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Inflation: What does it mean for you?

Remember when shops closed in March 2020? And then they just… didn’t reopen? For like, a long time? Something about a pandemic?

That closure and others like it were necessary to keep people safe. But those closures also had expansive economic impacts that Canada is now attempting to recover from. 

To put it in a nutshell: in order to encourage strong economic activity within Canada, the Bank of Canada decided to leave the cost of borrowing money low. This meant people would  borrow—and crucially, spend—more money, keeping currency circulating in our economy. 

But choices like this one can bring on inflation, which can be a good thing or a bad thing. This post looks at what inflation is, what makes it happen, and what it means for us. 

What is inflation?

Our friends at Investopedia explained it simply when they wrote “inflation is the decline of purchasing power of a given currency over time.” No faff with those guys. 

Often, inflation is illustrated by imagining a grocery basket full of eggs, bread, and… wine. (This “basket” has to include a variety of products and services to be a good measure of inflation, and is often represented by the Consumer Price Index, or CPI.) This basket we’ve got will cost us $10, say. 

When inflation increases at a nonoptimal rate (i.e., when there’s too much inflation), the cost of goods rises. We might return to the grocery store to purchase the exact same basket of goods only to find the cost is now $15. 

This means that our power to buy goods, per unit of currency, has diminished. This is how inflation “erodes” the real value of cash, and cash holdings or savings, over time. 

Economists have been expecting an uptick in inflation; its absence is in part what encouraged the Bank of Canada to take the actions it did and leaving interest rates low. 

But this choice, and a variety of other factors, means we could see a rise in the rate of inflation in the next several years.

What causes inflation?

There are three general types of inflation: demand-pull inflation, cost-push inflation, and built-in inflation. An optimum level of inflation is actually a good thing, because it encourages economic activity and employment. 

Demand-pull inflation happens when an economy is well stimulated, and consumer demand for products actually outpaces the production capacity for those goods. As a product becomes more scarce, its price can rise. A classic example of  supply and demand.

Cost-push inflation is the opposite. This happens when the cost of production rises, and that cost is passed along the supply chain to the consumer with the ultimate price increase of said product. 

Built-in inflation is related to what can be called the wage-price spiral. When consumers see the cost of living rise—even a little—they assume it will continue and demand higher wages to compensate. These higher wages are reflected in the cost of production, which, again, drives prices, and so on. 

In Canada, we’re seeing bits of all of these types of inflation. This article itself could be considered a product of built-in inflation. Here we are, telling you that based on our research, increased inflation could occur in the next few years; this could drive you to change your behaviour. 

Similarly, as the Bank of Canada keeps the cost of borrowing low, consumers will likely continue to spend, potentially driving up prices. And ongoing problems in the global supply chain—remember when the big boat got stuck?—could force higher production costs down the supply chain onto the shoulders of consumers. But only time will tell!

What does inflation mean for me?

Inflation can have several impacts on the average consumer, both positive and negative. If inflation falls, it means your purchasing power grows. If it rises, it means your purchasing power falls. 

Inflation is always a possibility, and there are a few things you should be aware of. There are a myriad of potential impacts of inflation, but here are three you might find more likely to impact you. 

Consumer purchasing power may fall

Your wine, coffee, eggs, bread, furniture, car, rent, and imports (for example) may cost more than they do today. Some experts say it’s possible to insulate your savings against inflation by not holding cash, but rather other instruments like equities. Holding specific financial products may help counteract the erosion caused by inflation, but every scenario is different. 

Talk to a financial  advisor or broker if you’re worried about your holdings. 

Borrowing costs may increase

To counteract inflation, the Bank of Canada may opt to raise interest rates. If you have a variable interest rate on a personal loan, student loan, line of credit, or mortgage, this may impact you, as the interest rate on your balance owing may increase. Talk to your bank or broker if this concerns you. 

Spending may increase

When interest rates climb and inflation gets out of control, people tend to withdraw from the market. Worried about the economy’s future, they feel they should save what they already have. 

But in the early stages of inflation, oddly, the opposite tends to happen. 

With continued inflation in the forecast, consumers often actually increase their spending. This makes sense: the value of the dollar will likely fall, but the real use-value of a pair of new running shoes with room to grow for little Tommy or a new coat for wee Jimothy that’ll fit until  he’s older stays the same. The idea is to buy now, when prices are lower, investing in goods that won’t themselves lose value. But this increase in spending can actually drive inflation, as in the demand-pull scenario. 

Inflation: we can’t avoid it. That’s why it’s important to have a good understanding of economic trends like these so we know how to best respond and adapt as our economy recovers in unpredictable ways. 

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Why you need a financial plan

We all have goals. Whether career, life or family, there’s usually something that each and every one of us envisions for ourselves. Owning our own home, being our own boss, or retiring somewhere warm—where there’s no snow, amirite?

When it comes to financial goals, achieving them is usually easier said than done. Enter the financial plan. A financial plan is your personal roadmap to financial security and, eventually, financial independence. Think about it like a business plan: In order to succeed in business projects, companies will lay out a business plan to help them bring their projects to fruition and ensure their business sustainability. Financial plans act the same way as a business plan in that they will guide you at every step of your financial life.

Here are some of the benefits of having a plan for your financial goals.

  • Build a better, more secure future for yourself

With a financial plan in place, you’ll have a better understanding of your spending habits compared to your income. This will help you track your expenses and increase your net savings every month. 

  • Have enough for an emergency

A good financial plan should include an emergency fund that will help you cover any unexpected expenses or support you in case of an income loss. It’s usually recommended to have 3-6 months of your living expenses in your emergency fund.

  • Prepare for retirement

Your financial plan should not only include your short-term goals like saving for a trip or a car, but also your long-term goals like saving for retirement. 

It may seem tedious and—let’s face it, no fun at all—to start saving for your retirement when you’re young. However, the sooner you start saving , the better prepared you’ll be for a comfortable retirement. Your older self will thank you.

The road to financial independence

Imagine waking up every morning and being able to choose how you want to spend your time: do you want to work today or do you want to take advantage of the beautiful sunny day to go for a walk or hike instead?

This is exactly what financial independence is all about: having the choice to work or not.

Being financially independent means having saved enough money to cover your essential and leisure expenses. You no longer need to go to the office to pay your bills.

Since everyone’s situation is different, we recommend you meet with a financial planner to figure out what’s needed for you to achieve financial independence.

Unfortunately, there’s no blueprint to reach this goal: your financial situation and essential and leisure expenses may be different from those of your neighbour.

An expert can also help you establish a savings and investment plan to achieve financial independence in the most efficient way.

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A Canadian Dream for everyone

So what is the Canadian Dream?

Our friends at Mogo wanted to find out for themselves, and recently carried out a survey with members of the Angus Reid Forum, where they found that Canadians consider financial security and climate health as essential elements of the Canadian Dream.

Financial security certainly helps Canadians pursue their goals, but achieving these goals all starts with access to financial services. As financial technology companies continue to develop innovative tools that empower Canadians to save and invest more, they enable each and every one of us to unlock success and pursue our Canadian Dream. 

The financial challenges that we face are different from our parents’ generation, so we need different financial tools. Luckily, we have more financial options available to us than ever before, and when used correctly, they can get us closer to achieving the dream. 

Canadian Dream study: Key findings

From an online sample of 1,000 Canadians, the study found a clear picture of the top priorities for Canadians today.

When asked what they think the most important aspect of the Canadian Dream is to them, the number one choice for Canadians was ‘financial security’ (33%). In second place was the ‘freedom to follow personal dreams’ (24%), followed by buying a home (11%) and living without discrimination (11%), with ‘having a family’ coming in last (6%).

Asked what is most important to them personally, 33% of Canadians said, ‘providing for their loved ones,’ followed by ‘enjoying life right now’ (29%), ‘protecting the environment’ (13%) and ‘building wealth’ (11%).

Based on the above, we can see how essential economic stability is for Canadians to achieve what’s important to them. 

How can Canadians achieve this dream for themselves?

Financial technology companies exist to make financial services more accessible and affordable for Canadians. With the wide array of tools available, it’s now more possible than ever before for Canadians to achieve their dream. We’re excited about what Mogo’s building to help Canadians gain control over their spending and get on the path  to building real wealth—all while helping the planet at same time.  

Mogo’s goal is to empower Canadians to build a secure future—both in terms of personal financial security and a healthy planet. And with the help of the MogoCard, it could be easier than ever.

For many Canadians, building wealth to secure a comfortable future is the most important aspect of achieving their Canadian Dream. The path to financial security might include never spending more than you earn, paying down debt fast, and then investing what you don’t spend (but everyone’s circumstances are different).

The MogoCard is here to help Canadians on their journey to financial security. Loading up your MogoCard with the amount of money you know you have available to spend gives you a set spending budget. Plus, you can stay on budget with helpful push notifications that are sent every time you make a purchase. According to another Mogo survey, some MogoCard users reported saving an average of $201 per month just by using their card, and 91% said the card helps them better control their spending.1 

That could be put towards an extra debt payment, or a bigger monthly investment. 

With financial security and climate health being deeply interconnected, how Canadians manage their money can play a big role in achieving the Canadian Dream. Mindful consumption could help Canadians build wealth responsibly, so you can still live the life you want while saving up for your future (and helping to protect the planet).

This is why Mogo’s built a climate focus into many of their products. Take the MogoCard, for example, for every purchase made with the card, Mogo will plant a tree on your behalf with the help of their friends at veritree. Planting just 10 trees a month could make you climate positive by removing more CO2 from the air than the average Canadian produces. That’s only 10 taps of the MogoCard per month!2 It’s a smart way to spend money while helping to fight climate change.

The Canadian Dream is simple

All of this taken together, the Canadian Dream is a simple one. Canadians want to be able to live comfortably and securely in a healthy climate that doesn’t put them or their families at risk.

These two tenets of the Canadian Dream are deeply interconnected, and access to financial services that help Canadians manage their money plays a central role. 

Just like each of us is unique, so are our financial situations. Taking a few minutes to understand the tools and services that are available to us, can set us up for financial success, and maybe even the Canadian Dream.  

Mogo Inc. is the parent company of Moka Financial Technologies Inc. (“Moka”), and Mogo Finance Technology Inc. (“Mogo”) is an affiliate of Moka. This blog is provided for informational purposes only, is not intended as investment advice, and is based on findings of a study/survey conducted by Mogo Inc. from September 10-14, 2021, with a sample of 1,000 online Canadians, outside Quebec who are members of the Angus Reid Forum. The study/survey was conducted in English only. The precision of Angus Reid Forum online polls is measured using a credibility interval. In this case, the poll is accurate to within +/-3.1 percentage points, 19 times out of 20. All sample surveys and polls may be subject to other sources of error, including but not limited to coverage error and measurement error. If you want to read more about the key findings of the study, those can be found here.

*Trademark of Visa International Service Association and used under licence by Peoples Trust Company. Mogo Visa Platinum Prepaid Card is issued by Peoples Trust Company pursuant to licence by Visa Int. and is subject to Terms and Conditions, visit for full details. Your MogoCard balance is not insured by the Canada Deposit Insurance Corporation (CDIC). MogoCard means the Mogo Visa Platinum Prepaid Card. To apply for any Mogo product, you must open a MogoAccount and pass identity verification. MogoAccount is currently only available to individuals in Canada (excluding Quebec).

1-Based on an online survey of active MogoCard users by Mogo Inc. conducted between July 13, 2021 and July 16, 2021, with 1,446 respondents to a combination of multiple choice and fillable text box questions. 91% of respondents agreed that the MogoCard can help them better control their spending. 66.5% of respondents reported that they were spending less on discretionary spending now that they were using the MogoCard, with respondents reporting that they believed to have an average savings of $201 per month (based on 902 respondents who specified an amount and excluding 60 respondents who did not specify any amount).

2-An average Canadian emits approximately 42,000 lbs of CO2 in one year. Each tree will absorb approximately 500lbs of CO2 over its lifetime (approximately 25 years). For every purchase made with the MogoCard, a tree will be planted. If you used your MogoCard for 10 purchases each month, 10 trees would be planted. If 10 trees were planted every month for a year, that would be 120 trees, and those 120 trees would absorb a combined total of 60,000 lbs of CO2 over their lifetimes (25 years), making the average Canadian climate positive. Learn more: Blog. 

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How to prioritize your savings goals

A down payment or a new car: which takes priority in your savings plan?

Canadians often have complicated, even competing, financial goals. 

Saving for retirement, a down payment, this year’s vacation and a new couch? If you’re struggling to do any of these things efficiently, you’re not alone. 

Assigning priority to our savings goals—and designing saving strategies to complement this priority—is no easy task. But it’s necessary if we want to reach our goals as quickly as possible. Here are a few tips to help along the way.

For the purposes of this article, we’re assuming that you don’t have any debt to pay off. If you do have debt—that’s OK! Everyone’s situation is different so it’s important to do your own research and make decisions based on your personal circumstances. That’s the smart thing to do anyways—you know your finances best!

Determine the cost of your goals

The first step? Figure out the cold, hard facts.

Want a new car? What is it actually going to cost you—payments, interest, insurance, gas and all? 

Maybe you want to go on vacation. Think big picture: a trip to Paris is going to cost more than just a plane ticket, hotel, and a pass to the Eiffel Tower. You’re going to need transit fare, a budget for dining out, and probably some extra money for souvenirs. Oh, and don’t forget the exchange rate!

What about purchasing a home? Maybe as a first time home buyer, you’re eligible to purchase a home in Canada with only 5% down. But is that worth it? You may be charged more in interest over time, or face greater penalties if you default on your payments. Is it actually cheaper to purchase with 10% down? 

Once you’ve got the figures—and be realistic here!—you’re ready to start prioritizing.

Rank your goals based on necessity

Next, think about necessity. 

It’s a good rule of thumb to first save for emergencies. If you don’t have an emergency fund, you’re vulnerable to sudden expenses like a broken down car, a leaky roof, or even medical bills. Saving this lump sum first enables you to quickly get onto your real savings goals—with added peace of mind!

Then, thin the herd. Do you really need to go to Paris this year? Honestly—what about next year?

Ranking your goals by necessity is not intended to suck the fun out of your goals. But it’s a simple fact that dividing your income up into several portions for several savings goals will slow down your progress on all of them. 

So, try asking yourself: do I need a new car right now? Yes? Maybe I should move the Paris trip to next year and double down on buying a new car sooner. 

Set deadlines for your savings goals

This tip is probably the most important when it comes to prioritizing your savings goals—and deciding which strategies to use to reach them.

The idea is simple: when are you going to need this money? The answer to this question will determine how much you need to save and which tools you need to use. 

If you’re saving to replace the transmission of the car you use to get to work everyday, you would probably want to allocate as much money as you can to this short-term goal. This might look like re-allocating money from elsewhere in your budget to increase the amount you can contribute this month, growing your principal savings balance. 

If you’re saving for a down payment on your first home, by contrast, you’re probably looking at a couple years of focused, consistent saving. 

In this case, it probably doesn’t make sense to save every single spare penny, leaving no funds for fun, vacations, or other “wants”. You still need to be able to live your life. Instead, you might consider opting into a tax free savings account (TFSA) which you use to invest into low cost exchange-traded funds (ETFs). Investing your savings—even over the course of five or six years—can really contribute to its growth. 

Meanwhile, your retirement fund is also a different beast. If you’re retiring in 40 years, you’re probably going to be counting on the magic of compound interest. It probably doesn’t make sense, therefore, to pour *every* *single* *dollar* into your retirement savings starting today. 

Instead, you may want to find a reasonable percentage of your income to contribute every single month. But because you’re on a much longer timeline, this amount might be lower than what you’d contribute to a medium-term down payment savings account or a short-term car repair account. 

Saving is about strategy

To summarize, short-term savings goals are the least able to take advantage of amazing tools like compound interest, and as such, these probably need more capital contributions up front. The longer the term of your goal, the more you can simply set it and forget it. 

Using these tips and your budget, you can figure out how much money you should be directing into which savings account every month. As always, consistency is key. But being thoughtful about your savings strategy and accurately prioritizing your savings goals is a close second. 

You got this! 

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Emergency fund: Why you need one

There’s an astonishing amount of content on the internet that says you don’t need an emergency fund. But in all likelihood, that isn’t true. No matter how great your insurance is (or how expensive it is!), an emergency fund is always something good to have on hand. 

You need an emergency fund. Every Canadian does. Luckily, these funds are some of the simplest to amass and the easiest to maintain. 

What is an emergency fund?

An emergency fund is a fixed amount of cash that is kept on hand for use only in emergencies. 

These funds are generally saved up only once, and then topped up as the funds are used. They’re not something you contribute to forever.

These funds are intended to pay for unexpected expenses that require immediate action and that aren’t otherwise covered by Canada’s social security net, like employment insurance or medicare. 

Emergency funds are designed to help prevent you from going into debt, or from being unable to pay for something you desperately need. They enable you to handle surprise expenses without tapping your savings.

How much should I save in my emergency fund?

This number is different for everyone, but the ideal emergency fund would pay for six months of your living expenses, assuming you had absolutely zero income during that period. 

This might sound like an intimidatingly large number to save, but once you have it, you can rest assured that losing your job or needing a car engine replacement wouldn’t put you heavily in debt. 

Many Canadians live paycheque to paycheque, and any sudden strain on their finances could jeopardize everything. With an emergency fund, you have a cushion to fall back on. 

To calculate your ideal emergency fund value, add up the monthly cost of the things you need to live, and multiply by six. These items may include:

  • Your monthly food budget, possibly excluding dining out and alcohol purchases
  • Your rent or mortgage payments
  • All insurance payments, such as home, car, health and pet insurance
  • Utility bills, including phone and internet bills
  • At least your monthly minimum debt payments, but ideally, 1.5x that amount as minimum payments do little to actually pay down your debt

If you lost your job tomorrow and weren’t going to find another position for six months, you would need to treat your emergency fund with care. For many Canadians, losing income would require families to rein in expenses.

It’s important to be realistic about what it would cost you to live comfortably but perhaps sparingly for several months and start there. 

What are emergency funds for?

Emergency funds are for expenses you’ve probably encountered before and have had to scramble to manage, or have had to withdraw money from your savings to cover.

These include things like:

  • Insurance deductibles following a car or home accident
  • Dental or eye care which is either an emergency or simply required but not covered by your insurance
  • Big home repairs, like a leaky roof or cracked foundation
  • Deductibles and related expenses for pet health care, like emergency surgery
  • Or even a new laptop if yours breaks and you need one 

Emergency expenses are one of life’s givens (along with death and taxes). The best way to handle those expenses is to be prepared in the first place. Then, when you’re faced with a scary expense, you know there’s money set aside for just that reason.

It’s a win-win. Emergency funds are good for your financial health and your peace of mind.

How do I create an emergency fund?

When saving an emergency fund, it’s important to be thoughtful about your strategy. 

For example, saving up this cash in your chequing account may expose it to accidental use. Therefore, it’s important to find a safe place to keep it (not in your mattress or a hole in the backyard, though, k?).

You may choose to open a savings account for your emergency fund. When selecting an account, ensure that:

  • You pay very low or no fees, 
  • There are no penalty fees for withdrawing funds at any time, 
  • You earn interest on the money you save.

Here are some more tips on building your emergency fund from the Government of Canada.

Moka’s automatic roundups are another way to help you build your emergency fund and savings. Your spare change is automatically rounded up and invested in a fully-managed, diversified portfolio of exchange-traded funds (ETFs), making saving money easy and effortless. Plus, you can speed up your savings by setting up recurring weekly deposits or multiplying your roundups. 

Once you’ve selected your saving strategy, determine how much you’d like to save every month. Budget for this amount, and be consistent in your savings. With that, you’re well on your way. 

After you’ve reached your desired amount, you may choose to reallocate your monthly savings to another savings goal. If you use your emergency fund, top it up. Rinse and repeat.

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Managing debt: Where should you start?

When it comes to tackling your debt you might find yourself wondering, where to start? This is totally normal! It’s easy to feel overwhelmed but with a few first steps, you can create a repayment plan that will set you on course to becoming debt free. 

The first step is to list all of your current debts. This includes not only your loans and credit card balances, but also your unpaid utility bills, phone bills or even a loan you took from your cousin’s neighbour’s colleague months ago. 

Having an overall picture of your debts ensures that you don’t forget any creditors when creating your debt repayment plan.

The next step is to determine your ability to repay your debts. To do this, you need to analyze your budget by listing all of your expenses, and whether they’re essential or discretionary. This will allow you to see how much you have left each month to pay off your debts comfortably.

Finally, prioritize one debt at a time, this way you can  focus all your efforts on eliminating them one by one. You should still continue to make your minimum payments on your other debts during this period so that they don’t affect your credit report.

This leads us to our next question…

Which debt should you prioritize first?

You should always prioritize the debt with the highest interest rate, since  they cost you the most. 

It’s important to know that your debt payment is broken down into two parts: one part of your payment is the interest payment, which goes to pay the interest fees, and the other is the capital payment, which pays the principal (the original amount borrowed). The higher your interest rate, the higher your interest payment will be, and the lower the capital payment to actually pay down the principal.

Note that the principal payment is your real payment toward your debt. So, when the interest portion of your debt payment is higher than the capital payment, it will take you longer to pay off your debt. That’s why higher-rate debt should be tackled first.

If you’re deciding between two debts with equal rates, choose the one with the smaller balance. Remember, paying off debt isn’t  a sprint, but a marathon. You need to break down your ultimate goal of paying off debt into smaller goals to keep the motivation you need to get through your plan. That’s why paying off your smallest balance first (when the rates are equal) will motivate you to keep going.

If you have multiple high-interest debts, it’s recommended that you use the Avalanche strategy to accelerate your debt payment. With this strategy, any time you pay off one of your high-interest debts in full, the freed-up money that would have been used for that debt payment is allocated to the payment of your next highest interest rate debt and so on. As you pay down each debt, the extra money will increase over time, which will help you get out of debt faster.

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Rent and food: How much should you be spending?

Here, we take a look at how much you should really be spending on rent and food and what you can do to lower these fixed costs.

How much should I be paying per month on food? 

Eating. Groceries. Cooking. We all have a love-hate relationship with food for a myriad of reasons. Planning your next meal can sometimes be fun, while other times, not so much. No matter how or where we consume it, we’ve all wondered: am I spending too much on food?

There’s no one size fits all answer to how much should be spent on groceries since how much food you need varies from one household to the next. Your food needs may be different from those of your neighbour: for example, a family of two adults and four children will have different needs than a person living alone.

The Credit Counselling Society estimates that you should spend between 10 to 15% of your budget on food. This means between $4,000 and $6,000 per year for a person earning $40,000.

If you feel that your food expenses exceed this percentage, here are some tips to help you spend less in this category:

1. Cook in large batches: This not only saves you time but also prevents you from wasting food. You also avoid buying pre-made meals during your busier times.

2. Avoid pre-made meals: Cooking for yourself is not only healthier but also better for your wallet.

3. Shop around for specials: Always be on the lookout for price reductions to save money. To do this, try using the Flipp app, which scans local grocery store specials every week.

4. Avoid processed foods: These are generally more expensive than raw foods. It’s also  better to chop, grate or grind food yourself to save a few bucks.

5. Plan your meals for the week and make a list: Having a plan will help you manage your expenses and budget your grocery spending. 

Am I paying too much for rent?

Housing expenses (rent, utilities etc.) are a significant part of everyone’s budget, so it’s important to pay close attention  and how much you’re spending on them every month. 

Rent prices vary from one city to another. For example, the average price of a one bedroom apartment in Vancouver is 2,100$ per month, compared to 1,350$ in Montreal. So, be sure to use comparables with the options offered in the same city.

To make your search easier, try using Zumper. It’s both a search tool for available apartments and it analyzes their prices.

If you think you’re unable to find an apartment or rent price that fits your budget, you can  always try house hacking: find a friend,relative or  colleague to share your apartment.

This will not only reduce your rent costs but also allow you to split other bills, like heating, electricity, internet—and even some grocery expenses.

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Make a change: Tips and tools to help manage your money

Remember, everyone’s personal situation is different, so the approach you choose should fit with your financial situation and life stage.

How can I manage my expenses?

Managing your expenses is a first step to achieving your financial goals. Understanding where your money is going will help you get a handle on what changes you need to make to ensure you’re living within your means and making your money work for your future.

To start, creating a spending plan is a useful tool to manage your expenses. To do so, you’ll need to track your spending so you can figure out where your money is  going every month. For a typical household budget, spending items are usually categorized into necessity expenses (essential expenses, like food) and discretionary expenses (non-essentials, like eye cream). 

Note that the non-essential expenses are the ones you can better control. The easiest way to reduce them is to do so gradually while balancing your quality of life.

Once you get a handle on  your spending habits, it will be easier for you to define your spending goals and set a  limit for each expense category, with the goal of  having cash leftover in your budget every month. 

You should also include a savings allocation in your spending plan to make sure that you don’t spend all of your money.

Once you’ve organized your budget plan, you should re-evaluate it every month to make sure that you’re on track.

Budget managing apps

There are a lot of apps out there that can help you manage your budget. They all have different methods and functionalities, so it’s important to understand what they offer and which features are most important to you.  

First up, we have Mint and Fudget. Both of these apps are free and user-friendly.  They use the estimated budget technique: at the beginning of the month, you estimate your expenses for each category. You then follow the monthly evolution of your estimated budget with what you’re actually spending and make adjustments as needed.

Mint also allows you to import your bank transactions automatically, making it much easier for you to manage your finances all in one place.

If you’re willing to shell out a few bucks, YNAB is also a great option for managing your budget. Just like Mint, it automatically imports and categorizes your transactions. The difference between the two apps is in the budgeting technique: YNAB uses an envelope method—a time-tested technique since before the invention of the computer!

What’s an envelope method? We know you’re at the edge of your seats so we won’t keep you in suspense: with the envelope method you assign  a job to each of the dollars you earn. By doing this, you categorize your available money instead of basing it on the money you think you earn. You then spend according to the money you have available.

As added value, YNAB also offers educational content such as podcasts and blogs, so you can keep learning about how to gain control of your money.

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Get to know Cloé, Head of Customer Success

Cloé comes from a small seaside village in northern Quebec. At 16, she moved to Montreal to pursue her university studies, and she’s been calling the city home for the past 15 years.

Cloé has been with Moka since 2016, and her current role is leading the Customer Success team. Her main mission is helping users have the best possible experience with the Moka app—she’s also the one who sends you those friendly Moka emails and wishes you a good day! 

Why did you decide to join the Moka team?

I had moved to Australia for 2 years, and when I returned to Montreal, I was looking for a new job. I met Phil Barrar, the founder and CEO of Moka, through a friend. At the time, the Moka team was only 4 people, and the app was not yet available on the Apple Store and the Google Play Store. I was the person Phil was looking for to handle all aspects of the client experience. Now with so many years of experience at Moka, my role is constantly evolving.

How were the early days at Moka?

I arrived during a period of high-growth. The team was in the same building and floor as they are today, but in an office at the other end of the hall. They worked in the same offices as their incubator, in a collaborative space where they could exchange and share their ideas with other start-ups.

How was your experience working remotely during the pandemic?

My partner and I bought a loft a few months before the start of the pandemic—an old factory that had been converted into apartments. We had plans to renovate everything and to move in afterwards. Then the pandemic hit, and the loft wasn’t close to being ready for working from home. Picture a completely unfinished loft without a kitchen table, me working from the sofa, and dust everywhere! 

Needless to say, it was a challenge for a few months. Like so many of us, we made the best of the situation, and today I have a great home setup.

What do you love most about your  job?

Many things make me happy working with Moka, but the main thing is having a positive impact on the lives of our users; namely, helping them invest when they didn’t know it was possible.

Are there any differences between French and Canadian Moka users?

Of course, the French and Canadian cultures are different. Canadians tend to be more familiar with the stock market, and with the concept of investing. The launch of Moka in France was different because the product had to be more informative and educational.

There are also some notable language differences. Both Quebec and France have French as the main language, but each country has its own unique expressions. Sometimes, the Customer Success team learns and teaches new expressions to our users!

What qualities are essential for your  role?

Being comfortable with the unexpected and with change are key for thriving in the world of start-ups. I have good listening skills and am empathetic, as our team represents the voice of the users. You have to be able to put yourself in their shoes and understand their point of view in order to offer them solutions.

What is your #1 financial goal?

I want to move. Because of the ongoing pandemic, my boyfriend and I have realized that a loft isn’t ideal for working from home.

We hadn’t planned on staying in the loft for a long time, as it was intended for a short, transitional period. But the pandemic changed our needs, and we’re now looking for a larger place where everyone can have their own space to work in peace.

What do you do to save money on a regular basis?

Like so many young adults, I didn’t realize the value of every single one of my expenses, and like so many people I struggled to save. Every month I paid my rent, bills, and necessary expenses, and only after did I save any money that was leftover (if there was any!). But now I’m  much more diligent! I allocate part of my pay each month as soon as I receive it into several investment accounts, including my Moka account. I don’t even have to think about it anymore because it’s automated.

What goal(s) did you achieve with Moka?

My first goals were travel goals, and I certainly reached them over the years! Currently, because of the pandemic, my goal is to build an emergency fund, which I’ve successfully been able to grow. 

What do you do in your spare time?

I’m very fond of yoga, reading, and I love to travel. I also enjoy spending time with my friends, and I’m a big foodie! 🍽 If you have any great spots in Montreal to recommend, don’t hesitate to share them with her 😉

Your favourite must-watch series?

There are almost too many to list! I really liked The Queen’s Gambit, because I found the costumes and the entire storyline very beautiful. Another favourite is The Crown, an interesting historical series on the Queen of England. I also recommend the series Atypical, the story of a young man with autism. For me, it’s both a touching and funny series.

What was your dream job when you were little?

I’ve been practicing classical dance for years. As a child, I dreamed of becoming a professional dancer 🩰

A funny story that happened to you?

I went to Miami with some friends for a music festival. We had a great week partying in Miami and our return flight home was booked quite early in the morning (you can imagine how we felt about this early flight!). Despite all the fun, we still managed to pack everything and have our things ready for the next morning.

We stayed out until 6am (it’s Miami after all!) but still got to the airport on time and checked in our luggage as planned. Once at our gate in the departure lounge, everyone put on their headphones and fell asleep while waiting for the flight. We were called to board but…no one woke up! The flight left without us along with our suitcases. We explained to the agent that we had actually arrived at the airport 5 hours earlier, but still missed the flight. Luckily, they booked us onto another flight home the same day.

The lesson she learned was to always set an alarm if you plan on falling asleep at the gate!

Is there another career that she would have wanted to pursue?

Maybe a lawyer, because what I was doing before Moka 👩🏼‍⚖️ I studied law and worked as a criminal lawyer. I miss some aspects of the job, but criminal law ended up not being the right fit for me. I would potentially be interested in a completely different branch of law, such as information technology law.

Invest smarter Save more

Saving vs. investing: What’s the difference?

Sometimes “saving” and “investing” are used interchangeably, but they’re two completely different concepts. And choosing one or the other can impact your long-term financial situation significantly.

What is saving?

Saving means simply putting aside part of your income. Instead of spending everything  you earn, you set aside a certain amount to use later. There are different ways to save, but the most common is to put your money in a savings account in a bank. There is no risk to save—your money will be there whenever you want to withdraw it!. 

However, it’s important to know that in 2021, the annual inflation rate is around 1.1% on average, but interest rates for savings accounts usually range from 0.75 to 2%. Essentially, this means that the interest you could earn on your savings may not  compensate for ever increasing prices (or inflation!).

If your savings are intended to finance a short-term goal, such as taking a trip or buying a new car, annual inflation doesn’t pose much of a problem. It’s when it comes to long-term saving plans—financing the purchase of a condo, for example—that you might end up losing purchasing power.

What is investing?

To put it simply, investing means acquiring assets (stocks, bonds, property, real estate, etc) that have the potential to increase in value over time. In this case, the point is to get a return on your investment. The money deposited in a savings account earns very little, while a smartinvestment allows you to grow your money much faster. Of course, the amount an investment earns during a specific time period (or yield rate) will vary depending on the type of investment, and there is also a risk that your investment may not see any returns. 

What’s the fundamental difference between the two?

From a strictly economic point of view, saving is simply the money you don’t spend. The money you save is also  liquid, meaning it’s  available immediately. 

Investing, on the other hand, is about using your money to generate a profit. Usually this is done with a long-term plan in mind. 

Saving can be seen as a safety net that can be used to deal with the unexpected expenses that arise in life. If your car might break down or you owe money on your tax return, your savings can help you stay out of debt. A good rule of thumb for emergency savings? Aim to have the equivalent of 3 to 6 months of expenses set aside, so you can cover rent, groceries, utilities and all the other basics even if you suddenly lose your income.

If saving is a safety cushion, investing is the entire couch. Money that’s invested in the medium- and long-term is what generates a profit and can make it possible to improve your quality of life and set you up for retirement. 

Making the choice between saving and investing is a question of your needs and personal preference. Your goals, risk tolerance, age and financial situation, such as whether or not you’re in debt, can help inform your choice. Getting advice from a financial advisor will help you make cents of your situation. What’s certain is that it’s never too early (or too late!) to start investing.

Give me an example!

Take Peter and Chloe: they each have the same profession and earn a salary of $40,000 dollars a year. Every year, Peter and Chloe both save 20% of their salary, or $8,000.. While Peter puts his money in a savings account, Chloe invests her savings.. Peter’s savings account earns 1% per year, while Chloe’s portfolio earns 5%. What happens after 40 years of working? Chloe will (potentially) have accumulated $694,718 in compound interest, while Peter will have only accumulated $75,001.90, even though he is earning the same salary and putting exactly the same amount aside!

It really makes you think, doesn’t it?