July 1, 2011

Four-day weekend ahead

July 1, 2011 - Categories: planning

Today is Canada Day. Monday is a floater day for IBMers in Ontario. (IBM uses floater days to balance out the number of holidays across the provinces. Nice, isn’t it?) This adds up to a four-day weekend. You can get a lot done in a four-day weekend.

I make lists of things to do so that I don’t give in to the temptation to spend the time working. Time to review my initial list of unstructured time activities (update focusing on evenings and weekends), maybe think about plans for the summer and long-term plans.

Things to work on:

Chore-day: – just get everything ready for more good weeks:

Other things I can work on:

I was thinking about sewing, but I’m fine in terms of clothes, so I don’t particularly need it. Last year, we used these long weekends for woodworking. Shelves and cabinets would be nice, but again, we’re doing pretty well right now.

Organizing and writing, I think. That’s the key. And maybe some more Latin.

2011-07-01 Fri 12:06

How I organize my personal finances

July 1, 2011 - Categories: finance

Update: I found the image!

Mia is learning more about personal finance. She came across my post on my financial network map and virtual envelope system and wanted to know if I had a copy of the image. Unfortunately, I don’t seem to, but it’s as good a time as any to post an update.

What’s changed in the last two years? What have I learned about personal finances?

One of the key things I think people should learn when they’re mapping out how they organize their money and how they want to organize their money is this:

The logical organization of your money doesn’t have to be limited by the physical organization of your money – which bank accounts, which jars full of coins, whatever.

I make my logical decisions first: how much to save, what to save for, what levels of risk to accept. Then I use those decisions to guide how to organize my money: chequing, savings, GICs, investments; registered, non-registered, tax-free, etc.

I use a virtual envelope system to keep track of what I’m saving up for and how much I’ve budgeted for regular expenses. I like this more than a straightforward budget because of the flexibility. If I have a surplus in one category (say, I don’t sew as much), or if I need to spend more in a more important category, I can move money around.

Current envelopes (no particular order):

I track almost all my expenses, with miscellaneous cash expenses grouped together if I can’t categorize them properly.

I keep my financial data in plain text files using John Wiegley’s awesome ledger tool. It’s very geeky. I use it because I can quickly answer questions like:

I use more financial institutions now. It does take me a little bit of time to check on my accounts at all of them, but I think the benefits outweigh the costs. Here’s how and why I use each of them:

Overall, I’m at about 6% cash, 20% GICs, 49% Canadian index funds, 9% US, 9% international, and 7% bonds. 31% of that is in my RRSP. It skews a bit more conservative because of the GICs.

Update: Here’s the old map:

Here’s what that map looks like now:

It takes me 15-30 minutes a week to update my accounts, reflect on my expenses, and review my goals. I like the steady progress.

Good personal finance is boring. ;) It’s mainly a matter of time: saving up, adapting to changes, letting interest compound, learning more… The next thing might be to move money from index funds to ETFs in order to take advantage of the teensy difference in management expense ratios, but it’s no big deal. I’m on track to make my savings target this year. I can’t do anything about the markets, but I can do something about how much I save. We’re getting better at what we spend on, too, as we learn more about what we value and enjoy.

What have you learned about personal finance?