Where does your money go?

How to pay yourself first

A recent study from the Canadian Payroll Association shows that almost half of Canadians live paycheque to paycheque.  When you are stretched that thin, chances are it is impossible to accumulate savings. So, when you are faced with substantial expenses of any kind (emergency or otherwise) you’ve got to turn to debt, which sets the stage for the debt cycle to continue to churn and churn.

Want to stop that cycle in its tracks? Change the way in which you live paycheque to paycheque by paying yourself first.

“When trying to make ends meet, savings inevitably falls to the end of the priority list. It’s not that people don’t want to save, it’s that they don’t feel that they can afford it,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.

“In reality, savings isn’t as much about finding extra money, but is about being strategic with the money you’ve got.  It’s about creating a habit that is seamless and incredibly helpful in setting yourself up for financial success.”

Here are some tips on how to pay yourself first.

Do you read your paystub?

The cornerstone of good financial management is financial literacy, which will help you understand your options to stretch your income further.

People don’t always take the time to really understand their paystubs. Make a habit of getting familiar with each and every line item. What is your gross vs. your net (take home) pay? How much is being deducted?  What is it going towards? You are likely paying a variety of things, like income tax and Employment Insurance benefits. You may also notice employer specific items you are paying for- like benefits, vacation pay, charitable donations or even company-sponsored savings.  There may be areas to scale back your deductions, increasing your take home pay, but you won’t know unless you examine it thoroughly.

Here is a good resource from the Government of Canada on how to read payslips.

Direct deposit

If this is an option with your employer, elect to have direct deposit into your bank account. That means that you can count on money arriving at the same time in your bank account, which can help support your savings efforts.

Automatic savings

Your employer may offer automatic savings plans, where a specified amount of savings is taken right off your paycheque. Hands down, automatic savings deductions are the best way to accumulate savings because it’s done right at the source.

If your employer doesn’t offer this service, you can DIY your savings, using the same principle. Set up an automatic savings program with your financial institution. They’ll deduct what amount you choose and put in a savings account (or wherever you choose) each pay cycle.

Every little bit counts

People tend to discount the importance of savings sometimes when they feel that they’re not accumulating enough to make a difference.

Rest assured, every little bit counts. It’s about setting up the habit of savings. You’d be surprised that once you’ve decided to pay yourself first, how quickly the savings grow.

For more information on this and other financial literacy and credit issues. Check out the online Financial Education Centre at www.jamati.budgetlounge.ca and http://iicanada.org/national/articles/financial-literacy-links

The Canada Mortgage and Housing Corporation (CMHC) recently revealed the results of a "stress testing" exercise it performed covering 2017 to 2021. For a summary and further details, please click here.

A financial literacy resource page that includes information on a variety of financial and economic matters, including access to free webinars on money matters can be accessed here. Updated information will be posted regularly.

The Aga Khan Economic Planning Board for Canada is pleased to present its Fall 2016 newsletter featuring information about the current economic climate, alliances, investing in real estate, employment regulations for franchises, and more. Click here to download.

Click here to read the EPB Newsletter for Fall 2016

Please click here for Financial Consumer Agency of Canada's Special Edition Newsletter about Financial Literacy Programs. 

Please click here for the recent Economic Update. 

The Council for Canada would like to update the Jamat on the outlook for the Canadian economy.

The Canadian economy contracted in the second quarter partly due to lower oil prices and other commodity exports.

While third quarter growth is expected to rebound, a number of global events will continue to create economic uncertainty, including how Britain will negotiate its exit from the European Union, the continued political and economic challenges in the European Union and China, and events in the United States including the upcoming election and prospects for rising interest rates.

In Canada, additional challenges are creating economic uncertainty including high household debt which is amongst the highest in the developed world, and rapidly rising housing prices, especially in Toronto and Vancouver. It remains to be seen what long-term effects the introduction of the new foreign buyer tax will have on the Vancouver housing market. In Alberta, low oil prices continue to negatively impact housing markets. The federal and provincial governments have responded to economic uncertainties by increasing spending for infrastructure projects and by continuing to keep interest rates at record low levels.

Technology advancements are beginning to change the way businesses operate and continue to threaten jobs. In Singapore, for example, the world’s first trial of self-driving taxis was recently launched and, if successful, may lower the need for human taxi drivers worldwide. Knowledge workers are not immune to these trends.

During these times of economic uncertainty and technological change, consider taking the following steps:

1. Build up adequate savings: Keep at least 3-6 months of expenses in savings in case of job losses or other unforeseen events.

2. Reduce debt, if possible with any excess savings, especially if the interest cost on investments is higher than the returns. If seeking loans to finance business growth, ensure that the business can service interest costs should short-term interest rates rise in the future. Refrain from accumulating debt for weddings or celebrations.

3. Reduce expenses wherever possible. Avoid the temptation to keep up with others, or to accumulate consumer goods for show.

4. Seek confidential support from the Jamati institutions or broader community if needed. The risk of alcoholism and drug addiction are higher with increased financial stress levels.

5. Consider asking: “Is my job going to exist in the next five years, and if not, what can I do about it today?” We live at a time when technology is rapidly changing and companies such as Uber, Airbnb and others are significantly disrupting traditional industries and displacing workers. As a result, continuous education is critical to adapting to changing times. Many universities are making course content available online free of charge.

Lastly, it is important to remember that during times of slow economic growth, there are higher risks of fraud and theft. If you are considering private investment opportunities, perform proper due diligence and have written agreements and exit strategies wherever possible.

Please contact members of the Economic Planning Board or visit iiCanada.org for information on language proficiency classes, finding and financing vocational training and skills upgrading, and other relevant programs, events and workshops. Thank you.

The attached speech was read in all Prairies Jamatkhanas on Friday, October 21st.

Join us for another series of basic computer skills classes for adults. The sessions will take place on Wednesday evenings at Headquarters Jamatkhana over a course of 9 weeks.
Please Contact: Email: epb.crc@gmail.com Phone: (403) 689­-8584 (Zull Punjani) or  Please see the electronic Al­Akbhar or visit the ICARE desk for a detailed course outline and registration. Please see the poster attached.