their YNAB methodology

They have a YNAB philosophy composed of 4 principles or rules:

1. Give every dollar a job
2. Save for a rainy day (or other infrequent expenses like car insurance, property taxes, vacations etc.)
3. Roll with the punches (the software is smart enough to take off the money you go OVER your budget in January from February- so that you WILL feel guilty and won’t be tempted to think you’re starting fresh… thus making you more accountable)
4. Stop living paycheck to paycheck (they want you to spend THIS month what you earned LAST month)

Without further delay here is my PROs and CONs list for YNAB 3:

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I always hear about how cash flow is king so I decided to dedicate this post to analyze whether cash flow is indeed “king”.

What is Cash Flow?

When defining the fiscal strength of an individual, the most important financial aspect to consider is the cash flow.  Cash flow is the movement of money within any given account, of course, a positive cash flow is king.  Factors consistently replenish and deplete funds within that account, these include expenses like rent, debt payments etc. and positive factors, like income, rental income, dividend income etc.  This movement of funds is typically observed for a set period of time and then this is used to determine whether one has positive cash flow or not.  This figure is then represented in a statement of cash flow and can be used to determine the specific factors of an account that are performing well and those that require improvement or adjusting.  It sort of works like a budget, but not really.

Types of Cash Flow

There are three primary types of cash flow that are analyzed for the cash flow statement.  Each will apply to both businesses and individuals in different ways.  The first is operational cash flow.  Operational cash flow, as the name implies, results from the money generated by typical operations.  This means the production of a good or service for a company or the income generated from a job or side hustlin’ projects for individuals.

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I got an email the other day from a reader (I kid you not, I didn’t edit this email to make myself feel good– though by the glowing email, it almost sounds like I did! ).  I really really heart fan mail- ’nuff said.

I would like to start off by thanking you! Your blog is one of the best things that has graced my inbox EVER! Before you, I was drowning in all of the financial lingo, with no clear place to start on my ‘investment journey’.  I finally have a starting point for myself with the confidence to know I have the ability to navigate the world of investing.
Anyway, the reason I’m writing is because I have a question about short term goals.  Everything I read says you should be in for the long haul, which I will be.  But in the mean-time, I have a goal  with my partner in about one year.  So, here’s the run down. We have a townhouse in construction, which is payed for in full, however we want to save for upgrades in the mean time.  We have a high interest TFSA with ING, but I can’t help but feel that I should be doing more with my money.  Do you have any advice about short term goals? Are dividend paying stocks an option?  I am very new to this, so any advice you have to offer is really appreciated!

So this email begs the question.  What do you do for short term goals?  First we must decipher what short term goals are.

What are Short Term Goals?

To me, short term goals are any goals you want to save up for that are in the one to three year time horizon.  Our dreams are free, but to make them come true, 99.9% of the time, you’ll need some money to make that happen.  Some of my short term goals is to save enough money for school, save enough money for my upcoming Thailand trip early next year, and also fund my journey to climb the highest peak in Africa, Mt Kilimanjaro in two years time.  As you can see, I am addicted to travel and my goals are purely associated with travel most of the time.  I’m sure yours are different.  Everyone is an individual and we all have different dreams and goals.

Here are some other examples of short term goals:

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Part of blogging about your goals and resolutions means trying (key word, trying!) to keep accountable with them.

So in order to keep accountable, I thought I would share with you how I’m doing so far with my personal finance resolutions for the year 2011 so far.  As you know, I blogged about my personal finance goals for this year early in January, and also shared my personal goals.  I will share how I’m doing for both.

• Max out TFSA to $15000- In January, I’ll have $15,000 of TFSA space because I took out all of my TFSA’s for my down payment.  I plan to sell some of my non-registered stocks in order to put money back into my Tax Free Trading Account and top it up with savings.

40% to goal completion: I’m at about $6400 in my TFSA, so I have about $8600 more to go to max out my TFSA.  Initially I was thinking of selling my non-registered stocks because I hate keeping track of capital gains when I buy and sell, but I don’t want to interrupt my beautiful dividend paying stocks by selling them and having to pay capital gains.  I’ve been slowly selling my non-registered portfolio and moving it into my TFSA.  I also put in an $1000 from the tax return I got this year.

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