The MapleMoney Show » How to Save Money » Budgeting

Helpful Tips for Managing Your Finances, with Patrina Dixon

Presented by Wealthsimple

Welcome to The MapleMoney Show, the podcast that helps Canadians improve their finances to create lasting financial freedom. I’m your host, Tom Drake, the founder of MapleMoney, where I’ve been writing about all things related to personal finance since 2009.

When it all boils down, personal finance is all about how you manage your money. Anyone can outspend their income, no matter how much they make. What you need is a plan and a few steps to follow.

Patrina Dixon is a Personal Finance Expert and founder of It’$ My Money®. Her mission is to help people transform their lives by mastering money management. She teaches these skills through workshops and her financial course. Patrina has been featured in Black Enterprise, Yahoo Finance, and Experian. Patrina joins me on the show to share helpful tips for budgeting, tracking expenses, and growing your income.

Patrina and I talk about the importance of not only looking forward but also looking back when budgeting. Only by tracking your expenses can you see how much money you’ve spent in different categories. It can be a real eye-opener and lead to positive changes in your spending habits.

One of the hot topics we touch on is the “latte factor”. In other words, the idea that what seems like a small purchase, the daily coffee, can become an astronomical expense in the long run. Patrina’s message isn’t that you should never buy coffee, but that you shouldn’t buy 4 cups a day, 7 days/week. Believe it or not, some people do.

Patrina and I touch on the topic of savings, and she stresses its importance. If you’re having trouble putting money aside, Patrina recommends opening a high-interest savings account at an online bank, where the funds aren’t as easy to access. If you want money, you need to transfer it over to your main bank account. This will help to prevent impulse spending.

At the end of the day, it’s important to remember that personal finance is just that…personal. Everyone has a different reason to save, whether it’s for emergencies, a child’s education, or their own retirement.

Do you prefer to invest in socially responsible companies? If so, our sponsor Wealthsimple will help you build a portfolio that focuses on low carbon, cleantech, human rights, and the environment. To get started with Socially Responsible Investing, head over to Wealthsimple today!

Episode Summary

  • The importance of tracking expenses
  • Patrina reveals the spending habit that made her take control of her money
  • Why you should budget for things that don’t have due dates
  • Paying yourself first and automate your savings
  • Personal finance is…personal
  • Everyone’s savings goals are different
  • The value of starting a side hustle

Read transcript

At the end of the day, personal finance is all about how you manage your money. Anyone can outspend their income no matter how much they make. What you need is a plan and a few helpful tips to follow. Patrina Dixon is a personal finance expert and founder of, It’$ My Money. Her mission is to help people transform their lives by mastering money management. She teaches these skills through workshops and her financial course and has been featured in Black Enterprise, Yahoo! Finance and Experian. Patrina joins me on the show to share helpful tips for budgeting, tracking expenses and growing your income. 

 

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Do you prefer to invest in socially responsible companies? If so, our sponsor, Wealthsimple, will help you build a portfolio that focuses on low carbon, clean tech, human rights and the environment. To get started with socially responsible investing head over to maplemoney.com/wealthsimple today. Now, let’s chat with Patrina… 

 

Tom: Hi, Patrina. Welcome to the Maple Money Show. 

 

Patrina: Hi, Tom. How are you? I’m so glad to be here. 

 

Tom: I’m great and thanks for being on. I wanted to have you on because you just released a new book. Normally, I get people to promote it at the end but if you could just tell us a little bit about it now, it might help set up what we’re going to discuss. 

 

Patrina: Absolutely. So my new book is called, It’s My Money, A Guided Journal To Help You Manage Your Finances, Volume Two. It’s the second of a three part journal series. It includes a lot of financial concepts as well as a glossary in the back, inspirational quotes throughout, and it’s written in journal format. It has lined pages so the reader or journalist can document where they are in action steps they feel they need to complete based on the reading. 

 

Tom: Okay, great. I wanted to walk through with you, these three tips to master your money management. I’ve said before in the podcast, I think managing your money is what all this kind of boils down to because you can get into some of these different hacks and everything but it really just kind of comes down to cash flow. You need to make sure you’re making more than you spend or spending less than you make. However you get around to that, you need to keep that bit of a buffer so you can start to grow. Can you walk us through these steps, starting with your first one? 

 

Patrina: Sure. Budgeting… I like that you used the word cash flow because often times, working with so many people of all ages, there seems to be a fear or anxiety about the word budgeting so I like that you said cash flow. It’s a term that could be used as well as budgeting, money management meeting—whatever you want to call it, it’s an exercise I want to make sure everybody completes. It takes into account all the income you have coming in from all the sources you have. If you have one source, then that’s what you want to include. If you have more than one source, you want to include that total net income amount. And then the next step is to write down all of your expenses, not just those with due dates. Anything that you pay out of that income, you want to write down. The reason I make sure I say not just those with due dates, because if you’re a car owner, you may have a car payment and car insurance, which both have due dates, but the gas for the car does not. The maintenance does not. So you want to make sure you include all of those. Groceries do not have a due date, but that’s something that is an expense you may incur out of your income. The other thing, it’s really important to go back and look at what you actually did. With budgeting (or cash flow management) you’re looking at what’s coming in, what you plan to go out, but then you have to look at what actually happens. Because sometimes life happens where you intend to spend a certain amount or a certain thing or pay a certain bill but they you may have to revisit it and modify the thing you intended to do based on what happened in your life. So you always want to go back and write down what you actually did as well. Income, expenses, and what you actually did—three easy steps. Budgeting, cash flow management, money management, meeting or whatever you want to call it—just make sure that you do it. And this is a question I get often, “How often should I do it?” You should do it as often as you get income. You need to become very intimate with your money. 

 

Tom: It is easy on paper, but maybe it’s more of a mental thing. There’s a lot of people still getting hung up about this. I like that you mentioned tracking it because it’s easy to say, “Oh, I probably only spent this on groceries or this on coffee…” but when you actually see the totals, sometimes that’s a little different. 

 

Patrina: That’s absolutely right. I won’t go into the whole story here but I used to spend so much money on coffee. We’ll leave out the name of the barista. I didn’t realize how much I was spending because I was not doing what I said earlier, which was budgeting and tracking where my money was going. I was trying to figure it out after I spent it. Once I really sat down to see where my money was going, to see what I had planned to spend on coffee at this barista, I thought, “Oh, my gosh, I was really spending that much?” Again, it made me become intimate with my money, realize where my money was going and actually be in control. I thought I was in control because I did what I wanted to do. I made it so I would spend it the way I wanted. I really was not in control until I told my money where it was going. I still got coffee from the barista, but not as much or spent as much on it as I did before I started budgeting. So it definitely empowers you because you are going to spend money, but now you know how much you can spend. It gives you a sense of relief knowing where it’s going because you planned it accordingly. 

 

Tom: One thing that I’ve seen have a big effect when you’re tracking your money as part of a budget, is looking at it annually. That cheap coffee starts to look like a bigger number. And it’s not just having a bigger number for the sense of shock. You can look at that bigger number and make a better value judgment of, “Do I want to spend this much on it compared to this one fancy item I want to get or something that might be of equal value?” Then it doesn’t feel like you’re just spending a few dollars here and there. It’s a real decision for hundreds of dollars. 

 

Patrina: Exactly right. And the other thing I’ll add is, in me sharing with you to look at budgeting, I am not saying don’t get coffee from your favorite barista. What I’m saying is don’t get four cups a day, seven days a week from your barista. That’s what we’re saying. Sometimes times this conversation is with people that are looking for ways to use money in different places, save more or put towards this or that and not realizing if they spent less in one category, their budget will tell them that, and then they can move that money to a category that would make good sense for their overall cash flow. 

 

Tom: You mentioned when budgeting, to budget for the things that don’t have due dates. How far do you take that? When you talk about car maintenance, do you really try to capture everything? Or do you lean on emergency fund, putting some money in there? Where’s that line drawn? Are you trying to capture everything as a budget item or let some of that buffer be an emergency fund? 

 

Patrina: That’s a great question. And if we’re sticking with car, I feel like the emergency fund or “freedom fund” which is what I call it is for what I would call an emergency. As for maintenance on your car… I don’t define that as an emergency. Let me give you an example. For my car, I have to get my oil changed every certain number of miles. Most cars are like that so I budget for that time frame. That’s not something I’m putting in every month, but for that duration from when I got my last oil changed to when I need to get it done again. It will be in that particular month. When I say budget for it, I’m not saying put it on your list of expenses for every time you get income or every month. Put the appropriate amount you expect to spend when you’re going to get that oil change. You should know when you need your tires rotated or whatever have you. With that said, if you drive out of the driveway in front of the grocery store and somebody crashes your car, that may be a time when you need to go to your emergency fund to pay your deductible or something to that effect. But maintenance should be budgeted, given you know the time frame you need to get certain maintenance done on your car. 

 

Tom: I love that. It’s exactly what I was thinking—for emergencies, accidents or even those unexpected big bills. I remember having a pretty crappy car when I was younger. If I could get out of the mechanic shop under $1,000, I was happy. But sometimes it would be a $1,500 or $2,000 bill. Especially when I was younger, I would count that as an emergency. You’ve got to keep that vehicle running if you want to work. 

 

Patrina: That’s right. That’s absolutely right. And that’s why I mentioned gas, because a lot of my clients will put their car payment and insurance on because they have a due date they’re very familiar with. But I say, “Okay, it’s great that you’re paying for the car note and insurance but you’re not going to drive anywhere because you didn’t put a line item for the gas for the car,” and it would need gas in order to move. It’s funny because it’s the one that oftentimes is forgotten on the overall budget. 

 

Tom: If we’ve come this far and we’ve got our money under control, or at least we’re aware of what the income and expenses are, what’s our next tip from you? 

 

Patrina: I call it, “Pay Yourself First.” And that is savings. You want to have, if possible, money going directly deposited into a high-yield savings account. That means you do it even before your expenses. Then automate it and forget about it. Have it in a high-yield savings account. Nowadays, high-yield is still under one percent but it’s better than your brick and mortars because brick and mortars may be at a .02 percent. A high-yield savings account right now is probably at a .50 or .60. You want to do your research and find the highest, online savings only bank, if you could, or a local credit union that has the highest interest rate you can yield from a savings account, and have your money directly deposited into that account. In your head you may say, “How much and what percentage?” I respond to that like this; personal finance is just that, it’s personal. So your percentage may be different than mine. You have to determine what’s the right amount. But here’s the tip that I will give you—automate it and forget about it. And secondly, if you’re not doing it today, start with a small amount. Make sure you can continue that consistently and then increase it incrementally as you go along. Don’t try to say, “Oh, this is a great month. I don’t have a lot of bills this month so I’m going to start off with $200,” and then next month or the very next week you’re taking some out. You have $200 in there but you’re taking it out all the time because that’s too large of an amount if you’ve never done it before. So start small, even if it’s $20 and then increase it after a month doing the $20. Usually, that’s two paychecks for those that get paid every two weeks. If that works, and you haven’t had to withdraw any, then maybe you can increase it to $30. You go that way versus going the opposite way. 

 

Tom: Automated savings is huge. Again, when I was younger I remember we had the savings option. It wasn’t retirement based, but through my employer we actually had just a savings option that made almost no money—much like nowadays. It made almost no money but just having that money come out immediately, where I could forget about, it didn’t feel part of your actual spending money for the month. The sooner it comes out, the better. The other thing I like about the online savings accounts is they often have better rates than the banks. Nothing amazing right now, but in general. But it’s also just that it’s not quite as handy is to get to that money. Sure, you can get it pretty easily. You can transfer it over. But it’s something you have to take a slight pause and think about instead of just being the savings option on your bank card when you’re at the store. 

 

Patrina: That actually supports delayed gratification. If you have your money automatically going there, then you’ve made a decision. If you want to buy something, whatever that is, if you have that money immediately available to you, you may go and make a purchase that you may possibly regret next week. When you have your money in an online savings account, in order to get it out because it’s online only, you have to transfer that money and it may take 24 to 48 hours to get it. It allows you the time to think about what you wanted and why you were taking the money out. It delays and gives you that buffer time to decide. Do you really want to spend that money? Maybe you do go ahead and buy that or decide you don’t want that. You can spend it on something else or go ahead and transfer it back into that online savings. The whole key to it, as well, is the accumulation of interest you would get from the bank. So even though it’s small, it’s better than nothing. I like free money—I call it free money. It compounds too so the longer you have it in there, the more the bank will give you for letting it sit in there. 

 

Tom: And your point about just getting started is huge, too. I’m slightly different. I complained a few times about that when I first started investing, about these mutual funds because they had high fees on them. Ultimately, they were still making some money and it got me started. There was still this balance that was very helpful at the end. Even when it’s low interest, it’s not going to be too impressive of a game but even if was zero percent, it’s just the fact you’re putting this money away. There’s something adding up. You’re going to miss it when you’re saving it, but you’re going to notice it at some point. 

 

Patrina: That’s exactly right. I love how you put that. You’re not going to miss it when you’re doing it but after a few months of doing so, you say, “Oh, my gosh! I was able to do that?” And because it’s not crippling other expenses you need to take care of, it’s money that you would probably spend anyway at the barista. You’re just taking it off the top and not having it as an option for your immediate spending. It’s yours. It’s not going anywhere that you do not have access to. But you’re taking it away from that immediacy you may think you need for whatever that item is. 

 

Tom: When you suggest that someone starts saving it in the high-interest savings account, what’s the end result? Is this for retirement? Is it for a goal like travel? What do you often find that people want to do with the savings? What’s the point? 

 

Patrina: That’s a great question and I’m going to answer it in a couple of ways. Again, I go back to personal finance. Is that for you? It may be sending your kids to college. That’s not what situation is right now. For me, it’s a retirement—the retirement home on the beach. It’s whatever you want it to be. I encourage different savings accounts. That’s the second part I’m going to answer. You may have one for your emergency savings if your car gets hit, or for the hot water tank—whatever it is. You can have one for your vacation account and one for your retirement account. When I say retirement, I’m saying over and beyond the retirement you may have with your employer or something like that. It’s extra money that you’re putting away for something in the future. The intent is, it’s a way you can save money for long-term things you need. Long-term would be longer than three months. So, if you want to go on a vacation next year, then maybe you can start saving today with little incremental amounts that equate to whatever that price is for that all-inclusive vacation you want to go on.
There is not a limit on the number of savings accounts you can have. That’s the first thing I want to say. There may be a limit on how many you can direct deposit into with your one employer, but it doesn’t mean you can’t have more than one. Your employer may only allow up to four. I don’t think I’ve seen more than four. They may have you do the majority into a checking account and but you may have three different savings accounts you can put money into. But it doesn’t mean you can’t have more than a three savings accounts. 

 

Tom: I like the idea of travel, too. Just like you said, it’s not that you can’t have the coffee, you might just want to see how much you’re spending and decide how many coffees you should really have. It’s the same with travel. If you’re saving up for it, you can get so much further ahead. A lot of people I know personally will put their travel on their credit card and then figure out how to pay it off afterwards. Interest aside, it’s still going to cost the same amount for the trip. You might as well save in advance and get that small interest rate instead of paying a larger interest rate on the other end. 

 

Patrina: And you know what? I’m glad you brought that up, because this is something that I get when I have discussions like these. “Are you saying not to pay my agent if booking travel with my credit card?” I’m not saying that. What I’m saying is, plan for your vacation. Let’s just say it’s $3,500 and you have the $3,500. You can still make the purchase on your credit card, but you have the money to pay that bill in its entirety because you’ve already saved for it. So make sure you’re coupling those two things together. The take away… I’ve saved for my vacation. I’m going to use my credit card to make the payment. I’m going to take the money from my savings and pay my entire credit card bill for the amount I planned for my vacation. 

 

Tom: And then you’re getting the best of everything. You’re getting that bit of interest. You’re saving up and you’re not paying any interest as debt. And you’re probably getting some credit card rewards and other benefits there, too.  

 

Patrina: I love it. 

 

Tom: So one thing we didn’t cover, speaking of credit, is dealing with debt. We’ve got our budget lined up. We’re starting to save some money. What do we do about debt? 

 

Patrina: Yeah, some people are debt-free, which is great. Yet, some people that find themselves debt-free may still have a mortgage. That’s a little different category in itself. One, you need to know the debt you have and a way to know that is by the budget sheet we talked about earlier. You can tackle debt, pay off with debt or pay down is by looking at where you’re overspending. Reduce your spending there and then put that towards your debt. That’s one way you can try to pay down or pay off your debt. The second can be to make money from your skills. Have side hustles or start a business in something you’re already skilled in that can bring in extra income to go toward your debt. Now, if you decide to go that route, be intentional. We talked about vacation and having to set a savings account for that. If you have a $2,000 bill—let’s say you drive Uber or whatever and you get income from it, that’s your $2,000 credit card income. You can’t pay it directly from Uber to the credit card, but you know that all the income you get in from there, you’re paying that $2,000 credit card off. You can manage the income you’re making on the side to put on that particular debt you have. Now, as you’re doing that, you still, at a bare minimum, need to pay the minimum amount on that credit card but the goal is to pay it off as quickly as possible. And your side income can help you do that. There are so many different side hustles you can do. Some people earn from podcasts like Tom and I, we’re podcasters. You can make money through that. There are a bunch of different ways. Blogging, what I will tell you about side hustles (making money with your skills) is, don’t think about it as a job. Think about what you enjoy doing the most, determine what that is, figure out how that can help somebody else and then put a price tag on it. Don’t make it a job. Don’t make it where you’re saying, “Oh, I’ve got to do this thing again!” I can talk about finances all day long. Although I just got off from work and have to get dinner for my husband, I can sit here in this chair for three more hours talking about finances because I absolutely love doing it. You want to find what you love doing. It could be watching TV. It could be reading. It could be talking. Whatever it is, there are ways you can monetize, make money from those particular skills. 

 

Tom: I’m a huge fan of side hustles, especially when it comes to paying off debt. So many people are in debt. The first thing I’m sure you’ve heard from anyone in this situation is, they’re living paycheck-to-paycheck and think there is no way to pay this debt off. A side hustle, which is literally a second stream of income, is a perfect way to do it. And it’s very motivating. If you’re in a situation where you’re going to work an extra five hours in a day or something like that, then having some kind of goal like paying off your debt is probably more motivating than saying you’re going to work extra just for the sake of working extra to see how that works out. 

 

Patrina: That’s exactly right. 

 

Tom: And I love side hustles too because you can pick something you love. Back in the day you’d have to go and get an actual part-time job to pay your debt off. And nowadays, with something like Uber, you can just turn on the app when it meets your own schedule. At least half the people I’ve talked to that drive Uber, a lot of times don’t actually mention the money as the primary reason. They’re just like driving around, talking to people and making money on the side. 

 

Patrina: That’s exactly right. I had a client. She and her husband both worked day jobs. They also both for Uber for vacation money. They went on vacation twice a year. Let’s just say the vacation was $3,500 for the two of them, somewhere all-inclusive. Each of them would drive until they collectively got to $3,500. That was their vacation. They didn’t have to put a line item in their budget and they didn’t have to touch their savings. Their Uber income was specifically for their vacations each year. Both drove and they both accumulated money into this account. So what is that? Maybe around $7,000 or more for other things aligned to the vacation. But they’re Uber driving. They were very intentional about why they were doing it and that’s how they were able to not blow their budget and not spend their expense money for their bills on vacation and still have a vacation. And the wife (of this couple) was like you said—she just liked meeting people. She would only do it on her way home from her other job and maybe a few hours on Saturday. And she met people. She was in real estate so she probably got some clients that way too. Again, you want to make sure that your side hustle is something you enjoy so that you’re not frustrated by the other thing that you have to do—your day job. Be intentional about why you’re doing it. 

 

Tom: I love that. It really is so much easier. If you like dogs you can use Rover now. You can walk dogs, dog sit—all these things and get paid for it. I don’t like to give people a hard time for what they do in their spare time, but a lot of people I’ve talked to that have debt or are having trouble paying their bills, it’s often the same people that will be at the water cooler at work talking about all the TV shows they saw the night before. So you can decide what you want to do with your time but some of the decisions might be more profitable than others. 

 

Patrina: Well, even that, you’re a critic. You can do that. There are so many ways! We’re laughing about it but the ways you can earn money on the side to pay off debt or do other things like we talked about, the list is really endless. Again, it’s about figuring out what you enjoy. Then literally Google to see if somebody out there is paying for watching Marvel movies (or whatever). You’d be surprised at how many people will pay you for either your skill or something you’re already doing to monetize. 

 

Tom: Yeah. When it comes to an interest like that, you mentioned things like podcasting, blogging. If someone wants to do YouTube, that applies to anything. You could be an avid golfer. You could be a big movie fan. Anything you can share that passion with in any of those different formats is a possibility. It’s not quite as instant an income as Uber or something like that, but it’s still in the same vein of a possible income stream. 

 

Patrina: That’s absolutely right. Let me add one other thing here. I’ll tell a quick story of my own to show you why I’m sharing the story. I wrote volume one of my book, It’s My Money—A Guided Journal to Help You Manage Your Finances, Volume Two. I was so excited. I had a cover, an editor. Oh, it was beautiful. I held the first manuscript and then I held the first actual physical copy. It was done! It was on Amazon, but nobody knew about it because I completely forgot about the marketing. I was so excited to be a published author—oh my, gosh! Whatever it is you decide to do if you go this route to help pay off your debt or save for something you want, you have to tell people that you’re doing it. You have to market it. It doesn’t have to be something you pay for. You could tell people in your Facebook group, on your social media, people in your local community. The point is, you can’t just say, “I’m going to walk dogs,” but not go to the dog park to hand out flyers. You have to tell people what you’re doing so they can consider you as the source to pay for whatever services or products you’re providing. That’s my point. 

 

Tom: That’s the biggest difference between those two different types of income, for sure. But with something like an Uber or a Rover you might just be able to log in. It depends on where your skill sets are (if you’re going to be a marketer). But thanks for running us through these three tips. Can you tell people where they can find you online? 

 

Patrina: Absolutely. First, I want to thank you for having me on the show. I had a great time. You can find me across social media @itsmymoney_. My website is, itsmymoneyjournal.info. I’m known across social streams as It’s My Money, Lady. And as Tom mentioned at the beginning, I have my new volume which is, It’s My Money—A Guided Journal to Help You Manage Your Finances, Volume Two. I’m so excited about this one. I would love for you to check that out. You can get it on my website or any of my social pages. Click the link in the bio and you can get it there.  

 

Tom: Great. Thanks for being on the show. 

 

Patrina: You’re welcome. 

Thank you, Patrina, for sharing so many great tips on managing finances and for the side hustle advice. You can find the show notes for this episode at maplemoney.com/163. Are you a member the Maple Money Show Facebook community? If not, I’d love to connect with you there. It’s a great place to ask a question or share a recent money win to encourage others. To join, head over to maplemoney.com/community to share with the group. I look forward to seeing you back here next week when Kornel Szrejber joins us to share what he’s learned from interviewing financial experts. See you next week.

I’m not saying don’t get coffee from your favourite barista. What I’m saying is, don’t get four cups a day, seven days a week from your barista. - Patrina Dixon Click to Tweet

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