It’s tough being single

It’s tough being single … at least when it comes to money. Most financial plans tend to centre on milestones that have a lot more to do with couples than singles: Get married. Merge your financial lives. Buy a house. Have a child. Buy some insurance. Start saving for college — it’s a pretty traditional pattern.

Expect that today people are marrying much later or just aren’t marrying at all — to say nothing of all those relationships, same-sex or otherwise, that fall somewhere in between.

Just as with married couples though, the older singles get, the more assets they accumulate. And they’ve got an even greater need than a couple to put a plan in place that will protect what they’ve got, including that earning power. After all, there’s no spouse who’ll automatically inherit property or who can make up for some of your lost earnings if you get fired or become sick.

The asset singles most need to protect, however, is probably their earning ability. One way to do that is with a disability plan, income-replacement insurance that provides a tax-free income in the event you can’t work because of injury or illness. It’s a perk that many employers don’t offer, or at least not at the level that higher-income earners might find useful, and it’s one worth exploring.

Consider it one of your New Year’s resolutions.

Things are going to be different next year

Even the best of us make poor money choices and sabotage our financial future as a result. Sure, it’s not easy to change. But the important thing is to do something, starting right after the holidays.

For example, are you putting off saving for retirement because the “deadline” seems so far away? Or are steering clear of addressing your unwieldy debt load because it’s so intimidating? Don’t. Instead, ask yourself where you want to be in five years. Then try these simple steps…

Make a written plan. You can’t sidestep your financial responsibilities forever. Your odds of following through will increase dramatically if you set milestones. This way, you’ll hold yourself accountable for your choices.

Set specific goals. Break each one into several objectives: short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more). Talk often about these goals with a partner, friend, or family member. You might even consider recruiting someone with the same outlook and work at things together.

Budget for savings. Pay yourself first. Just as you learned to budget money every month to pay bills and cover the essentials, you should also budget to save. The amount isn’t the issue at this stage -– focus on the process.

Track your spending.
Do you know where all your cash is going each month?  Are you honest with yourself or your partner? Prove it. Keep a spreadsheet of your spending for a few months and look for patterns. Try to figure out why you failed to pick up on unanticipated costs.

Monitor the results. Make sure you keep an eye on results, periodically comparing them against those milestones. If you’re not making satisfactory progress on a particular goal, reevaluate your approach and make changes as necessary.

Consumer confidence hits a record low

No surprise that the latest measures show consumer confidence in Canada is at the lowest ebb since the recession of 1981-82. According to the Conference Board of Canada, we feel that we are now worse off than we were six months ago. And we expect to be even worse off six months from now.

People cite uncertainty about their employment prospects, which feeds directly into their ability to manage their current debt load and their willingness to spend a nickel that’s not necessary.

But arguably, the political games, the search for scapegoats and the general absence of leadership is exacerbating the lack of confidence.

The fragile political balance, means that compromise and deal-making trump bold action. On the corporate front, multinational ownership and offshore head offices have also heightened the sense of a lack of control. And on top of that, the witch hunting, finger pointing and blaming has begun.

Economists say that lack of confidence will translate into the need for an even bigger government stimulus initiative to kick start the economy. Effective leadership is never cheap, but for once we may actually be able to put a pricetag on it.

Turn and face the future

Interesting article about what makes investors tick from MorningstarAdvisor , a U.S. publication that offers practice management and business building advice to financial advisors.

For months now, people have been abandoning stocks in a kind of slow-motion crash that reveals growing apprehension about what is likely to be a long and deep recession. In short, they’re running scared.

To understand why you have to look at how the “physiology of fear” affects investors, says Deborah Price, founder of the Money Coaching Institute.

The more people listen to the news and replay all the negative information, the more fearful they become. The barrage of bad news triggers the amygdala — that’s the part of the brain that stimulates the fight, flight or freeze response. And that’s where they get into trouble.

People can tolerate this fear, however, if they’re fairly sure the situation is going to end within a specific time frame. That’s how most of us handle roller coasters. We ride them because, on some level, we have a sense of trust and we know the ride is going to end.

Clearly, no one can be sure when this current market situation is going to turn, but we do know that — historically — U.S. recessions have averaged somewhere between eight and 16 months. And we also know that the stock market is a discounting mechanism which historically bottoms well before the end of a recession.

There, feel better?

Giving credit where it’s due – and where it’s not

In keeping with the tone of the times, U.S. regulators have introduced consumer-friendly new rules for credit card issuers: as of July 2010, issuers can only raise interest rates on new cards and future purchases, but can’t jack up the charges on current balances. Furthermore, card holders will get 45 days notice before any changes are made to any of the terms on an account.

Not surprisingly, consumer advocates are now urging the introduction of similar rules for Canada – including one that would compel card issuers to pass along interest rate decreases in a timely way.

That’s a very popular stance to take and this next point is sure to be, well, really unpopular.

It’s just a reminder that people who don’t pay their credit card balances off on a monthly basis are carrying high-risk, unsecured credit – the most rare and expensive form of credit that exists, especially in these illiquid times. If they were corporations, they’d be paying a massive premium for that privilege.

Unlike the old Dire Straits song, you can’t get your money for nothing – or your chicks for free.

Banking on goodwill

One of the biggest challenges for business leaders these days is to stay engaged and closely attuned to what’s going on outside their immediate circle. It’s human instinct, after all, to turn inward during times of trouble and to focus on the urgent matters at hand.

The perils of succumbing to that, however, are splashed all over the front page: chartered banks, which have no shortage of their own concerns, are coming under fire for being self-absorbed. Given the potentially steep cost of grassroots backlash against them, it might be a good idea for the bank chairs to listen up.

First, no one less than the Governor of the Bank of Canada, Mark Carney, is exhorting the chartered banks to help re-float the faltering domestic economy by lending to credit-worthy businesses and individuals at the new, lower rates – instead of hoarding capital as a cushion against bad loans.

The Premier of Ontario, Dalton McGuinty, is also scolding the Big Banks for their call for a provincial corporate tax cut from 14 per cent to 10 per cent. He wasn’t too impressed with their suggestion that if a cut isn’t forthcoming in 2009, there will be job cuts in the Ontario-centric financial services sector.

Taking a careful reading of the general mood – particularly on the political front – it might be a good time to cultivate an image as part of the solution. Not a new source of trouble.

From denial to acceptance: the story of a budget

It’s always fascinating to watch the elaborate process of a government shifting from denial to acceptance. Instead of a simple, “Oops, we goofed,” there’s always lots of chin-stroking, earnest pronouncement and, this time out, a desire to spread the blame by getting collegial and consultative all of a sudden.

Just weeks after saying there wasn’t an economic crisis and that there would be no deficit, the Conservative government is now admitting what we all knew already: Canada is looking at deficits for at least the next four years and most likely this year too – despite the forecast of a $2.3 billion surplus.

As part of the necessary shift, it’s not surprising that Finance Minister Jim Flaherty has formed an 11-member economic advisory committee to help him shape the upcoming January budget. After getting pelted with criticism over his recent economic statement, he clearly wants to spread the responsibility around, and the options of including other people from business and academia, created the perception that the Tories are on top of the file and prepared to dig in for the duration.

By the time this is all over, perhaps they will even succeed in convincing themselves that they always knew things would be this tough.

An Apple a day doesn’t keep rumour away

How much is a human life worth? Well, if you’re Steve Jobs you’re apparently worth about $20 billion in the market capitalization of the company you run.

With today’s new that the founding CEO of Apple will not make his annual speech at the upcoming MacWorld event, persistent rumours about Mr. Jobs’ health have re-surfaced. Apple’s stock was down about five per cent even before the rumours began swirling again when someone noticed that he wasn’t a confirmed speaker on the agenda.

Apple is as notorious for its internal cult of secrecy as Mr. Jobs is for his controlling ways. When speculation about the cause of his gaunt appearance first began, his top spokesperson even publicly lied to shareholders at his instruction. Something for which neither she nor Mr. Jobs expressed regret.

You’d think that a company as savvy and leading edge as Apple might understand better than most, just how hard it is to keep things on the down-low in a wired world. A world they helped create.

News you can no longer afford to ignore

Time was we could all afford to yawn or change the topic when we heard such news as the federal finance minister is meeting with his provincial counterparts in Saskatoon.

The economy being what it is, however, we no longer have the luxury of plugging our ears and humming: these are pre-budget consultations which have a direct and immediate bearing on our respective bottom lines – not to mention the political and economic consequences that hang in the balance.

The provinces are in dire need and are pushing for the federal government – which most of them were actively dissing up until a couple of months ago – to push forward with big-ticket infrastructure projects to kickstart the economy. That’s supposed to be the golden bullet that will create jobs and, of course, get tax revenues rolling into government coffers once again. The catch is that many of these projects were supposed to be public-private sector partnerships (known as Three Ps in certain circles) and the private money isn’t really there anymore.

On the political front, if Finance Minister Jim Flaherty doesn’t get it right, the Opposition will defeat his January budget and send us all back into political purgatory – wasting even more time at such a critical juncture.

So stay tuned: who knew Saskatoon could be such a hot spot in December?

A Facebook friend you may not want?

Trust the Aussies to set a precedent as new adaptors: an Australian court has ruled that it is acceptable to use social media – specifically, in this case, Facebook – to serve legal notice.

This is a move that’s going to be tracked in quite a few jurisdictions because to date, there’s been considerable ambivalence about how to treat this newfangled technology. Many companies and most levels of government in Canada have prohibited or strictly limited access in the workplace. The underlying belief is that employees will spend all day poking each other instead of working and productivity will suffer.

That conviction, however, can come at a cost. Social media are an important way to keep in touch with what others are saying, doing, thinking. It’s an important if non-traditional, window into emerging trends and the collective unconscious.

And, as they’ve discovered in Australia, it’s a highly efficient to reach out and super poke someone who isn’t necessarily eager to be found by creditors or other authorities. Which is just the beginning of an inevitable attitudinal shift.