Understanding Cash Flow: Stewardship, Awareness, and An Embarrassing Story

Understanding Cash Flow: Stewardship, Awareness, and An Embarrassing Story

Written by Tara Tennant
Client Care Coordinator, Betty-Anne Howard, Athena Wealth and Legacy Solutions

I think we can all agree that many factors go into our decisions around how we steward (make, spend, save, and invest) our money. A lot of it is tied to our emotions and how we are experiencing the world around us. And that is often the first lynchpin in the financial planning process – how can we make sure that we align our emotions and values with a healthy financial plan?

Step One: Awareness of our Cash Flow

Oddly enough, I’ve learned that the more money we have, the harder it is to stick to a budget. Why? Because when we have access to a lot of money, we don’t run out. We can just keep right on tapping that plastic card, and there’s nothing to stop us.

However, managing our cash flow is one thing that can get us into considerable trouble if left unattended. Like a small leak under the sink or a funny rattling under the hood of your car, the longer we go without getting a check-up, the more it will cost us to correct the mistake.

Let me illustrate my point with an embarrassing story about spending…

Recently, my husband and I were working on a family budget. When we sat down to put the numbers together, I asked him how much he thought we spent on “entertainment”. Entertainment includes movies, take-out, visits to the local ice cream shop, and the LCBO.

Since the pandemic began, our entertainment expenses have been limited. We’re mostly down to the odd take-out meal and trips to the LCBO. Nothing major, really. $25 here, $15 there. We estimated our entertainment expenses to be around $150 for the month.

Well, I’ve been around the block long enough to know that when it comes to budgeting and cash flow, the “proof is in the pudding.” In other words, the numbers you pull out of your head when doing an exercise like this are just that, air. The REAL work comes when you compare the numbers you THINK you’re spending to the ACTUAL amounts you’ve spent.

I dutifully printed off last month’s statement from my online banking and went about verifying my numbers.

Now, keep in mind that my husband and I both take an occasional trip to the LCBO. He’ll pick up a six-pack after work; I’ll pick up a bottle of wine on occasion. So when I did our spending analysis, I did not expect to see the number of visits that I saw. HOLY COW! When I added it all up, it totaled over $400, more than double what we thought it was!

So how did that happen? Obviously, we had no idea that our occasional LCBO visits amounted to a big part of our entertainment budget!

It’s so easy to lose track of our spending when we dismiss our purchases as “little” or “insignificant” and when one hand doesn’t know what the other one is doing. Unfortunately, neither one of us was aware that we were overspending.

Lesson learned.

Since that realization, we’ve decided to budget our entertainment and go back to the envelope method (or jar if you prefer). We have a little envelope of cash for our LCBO spending, and when the money is gone, that’s all she wrote.

Without the awareness that came from going through the exercise, we would have continued overspending. If that had happened, there would have been less leftover in December when it was time to top up the kids’ RESPs. Then we would have had to take that money from our line of credit and pay interest on it as we paid it back. Not an ideal situation.

Rough Waters Ahead

Managing our cash flow and our budgets will get even more challenging. Higher gas and food prices have already impacted our lives, and if you haven’t done a cash flow check recently, maybe now is the time. Inflation is real, and it’s likely to continue. We also know that interest rates will go up, and probably faster than we thought. This will impact the amount of interest we’re paying for loans, lines of credit and variable-rate mortgages – all impacting our cash flow.

It doesn’t matter if it is your personal finances or your business; if you aren’t checking your actual results against your projected budget, then you can’t identify the areas where you are going off course and make the adjustments that need to be made to meet your goals. Then it will always be a mystery when you get to the end of the month and all of the cash is gone.

Now, one thing you should know about me is that I really don’t like pointing out problems without also offering a solution. I also have a real passion for planning and organization. So, let’s talk about actionable steps that you can take to raise your awareness and get on the right track.

Step 1: Block off some time to work on it

It doesn’t have to be a lot of time, start with a half-hour. Block it out in your calendar, and don’t let anything distract you. Spend that half-hour writing down all the money coming in and out of your life. All of it. We’re just estimating in step one, so pull those numbers out of the air, if necessary. If a half-hour feels daunting, start with 10 minutes. When your session is up, book another ten minutes in your calendar. And so on.

Step 2: Separate your expenses into two categories

The two categories to use are “fixed / committed” (you can’t change it easily) and “variable / spendable”. When it comes to starting to cut costs, it’s your variable expenses you will look at first.

Step 3: Review your estimates against your ACTUAL

All of the planning you do doesn’t mean a lot if you aren’t making sure that you are following all of your own rules. That is why the envelope method works so well for personal finances. This step can take a little longer, but it is where the rubber meets the road. Print off or download those bank statements and make sure you are within range of what you thought. For anyone who has any “ah-ha!” moments at this stage, I’d love to hear about it!!

Step 4: Think deeply about what needs to be adjusted and how to make that happen

This part can be tricky and you may want to enlist the help of a financial advisor if you get stuck. At this stage, we want to look at two areas in particular:

  • Am I overspending?
  • Am I saving enough?

Cash flow management is the key; it’s the beginning, middle, and end of your financial plan. First, you need to ask yourself, am I making the right decisions with my money today to help me reach my financial goals in the short, medium, and long term? That’s how we take the temperature and measure how we’re doing. If you aren’t sure where you stand, it’s time to reach out to us for a review.

Step 5: Adjust and repeat

The best part about this process is that you get to make corrections quickly. When you are on top of your cash flow, you can easily see what is happening and make the adjustments you need to stay on track.

Effective cash flow management is an elusive, ever-moving target. The more awareness we have about what influences our decisions around our money stewardship habits, and the more information (data) we have to back that up, the better positioned we will be to achieve financial peace of mind.

Even though cash flow planning can sometimes seem tedious and painful, it’s ALWAYS better to know where you are and what’s happening. Eventually, you will even get excited when you find out that you’ve overspent because you’ll catch it before it gets away from you! And then, you’ll pat yourself on the back, say, “well done, smartypants!” and celebrate.


Income Tax Reduction & Estate Tax Elimination Webinar

Income Tax Reduction & Estate Tax Elimination Webinar

Income Tax Reduction & Estate Tax Elimination Webinar

You Will Learn How To:
Minimize or even Eliminate Taxes on your estate.
Change your Estate Plans during this COVID-19 Environment.
Avoid Double Taxation on your “Red” retirement accounts.
Bypass paying upfront Capital Gains Taxes when selling your investments.
• Convert assets into an Income You Can’t Outlive and leave a Lasting Legacy.
• How our government wants you to Save Taxes and Leave More To Charity.

DATE: March 22, 2022
Registration Time: 10:15 a.m.
Webinar Presentation: 10:30 a.m.

Reserved spaces are complimentary.
Contact Cheryl Moore to secure your virtual seat today!
(613) 256-2500 ext. 2610 or
email your response cmoore@agh-fvm.com

A Live Webinar Presentation
Instructions, link & password will be sent once you have registered for the event.

Betty-Anne Howard has been guiding individuals, couples and families to realize their financial dreams for over 20 years. With her specialization in strategic philanthropic planning she has been able to direct millions of dollars to the charitable sector while dramatically reducing taxes for those individuals she has assisted.

Betty-Anne is an accomplished author having published her most recent book, Making Your Dreams a Reality and has been interviewed by The Globe and Mail and Carleton University’s publication, Philanthropy in Action. She is a member of the Canadian Association of Gift Planners having also been their Ottawa Education Chair, and for two years served as a Trustee at the Institute for Advanced Financial Education.

Growing up in poverty and fueled by her father’s illiteracy in rural Ontario, Betty-Anne became committed to higher learning; becoming the first person in her family to attend university and obtain a Masters and Honours degree. Later on she developed and delivered courses at both Queen’s University and St. Lawrence College. She has been honoured with numerous awards for her public speaking and has facilitated a variety of inspirational talks to organizations such as the Ottawa Estate Planning Council, Friends of the Earth Canada, Action Canada and the Canadian Association of Gift Planners.

Betty-Anne has been an active Board and Committee member for such organizations as Queen’s University Ban Righ Foundation, the Kingston Unitarian Fellowship, the Sexual Assault Crisis Centre and the Kingston Arts Council. She has been on the Board of the Kingston District Health Council where her involvement was instrumental in obtaining Ministry of Health Funding for the first Sexual Assault Crisis Centre in Canada. Betty-Anne lives with her spouse and adopted golden doodle, Phoenix, on beautiful Bass Lake between Kingston and Ottawa. They enjoy the great outdoors and spending time with their horses, Stella and Brooklyn

Do not miss this opportunity to hear one of our nation’s most knowledgeable, entertaining and engaging speakers on the topic of how you can save income and minimize estate taxes.

What previous attendees have said about our presentation:

Betty-Anne’s passion and knowledge in the areas of planned giving and legacy are second to none! This is a niche area of financial planning that requires a professional dedicated to its true opportunities and meaning; Betty-Anne has dedicated her time and energy to being a expert in this niche and I would highly recommend placing your trust and legacy journey in her hands.
– Erin M.

Betty-Anne truly understands how the tax rules work when it comes to charitable giving and the strategies to pay less in tax while giving more to charities. She is also a dynamic, inspirational and motivational speaker who is passionate about her mission and message to make a difference in the world and in the lives of others.
– Maggie A.

Betty-Anne Howard is a force of nature – an inspirational speaker whose stories pull at your heartstrings and then she demonstrates how to grow your heartfelt ideas into realization.
– Beatrice O.

As a world class speaker Betty-Anne inspires and motivates her audience to consider their legacy while helping guide donors through a process to maximize your gifts that can have the greatest impact on the charities you want to support. Not only that, she is a Philanthropist through and through as she has incorporated charitable & planned giving into her own life and her business.
– Jayne & Steve L

Betty-Anne is in a category we call exceptional in everything she does. She’s an exceptional speaker and doer of good deeds. She’s passionate about leaving a legacy and helping others do the same. She recognizes we all have our own journey and path to making a difference in the world and the lives of others. Philanthropy is at the core of her being and that comes through in her presentations and how she guides donors on their own personal journeys.
– Mark M

Did you know, retirement is changing…?

Did you know, retirement is changing…?

A new report released by Fidelity Investments states that retirement and retirement planning have changed dramatically over the past few years, and that really shouldn’t be surprising. After all, COVID-19 has changed everything for Canadians, and retirement planning isn’t exempt. According to the report, over ⅔ of you are expecting to go back to work in your retirement, but not simply for the money. Read more here…
AGH’s Newest Guardian Angel – Jodi Lee, RN OBS

AGH’s Newest Guardian Angel – Jodi Lee, RN OBS

AGH’s Newest Guardian Angel – Jodi Lee, RN OBS

A small group gathered today (Dec. 16) to recognize and support our newest Guardian Angel. Hospital President and CEO, Mary Wilson Trider, and OBS Manager, Lynn Heath, presented Jodi Lee, the Team Lead on OBS, with a Guardian Angel Pin on behalf of an anonymous but very thankful donor.

Mary said she had received a very touching letter from a patient who had experienced very difficult circumstances but received tremendous kindness from all the OBS staff. The donor was very grateful for the skilled and compassionate care that everyone but especially Jodi provided to both her husband and her. They wanted Jodi to know how much they appreciated everything she did.

Congrats Jodi and the OBS team!

Catch the Ace Almonte Explained

Catch the Ace Almonte Explained

Lots of people are talking about and playing Catch the Ace Almonte in support of the Almonte General Hospital Fairview Manor and the Almonte Legion, Branch 240. But there also seems to be lots of community members that don’t quite understand how the lottery fundraiser works. Questions like:

  • What’s the difference between the weekly prize and the progressive prize?
  • How does the jackpot grow?
  • Why do I need to pick an envelope?
  • How do the charities make their money?

It’s precisely to address this confusion that the AGH FVM Foundation and Almonte Legion produced a fun little video called: Catch the Ace Almonte – Everything you need to know.

The video, which features the voice talents of Almonte’s Noreen Young and Stephen Brathwaite, helps simplify what Catch (or sometimes called Chase) the Ace is and how it works, both for the players and the charities.

We tried to produce something short and fun,” said Al Roberts, Managing Director of the Foundation, “because we continue to hear that some people are not playing because it just sounds too complicated. Noreen and Stephen agreed to help out which gave it a real nice Almonte touch.”

The more people that play, the better for the two charities.  Our first round raised over $45,000 and the big winner won over $58,000. So far this second round has been running for 12 weeks. The progressive jackpot currently sits at over $12,000.

Tickets are available online at www.catchtheacealmonte.ca

Lottery license #RAF1216249