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In a recent newsletter, a reader asked for help in differentiating between a splurge and necessities. I want to share two of the responses from you because they illustrate how personal finance should come from the heart as well as the brain.

This reader and her family are trying to fine tune their household budget to balance necessities, saving and fun. Specifically, she wondered if fixing the front steps of her home and new mattress toppers for her children’s beds are necessities, or a luxury expense. The consensus was that more comfortable bedding for the kids is a necessity, and that fixing the front steps is likewise because it helps maintain the value of the family home.

Some comments from Peter Hambly, a retired financial planner in Hanover, Ont., added some emotional depth to the discussion. A few of his points:

  • “We deferred a lot of (mostly necessary) home improvements. That was a mistake. Get your home how you want it, asap, for enjoyment and utility.
  • “In our case, doing it again, we would live more for today instead of worrying about the future. That may not be typical.
  • “If [this reader] has kids at home, live it up a bit now. Those relationships and memories may not be recovered later.”

I asked Mr. Hambly if the pandemic influenced his thinking. “The pandemic had no effect,” he told me by e-mail. “I realized, looking back various times, that a lot of financial decisions previously made were hard to understand after the passage of time.”

Now for a hard-nosed, rational take on budgeting, courtesy of insolvency trustee Linda Stern. Among the monthly expenses listed by the reader who asked about splurges was a payment on a consolidation loan to retire various debts.

“Being a trustee, in my opinion, the debt should be paid off first before vacation and RRSP savings,” Ms. Stern wrote.

Some thoughts from other readers

  • Set up a monthly savings plan for home maintenance projects like the front steps
  • Consider registered education savings plans for the kids
  • Contributions to the group retirement savings plan this reader has access to at work is a must because of the likelihood of matching contributions from the employer.

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Ask Rob

Q: What is the difference between a financial planner and a financial adviser? Should I see someone with a bank, or an independent firm? I’m 57 years old and, while I have investments and have contributed to an employer pension for four years, the older I get the more worried I get that I haven’t been doing enough.

A: Generally, planners build comprehensive financial plans and advisers manage investments. That said, some planners handle investing, and some advisers plan. Sounds to me like you want a planner. May I suggest considering an independent fee-for-service planner paid hourly or through a flat rate? Advisers, and some planners, are typically paid through fees and commissions generated by the sale of investment products or managing portfolios. A fee-for-service model offers transparency. You’re buying advice.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

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Editor’s note: This article has been corrected to reference registered education savings plans and not registered retirement saving plans.

Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.