3 year olds are exhausting. They wake up at the crack of dawn, throw food all over clean floors and conveniently wake up screaming just as you fall asleep. And they make you worry: about how much they eat, how much they sleep and what they’re learning. And yet the amazing thing about kids, as any parent will agree, is how quickly they absorb things around them and how their observations are reflected in their behaviour. They watch, they observe, and they pick up on nuances that otherwise go unnoticed. By watching him, I’ve picked up few things of my own. Here are a few things about money I’m learning from my 3 year old.

On Spending

We like to give Big Brother options and ask him to choose: which shirt do you want to wear, do you want an apple or an orange for snack, you get the idea. The illusion of choice helps with decision making and increases his independence and confidence. One fine summer evening, Emily was on one of her online shopping benders, picking out trendy local handmade fashions. Armed with a few choices, she opted to let him make up his mind.

“No Mama,” he said. “I already have lots of clothes and I wear them all the time. I don’t need new ones.” Emily reluctantly agreed. No money was spent that day.

Kids don’t have to be as expensive as we make them out to be. Sure, new outfits have their place but purchases tend to satisfy our needs rather than theirs. Come to think about it, we also have a closet full of clothes. What else are we buying that we just don’t need?

On Saving

A few months ago, we re-painted our condo in varying shades of white. Vehemently disapproving of our design aesthetic, Big Brother declared that he is saving up his money to buy a house with dark blue walls. Now, any coin that he comes across goes right into his piggy bank to save for his house of his dreams. He still hasn’t given up on his vision and continues to remind us of his steadfast resolve. Yet, on his weekly farmer’s market visits, he takes out a quarter for a cup of tasty apple cider.

It isn’t hard to save for long terms goals if you know what you want and you want it enough. It’s also important not to lose sight of the short term needs and enjoy the little things that make the effort worth the while.

On Having Fun

Every time I travel for work, I come back with a surprise for Big Brother. Each of those surprises have contributed to an impressive collection of Pixar Cars that he lines up on the floor of his room. He loves Lightning McQueen and all his “Cars with eyes.” They are his toys of choice and he plays with them ALL. THE. TIME.

Until recently. The cars have been spending more time tucked away in their basket because Big Brother has discovered a love for books. Books we bring back from our weekly trips to the library. Don’t get me wrong, he loves the cars but it it may just be that the books are more interesting.

Toys, the latest tech gadgets and a new handbags end up collecting dust and are poor alternatives to a good book, learning new skills and picking up new hobbies. Some of the best things are free.

On Generosity

Social responsibility is a topic that comes up in conversation around the dinner table every so often: the earthquake in Nepal, the ongoing crisis in Syria and most recently, our family project to fundraise for a health clinic in Nigeria. Upon first hearing about the situation in Nepal, Big Brother asked if the people who had lost their homes to the earthquake could come live with us. On hearing that women in parts of Nigeria do not have doctors to help them birth babies, he responded saying that we should “fly them here so they can go see Mama’s doctor.”

The innocence in the genuine compassion of a child is something we should take to heart. If there’s anything to be learned here, it is to give- and to give freely- to those in need.

The Last Word

Buy what you need. Save for what you want. Fun doesn’t have to cost much. Give to those in need. We are so consumed with feeding our children with information that we often forget the lessons about life- and money- can come from the unlikeliest of places. There’s something to be said about the unassuming logic of a 3 year old and when we take the time to notice, the lessons we can learn resonate with ageless wisdom.

I recently had the pleasure of geeking out at the Canadian Personal Finance Conference 2015, affectionately known as CPFC15. I had a good time at CPFC13 and the second kick at the bucket certainly did not disappoint. The who’s who of the personal finance community in Canada made their appearances and I was happy to connect with new and familiar faces. Rather than regale you with sightings of CPF royalty- if there is such a thing- I wanted to share an interesting viewpoint on interest rates that I hadn’t much considered before.

Related: Recap of the Canadian Personal Finance Conference 2013

CPFC, with the help of their new sponsors, secured Dave Chilton- of Wealthy Barber and Dragon’s Den fame- as the keynote speaker. Confession: I’ve never read the book or watched the show. But his reputation certainly preceded him; he’s an impressive speaker. Chilton has a very keen ability to engage an audience on topics that admittedly can be very dry. He shared some of his insights on the future of interest rates. His take: They will remain surprisingly low for a surprisingly long time. He is of the opinion that it’s going to be tough for inflation to take hold. On one hand there are the “traditional” challenges in the demographics of an aging population and lower prices due to globalization, but the driver, in his mind, for continued low interest rates is the significant deflationary potential of exponential technologies. He sees artificial intelligence, virtual reality, 3D printing as having huge deflationary impacts.

Interest rates will remain surprisingly low for a surprisingly long time due to significant deflationary potential of exponential technologies.

He cited the familiar examples of Uber and AirBnB for offering prices 40% less their respective competition. Chilton also had one very interesting hypothesis on the impact of 3D printing. You may have heard about 3D printing as a fringe hobby, but apparently it has come a long way. It is now possible to print with 285 different materials, and can be used printing for customized prosthetics and old discontinued car parts. The future of 3D printing, he believes, has the potential to disrupt the economy.

He painted a picture: “You own a bar. You’ve got a urinal. Some drunk guy breaks your urinal- happens all the time.”As the bar owner, you would need to go out and buy a new $450 urinal. “Not in five years, you don’t,” he said. “You print it. You print your own urinal.” Working backwards, he broke it down: if the urinal costs $450, it probably cost the seller $200 and the manufacturer about $80 including labour. That leaves a material cost of roughly $40. Assuming the material cost for 3D printing is 3x as much, he estimated that it would cost $120 to print a new urinal. If bar owners print their own urinals, what happens to the distribution channel? Jobs are going to be challenged, keeping inflation at a minimum. The Chilton forecast: low interest rates are going to stick around.

It’s going to be interesting to see how established industries cope with emerging disruptive technologies. Will changes come as quickly as Chilton predicts? I think they will…and when they do, will we be caught on our heels wondering how to react or will we have seen the signs and adapt to tip the scale in our favour? Don’t mind me while I sit here and chew on that for a little bit.

The stunning victory for Trudeau’s Liberals in Canada’s 42 federal election finally puts to rest the speculation as to which campaign promises will affect us in the foreseeable future. Here’s what to expect from the new Liberal majority and what that means for your finances:

Saving/Investing:

• The TFSA annual contribution limit will be reduced from the current non-indexed $10,000 to $5,500 indexed to inflation.
• Likely future expansion of the Canada Pension Plan.

Taxes:

• The income tax rate for those earning $44,700 – $89,401 will be reduced from 22% to 20.5%. The reduction will result in savings of $670/year per individual, funded by a new 33% tax bracket for incomes over $200K.
• Payroll taxes, in the form of Employment Insurance premiums, are expected to fall to $1.65 per $100 down from the current rate of $1.88.

Families:

• The Universal Child Care Benefit (UCCB) will be scrapped in favour of a new Canada Child Benefit that promises to give families of four up to $2,500, tax-free.
• A new flexible paternal benefits plan will be introduced, making it possible for parents to take leave up to 18 months at a lower benefit level. The plan will also allow benefits to be paid out every two weeks instead of each month.
• Income splitting will be repealed.

Students:

• Graduates can expect not to repay their student loans until they are earning $25,000 a year.
• The Canada Student Grant will be increased to $3,000 per year for full-time students and $1,800/year for part time students. Income thresholds for CSG eligibility will be increased
• Existing textbook tax credits will be cancelled.

Seniors:

• Old Age Security (OAS) and Guaranteed Income Supplement (GIS) eligibility will be rolled back to the age of 65, instead of 67 for those born in or after 1958.
• Income splitting for seniors will remain.

Home Ownership:

• The Home Buyers’ Plan will be expanded so that those who experience significant life changes (job changes, death of spouse, etc) can make withdrawals from their RRSP savings against the HBP to maintain home ownership.

The Last Word

Regardless of your political stripe, there are measures in the upcoming changes that will undoubtedly help many Canadians. While I’m disappointed with the decrease in the TFSA contribution limit, I’m interested to see if the new Canada Child Benefit will be more practical than the UCCB. Whether you like it or not, this is the hand that’s been dealt and we’ll have to watch it play out over the next four years.

Do these changes work in your favour?

Lately my days have been looking a little something like this: I wake up, feed/entertain the kids, take a nap with the kids, feed/entertain the kids some more, put the kids to bed, and then pass out from exhaustion. On occasion, drink coffee with friends, arrange play dates with other mothers and their kids, and take day trips around the city for culture, food and shopping. This, my friends, is me on maternity leave.

Four months ago, we welcomed Little Sister into the world. She was born 7 lbs, 5oz- though I’m certain 20% of that was hair; Little Sister has a lot of it. Daniel took a week off to help with the transition from having one kid to two, and I started a year long maternity leave at home.

In a nutshell, we lucky Canadians are entitled to a year of unpaid time off from work with paid benefits as a part of Canadian Employment Insurance. So basically, the government pays me up to 55% of my regular income , capped at a weekly maximum. We’re fortunate to have the income, but it amounts to a significant reduction in salary. So our household income takes a hit this year, but it is a year I get to play with the kids- all the live long day.

The reduced income undoubtedly impacts our family finances. While our expenses do not exceed our income, bringing home less diminishes our ability to save. No biggie- I guess- what is one year in the grand scheme of things, right? Wrong. We still want to maintain a savings rate that we’re comfortable with, and in order to do so, we’re reducing our expenses.

Ways We Save On Maternity Leave

Don’t Buy Things for Baby

Contrary to popular belief, babies are NOT expensive. For the most part, baby related expenses are minimal, especially if the baby isn’t a first born. Little Sister is breastfed exclusively which means there are no food costs. As for clothes, she generally wears hand me downs and borrowed clothes. We are re-using all the baby gear, including a huge stash of cloth diapers, that we purchased with our Big Brother. So, Little Sister has food, clothes, gear, and diapers- at the cost of $0. The costs we have incurred are discretionary: save for a box of newborn diapers and some really cute baby girl clothes (I couldn’t resist!), we have not spent any money on Little Sister.

Don’t Buy Things for Ourselves

We decided to stop making personal purchases.. The budget for our personal allowances have been unofficially set to $0.There is no strict no shopping ban per se and we can still buy whatever we want (within reason, of course), but we try not to make purchases for items we do not absolutely need. Four months in and it hasn’t been hard. Daniel typically doesn’t spend money anyway. Clothes are usually my weakness, but since I am still carrying some of my pregnancy weight, I have had no desire to shop. Aside from houseplants, I’m happy to report we have not made any unnecessary purchases.

Cut back on Daycare

Big Brother was attending daycare full time when I was working. We debated whether or not we should keep in while I was on maternity leave and decided that part-time daycare would be the best option for our family. He spent the entire summer at home and now attends pre-school three days a week. Since daycare is so expensive, even cutting back a couple of days made a big difference; it saves us a few hundred dollars a month. If we wanted to further reduce expenses, we could take him out entirely and have him stay home, but at the moment, part-time is working well.  

The Last Word

We all have different priorities. Some mothers don’t take a full year off be it for their careers or financial implications. Some families may choose to forego a year of saving in order maintain their standard of living. How to approach maternity leave is a choice that many make depending on their circumstances.

I chose to take a year off on maternity leave. It comes at a price but I want opportunity to be with my children. At the same time, Daniel and I want to continue to make our savings a priority and hope to achieve the saving goals we had set out earlier in the year. With the lesser income, it means making some changes to the way we manage our money. We are choosing to spend as little as we can to save on maternity leave.

What expenses did you cut while on maternity leave?

“Wealth is the ability to fully experience life.” – Henry David Thoreau

You may notice a few things are different around here. Let me start with a recap of what we’ve been up to and why you should care.

When last we connected, we had a rosy outlook for 2015. Fast forward 10 months later: we did a bit of the travel thing and then spent much of the summer outdoors tending to our urban garden. We are now happy parents to an insomniac 4-month-old and have been living life through the eyes of an inquisitive 3-year-old.

We’ve been able to dig deep and deliver on the goals we set out earlier in the year. We maxed out one of our TFSA accounts at the new $10K contribution limit for this year. If all goes according to plan, we will close to maxing out the other by the end of the year. We’ve been putting aside enough in our RRSP to max out our employers’ match and we just made an investment in a second RESP. We’re in the best financial shape we’ve ever been. We’ve developed a solid understanding on why we spend, what we spend on and where and how to invest our savings.

We started our urban departure as a two part experiment. We wanted to track our financial evolution and try our hand at building an online community.  As our time became increasingly pressed with the demands of balancing our extracurricular activities with work and parenting, it became clear that we would need to refocus and re-establish the simplicity we so longingly desire.

For the better part of the last year and a half, we’ve been haphazardly writing about how our finances impact our lives- hoping that you, our patient readers, would glean a lesson here or pick up a tip there. That’s fine and all, but everyone in town’s got their own two cents. Sure, we’ll continue to share our hacks, but we can do better.

“Wealth,” in the words of Henry David Thoreau, “is the ability to fully experience life.” Managing money and debt is stressful. Depending on where you live, $5 can mean a cup of coffee or a day’s wages, but the numbers in our bank account don’t dictate our ability to realize potential or nurture lasting relationships. We’re committing to explore this definition of wealth and engage- wholeheartedly- in this pursuit with the best and worst of which our financial circumstances will have to offer. Let’s work together to set our finances on autopilot so that we can focus on the things we really care about.

Urban Departures is our labour of love. Our little layover has given us some clarity as to how we are going to move forward…and we can’t wait to get started. Please fasten your seatbelts, we’re about to start the second leg of our journey.