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You’ve heard of inflation, it’s the general rise in prices of goods and services over a period of time (according to Wikipedia).  Because of inflation, you get less bang for your dollar.  It’s like how on Austin Powers, Dr. Evil asked for a MIIIIILLLLLLIOOOON dollars for compensation, but a million dollars is nothing nowadays.  Good thing our salaries go up too, in accordance.

Or is it?

I can’t argue that having a larger salary is a bad thing (because of course, it is a good good thing).  However, if you get a raise, or if you start earning the big bucks (over $100K a year for example), you have to be careful that lifestyle inflation doesn’t catch up to you.

Lifestyle Inflation (according to moi) is when your lifestyle (your house, your car, your trips, your eating out expenses) catches up and maybe exceeds your salary in order to “keep up with the jones’ ” or to show the world that you are indeed a wealthy individual because of your job and your higher pay.

You may think that some doctors or lawyers must be well-to-do, and they very well may be, but at the same time, they might not be.  I was driving to work one day, and saw a lawyer in a fancy car with the license plate “LTG8TR”.  He probably was well to do, but he probably also had high expenses to pay.  He probably had a lot of debt, too.  Mortgage debt, car loans, you name it (if you think I’m being ridiculous by assuming he had a lot of debt, I often think of this when I see people driving fancy cars to make myself feel better- coping mechanism, you can call it).

If your paycheque upgrades, you should try your very best not to upgrade your expenses too.

I have been getting a small raise every year, but I still budget for it as if it were last year.  So the extra $100 every paycheque doesn’t really exist in my budgeting-eyes.  It’s best to pretend that you’re “now making X amount of money per year”.  Again, it comes down to what your values are- what you really want to spend your money on and what is superfluous.

As we move into our highest paying salary years (our 30′s and 40′s and 50′s), we do get instant lifestyle inflation, be it a home purchase, a baby (they are $$$!), saving for children’s post-secondary education and so on.  I think it’s important to get good spending habits now (our 20′s) to carry us forth into later years, when spending loads of money because you have money is easier to do.

Have you resisted the temptation of lifestyle inflation?  What have you done for yourself to ensure that you don’t spend more…now that you’re making more?

Welcome to the final Part of the Financial Cleanse (part III).  Guaranteed to detox your financial-bowels to a better and more money-savvy you!  (I’m kidding about the guarantee, but I did use these suggestions for a more money-savvy me!)

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In Part II of the Financial Cleanse, we’ll talk about Making it Automatic.

In the Automatic Millionaire (by now, you must think I’m in love with David Bach since I mention him non-stop) he talks about making it automatic.  You pay your cell phone bill, your rent, your utilities, and then you have some money left over.  You spend like usual, and at the end of the month, you have $25 to spare, so you put it away in savings.  The next month- same thing, you have $15 to spare, so you put it away in savings.

I used to roll like this and it didn’t work.

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Welcome to the Part Series of the Financial Cleanse.  Guaranteed to detox your financial-bowels to a better and more money-savvy you!  (I’m kidding about the guarantee, but I did use these suggestions for a more money-savvy me!)

Sometimes it can be really hard to cut back on spending.  Sometimes you may wonder where the heck the $100 you took out from the ATM went (no, it didn’t go missing, you spent it, remember??).  Sometimes you wonder why you don’t have enough money to spend on the things you want to spend it on.  There’s a way to fix this.  Here’s how:

To lose weight, one suggestion often used is to start off by writing down exactly what you’re eating.

Keeping a diary will help you realize the bad stuff you’re putting into your mouth, and allow you to reflect on when you made that decision and why, thus helping you stop eating that junk food.  Kind of like in that show The Last Ten Pounds, where the personal trainers dump a huge bag-full of crumbled muffins and pastries on your kitchen table to make you realize how many muffins and pastries you’re actually consuming.

The same strategy can be applied to purging your expenses.  Just try it for a month and see.

Write down EVERYTHING that you spend your money on. Then add these up at the end of the month.

Briefly go through each entry and see whether it was money well-spent or not.

If it wasn’t money well spent (for example, those daily lattes) then think about a way where you can cut down on that spending.  Sometimes, our lives go into auto-pilot mode, and you don’t really realize what you’re spending your money on.

I have a notebook that I recorded in since I was 17 of the various items and experiences that I spent money on.  Some months I am better at documenting my spending than others.  Nowadays you could just input your expenses into your iPhone or iTouch with a free budget calculator app, which makes it 100x easier to track your spending (though it can make it more difficult to find the history).  It’s actually quite amusing to glimpse back at what I was spending my money on way back when.

Readers, do you usually record what you spend your money on?  Do you find doing this helpful?

One of my favourite personal finance bloggers is Budgets are Sexy- he makes personal finance well, sexy and fun. He started a Million Dollar Club where you can pledge your mini-goals to reach the ultimate goal of a million dollars.  So I decided to join the Million Dollar Club.  Nothing like having your goals out in the public eye to make you stick to them, right?

Besides, that badge is really cool looking- so I wanted it on my sidebar. Kind of looks like the Fred Perry logo that they have on those $75 golf shirts, maybe Budgets are Sexy can start a new brand! The Million Dollar Club (catchy, huh?)

Because I’m 20-something and of the generation Y blood, I don’t want to be working until I’m 65. I want to have it all- enjoy life, save money, spend it on things that give value to me (e.g. TRAVEL!) and also as Rich Dad Poor Dad says: make my money work for me, not work for my money.

So without further adieu, here is my pledge in order to reach my goal of $1,000,000 net worth. Man, when that day comes, you better believe that I’ll be enjoying a good drink (maybe some Silver Patron?) to celebrate! (I must have TI’s You Can Have Whatever you Like in my head). In the meantime, I’ll be livin’ it up to Having Whatever I Like, Weird Al Yankovic style in order to work hard, spend less, and achieve my goal of achieving millionaire status.

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I know that as Canadians and Americans, we like to hang out at the mall.  We must, because otherwise there wouldn’t be so many people in them every time I venture in.  (I think… “what recession??” when I venture into the mall).  I used to work in a mall when I was working at a department store in high school and university.  I know how dangerous they can be- I think I was spending a lot of what I was making!!  Shopping on my breaks.  Taking advantage of the sales in the shops.  So I would be perusing the shops at the mall at least twice a week.

Nowadays, I go maybe… a few times a year?  I don’t go unless I absolutely need something (or when I need to Christmas present shop).  I really can’t window shop. I can’t (especially when there are end of season sales tempting me).

That’s why, when today, Mr. youngandthrifty wanted to get a haircut at the mall, and asked me to come with him, I thought “ughhh!! I will have to test my will power again!”   Initially, I thought I would do some more grocery shopping for an hour (but I did some earlier that day already and got everything I needed for the week.. basically I was lying to myself- giving myself an excuse to go to the mall) so I ended up checking out some of the clothing shops.

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Happy New Years- hope everyone had a good one.

I can’t believe it’s 2010 already.  When I was younger, I always thought we would be flying around Jetsons style already by 2010.  With a new year, comes new resolutions. New goals and hope for a new year.

I know, I know, new years resolutions are kind of lame.  No one REALLY keeps them anyways. 

But maybe financial resolutions are easier to keep.  Somehow for me, it’s easier to work on financial resolutions e.g. save 10% of your monthly income than to remember to go to the gym three times per week, or to floss every day (uh oh, was that too much information?)

I think I’ve come a long way since last year’s financial resolutions.  I told myself I would automatically move a certain amount of my monthly income to a savings account (the advice David Bach’s Automatic Millionaire talks about) and I got my butt together and did that. It was pretty easy too. Just put seperate it and forget about it. I wanted to buy a place last year too, but didn’t end up doing so (despite the all time lows of mortgage rates) because I wanted to save more for a downpayment.

For 2010, I have a few more financial resolutions:

• Continue to calculate my networth every month (knowledge is power!  I have asked for all the client access log-ins from my financial advisors- to their dismay- so am tracking my finances much more closely)
• Regain the money I lost in bad investments- I had entrusted  my hard earned cash to some risky investments when I didn’t know any better (venture mutual funds, flow through shares, Investors Group mutual funds) and want to regain it.  In total I think I am down about $10,000.  I hope to do this by being more active and aggressive in my equities.
• Max out my RRSP and TFSA Iam hoping to max out my RRSP I can utilize the $25,000 allowance for First Time Home Buyers
• Reach a Networth of $100,000- This should give me enough leeway for a downpayment and extra money to play with
• Buy my first home – Hopefully the mortgage rates won’t skyrocket next year and hopefully the prices of Vancouver homes will come down to realistic prices (check out MLS.ca to see which closet you can get for $350, 000).

 How about you?  What are your financial resolutions for next year?

A generalization of Generation Y (read: 20-somethings) is that we want things done fast, done now, right away, no time to wait….er…did I lose your attention already?

Generation Y are internet and techonology savvy (everyone at work is AMAZED at my typing speed. AMAZED. I honestly do not think I type that fast) so we don’t really have the time or energy to sit through flyers and circle what we want on sale. To find information that we need, we google. To spread information to friends, we facebook or twitter. So, to find the coupons and grocery store deals we need, what should we do?

I like to save money on groceries, and I like to use coupons (I’m not ashamed to use coupons, are you?) at the checkout.
There’s a Canadian website (based in Victoria, our good ol’ capital city of Beautiful British Columbia) called: Grocery Alerts Canada – Coupons and Deals that gives you the one-stop shop for flyers in Victoria, Vancouver, and the T-Dot (that’s Toronto, in Canadian-speak). It eliminates the need to scour the flyers for the grocery item that you need- or don’t need, and it has posts on hot coupons (I’m printing out that 75 cent coupon for Olympic Yogurt- that stuff is pricey, but delicious!) and deals. You can even subscribe to deals in your area and get it emailed to you, handy for you to print out.

Check out the latest coupons out to the right of this post ——->

Do you cut or print out coupons to save money?
(every little bit counts right?)

I used to be so ashamed when I was shopping with my mom at the grocery store and she whipped out her coupons. I’m not sure why I was (must’ve been my teenage angst)- maybe it’s true what they say that you turn into your parents when you get older….

I was checking this post by Studenomics that talked about why Twenty Somethings are not saving money and being of the same generation Y/ 20 something category, I got to thinking…

In the past, Canadians have traditionally saved about 10% of their gross income and stashed it away in their piggy banks. Currently, the savings rate is about 0% (or with a net negative percentage). In China, it’s 30%. For some reason, we are not saving money any more!

Really, why AREN’T we 20-somethings saving money? Why IS there a disparity between the savings of Generation X and Generation Y?

I personally have a few hypotheses myself.

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Christmas is fast approaching (it’s less than two weeks away- eek!).  In the past few years, gift cards have been a thoughtful and welcome addition to give and receive as Christmas presents.  In Canada, now gift cards “won’t go bad”.  The retailers were making big bucks on them because they had tiny fineprint that said they could deduct $3 every month or year as an “inactivity fee”.  Now they banned that and your $50 gift card will still be worth $50 five years down the road… unless ofcourse that company goes bankrupt, that is.  But I digress.

Everyone loves receiving gift cards.  But if you get a gift card to a place that you don’t even shop at e.g Golf Warehouse or whatever, you don’t want it to just look pretty in your wallet and let it go to waste.   If you want to save some money or not let your gift card go to waste, there are some new websites now that let you trade gift cards for full value, sell your gift card and get 85% of the money back, OR buy discounted gift cards.

Gift cards and christmas

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