Metro's Money Makeover: Deciding Between Saving Money or Giving to Charity
Two young women want to change their lives by transforming their finances and creating a plan to achieve their top goals. For 27-year-old Yolanda, that is eventual home ownership and for 24-year-old Annick, that’s getting out of debt.Metro’s finance guru Lesley-Anne Scorgie is almost out of time to help the women tackle their largest financial burdens and teach them to allocate resources.Join the conversation #MetroMoneyMakeover @LesleyScorgie.
The Situation: Yolanda’s frugality is paying off. She’s up to $600 per month in savings towards a down payment and once she’s moved back in with her mom, she’ll be able to save an additional $200 per month.To smooth out Yolanda’s monthly cash flow, we re-scheduled her regular contributions into her TFSA, RRSP and savings account (a.k.a. her buffer account) from monthly to bi-weekly. That aligns with her bi-weekly paycheques and now she won’t feel squeezed on the first of every month.I’ve bit my tongue for over two months now, but finally asked Yolanda whether she believes she can afford to continue giving away $350 per month. Since she was young, her motto has been to give 10 per cent, but because she’s got a huge generous heart, one child-sponsorship turned into two, which then turned into tithing more to her church and, voila, 10 per cent turned into 15.After thoughtful consideration, Yolanda has decided to pare back her donations to $260 per month starting in April. She will still get the deep pleasure of knowing she’s helping others, but not at the expense of pushing out her financial goals another few years.The Lesson: Besides getting ripped off, there are very few things that irritate me more than when I hear “I can’t give because I don’t have any money.” Giving happens in a variety of ways — volunteering and money. During various stages of your life you’ll have more money than time, or vice versa.Giving is a critical component of any rock-solid financial plan because there is a return on investment when you give — investor types call this ROI. Not only does it help strengthen the fabric of our community (and reduce strain on important social systems), it leads to job and leadership opportunities, increased sales and expanded networks.Even when mega-wealthy people were poor and just starting out, most made giving a priority, just like Yolanda.When polled, rich people often attributed their financial success to spending within their means, saving for the future and giving back.Yolanda doesn’t make gobs of money. But with her $41,000 annual income per year, she’s chosen to follow in the footsteps of rich people; making giving a “need” rather than a “want.”The progress: Yolanda is kicking financial butt! Since first meeting her in December 2015, she’s increased her net worth by $2,450!
| Yolanda’s Net Worth | |||
| Dec-15 | Mar-16 | ||
| Assets | |||
| TFSA | $400 | $800 | |
| RRSP | $600 | $1,100 | |
| Savings | $0 | $150 | |
| Pension | $3,300 | $4,700 | |
| Total Assets | $4,300 | $6,750 | |
| Liabilities | |||
| VISA | $0 | $0 | |
| Master card | $0 | $0 | |
| Total Liabilities | $0 | $0 | |
| Net Worth | $4,300 | $6,750 | |