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Financial Literacy

ON - Adopting Effective Money Management Practices

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Ontario edition

 

Caring for your grandchildren, especially when you don’t expect it, can

present unforeseen challenges. Many grandparents experience difficulty

managing their finances and budgeting from their income appropriately,

particularly because they have retired, are unable to work, or did not

think they would have to take care of their grandchildren.

You may be unsure about how to budget your monthly income to raise

your grandchild. You may find that, financially and socially, raising

children today has changed substantially from what you experienced

when you raised your children. This pamphlet is designed to help you

budget and manage your money, and prepare for the costs of raising

your grandchild.

Adopting Effective Money Management  Practices: Budgeting for the needs of Custodial  Grandchildren Ontario Edition

Caring for your grandchildren, especially when you don’t expect it, can  present unforeseen challenges. Many grandparents experience difficulty  managing their finances and budgeting from their income appropriately,  particularly because they have retired, are unable to work, or did not  think they would have to take care of their grandchildren.

You may be unsure about how to budget your monthly income to raise  your grandchild. You may find that, financially and socially, raising  children today has changed substantially from what you experienced  when you raised your children. This pamphlet is designed to help you  budget and manage your money, and prepare for the costs of raising  your grandchild.

Why do I need to budget?

  • Budgets can help you manage your money effectively. This can be very  helpful for reducing the stress associated with unexpected financial  needs, like medical needs or important school trips, arising from  caring for your grandchildren.
  • Budgets can help you prepare for costs you know will arise. As a  grandparent caregiver, you can plan for birthday presents, activities,  or lessons that your grandchild may need.
  • Using a budget helps you see exactly how you are spending your  money so that there are no surprises.
  • A budget benefits you, so it is important to be honest with yourself  and realistic when you are creating your budget.

How do I create a budget?

A budget contains a list of your planned and actual expenses and  your income, which includes all of the money you receive from work,  government and investments.

  • ½ Income does not include sources of credit (for example, credit cards  or lines of credit).

A good principle for budgeting your money is the 50-30 20 rule.

  • 50% of your income should be spent on needs, including housing,  heating, food, etc.
  • 30% of your income should be spent on wants, including  entertainment, gifts, and eating out.
  • 20% of your income should be put toward savings. It is always a  good idea is to put some money away for emergencies, and some  for expected purchases.
  • If you cannot save that much money, aim to save at least 10%  every month in an emergency fund. This can help you deal with  unexpected expenses that will come up.

Step One: Track Your Monthly Income and Expenses

  • Keep all pay stubs, bills and receipts for cash purchases to help you  figure out what your monthly income and expenses are. About six  months’ worth of paperwork will give you a good picture of your  income and expenses.

Step Two: Record Your Monthly Income and Expenses

List all of your monthly income sources and your expenses.

  • Use a budget worksheet to add up your income and expenses for the  last month.
  • If you have certain expenses that are paid annually, divide the number  by 12 to determine your monthly cost.
  • Continue tracking your income and expenses in this way every month.

Step Three: Calculate Your Total Money Available

Subtract your total monthly expenses from your total monthly income to  get your Total Money Available per month. Finally, subtract any loan and  credit card payments from your Total Money Available per month to see  if you have money left over or not.

If you do not have enough income to pay your expenses, you need to  look over your budget and see where you could spend less money.

We have created a sample monthly budget you can use to help you  balance your monthly income and expenses. You need only input the  information and the spreadsheet will help you calculate your budget and  help you balance it properly. You can access the spreadsheet at  www.nicenet.ca.

How Do I Stay On Budget?

Be honest and realistic. Spend less than you earn. Make sure you list  everything. Set short-term (like paying off your total credit card balance)  and long-term goals (like an account for planned savings). Learn to say  no if you cannot afford what someone is asking you to spend.

Tips for grandparent caregivers

Grandparents who care for their grandchildren sometimes find that what  children require for school and social activities has changed since they  last raised children. These tips may help you stay within your budget as  you raise your grandchildren.

  • It’s okay to say no to your grandchild. You can use this as a chance to  teach your grandchild about saving up for something he or she wants.
  • Get your grandchildren involved in budgeting if you can. Teaching your  grandchildren how to budget can help them understand how your  family decides to spend money.
  • Your grandchild may participate in clubs or sports that require uniforms  or have higher start-up costs, like hockey or music, or scouting.  Contact the group administrator or leader to see if there are subsidies  you can access or a uniform clothing swap that parents organize.
  • If your grandchild is part of a sports club or other group activity, or  wants to join one, find out if the group offers reduced or subsidized  costs for lower-income families. Don’t forget to claim these expenses  on your taxes- the Federal government offers tax credits for children’s  activities, and your provincial government may also offer tax  credits for these activities.
  • If your grandchild attends a school where students wear uniforms,  contact the school to find out if and when they have a clothing  exchange, or if some pieces do not need to be official uniform pieces.
  • Plan ahead for expenses you know are coming. For example, put  money aside regularly for your grandchildren’s new school shoes, or  sports equipment.
  • Give your grandchild a small allowance if you can afford it. Depending  on what you might have them budget for, fifty cents to one dollar per  year of age, weekly is a good rule. Help them learn about saving up for  things they may want, like toys, outings, or other fun ‘wants’. Instead,  you may want to encourage them to earn money by doing chores that  are not ordinarily expected or by working as they get old enough.
  • Public libraries and community centres may offer subsidized or free  activities for lower income families. Check your local community  centre or library for information about reduced cost or free activities.
  • Your municipality may offer subsidized child care. If you can’t afford  day care for your grandchild, you may be able to get assistance from  your city. You may also be able to share child care responsibilities with  friends or relatives, by taking care of children in exchange for child  care time.
  • Some communities offer subsidized dental care for lower income  families. If you cannot afford to pay for dental care for your grandchild,  your city may offer a subsidized dental care program.
  • Where applicable, consult your city’s Internet page for more  information, or talk to your grandchild’s doctor or school. If your city  has a municipal helpline (311), you may be able to get information  from there.

You should not rely on this pocket tool for financial or legal advice. It provides general information only. NICE is not responsible for any use of the information other than for general educational/informational purposes and no claim can be made against NICE or any of its personnel for any such use.
National Initiative for the Care of the Elderly (NICE)
246 Bloor Street West, Room 234
Toronto, Ontario M5S 1V4, Canada