Advice from a modest millionaire

With the announcement of Erin O’Toole’s (leader of the Conservative Party of Canada) carbon tax proposal, all political parties in Canada are on board with carbon pricing. Which is great news for the environment!

Canada’s current carbon tax and rebate initiative – also known as the Climate Action Incentive – is available for the residents of Ontario, Manitoba, Saskatchewan, and Alberta. The federal government has put a price on carbon emissions (i.e. a carbon tax) and that price will increase every year. The government then takes all that money from the carbon tax and gives it back to businesses, non-profits, and households (i.e. a rebate). As the price on carbon increases, the amount families get back from the rebate also increases. The average family of 4 in Ontario will receive a rebate of $600 in 2021, and that amount will increase over the years (you can check out our rebate calculator to see how much you can be expected to get in 2030!) 

That’s a whole bunch of cash. Which is why it’s important to make smart money decisions.

So we reached out to Mel Dorion of Modest Millionaires. A former senior business analyst in the Federal Government, Mel now works full time as a financial coach. Over the past five years, she’s coached individuals, couples, and families to get unstuck and take control of their finances. (fun fact: her content and services are available in both French and English)! You can also find her on Instagram and Twitter.

Q: What do you think of Canada’s Carbon Tax and Rebate Initiative?

MM: I believe in the power of modifying our behaviors and habits to reach our goals. According to habit design expert James Clear, the formula to stick to good habits is to make them obvious, attractive, easy and satisfying. Eliminating bad habits requires the opposite. 

The [Carbon Tax and Rebate] program follows this proven formula in order to incentivize people and companies to be mindful of their consumption of products that create greenhouse gases and choose behaviors that reduce carbon pollution. This is similar to when you start tracking your spending and notice how your take-out habits might be costing more than you initially thought.

 Q: What would you do with your rebate money that helps you live a more environmentally friendly lifestyle? Anything you recommend doing that both saves money and improves energy efficiency?

MM: Knowing that many have been financially impacted by the pandemic, it might not be realistic to expect spending the rebate on renovations or appliances that improve energy efficiency. Yet, there are many simple frugal ways to move to an environmentally friendly lifestyle. 

You could install a clothesline or change your light bulbs to an eco-friendly brand. Even buying a few missing items to make cooking at home easier could help with this shift. While this saves you money, tangential benefits also include saving on gas since you don’t drive to restaurants while avoiding the use of disposable containers.

Q: For those who like to save rather than spend, how would you recommend investing the money?

MM: I approach investing as something that I want to keep as simple and as inexpensive as possible. That’s why my own strategy relies on low cost exchange traded funds (ETFs). Thankfully, there have been many new ETFs with a focus on sustainability that have launched in the last few years. What is lovely about ETFs is the transparency of their holdings. 

A first step could be to look for an environmental, social and governance (ESG)-oriented index based on Morningstar’s sustainability rating. 

Q: For those who want to donate rather than save or spend, do you have any recommendations on how to figure out which environmental causes or charities to support?

MM: I’d recommend you look at what is going on in your local communities. Some small organizations that provide multifaceted help to populations in need (while diverting items that often end up in landfills – i.e. food) have been hit quite hard by the pandemic. 

Messaging a local facebook group could be a fantastic place to ask about local needs in terms of donations to such organizations.

Q: Why is climate change action and living a more sustainable lifestyle important to you?

MM: I believe in the power of dedicated effort and kindness to improve the world around us. We’ve recently witnessed severe events that have a serious impact on people’s lives as a direct result of climate change. We must do all we can as a society and as individuals to avoid worsening conditions that can result in turning other people’s lives upside down.

Furthermore, living a more sustainable lifestyle requires paying attention to our consumption habits. When we waste less, we not only help fight climate change, we also keep more money in our pockets. It really is a win-win situation!

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