This is where your finance takes place

Everybody knows that, if you want to save money, you have to pay yourself first. However, this simple technique seems to be much harder to apply to your personal situation than telling people to do so. In fact, by contracting a loan, you have to commit yourself to make this payment every month. You have no other choice but to meet your financial obligation as your bank will quickly remind you if you ever forget. By having a loan, you will also avoid to skip a monthly saving deposit because of so and so. You will have to put money aside no matter what.

Yeah, but you are paying interest, that’s not really frugal!

It is true that you are paying interest and that this money is being wasted away. However, I did not tell you what you should do with the amount of the loan. If you do not need money, why would you get a loan for? In order to compensate for the interest paid, you are better off investing your money into an asset. If you are well aware that you have free consistent cash flow. You can easily apply for a loan and use this money to grow an assets. I am thinking of a loan to contribute to your RRSP (remember, time is flying!), an investment loan or a loan to buy a piece of property (or land). You don’t need to be risky with your new assets. The goal is not to make you take unnecessary risks, especially if you are risk averse. However, you can easily buy a piece of land with a personal loan. Chances are that your land will grow in value over the term of the loan and will greatly compensate for the interest charges.

So you are talking about leveraging, don’t you?

It is a leveraging technique in the sense that you are using other people’s money to buy an asset. However, if you are considering this definition of leveraging, do not be surprised to find out that you used leveraging strategies for to pay off your tuition fees, your property and possibly your car. In fact, your life is full of leveraging. Any leverage technique is good for an individual as long has he benefits from a consistent cash flow. The loan is used in a perspective of obligation in this case. There is no way you will postpone your savings project if you have financial obligations linked to a bank at the same time.

This technique may found strange at the beginning but it makes sense when you try it. A few years ago, my girlfriend and I didn’t have much debt, no children and no mortgage. Therefore, we had a lot of money to waste, or to invest! We took a personal loan and bought a land. It was forcing us to put $675 a month aside to pay back this loan. A year after, we decided to buy a house. We sold the land with profit and recuperate our savings. In fact, considering the amount invested (the monthly payment including interest over a year), we made 43% profit on the sale of the land. During that year, we increased our net worth, built a strong credit history and created sufficient cash down so we could buy the house we wanted. We did all that from a personal loan, not bad huh?

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#1 Plan your gifts in advance

By planning your gifts list in advance, you will be in a better position to establish a realistic budget and you will not be caught off guards on December 23rd, buying anything you see at any price just to make sure you find something for everybody. While planning in advance, you have also great chances to be able to get your gifts with unexpected rebates. Most goods go on sale either on November to warm up the consumers for Christmas or in January in order to compensate for the after Christmas drop.

#2 Initiate a gift exchange system with your family and friends

A few years ago, we instigate the gift exchange process with my in-laws as nobody had much money for gift on that specific year. So instead of buying ten gifts and be ruined at the end of the month, everybody had picked-up a name from a hat and had one gift to buy. You will not only save money, but you will also have more time to buy your gift. Therefore, you can be more creative and find the perfect gift for the person you have chosen.

#3 Pictures are always an appreciated gift

That is a trick when you do not know what to buy to grandparents, parents, uncles and aunts. Have you ever noticed that they always mention they do not see you enough? So get with you family into a photo session for about $40 and then by nice picture frame. You will not spend more than $10 per person and everybody will be so happy to receive nice pictures of you and your family. The only bad thing about it is that you are not likely repeat the same process the next year

#4 Get together for a bigger gift

I always have a hard time finding something for my father. This guy just buys whatever he wants whenever he wants! After several years, it became more and more complicated to find something he would like without breaking my piggy bank. I now combine my effort with my mother and other relatives to buy him a bigger gift. It will individually cost less to everybody as we pool together and he will receive something he was looking for. It is definitely a great trick for those who has everything.

#5 Make homemade basket

I got this idea from a colleague of mine. As both him and his spouse have a big family, they decided to make their own basket. The whole family get in the kitchen and prepare homemade chocolate, jam, candies and put this together in a beautiful basket. The children can add a little drawing and he even got the idea of making his own wine and give a bottle per family. We do not know yet if the wine is drinkable but if it is, it will be a great gift. He just has to be the dedicated test drinker for the first bottle

I did not want to make an exhausting list as I am sure that you have some trick of yours. Feel free to leave them in the comment section!

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When we first had William, our whole life went upside down and my wallet followed the lead. The arrival of this little angel in our life brought up many financial concerns in regards to his needs. You may read a lot about having a child, there are still things you discover along the way. When we had our second child, Amy, I was expecting to have my baby expenses explode for the second time. It now has been two month and I barely notice a difference in our budget. I tried to find out why.

You learn from your previous mistakes

You will absolutely remember this stupid little gadget you bought for the first one and that did not work at all for him. You remember which kind of diapers to buy at what age and you can differentiate a good brand from a bad one. Therefore, you will not waste your money on all those gimmicks. Unfortunately, the newborns have become a highly profitable market for companies. With experience, you are able to make good choices.

You receive bigger allocation to compensate

Depending in which country you live in, there are many government programs that grant money to parents for their children. Most of my allocations doubled when Amy was born. This was definitely a great help to finance the coming of my sweetie pie! At least for once, I know where my taxes are going; right back into my pockets.

It might become more expensive in the future

Unfortunately, the financial future is not so bright. As they become older, you will not be able to use the same clothes, toys and furniture for the two of your children. This is where a saving plan would come handy. In addition to that, you will have to think further and start contributing to an education plan so you can provide your children with a decent amount of money to finance their way to the next Google!

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