If the news about the rising cost of tuition and student debt are keeping you awake at night, you are not alone. Stories about young people graduating from university with mortgage-sized debt loads seem to be everywhere lately. But experts agree, that no matter our income level, parents can help their children meet their education goals by creating and sticking to a written plan.Recently, the Financial Consumer Agency of Canada (FCAC) released its findings from a cross-Canada financial well-being survey it conducted in early 2018. Their survey results show that “regardless of the amount of money someone makes, regular efforts to save for unexpected expenses and other future priorities appears to be the key to feeling and being in control of personal finances.”It turns out, though, that less than half of us are actively saving for things like RESPs or RRSPs, let alone for other unexpected expenses. One in 10 of us uses credit to cover monthly expenses and a similar number of Canadians report that they regularly splurge and make purchases they can’t afford. These statistics beg the universal question: if sticking to a budget increases our overall sense of well-being, then why do so few of us actually do it?Like anything that’s good for us, it would seem that budgets are easy to put off getting around to. Financial advisors suggest various reasons for this. Modest income earners may feel that having a budget won’t work for them because they have no discretionary income to save in the first place. Meanwhile, higher earners may be meeting their monthly payments, so they don’t see the value in bothering with a budget.Another element that may be holding people back from creating a written plan is that the process can seem overwhelming. So, we created this simple monthly budget that you can download to get you started and help ensure that you’re contributing to your and your children’s future goals.A basic budget can be created by using our tool and following these easy steps:Determine household income. Include items such as your income, spousal income, interest, dividends, gifts, rental income etc.List your expenses, including rent/mortgage payments, utilities, groceries, insurance, as well as discretionary spending like entertainment, clothing, eating out, gifts, etc.Calculate income versus spending. If your final figure is a negative number, some adjustments for discretionary spending may need to be made. This number can help you establish realistic debt-repayment and savings goals.Set goals and pay yourself first. Once you have a broad sense of your financial landscape, advisors suggest paying yourself first so that you can keep on track for your long-term goals. The easiest way to manage this step is to set up pre-authorized payments for things like RESPs and RRSPs.Track your spending. Tracking spending is a great way to develop better budgeting habits. Smartphone apps can help make this step almost second-nature. After all, it’s all too easy to spend just $5 extra per day without noticing, but that can add up to a whopping $150 per month!!By sticking to a written plan and tracking your spending, you can make more informed decisions about where you want your money going. You can also ensure that you are maximizing your ability to contribute to and enjoy the compound growth that comes with products like RESPs, RRSPs and by paying down debt faster.
Keeping an up-to-date last will and testament is a crucial component of estate planning and maintaining a solid overall financial plan for families. Surprisingly, however, more than half of Canadians don’t have a will at all. Another 15% of us acknowledge we don’t keep our existing wills up to date. That means as many as 65% of Canadians are at risk of letting an outside legal process decide what happens to their assets should they pass away. Drawing up and updating a will gives us control over our assets after we pass away, so why is it that so many of us put off making a will?
What happens if a person passes away intestate?
The worst-case scenario for people who die intestate, is that all the careful measures they’ve taken to care for their children and other beneficiaries for the future could suddenly become null and void. For instance, parents who have been paying into an RESP and who have claimed the Canadian Education Savings Grant (CESG) may risk losing those benefits if they die intestate. The administrator of their estate may have no choice but to collapse those plans and distribute them to all of their beneficiaries, while the CESG and other benefits may need to be repaid to provincial and federal governments. There are some fail-safes in various investments and insurance plans that may shift those plans to a spouse or partner if the worst should happen. However, without a will, if both parents pass away, their hopes and plans for their beneficiaries’ futures could unravel.
Planning your legacy
Drawing up a will can be a positive experience. It’s a process that can help us determine what type of legacy we wish to leave behind. We can leave gifts to charities or causes that mean something to us. A will is where can assign guardianship for minor children so that they don’t become wards of relatives we’d be uncomfortable raising our kids. We can even state who will take care of our beloved pets and set aside some funds for their care. Thinking about making a will can feel like doom and gloom, but in reality, by setting out our wishes and hopes for our beneficiaries and our assets, we can take control of our legacies with a fairly simple document.
What’s holding us back?
The most likely reason many of us procrastinate on the task of drawing up a will is that it’s not particularly pleasing to think about our demise. It’s also not a topic that is top of mind when younger people are starting careers and families. So it’s not surprising that people over 55 are more likely to have an updated will than those in their 20s and 30s. In fact, 88% of Canadians between 27 and 34 say they don’t have a will.
It’s understandable that people in this younger demographic just don’t think they’re old enough to even need a will. Yet this is the age group that is most likely to have young children who would need to be taken care of should their parents pass away. A will can help ensure that the supports, including RESPs, that parents have put in place for their young children are delivered in the future according to their wishes.
How much does it cost?
The other reason many people don’t set up a will is because they’re worried about costs. Finding and hiring a lawyer may be intimidating for many, and lawyers’ fees may be too costly for some budgets. There are a number of low cost will kits available for purchase that can help people set up simple wills. These can cost anywhere from $40 to over $250, and they can be useful for straightforward estate planning.
Luckily, Knowledge First Financial clients also have free access to the Knowledge First Financial Will Kit, that guides clients, step-by-step, through the process and allows them save their documents on their own computers and to make changes when necessary. Laws are slightly different in Quebec, so those clients should consult the province’s estate planning rules.
Have more questions? Meet Karen from Knowledge First Financial at our ‘From Bump To Baby & Beyond Show’ this February 8th! Or you can reach Karen at the email below:
We are looking to add one amazing person to our dream team! This December, we are looking to hire a program administrator to help with team organization of events, workshops, planning and business development. Take a look at the post and see if you fit the criteria! We are all about community and connection so if this is one of your core values, think about sending in an application!
- Please send a cover letter and resume to our director Katherine at firstname.lastname@example.org. In the cover letter, let us know WHY you are applying, WHY you think you’ll be a great addition to our dream team and as well if you have taken a program with us before.
- Deadline for application for both of these jobs is Friday November 22nd. Please do NOT contact us, we will contact you if you are chosen for an interview.
- In person interviews will be held during the last week of November, with the successful candidates chosen and beginning in early December.
My little man is 4 years old now and he’s quickly learning that winter brings more than just snowmen, sledding, and skiing.
Last year he got sick. Not just once but a handful of times. It seemed like our house just continued to pass along colds and cases of the flu all winter season. It wasn’t a great winter.
This year we are optimistic about change. He’s one year older, he has now been in preschool for one school term so hopefully, he’s slightly more immune to every single illness. But this year I decided to try something different.
My husband and I both take our daily vitamins but we also take echinacea which we have found to be very helpful during the cold season. So I did a little research and found out that a company does, in fact, make echinacea for young ones!
A. Vogel makes ‘Echinaforce Junior’ a cold & flu chewable tablet for prevention and treatment. It helps to prevent and relieve the symptoms of upper respiratory tract infections (common cold and flu) and shorten their duration. It is recommended for children ages 2 and up. Bonus it contains no dairy and or wheat.
This is our first winter season we have decided to try it out and see if it works for my son. So far, he asks to take it every morning with his regular vitamin and he has no problem taking it. Check back with me after the cold and flu season has come and gone, when I will have more solid evidence but I can say that since September when winter really does begin in Calgary, he has yet to have a cold.
Like all of you, I just want the best for my kids, so I urge you to take a look and see if this might be an option for you in the fight to keep your little ones healthy this winter season! We handed it out at our recent Travelling Tot programs and I am not sure who was happier to receive it. Parents or the kids who thought it was a treat!
For more information on A.Vogel and ‘Echinaforce Junior’ you can check them out below.
Meet Venesa Wheatley. She is the creator of @Warrior Label, a brand of apparel designed to acknowledge, honor and celebrate warriors.
In 2015, when Venesa was almost 39 weeks pregnant she and her husband lost their daughter, Kate, to stillbirth. Venesa found in those early days that she really needed to be truly seen and heard; that she needed to share her story in order to process her loss and honor her daughter’s life. 4 years later, her need to be acknowledged for her story hasn’t changed, but where she once was so consumed by grief, she now feels stronger than ever for what she has gone through. She feels like a WARRIOR.
In her going through her own struggle, it also made Venesa acutely aware of other people’s struggles and their capacity for resiliency. She believes that there are millions of warriors out there, each with their own story, and feels they need to be both acknowledged and celebrated. She does this through the thoughtful designs of their apparel and in an on-line community she is establishing.
When she’s not busy building Warrior Label, Venesa is working part-time (both as an HR professional and a substitute teacher), volunteering in the pregnancy and infant loss community, and being an awesome mom to their 2 living children. Warrior Label is a brand of apparel designed to acknowledge, honour, and celebrate all warriors, no matter where they are in their journey. In choosing fabric that warms and envelops the body, to creating designs that resonate with those who are warrior-ing on through their struggle, compassion, care and acknowledgement are infused in every part of their brand.
Warrior Brand also gives back 10% of their profits to charities that provide support to individuals and families going through adversity. To learn more about their apparel and how they support worthy charities head to their website here.
Although Registered Education Savings Plans (RESPs) have been available since the early 1970s there are still some lingering myths and confusion for people exploring this investment tool. This blog will help clarify how RESPs work and address some persistent myths in order to make choosing the right RESP for your family less perplexing.
An RESP is a powerful savings tool designed to help families save for their child’s education. Similar to the Registered Retirement Savings Plans (RRSP) and Tax Frees Savings Account (TSFA), the investments within an RESP grow tax free but that is where the similarity ends.
Only an RESP is eligible for government grants which truly make them the best way to save for post-secondary education. The Canada Education Savings Grant can contribute up to $7,200 to your child’s future and depending on your financial situation and province, other education grants may be available and can add even more to your savings.
When the time comes for your child to withdraw from the RESP, known as an Educational Assistance Payment, the earned income and grants are taxable to the beneficiary, which typically means a minimal amount.
Let’s bust some of those persistent RESP misconceptions!
Myth 1: Setting Up an RESP Should Be Free
An RESP is an investment tool, so while individuals can certainly set up and manage their RESPs for their beneficiaries on their own, there will always be costs involved. At the minimum, there may be annual fees along with commission fees that must be paid if you buy or sell investments within the product.
Many families choose to work with organizations that manage the portfolio of investments on their behalf. Knowledge First Financial works with leading portfolio managers who actively manage low-risk investments to provide steady growth over the long term. “Keep in mind that all investments have costs, such as fees to cover portfolio management and administration.”
There is one important exception available for modest-income families who open an RESP to access the Canada Learning Bond. For families that qualify, the Canadian government provides an initial grant and helps cover the costs of setting up the RESP.
Myth 2: Only Parents and Grandparents Can Set Up an RESP
With an individual plan, like the Flex First Plan from Knowledge First Financial, the beneficiary of an RESP does not have to be related to you. There are no restrictions who the beneficiary is or how old they are — you can even set up an RESP under your own name.
Myth 3: RESPs Cannot Be Shared Among Family Members
If the beneficiary chooses not to continue their education after high school, another beneficiary can be chosen. An individual RESP provides the greatest flexibility in choosing who the beneficiary is.
One thing to keep in mind when changing the beneficiary is the lifetime limit of $50,000. Coordinating with an RESP expert can ensure that your contributions and benefits are maximized for your students/beneficiaries.
Myth 4: Accessing My Child’s RESP Will Be Cumbersome
Your contributions are always available to be returned to you, tax-free. To access the grants, grant income and contribution income in your plan, the process may differ between RESP providers. At minimum they are required to ask for proof of enrolment in a qualifying program in order to withdraw the income in your plan. At Knowledge First Financial, we want to make the process easy and memorable by enabling customers and students to request funds online, offering tutorials and web chat customer service to answer any questions.
Myth 5: If My Child Decides Not to Attend College We Lose Our Savings
The money contributed to your RESP can be withdrawn any time as a Post-Secondary Education payment. If your child is not attending a qualified program at that time, the grants must be returned to the government. Investment earnings can be withdrawn as an Accumulated Income Payment or transferred to your or your spouse’s RRSP if there is contribution room available, provided your plan meets certain conditions specified under tax regulations. While you won’t lose your savings, it’s always best to speak with an RESP expert to understand your options and the financial considerations.
If your child decides not to head directly into college or university after completing high school, there is no need for concern. Beneficiaries have up to 35 years to use their RESP money, which can be used to cover the cost of a number of post-secondary educational programs, including college, university, apprenticeships, trade schools, as well as part-time studies. That means if your child later chooses to change careers or upgrade skills, those funds will still be available through their RESP.
If you would like more information or to set up a free consultation contact me at Karen.Wallace@KFF.ca