FAMILY
> Getting married.
Weddings are a joyous time in life and one that requires a great deal of planning and prepartaion. You’ve probably put a lot of thought into the flowers, food and photography for your big day. But have you given any thought as to your soon-to-be family’s financial well-being?
It's important to factor your financial future before the ceremony takes place and not after you get back from your honeymoon. A few points to consider are listed below before you embark on your new life together to ensure a solid financial foothold.
1. Create a new budget.
Now that you’re considering a family of two, you’ll need to set a new spending plan. You’ll get to split the cost of utilities, but the grocery bill will probably increase. Make a list of all income and expenses and see where you can cut back if need be.
2. Pay down your debts.
A wedding is a very expensive event and you may have turned to credit cards to help pay for it. Talk honestly and openly about your debt and decide on a repayment plan. The best option is to try and avoid going into debt to pay for the wedding and try to take the time to save for it.
3. Assign financial responsibilities.
Someone has to take out the trash and someone has to pay the bills. Determine who’s in charge of paying the bills, monitoring investments, filing paperwork, and other financial tasks. It's important to keep on top of the financial obligations of the family.
4. Discuss your financial tolerance.
Are you a spender and your spouse is a saver? Does your spouse want to invest in bonds, whereas you’re interested in stocks? Take the time to get to know each other’s personal finance personality and tolerance for financial risk. You may also want to set some financial ground rules like determining a spending limit without first obtaining your spouse’s consent.
5. Start an emergency savings fund.
You’ll want to be prepared if and when the car needs new tires or the roof springs a leak. By setting aside money each month, you’ll accrue savings for life's little surprises. Saugeen Community Credit Union can help you pick the best account options for achieving this goal.
6. Set financial goals.
Buying a home, starting a family, sending the kids to college, and retiring are all exciting life goals – they’re also expensive ones. As a newly married couple, openly talk about what you want in life and determine what financial steps you must take in order to get there.
7. Joint or separate accounts?
Once you’re married, you may consider having joint accounts. A joint account makes it easier to deal with joint expenses such as rent or mortgage payments and bills. Each spouse may also want to keep their own separate account in his or her name, as protection should something happen to your partner. Separate accounts also allow for independent credit ratings.
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> Managing your children's education.
Many considerations must be taken into account when planning for your child's future education and life circumstances. Knowing that there is enough money to cover these costs will help alleviate the stress as the child begins their life journey.
A Registered Education Savings Plan (RESP) is one of the most effective ways to contribute to your child's future education goals. For more information on the benefits of investing in an RESP, please visit Human Resources and Skills Development Canada website.
The government will assist you with your savings with the Canadian Education Savings Grant which will pay 20% on the first $2,500 you invest annually on a per child basis through an RESP. This allows up to an additional $500 a year to a maximum lifetime government contribution of $7,200 per beneficiary.
You can invest a lifetime maximum of $50,000 with no maximum yearly contribution limit set. You only have to invest the $2,500 to get the 20% grant. Investment above the $2,500 gets applied to the following year's contribution.
Other options to invest in your child's future and education include:
• Scheduled monthly, weekly or bi-weekly contributions to a Saugeen Community Credit Union savings account.
• Scheduled monthly, weekly or bi-weekly contributions to a mutual fund account.
• Scheduled monthly, weekly or bi-weekly contributions to a Term Deposit or GIC.
In the event you haven't saved enough for your child's education, you could consider a personal loan or mortgage equity line of credit.
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> Going back to school.
You may decide at some point to return to school to gain new skills towards a change in career or advancement of an existing one. Going back to school is a big financial commitment as you will be taking a drop in your employment pay and be paying tuition fees and associated school expenses. Some of the ways to finance going back to school include:
• Saving for your future education plans through regular deposits in a savings account.
• Utilizing your RRSP through the Lifelong Learning Plan. This federal government plan allows you to withdraw up to $10,000 per year from your RRSP to finance full-time training or post-secondary education. The amounts withdrawn remain tax free if repaid within 10 years. Visit the Canada Revenue Agency website for more details.
• In the event you need to borrow money, a personal loan, line of credit or a mortgage equity line of credit are available.
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> Life's ups and downs.
As much as you plan for the good times and financial security, life has it's share of upsets that can affect your financial security and planning. Taking these possible upsets into account when you do make your financial plans can help alleviate the stress when they occur. When major life events occur, Saugeen Community Credit Union is ready to assist you through these transitions. 2 of the major events that can occur are divorce and the death of a loved one. Things to consider if either one happens:
1. Divorce and separation.
• If you have support payments how will they affect your finances and how do you plan around them?
• Do you have legal representation to pay for?
• Do you have joint bank accounts to resolve?
• How does the separation affect your title on your property?
• Do you have to change the beneficiaries on your RRSPs, GICs and insurance poilicies?
• Do you have safety boxes stored jointly?
• Do you have RESPs to change?
2. Loss of a loved one.
• If you are acquiring an inheritance what are your plans for investing it or managing it?
• Do you have joint accounts and investments that must be dealt with?
• Do you have life, mortgage or loan insurance to resolve?
• Do you have savings set aside for the cost of the funeral expenses?
No matter what your needs are during life's hard times, be rest assured that Saugeen Community Credit Union understands how hard it is to manage all that is happening. We are here to help guide you through the hard times so that you maintain a stable financial balance while trying to navigate through hard choices.