Personal Finance Interview with Tom Drake on Money Management Basics for

We're faced with a constant barrage of ads trying convince us that we should live more luxuriously. Want a $5 latte every day before work? Treat yourself. Is your car starting to show a little wear and tear? Why not trade it in for this year's model? Have you been drooling over that designer handbag? Get it. You deserve it.

But if you don't have the funds to back up your fast-spending consumerism, you'll eventually find yourself in a deep financial hole, says Tom Drake, founder of Canadian Finance Blog.

"The biggest mistake I think a lot of people make is spending beyond their means," he says. "I've had this issue in the past myself, and there's not anything more damaging than spending money you don't have. It leads to negative net worth and future money is already spoken for to pay the monthly interest incurred."

And like any good financial blogger will tell you, instead of focusing so much on your spending, it's wise to find ways to be a better saver.

We recently checked in with Tom, who works as a financial analyst for a major grocery retailer, to learn a little bit more about his blog and his philosophy on money management, and to get some tips for where to find savings when heading to the grocery store. Here's what he had to say:

Can you tell us a little about Canadian Finance Blog...when and why did you start your site?

I started Canadian Finance Blog in early 2009. I had just gotten married and we were looking to buy a new house while the market had dipped. On top of all that, we found out we were expecting our first child in the fall.

All these big life events in such a short period of time got me interested in improving my own personal finances. So I started reading a few Canadian personal finance blogs, mainly Million Dollar Journey. Before long I started to think I could start my own blog and share my own perspective on personal finance.

Who should be reading it?

Obviously the site is aimed at Canadians since I discuss topics like RRSPs and TFSAs instead of 401(k)s and IRAs. However, 25 percent of Canadian Finance Blog readers are from the U.S. due to many universal tips like saving money, increasing income and even a bit of financial psychology.

Why are you so passionate about personal finance?

Personal finance touches all aspects of our lives. Whether you're single or married with a huge family, you need to know how to manage your money. We could all improve our income by getting a raise or starting a business. Everyone can benefit from having a retirement plan. These are just some of the reasons that I'm passionate about personal finance improving the lifestyle of everyone.

How did you become an authority on money management - or at least someone with advice to share...what's your background?

As a financial analyst for more than a decade, budgeting and looking for ways to improve the bottom line are pretty natural to me. While my career adds some authority, I think life experiences have a lot to do with it too. On top of the changes I went through around the time I started my blog, we also paid off our debt of over $30,000 and increased our investment strategies from just a small contribution to the RRSP, to now putting money into TFSAs, an RESP and a non-registered account for use in a Smith Manoeuvre.

You're a financial analyst for a Canadian grocery retailer. Based on your insider's knowledge, what are some of the easiest and/or fastest ways people can save money when grocery shopping?

The easiest way to save money on groceries is by using flyers to your advantage. Many items go on sale in cycles, so you might be able to stock up on a sale of your favorite cereal that lasts you until it's on sale again in month. Keep in mind that the best deals can normally be found on the front and back pages of the flyer.

Another simple option is to buy the private label brands. They're cheaper than the national brands and the quality over the last few years is as good as, or even better, than the big names.

How does your family strategize before heading grocery shopping?

Making a list can keep you organized and save you money. We list the items we need and items that are on sale, which not only saves us time in the store, but also reduces the chance we'll pick up impulse items that are normally expensive and unhealthy.

What's your philosophy about money? Do you use credit cards? Take out loans? Do you invest?

I always like to get the best deal, and that doesn't just apply to grocery shopping. I think responsible credit card use makes sense; if you have to spend money anyways, you might as well benefit from using cash back credit cards.

Loans should only be used for "good debt." That definition can mean different things to different people, but I think a loan to start a business or to invest can be a good move, as long as the borrower realizes the inherent extra risk that adds.

I invest but keep it pretty simple. Most of my investments are ETFs and index funds, though I do have some individual REITS and dividend paying stocks.

What's your advice to other families looking to create and follow through on a budget?

The only way I've been able to create a budget that actually works is by having dependable tracking of your spending in the first place. I've been using Mint ever since they launched in Canada, and that's helped me a lot with keeping my expenses down since I know exactly where I'm at with the app on my smartphone and get email alerts if my spending does go over.

What are the most surprising ways you've found to pinch pennies over the years?

I don't have any stories of extreme frugality, but something certainly surprising recently was how much I saved on my home and auto insurance. I decided to shop around this year; it took less than an hour of my time to save almost $900 a year!

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