Money, or more specifically the financial machinery

[metawidget]

I've wanted to write a little about how I handle financial matters, and how our household money situation works — I like reading about other people's ways of doing stuff on LJ, and thought I'd throw my thoughts into the mix.

We're a two-income household, but I have the full-time income and the interest in making the nuts and bolts of our finances make sense. I think I'm a little less thrifty than Elizabeth, but more inclined to think about taxes, interest, investments and all that systematic stuff. I think running a household with a thrifty person has made me a little less inclined to spend frivolously over time. It seems to work for us that I take care of the savings, investments, mortgage and car-related stuff, Elizabeth takes care of the heat and activities for Oscar, and whoever is doing the actual purchasing pays for groceries, odds and ends and stuff. We have accounts that are personal and ones that are joint, and money flows around them pretty easily with a little heads-up to the other person when it's needed for something. Things just sort of incrementally came together this way; accounts got set up, we put both our names on the mortgage, we have shared responsibilities and our taxes affect each other.

We're interdependent money- and time-wise. We don't have daycare for Oscar, so for the most part we swap off parenting duties while the other one goes and earns money (or heads off to other activities where a toddler might be problematic). Maybe this complementary-schedules thing results in more pizza deliveries, and it is definitely a big time investment, but I think it does turn out frugal on balance. We have had lots of help from friends and family taking a stretch of Oscar time so that we have couple time and Elizabeth has personal and practice time (Oscar otherwise invariably turns music practice into a duet).

Within the specific domain of money, I know a few things about myself. If I had just one pot of money for everything, I would wind up living from paycheck to paycheck. I also tend to like systems, taxonomies, complicated plans and optimizing things. Take these two things together, and you get my basic system for having money when it's needed: lots of little accounts. ING is great for that: free savings and chequing accounts, up to some reasonable-ish limit. So, over time, I established a taxes account (for property/school taxes and amounts due on provincial income tax), a charity bucket (so I can earn interest while deciding, and give in amounts that won't be eaten away too badly by administration), a joint account for moving money back and forth with Elizabeth, a RESP accumulator so I can set aside money when I have it but contribute when the grants will work out best, and a miscellaneous savings account. My chequing account gets run down into the double digits, and often below ATM-withdrawal territory, most pay periods, but we're never really broke. Seeing that small number makes me a bit thriftier, though.

I'm not afraid to use my credit card, especially when I get little benefits, like free insurance on rental cars, or points that eventually turn into a mortgage voucher. Also, RBC gives me a discount on my chequing account with them in part due to my having a credit card with them. I do get it paid off every statement, come hell or high water, though. Back when I was a student with a roommate who had poor rent-paying skills, I floated a couple of months' rent on credit card cheques to placate the landlord. Paying more for credit card interest than for phone service sucks (and it takes a while to dig out of that as a student), and I have been pretty good at avoiding carrying a balance since then.

I've had registered investments since a little after I got my full-time job. Before then, I'd dabbled in short-term GICs but mostly just tried to stay with my financial head above water. I started off my RRSP with mutual funds due to the modest amount I had kicking around, and at some point I would like to get away from my bank's choices and pick a few stocks and bonds to buy and hold, but for now (and for the next few thousand dollars of savings) I think the drag of trading and account fees is higher than mutual fund management fees (and I doubt I'm brilliant enough to be confident that I will beat the pros at investing by the difference). Once it does get close to even, though, it will be nice to try and choose investments that are less evil than the dregs of your typical balanced fund.

As for what priorities we have as a household, we're pretty keen to pay down our mortgage fast, but also eat well and get out of the house. I'd say those three categories cover a good chunk of our spending — house (including the somewhat scary oil heating bill in the winter), food (at home and out) and travel (mostly assorted rental car) are the big ongoing expenses. When we pay off the mortgage, I think we'll have a bit more disposable income (and probably a few more expenses as the kids grow older and need/want more things that cost money), but a bunch of what used to be the monthly payment will go into an account for improving the house: insulation, going geothermal on the heating and cooling, and maybe a turret (or other more realistic extension).

Comments

[asimplelife.livejournal.com]

FUN! I love reading peoples' money things!

Are you still contributing to an RRSP? As someone who has a pension that may not be a good move. You may want to consider moving to a TFSA or even better: a spousal RRSP (even the best: both!). That way when you retire with a pension, E retires with an RRSP. The benefit of this is that you get the tax savings now but you don't get dinged down the road when your pension + RRSP flips you into a high tax bracket.