It’s that time of year again when the retail stores are lusting after your hard earned money and you almost need a two-wheel dolly to lug all the weekly flyers into the house. A lot of people dread shopping now and will do anything to avoid the crowds.
I have to admit that, personally, I like going to the mall. I like seeing the displays and Christmas decorations and I like to browse and actually see the items I plan to purchase. My sister-in-law usually has all her gifts bought and wrapped by the end of July, but I confess I’m one of those people that wait until the last week of December to do my Christmas shopping.
Every year I plan on getting a head start, but every year I always think I have plenty of time and then the month sneaks up on me and I have about one day to do all my gift shopping. This is usually the coldest or stormiest day of the year, I have to park at least 2 kilometres from the mall, and all the stores are filled with crabby customers, whiny children and overwhelmed sales clerks – but I love it!
Christmas Shopping Online
A lot of people like to avoid this scenario and do their Christmas shopping online from the comfort of their own home or office (on your own time, please) anytime, day or night. They can take all the time need to think, compare, calculate – and have a relaxing drink at the same time. This is not usually my thing, but there would be certain instances when it would appeal to me.
If I had to send a gift to someone in another city I would consider shopping online for the free (or low) shipping service some sites offer. They can deliver within a couple of days. Canada Post is outrageously expensive for parcel delivery, doesn’t guarantee a delivery date, and standing in a mile-long lineup in my heavy winter coat to get to the counter is not my idea of a good time.
Related: Save Money Shopping Online With Great Canadian Rebates
If I knew the exact item I wanted to purchase I would take advantage of comparison-shopping search engines such as NexTag.com or Bing.com. These sites will give you a list of places the item is available along with prices. You then can link directly to the online store and make your purchase. Bing.com also has a cashback program that allows you to get discounts on products you’re purchasing. This would save me from running all over the city when my time is at a premium.
Always remember to give your personal information only to secure sites. Set a limit and stay within your budget – it’s easier to overspend when you’re just clicking a button. Be patient – some days servers will be over taxed and there will be glitches. Expect that. And, check your credit card periodically (you can do this online) to check the balance and make sure there are no unauthorized charges. Happy shopping!
Life insurance is a plan where you pay money to an insurance company while you are living, and the insurance company pays your chosen beneficiary upon your death. The longer you live, the more profit the insurance company makes. Life insurance is a must for anyone with family responsibilities and little personal wealth.
Understanding Life Insurance
Typically this type of insurance is misunderstood by the general public. The industry has a perception of over-selling gimmicky products that play on your emotions, leave you underprotected, and offer little in the way of real value.
Here are a few terms that you need to learn when understanding life insurance:
- Beneficiary – The person who receives the death benefit or face value of the policy
- Death Benefit – The dollar amount that will be paid to the beneficiary if the insured dies
- Group Insurance – A plan which a number of employees or associates and their dependents are insured under a single policy, usually with lower premiums than an individual policy
- Policy Term – The period of time in which the insurance is in force. The term can range from one year to an entire lifetime
- Premium – The dollar amount you pay to the insurance company. Premiums can be paid annually, or in monthly installments
- Rate – The cost of a unit of insurance. For example a rate of $30 per $1,000 unit means that $300 would buy you $10,000 of life insurance
- Universal Life – Term insurance bundled with an investment plan. The premiums are variable, with the amount in excess of the insurance premiums going into the investment plan
Life insurance is a trillion dollar industry and with all of the marketing and sales out there targeting your money and playing on your emotions, it is important to arm yourself with some knowledge about the terminology as well as the products that are available to you so that you can choose what option (if any) is best suited for your needs.
Here are a few tips to help you determine how much life insurance you may require:
- If you are single with no dependents, don’t buy life insurance – Life insurance should only be purchased to prevent a financial hardship that would occur if the insured died. If you are single, invest your money for retirement. Who are you going to leave the insurance proceeds to, your dog?
- Never buy life insurance on children – Here’s where the emotional games come into play. Although your children are an emotional asset, they certainly are not a financial asset. Unless your child is the next Miley Cyrus, your money should be placed in an RESP or savings account for them.
- Insure the income earning spouse – If your spouse is the sole bread-winner in the family, they are a financial asset and purchasing term insurance for them makes sense. If you have no children and your spouse stays at home or works part-time, even cheap term life insurance is unnecessary.
- For two-income families, live on one salary instead of buying life insurance – For the double-income-no-kids couples out there, you need very little life insurance, if any. A good career represents far more substantial financial security than a life insurance policy.
- Buy life insurance on a spouse at home if you have dependent children – Your stay-at-home spouse can be a full time caregiver, chauffeur, teacher, and cook. While more difficult to quantify, this still has tremendous monetary value. Inexpensive term life insurance will provide the financial protection you would need if your family were to become a one-parent household.
- As you get older, replace life insurance with other income sources – Your need for life insurance will decrease over time as your dependents grow older and your net worth increases. And the greater your passive income streams are, the less life insurance you will need. Income from dividend paying stocks are a perfect example of how to transition from buying life insurance to becoming self-insured.
Next week we will look at insurance products and some do’s and don’ts when purchasing your life insurance policy.
There was once an experiment done with young children offering them one cookie now, or two cookies later (perhaps after a nap or bath). In the majority of cases the youngster accepted the one cookie immediately thereby proving that one cookie in the hand is worth a lot more to them than two cookies in the distant bush.
Of course, this is the major premise of credit cards and other buy now-pay later plans that can get a lot of people into financial trouble. But there are other ways that instant gratification grabs hold.
For example, in my many banking years I sold hundreds of RRSP loans. The premise was that once the tax refund was received, the loan was paid off. Or, alternately, if no loan was required, the refund would be applied as a lump sum payment on the mortgage. We all know this theory.
However, I saw very few people (hardly anyone really) who actually did this. It seems that as soon as the tax refund was in hand there were a lot of other, more desirable, ways it could be spent. After all, the monthly loan payment is affordable, and you hardly see the decrease in the mortgage balance.
A common budgeting practice is to annualize the cost of your small indulgences and vices. You can see that your daily specialty coffee comes to $1200 and your weekly carton of cigarettes cost you $4000, etc which could be the start of (or added to) an investment portfolio or put toward another goal. But it’s really difficult to see the big picture – it’s so far away and one drink (this time only) won’t make much of a difference.
I have a friend, let’s call her Gladys, who is over 65 and whose only income is her pension and a small salary from working ten hours a week as a sales clerk. Since retirement, Gladys, with a seniors group, has travelled all over the world.
She is currently on a six-week tour of China and surrounding countries and in the coming years she plans to take an African safari and travel to the South Pacific. She has admitted that she has made a lot of daily sacrifices in order to afford her trips, but you should see her face glow when she talks about where she has been. This is a dream of a lifetime.
Related: Why Do We Save?
This story shows that you have to have a very compelling goal to work towards that’s always in the back of your mind so that it’s easier to walk away from that cookie when it’s offered. Otherwise, you’ll be constantly wondering where your money went and complaining that you can never afford realized your future dreams.