1. How to Earn, Manage, and Use Your Money Wisely
Managing Money
How to Earn, Manage, and Use Your Money Wisely

2. Making Money
When considering decisions related to finances, most people emphasize how they will use their funds, yet few consider the intricacies of obtaining these needed financial resources.
While most employees are entitled to biweekly pay cheques for their work, there are a number of hidden costs associated with working:

3. Personal Costs transportation
clothing (eg., uniforms, special attire, etc.)
protective equipment (eg., helmets, safety glasses, etc.)
food (eg., lunches, snacks, etc.)
childcare

4. Employer Costs
Benefits cost your employer between 33 and 50 percent of your pay. This may include:
paid vacation days
paid sick days
health, dental, and eye care insurance
life insurance
disability insurance
pension plan
Registered Retirement Savings Plan (RRSP)
parental leave
stock purchase plan
employee assistance plans
employee fitness programs
employee discounts

5. Reading a Pay Stub
Understanding how much money you actually make is an important step in learning how to use your money wisely.
Diligently reviewing your pay stub will ensure that you are getting all that you are entitled to, as well as correct any minor mistakes before they become major issues.

6. Pay Period: the period of time to which the pay cheque applies.
Reading a Pay Stub
Pay Period: the period of time to which the pay cheque applies.

7. Reading a Pay Stub
Net Pay: the amount of money you will actually receive during this pay period.

8. Reading a Pay Stub
Gross Earnings: refers to the total income earned prior to the application of any tax deductions or adjustments.

9. Current: what you earned during this pay period.
Reading a Pay Stub
Current: what you earned during this pay period.

10. YTD: “year to date”; what you’ve earned this year as of this date.
Reading a Pay Stub
YTD: “year to date”; what you’ve earned this year as of this date.

11. Regular: total regular hours worked.
Reading a Pay Stub
Regular: total regular hours worked.

12. Overtime: total overtime hours worked.
Reading a Pay Stub
Overtime: total overtime hours worked.

13. Reading a Pay Stub
Deductions: standard deductions that apply to all employees.
EI: Employment Insurance
CPP: Canadian Pension Plan

14. RRSP: Registered Retirement Savings Plan
Reading a Pay Stub
Other Deductions: deductions that are specific to the conditions of your place of employment.
RRSP: Registered Retirement Savings Plan

15. The Art of Budgeting
Most people could not tell you how their money is spent; all they know is that all too often, their money is gone almost as soon as they earn it.
Learning how to manage your money effectively includes learning the art of budgeting - setting goals and deciding in advance how much of your income you will commit to necessities and savings, and how much you can spend on whatever you want.
Budgeting does not mean you are a “penny pincher” and have no fun. By tracking your expenses, you might be surprised to discover you are spending $10 a day on lunch, which equates to $ a year. By creating a budget, you may decide to “brown bag it” instead, and save that money for a vacation. As such, budgeting may be just what you need to find the money for the fun things you want to do!

16. Dissecting a Budget What is it?
A plan for spending and saving based on income and expenses.
What is required?
Choosing a budgeting period.
Estimating expenses and income.
Balancing expenses and income.
Why is it important?
puts you in control
helps you create a visual spending picture
helps you prevent impulse spending
helps you decide what you can and cannot afford
enables you to keep track of how you spend your money
helps you create a savings plan
helps you decide how you can protect yourself against the financial consequences of unforeseen events

17. Setting Up and Maintaining a Budget
An important aspect of money management is the ability to set up and maintain a personal budget. Creating and following a budget for a specified period of time will allow you to see where your money is going.
A budget serves as a foundation for long-term financial security because it supports your personal and financial goals. Follow these steps to set up a personal budget:
Step One: Estimate your income.
How much money will you net in a month?
Focus on expected sources of income, such as from a regular job.
Step Two: Estimate your expenses.
Fixed Regular Monthly Expenses: known expenses that don’t change (eg., rent, car payments, insurance payments, etc.)
Fixed Irregular Monthly Expenses: known expenses that fluctuate each month (eg., groceries, utilities, phone bill, etc.)
Flexible Monthly Expenses: expenses that may or may not be necessities, but don’t occur every month (eg., clothing, eating out, household items, entertainment, etc.)
Step Three: Estimate your future expenses.
Consider if you are hoping to save for a big purchase (eg., a new computer).
Predict if there are any major expenses on the horizon (eg., installing winter tires).

18. Setting Up and Maintaining a Budget
Step Four: Cope with change.
Plan for changing conditions or situations that increase or decrease your expenses (eg., decrease in shifts at work; rent increase; birthday money; etc.)
Step Five: Keep your personal and financial goals in mind.
Personal Goals: saving for a big purchase; saving for a vacation; etc.
Financial Goals: reducing debt load; saving money to invest; etc.
Step Six: Balance your budget.
Compare your income to your expenses at the end of each month.
Continue to rework your budget until your income is greater than your expenses.
Reconsider spending habits as necessary to ensure that you are saving money in addition to making money.
Change your plan as necessary to ensure that you are on the right track.

19. Reviewing a Budget
Using the knowledge you have gained about the purpose of a budget, as well as how to set up and maintain one, you will evaluate Michael’s financial situation to determine what he is doing well, and what he could improve when it comes to managing his money.
Start by completing a Monthly Budget Planning Sheet using the information provided about Michael’s income and expenses. Note that there are three columns – what he plans for (“Budget”), what happens (“Actual”), and the Difference between the two. There will be numbers in most columns, but not necessarily all of them.
After completing this sheet, answer a series of questions to help you determine if Michael has effectively budgeted his money. While the first five questions can be expressed in simple numbers or calculations, Question 6 requires a few sentences, and Question 7 should be written in full paragraph form.

20. Bank Accounts
There are two basic types of bank accounts: chequing accounts, and savings accounts.
Chequing Accounts are a safe, convenient place to keep money that you plan to use for day-to-day spending, or to pay bills over the short term. Use your chequing account for spending, not saving.
Savings Accounts allow you to store cash securely and earn interest on your money. Cash kept in a savings account is less accessible than cash kept in a chequing account, since you generally get charged a fee for too many withdrawals or similar transactions. However, a savings account encourages you to save money, which will continue to earn interest the longer you leave it in the account.

21. Keeping a Running Balance
One of the most basic and essential things that you should do to manage your money wisely is to keep a running balance of what you currently have in your chequing account.
This step is essential, since it keeps you from overdrawing your account – that is, having a negative amount of money in the bank, which means you owe the bank money.
You simply cannot rely on the current available balance that the ATM machine gives you; just because your debit card transaction is approved does not mean that you have enough money to cover it.
A running balance can be kept on paper, using a chequebook ledger, or you can use a computer program, such as an Excel spreadsheet. There are even apps that allow you to set up and maintain a running balance, complete with alerts for when automatic withdrawals are made, or an issue occurs.
Using the worksheet provided, practice keeping a running balance!

22. Reading a Bank Statement
A bank statement is a report that you receive each month that shows all of the transactions, deposits, interest earned, and service charges and penalties incurred on an account.
Use this statement to check if your cheques have been cashed, or other payments processed. Cross-reference this information in your cheque ledger, and record changes and updates!
It is important to note that a bank statement shows the cumulative effect of these transactions up to the date the report was prepared.
Like checking your account balance at the ATM, keep in mind that any transactions that occur after the time period of the statement will not yet be accounted for.
A paper copy of your bank statement is mailed to you once a month on a predetermined date. Most people have switched to electronic copies, though, which can be accessed from your online account.
Using the worksheet provided, practice reading a bank statement!

23. The Importance of Saving
Saving just a loonie a day will result in more than $ in a year. Small amounts saved and invested can easily grow into larger sums.
Maintaining savings is important. Your savings can be used . . .
in case of an emergency
to take advantage of unforeseen opportunities, such as an exciting trip or desired purchase
to reach financial goals, such as paying off debt, or investing in a long term purchase, like postsecondary education

24. Calculating Simple Interest
When you open a savings account, you will be quoted an annual interest rate that applies to the money in your account.
Generally speaking, the more money you have in your account, the higher interest rate you will receive. These rates are subject to both the economic conditions at the time you open your account, as well as the individual bank’s policies and account types.
Simple Interest Formula
Dollar Amount x Interest Rate x Length of Time (in years) = Amount Earned
Example
If you had $100 in a savings account that paid 6% simple interest, during the first year, you would earn $6 in interest, meaning you have $106 total in your account.
$100 x 0.06 x 1 = $6

25. Calculating Compound Interest
The longer you keep your money in a savings account, the more money you will make.
Compound Interest refers to interest paid on the original amount in the savings account, as well as any interest earned.
Compound Interest Formula
(Original Amount + Earned Interest) x Interest Rate x Length of Time = Amount Earned
Example
If you had $100 in a savings account that paid 6% simple interest, during the first year, you would earn $6 in interest. With compound interest, you would earn $6.36 in interest during the second year, which means you would have $ total in your account.
($100 + $6) x 0.06 x 1 = $6.36