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One of the first rules of investing is that you need to have a degree of diversity in your assets. That way, if something goes wrong with one asset class, you will have another asset available to pick up the slack. But how does that work if most of your assets are denominated in a specific currency, like that issued under the authority of Bank of Canada?
For some consumers and investors, the idea of an alternative currency independent of a federal government is an attractive one. In fact, over time local currencies have cropped up around the world. Even in Canada there are examples of local alternative currencies. One of the most popular — even though it might not actually be considered a true currency — is Canadian Tire Money. While it makes sense that it’s mostly for use at Canadian Tire locations, there are also other stores that accept it as payment.
But that’s not all. Some places, like the community of Salt Spring Island in British Columbia, issue local currency that can be used in participating establishments. These currencies are often backed by federally issued currency, though.
Another option is to use alternative forms of money, such as gold and silver coins (not federally issued). In the United States, there are some states, like Utah that allow consumers to use gold and silver coins that aren’t normally thought of as legal tender, such as “silver eagle” and “gold buffalo” coins, as legal tender. If a shop is willing to accept the coins as currency, for their value according to weight, then you can use it as currency, even though it’s not federal legal tender.
What About Bitcoin?
For the most part, alternative currencies operate in local areas. You can’t take your Salt Spring currency and use it in Calgary. None of the shops would accept it. One of the alternative currencies working to take the concept of alternative shopping global is bitcoin. Bitcoin is a global digital currency, created from computer processing power. If you have bitcoins, you can exchange them digitally with others for goods and services. In my hometown, there is someone who accepts bitcoins. Since the transactions take place digitally, there are no fees, and you don’t have to carry around a wallet (although you do need to be able to access your digital wallet on a computer device).
Bitcoin has received a lot of attention lately due to the fact that it is possible to use exchanges to turn in your bitcoins for other currencies. At one point, you could exchange one bitcoin for US$1,000. However, unlike other alternative currencies that are backed by more “official” tender, or by their metal content, or by some other means, bitcoin isn’t backed by anything.
And, in the end, no matter what is “backing” a currency, any medium of exchange only works so long as those involved agree that it is “worth” a certain amount in goods and services. Even barter could work as a medium of exchange — as long as you had faith in the value of what someone else is offering.
What do you think of alternative currencies? Would you consider using them?
This time of year, it seems as though materialism is ratcheted up a notch. Kids see toys everywhere, and they are encouraged to ask Santa Claus and just about everyone else for more things — things that they probably don’t need.
If you are concerned about how materialism is creeping into your family life during this time of year, here are a few strategies to limit the manifestation of the “gimmies” during the holiday season:
Start Holiday Traditions that Don’t Focus on Things
Consider family activities like shopping for a tree, putting up decorations, baking cookies, or going ice skating. Ask your parents and grandparents what they did during the holiday season, and consider adopting some of those traditions and practices. From creating ornaments for the tree to singing holiday songs, consider ways that you can enjoy the holidays while emphasizing family togetherness and making memories. There’s no need to make it about the stuff.
Encourage Community Service and Giving
Consider age-appropriate community service activities and giving opportunities. Have your children help you gather up canned food to take to the food pantry. If there is an Angel tree or giving tree in your community, have your child pick something off the tree and then help you provide a needed item for someone else. Encourage your children to go through their toys and clothes during the holiday season and choose some to donate to the local charity thrift shop. There are a number of ways that your children can get involved in giving to others and focusing on helping, even if its encouraging him or her to take a dollar out of his or her piggy bank and put it in a collection bucket.
Have a Homemade Holiday
Rather than buy everything, put together a homemade holiday in which your family members give gifts they make themselves. This doesn’t have to be things, either. Children can give “coupons” that allow others to ask them for help with chores, or for some other purpose. There are a number of fun, thoughtful, homemade crafts and ideas online. Encourage your children to personalize their gifts to others, and put some thought into the giving part of the holiday season.
One of the best ways to take the focus of material things is to express gratitude for what you already have. Getting in the habit of being thankful for the things you already enjoy is a good way to take the focus off of stuff during the holiday season. Make it a point to express gratitude during the holiday season. Tell your kids in the morning to think about something they are thankful for during the day. Tell them to watch for it, and then be ready to share it around the table. Being able to look for things to be glad of can put your child in a mindset to be contented, and to not always be thinking about things he or she wants.
What are some of your best ideas for limiting materialism during the holiday season?
It is becoming increasingly difficult for children, and parents, to burden the cost of post-secondary education. Luckily in Canada we have some options. One way that parents can soften the burden on themselves and their children is by opening a Registered Education Saving Plan (RESP) when their children are young. An RESP in Canada can be a great way for parents to maximize education savings as both provincial and federal governments offer grant contributions towards the RESPs. There are also a number of tax benefits to investing in an RESP.
Individual plans can be set up for the benefit of an individual beneficiary or a family plan can be used for more than one. Although there is no longer a maximum annual contribution to an RESP, the maximum lifetime contribution per beneficiary should not exceed $50,000.
There are number of different provincial and federal grants that certain RESPs may be eligible for. They requirements vary based upon province and the contributions made by parents (or other contributors). The Canadian government provides a grant of 20 cents for every dollar that is contributed up to a maximum of $500 every year and a lifetime limit of $7,200.
Lowered Taxable Rate
Once the money from the RESP has been given to the beneficiary, the income that is earned on the plan along with the amount of federal contributions is taxed as the beneficiary’s income. As a student, the policy holder’s child will not have much taxable income. Apart from that, they will be eligible for education and tax credits. In short, they will have little to pay in taxes. Tax-Free Transfer
Parents have always have the assurance that if their child decides not to pursue a post-secondary education, their capital contributions to the savings plan will be returned to them tax-free. With an RESP, they will have additional assurance that up to a maximum of $50,000 of the income that has accumulated in the plan can be transferred into their RRSPs tax-free up to the extent that they have unused contribution room available.
However, they should follow three special conditions to achieve this. The plan should be in effect for a minimum of ten years, all beneficiaries should be at least 21 years of age and not seeking a higher education at present, and the policy holder must be a Canadian citizen.
Aside from having the capability to transfer the RESP to their RRSP, parents can also roll over the educational payment plan to another beneficiary without any tax implications. This is only possible if the beneficiary is under the age of 21 and is related by adoption or blood.
Tax benefits aside, RESPs are a worthwhile investment that will save parents and children the headache trying to fund their post-secondary education out-right.
Thanks to technology, it’s possible to stay on top of your banking anytime you want. Not only is this helpful for you, but it can also be helpful for the environment.
Mobile Banking and Your Finances
I love mobile banking because it provides me with a way to keep track of your finances all the time. Whenever you want an idea of where you stand, you can check your account for information. It’s possible to use mobile banking to transfer funds, and accomplish a number of other tasks.
Mobile banking provides you with a great deal of convenience and access. I especially like that many banks now allow for remote check deposit. All you have to do is take the appropriate images of your checks and send them along. It makes the whole process easier, since you don’t have to go into the bank in person. Just as long as you shred the check at home, you can manage all aspects of your finances remotely.
You can also catch problems sooner with mobile banking. From errors to fraudulent purchases, the ability to check your account can help you identify problems much sooner. Mobile banking provides you with greater convenience, as well as a greater amount of control over your bank account. You can be more informed, and you can take care of problems faster.
What About the Environment?
Mobile banking can also help the environment. I got to the brick and mortar version of my bank now that I have mobile banking and the ability to deposit checks remotely. As a result, I am using much less gas, and there are fewer pollutants in the air.
If you combine mobile banking with the ability to go paperless, then you can do even more to help the environment. If you opt to receive your statements electronically, it means fewer trees cut down, and fewer greenhouse gases in the environment.
Switching to mobile banking can also have effects if you encourage others not to use paper checks as part of the effort. There are a number of services, from PayPal to Popmoney to Google Wallet that allow you to send and receive money from others without the need for writing a check. You can reduce the paper in your life, and help the environment, when you cut back on the paper checks.
On a larger scale, mobile banking has the potential to make an even bigger impact. If more people adopt mobile banking, physical bank branches could be smaller, reducing their footprints. PayItGreen estimates that if 20 per cent of Americans switched to electronic bills, statements, and payments every year, the savings would be huge: 150 million pounds of paper and two million tons of greenhouse gases.
That’s a big deal, and illustrates the power of collective action. If you can go with mobile banking and paperless finances, and convince others to do so as well, there is a very real chance that, not only will you be doing your part, but you will be part of a larger effort as well.
We are not a professional or financial advisors. Articles posted on this site are informational opinions only. Please make your own financial decisions based on personal research or see a financial advisor.
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