Finally some good news B次元官网网址� youB次元官网网址檝e landed a major promotion with a huge pay bump, or youB次元官网网址檝e finished many years of education and entered a high-paying profession.
Either way, you have some extra cash, and perhaps little else, aside from a student loan.
The act of seeking out advice B次元官网网址� or even just starting the conversation with yourself B次元官网网址� is worthy of praise, says Brian Himmelman, president and financial planner at Himmelman & Associates Financial Advisors in Halifax.
B次元官网网址淚tB次元官网网址檚 just so easy to B次元官网网址� treat [a pay raise] like lottery winnings and say, B次元官网网址極h, I finally want to get that Canada Goose coat, and guess what, IB次元官网网址檓 going to book a five-star vacationB次元官网网址� B次元官网网址� and boom, that differential is gone,B次元官网网址� Himmelman says.
Now is the time to decide what is important to you, says Brandon Wiebe, a fee-only financial planner with Money Helps, based in Saskatoon. The first financial conversations involve setting priorities for the near- and long-term, and involving partners, if you have one.
At this early stage, Wiebe says, a tax free savings account can offer flexibility for someone who wants to save and have tax-sheltered growth, but might change their mind on their priorities in the future. Paying down student loans and other debt is another goal that may be high priority B次元官网网址� or not, he says.
B次元官网网址淚 think some of the conversation [around debt] will kind of focus on a couple of different points,B次元官网网址� Wiebe says. B次元官网网址淥ne: what is the interest rate? How does that compare with what they would possibly be able to expect in returns if theyB次元官网网址檙e investing the money instead? And then, how do their student loans make them feel? You know, are they stressful?B次元官网网址�
For some, paying down student debt slower but investing sooner is the smarter move.
Both Himmelman and Wiebe favour the B次元官网网址渂ucketB次元官网网址� approach, where disposable income is branched off into various areas, from debt repayment to saving, from investing to spending.
These buckets can change over time, just as priorities shift throughout life.
For a younger person with a certain amount of extra income every month, Himmelman says one possible arrangement could include three buckets: student loans, saving for a down payment, and retirement. Factoring in their age and goals, roughly 25 per cent extra could be dropped monthly on the loan, 50 per cent goes to the future house, and the last 25 per cent is put aside for long-term security B次元官网网址� a great habit to start early.
Himmelman also recommends saving a few monthsB次元官网网址� worth of expenses in case of an emergency, before saving more aggressively for a home.
B次元官网网址淎ll these amounts are moving sliders based on the individual, their circumstances, their conviction, and their priorities,B次元官网网址� Himmelman says.
B次元官网网址淪o somebody whoB次元官网网址檚 making lesser income now, but they have a career where maybe theyB次元官网网址檙e making twice as much in a few years B次元官网网址� theyB次元官网网址檙e better off concentrating on a TFSA. And people who are higher earners right out of the gate might be better off with the RRSP, because of the tax deduction.B次元官网网址�
Although saving for a home is a major priority for many young Canadians, home ownership is not the only way to gain financial security, Wiebe says. He prefers if clients prioritize owning a home for lifestyle reasons B次元官网网址� wanting to stay put, wanting control of their space B次元官网网址� rather than purely financial.
B次元官网网址淚 do advise people to try and stay away from speculation, that B次元官网网址業 need to get in nowB次元官网网址� type of thing,B次元官网网址� he says about the real estate market.
In HimmelmanB次元官网网址檚 experience, clients that bought and invested in real estate tended to havea higher net worth B次元官网网址� but that doesnB次元官网网址檛 predict the future for everyone.
B次元官网网址淸Some clients] might not just be wired for home ownership, and thereB次元官网网址檚 absolutely nothing wrong with that,B次元官网网址� he says. B次元官网网址淎 person can create a perfectly healthy long-term financial plan without home ownership.B次元官网网址�
The last bucket should be for fun. After near- and long-term goals are accommodated, Wiebe says, these hard-working individuals should enjoy their rewards, whether itB次元官网网址檚 more travel or a nicer car.
B次元官网网址淥nce theyB次元官网网址檝e taken care of the responsible part of it,B次元官网网址� he says, B次元官网网址渢hen they can actually take a look and see which of those financial things B次元官网网址� brings them happiness.B次元官网网址�
Himmelman agrees. He notes that among his clientele, he has scrupulous savers that have now reached their 70s, and have more money than they could possibly spend. Now that theyB次元官网网址檙e older, travel and some hobbies are less appealing than they once were.
B次元官网网址淭hey were so paranoid about not having enough money, that they overshot the runway,B次元官网网址� Himmelman says.
B次元官网网址淭here is something to be said about enjoying your money while youB次元官网网址檙e healthy. The name of the game is that balancing act of enjoying your resources and still having enough to look after you on the back end.B次元官网网址�
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