The big picture, in a nutshell, for you, a combination of debt reduction and income protection is a great place to start. You must build a secure foundation before anything else.
The first step is to see where your money goes. Quite possibly there are additional funds that could be freed up for investment purposes. If you haven’t already done so create a family budget. Go to Synergy's Calculators. It’s easy to use and will give you a better understanding of where your money goes. You’re looking for items such as the ‘daily Starbucks’ which could be costing you upwards of $2,000 per year. We’re not looking for windfalls here, simply picking out items that you may find you could live without. What you find may be surprising.
Next, in today’s world of uncertainly, establish an emergency fund to insulate your family in case of job loss. It is recommended that you set aside 3-6 months of living expenses (a number you can quickly pull from your budget analysis).
Now you’re ready to start your savings plan. Pay yourself first. Immediately when you receive your pay cheque, allocate 10%, if you can, to a savings account (even small amounts really add up over time). It may sound like a lot, but you’d be amazed how many people say that after a while, they don’t even miss it. It’s true. You may even want to arrange to have this automated. Set up an automatic transfer to coincide with your payroll, either to an interest bearing savings account or to a Wealth Accumulator which is a guaranteed product, or, depending on your risk tolerance, a balanced mutual fund* with equity exposure for potential increased return. The important message is, no matter which savings options you choose, just get into the habit, even good habits are hard to break.
Another aspect to consider is your children’s future education requirements and funding for your retirement. A Registered Education Savings Plan (RESP) is an excellent savings program. It provides tax advantages and flexible deposit options. For as little as $25 per month for an individual RESP, contributions grow tax-free and receive 20% matching government incentive funding. Some parents get so focused on their family they forget to put themselves on their priority list. Registered Retirement Savings Plans (RRSPs) for yourselves are a definite must. Not only are you taking care of your future financial well-being which incidentally is a great life lesson to teach your family, but there are some who believe if the choice comes down to whether you contribute to RESPs at the expense of your RRSPs, they point out your kids can get a student loan but you can’t borrow for your retirement.
This response provides a few highlighted items that you should consider. Also, feel free to speak with an investment specialist for further detail. Remember, if in doubt, our financial planning service is available to you - just call and set up an appointment. Then go forth and work your plan!
Mutual funds and related financial planning services are offered through Credential Asset Management Inc. Mutual funds, other securities and securities related financial planning services are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. Financial planning services are available only from advisors who hold financial planning accreditation from applicable regulatory authorities. The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.
Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. The information contained in this report was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.