April 20th, 2016 is Talk with our Kids About Money

Be sure to circle April 20th, 2016 on your calendar.  It is  Talk with our Kids About Money Day.

This day is set aside to focus on  encouraging and supporting parents, guardians, and teachers to start or continue such talks with youth. Canada’s Task Force on Financial Literacy noted that improving financial literacy was a shared responsibility, that it would be a lifelong process, and that it was important for financial education to be provided in our public schools.

Visit the Talk with our Kids About Money website here.

7 Signs That It Is Time to Talk to Financial Planner

Seeking professional help is always good thing.   Whether it is seeing a doctor for an annual check-up or a dreaded visit to the dentist, we entrust professionals to monitor and manage various aspects of our lives for our own benefit.

Working with a financial planner is no different.   Although it does not rank as important as having access to a doctor, a financial planner can offer individuals various benefits in terms of money management through various periods of one’s life.

One of myths that some individuals have about working with financial planner is that you have to be wealthy. Not true. Deciding to work a planner is a process in which individuals should sit down and consider it if they experience the following seven signs.

1 – Having long term goals for your money

Whether it be having a house when you are 55 years old or being well off before you retire, long term financial goals are attainable especially with the assistance of a planner. With a clear idea of what you can do in terms of saving and investing money, a financial planner can provide you with right approach and tools to enable to reach your goals.

2 – Steady flow of incoming cash

If you are fortunately to be working full-time and relatively debt-free, you probably want to make your incoming cash work for you. If that is the case, you may want to see what a financial planner can do for you.   Knowing that you have a steady amount of money to invest on a monthly basis, a planner can recommend the appropriate strategy to help your money grow.

3 – Extra cash in accounts

Have you opened many savings and chequing accounts over years and want to do something with the cash? Why not consolidate the money and put it in the hands of a financial planner.   The planner will not only make the extra month grow but you have the peace of mind that the money is in one place.

4 – Not happy with your returns on savings account

Although there is nothing wrong with trying to managing your savings on your own, you may have a limited amount of knowledge and time to make your money thrive.   See small returns at the end of the month should prompt you to start looking for professional help. By either placing your savings in a high interest account or tax free savings account, the planner is in the best position to invest the money based on your needs and how comfortable you are with risk in terms of investing for the years to come.

5 – Planning for retirement

Want to retire comfortably without being concerned about paying for monthly expenses?   You may want to work with a financial planner to establish a retirement plan.   Taking into account that both government pension plans may not be sustainable going into the future, having access to a planner may allow you to have registered retirement savings plan (RRSP) and or a tax free savings plan (TFSA) that are carefully built might be the best alternative for you.

6 – Understanding personal financial tools

Do you know what income splitting is? Are blue chip mutual funds the best for your portfolio? There are quite a few personal financial tools that are thrown around at tax filing time that may sound interesting and beneficially to you, however; there are not explained clearly. Sitting down with a financial planner will permit you to have a t personal financial tools that are thrown around at tax filing time that may sound interesting and beneficially to you, however; there are not explained clearly. Sitting down with a financial planner will permit you to have a tutorial on all the tools that have been discussed in the news and used by others in your age group and or financial situation.

 7 – Preparing for your family future

Having a family is costly process and money needs to be managed properly.   From paying the rent to paying for college or university, a parent must plan how money will be saved and invested in order for the expenses to be covered in the future. By working with a financial planner, you will an individual that will put your money away in the right places knowing that it is for your family future at the right time,

In the next column, I will discuss some of the questions that you should ask when you first meet with a financial planner.

What is a Mutual Fund?

This is one of our most common questions. This video will briefly explain what a mutual fund is and how it works. We’ll show you how investing in a mutual fund with Credential Asset Management Inc. at Synergy Credit Union can be beneficial for you – in both the short-term and long-term. It’s never too soon or too late to start saving.

Talk With Our Kids About Money Day Program: Kit for Parents or Guardians

Last week, we provided a brief overview of Talk With Our Kids About Money Day Program, a financial literacy initiative from the Canadian Foundation for Economic Education and the Bank of Montreal.

The program’s website is a hub of wealth of information and tools that we decided to log in to see what it has to offer specifically to parents or guardians.

The section is broken down into the following five segments:

• Overview – A brief review of the TWOKAM program and what it do for parents/guardians and children.
• Resources – A listing of practical references and tools to show how parents/guardians can teach their kids about money management. Parents/guardians can access:
  o Activities that can done in your community
  o Games to help kids learn
  o Links on the web
  o Books that have stories about money management
  o References from BMO
  o Craft ideas
  o Movies, Music & TV about money
• Tips and Suggestions – A collection of money management advice that you can share with children.
• Helpful Links – An extensive list of links elsewhere on the web dealing with every day issues about money.
• Contact Us – Parents/guardians can submit their questions and comments.
• Share Your Stories – An opportunity to share your experiences with your children when it comes to talking about money.

Below is a screenshot of the sample set of advice provided in “Tips and Suggestion” section.

Saving or Investing: 7 Common Questions

To some individuals, becoming wealthy is the ultimate dream.   Wealth provides the means to living a life in which you do not have to worry about working and the price of basic goods.    To build wealth, there are two routes to take: 1) buy a lottery ticket and hope for the best or 2) work hard and save and invest your money.   Considering that there is a very small chance that we all can win the lottery, saving and investing money seems to be the next logical choice.

Although saving and investing leads to the identical goal, there are very different avenues that some may get confused.  Having a clear idea between the two different approaches can lead to being financially independent before the age of retirement.

Below are seven common questions along with answers that will assist in understanding the two avenues to build wealth.

What is the difference between saving and investing?

When you decide to save your money, you are putting your cash aside to grow slowly in a safe account where you can access whenever you please.  (Please note: If it takes you more than 48 hours to have access to your money, then you have the cash in an investment).   Investing entails using your money to buy an asset that will hopefully increase in value over a period of time.   As an investor, you must understand the risks involved and the need to have a long term view of where your investments are going.

What kind of accounts can do I have to use to do both?

There are a variety of accounts that you can put money away in the future.   The most common accounts that yield the most interests are high interest yield account and tax free savings accounts which can be obtained from any financial institution.   Selecting which account and institution should be based on interest rates, service charges and financial advice.   Investment vehicles can come in the form of guaranteed investment certificates (GICs), term deposits and mutual funds, stocks, bonds and real estate.   To select the best long term investment, it is best to seek the advice and management of a financial planner.

How much should I save?

Once establishing a personal budget, you will be able to discover money that you can afford to put away after paying expenses.  No matter the amount, you should place it in account on a regular basis without having intentions of spending the funds to earn compound interest.

How much should I invest?

The answer to this question can be found again in your budget and once you talk to a financial planner.  The financial planner will take a look at your financial situation and assess how comfortable you are with risking money from an investing point of view.    From this exercise, you will be given difference options that you must decide to put money away on consistent basis.

When can I have access to my money?

If you select to save your money, savings accounts are pretty liquid meaning that you should have easy access to the funds.   If your money is not in a primary account such as a high interest account of a tax-free savings account, you will have wait a minimum of two business days for the funds to be deposited into your account.   Money that has been invested is not as easy to access.    Since the funds were used to purchase assets, time is needed to sell the assets at the right price to maximize the profit and process the sale by the financial services provider that you selected.  Time that is needed to receive the funds in your account can vary depending on the type of the investment.

Do I have pay taxes on the money that I will earn?

Interest that is earned within a savings account is taxable with the exception of tax-free savings account (TFSA).   Profit made from investment (known as capital gains) are taxable.    Your financial services provider will provide you with the relevant documents to be included when filing your taxes.   If you have your own registered retirement savings plan, remember that you are deferring paying your taxes until you retire.

Do I need a financial advisor to do both?

To establish a saving account, you do not need a financial advisor, however, if you wish to do both at the same time, you may want to obtain an advisor.   Primarily, the advisor is in the best position to select the right mix of investments and saving instruments to place your money.   Decisions are based on their knowledge of how the investment markets are performing and your risk tolerance.

Unless you are fortunate enough to inherit or win a lot of money, build wealth requires a plan, discipline and knowing where your money is going in the short and long term.

Can a TFSA be used as an emergency fund?

Great advice from our friends at Tangerine.  Building an emergency fund is a great financial literacy skill which pays off in the long run.   If you have not started your emergency fund  yet, you can do so using a Tax-Free Savings Account as discussed by Preet Banerjee in the video below..

 

Monnaie Money Financial Literacy Video Contest 2014 Winners

On December 19th, 2014, Monnaie Money announced the winners of the 3rd Annual Financial Literacy Video Contest. The objective of the contest is to engage youth by providing a platform for them to illustrate their knowledge regarding person financial matters. The following videos were evaluated on:
1 – Originality
2 – Financial literacy message
3 – Overall presentation and relevancy to youth today

1st Place – #NoMoneyMoreProblems by Mags

2nd Place – First Job First Bank Account by JFK High School

3rd Place – Iuliu Pop & Sebastien Philemon

4th Place – Comment être financièrement responsable? By Sarah alias Double XL

5th Place – The Hundred-Dollar Studio By Liam Alexandre and Jeremy Devon

6th Place – Vidéo contest 2014 by CJS

A complete list of videos that were submitted for this year’s contest can be found at the Monnaie Money YouTube Channel and on Vimeo.

On behalf of all contest participants, Monnaie Money would like to thank the following supporting partners:

• Tangerine Bank
• Autorité des marchés financiers (AMF)
• Financial Consumer Agency of Canada
• Prosper Canada
• Côte-des-Neiges–Notre-Dame-de-Grâce
• Standard Life
• Fondation J. Armand Bombardier
• TD Financial Literacy Grant Fund
• Bureau en Gros (Côte Vertu)

8 Things That Financial Literacy Can Do For You

November is Financial Literacy Month in Canada.   Several organizations across the country are holding various events to promote the importance of financial literacy skills.   From contests to workshops, learning the basic money management skills and being aware of threats to one’s wallet in terms of fraud schemes and scams are essential.   Becoming a better money manager is an investment that you can reap the benefits in the short and long term if you are willing to acquire the necessary skills and remaining informed.

Below are 8 results that can be seen when one selects to become financial literate.

1. Know where your money is coming and going

By creating a monthly budget, you can track your cash flow. From your pay cheque or pension benefits to groceries expenses, your budget will tell you the level of surplus or debt that you must manage. This financial literacy skill will assist you in making decisions such as how much you should put aside in a savings account or reducing expenses to avoid going into further debt.

2. Control your spending

Using a credit card to go shopping can be dangerous. Credit cards can prompt you to spend money that may not have in the bank. By being aware of your access to credit and interest rates, you can control your spending knowing the short and long term consequences of going into debt. Instead of using a credit card, you may select to use your debit card or cash to shop.

3. Prepare for your financial future

Do you have plans to buy a house? Would you like to retire comfortably? The financial literacy skill of long term saving is essential. Knowing how much to save per month and types of investment tools that are available to you is a responsibility that must be taken seriously and requires discipline. For young individuals, financial literacy will instruct you to start saving and investing early to benefit from compound interest over a long period time. Middle-age individuals will have the ability to shelter their money from taxes and retired individuals should be able to reduce debt levels and better manage funds given increasing household expenses.

4. Manage your debt

One of the major needs for financial literacy is dealing with debt. From avoiding the use of debt (i.e., credit cards, personal loans, etc.) to understanding interest payments, being able to deal with debt can make life easier from a personal finance point of view.

5. Increase your awareness of potential fraud

Fraud prevention is an aspect of financial literacy. In order to protect yourself from financial fraud, it is wise to be aware of the common and prevailing approaches that fraudsters gain access to your personal and banking information. March is Fraud Prevention Month, when the Competition Bureau of Canada executes their campaign to share tips to avoid fraud of all kinds.

6. Have your money work for you

Want to have your money work for you? If so, then it is time to become more informed on the different types of investment avenues for your needs. By understanding the different options and respective their benefits and pitfalls, you can decide where to put your money to watch it grow over time.

7. How to best use credit

We all have access to credit in different forms such as credit cards, personal loans and mortgages which entails incurring debt. To avoid the difficulties that are linked to going to debt via using credit, it is best to have the skills to know the best situations to use credit and sound strategies to pay back money with the least amount of interest.

8. Understand how banks work

The majority of your money is probably is in a bank; however, do you know how your bank manages your deposits? What type of products and services that you can benefit from to help to your money to grow? By becoming more financial literate, you will be able to compare difference banks in terms of what they offer and decide to move your money to another financial institution to meet your financial goals.

Acquiring the basic financial literacy skills to avoid common money management problems is an ongoing process. Although you can gather as much information as you can from different sources and organizations, it is your responsibility to apply the practical tips to improve your financial situation for the future.

Keep informed on what is shared on Twitter regarding financial literacy, click on the hashtags, “finlit” and “financialliteracy“

7 Money Saving Options For The Future

Saving money for the future is not only a skill but a necessity. Whether it be for education purposes, to purchase your first a home or an emergency, saving money early in life involves having the right mindset and knowing where and how to put away extra cash.

Along with knowing how to spend money wisely to prevent overspending, here are 7 money saving options for the future.

1. Savings Accounts

Saving accounts are the basic money saving tools that every individual should have regardless of age.   From allowances to money left over after paying monthly expenses, saving accounts permits to put away cash in a safe and accessible location.   You have the ability to make withdrawals when needed, however; you will lose the power to make your money work for you by diminishing the interest that can be incurred.

2. High Yield Savings Accounts

For individuals that have the capability to set aside money on a monthly basis, a high yield account is another money saving option to consider.   As the name suggests, these accounts offer a slightly higher interest rate that an ordinary saving account. There are a variety of financial institutions (including virtual banks) that offer high yield accounts in which you may select from depending on their interest rates and related service fees. Accessing your cash in a high yield account is easy, however; some institutions may need 24-48 hours to transfer the funds into your chequing account.

3. Tax Free Savings Accounts

For individuals that would like to begin saving for the long term (i.e., more 5 to 7 years), tax free savings account is a great money management tool.   This specific savings account was established by the federal government to encourage citizens to save for the future by offering the opportunity to invest up to $5500 per year which will not be taxed. In order to be eligible for a tax free savings account, you must be 18 years or older.   You may withdraw money from the account without getting taxed on the amount.

4. Canadian Savings Bonds

Canada Savings Bonds were created in 1946 by the Government of Canada to help Canadians reach their savings and investment goals.   You can buy a bond for as little as $100 and expect a full interest payment when the bond comes to maturity.   You can select to cash in the bond before the maturity date, however; you will receive the amount invested plus all the interest earned for each full month that has elapsed since the issue date or until either the maturity date or the redemption date, whichever comes first.

5. Guarantee Investment Certificate

Guarantee investment certificates (GIC) allows individuals to place their savings in an investment for a fixed period of time.   The length of the investment period can range from a few months to years. Since the financial institution guarantees the return of the money invested, GIC are safe and offer little risky.   If you require your cash before the investment period comes due, you will incur a penalty.

6. Registered Education Savings Plan (RESP)

For individuals that wish to be prepared for costs associated with enrolling themselves or children in college and university, the federal government established Registered Education Savings Plans (RESP),   Through the plan, individuals can contribute to the fund without incurring any taxes on the savings.   If you save for a child age 17 and under, the federal government also puts money into the RESP.   As the individual is ready begin his or her studies, the money can be taken out of the RESP   and open for up to 36 years. It is important to know that they are fees associated with having RESPs.

7. Registered Retirement Savings Plans (RRSPs)

Registered Retirement Savings Plans (RRSPs) are usually reserved for individuals that would to save for their future after the age of 65.     Once you are employed, you are permitted to contribute up to 18% of income earned in the previous year.   To encourage you to contribute, the federal government does not tax you for the amount invested into your plan until you withdraw the funds or when you are the age of 65. In fact, there are situations where the government will provide you with a tax fund to encourage saving more in the future.   It is vital to remember that a RRSP is a tax deferral tool meaning that you are postponing paying taxes to government until your funds are made available to you so be prepared to pay the taxman in the future.

Please Note: Not all saving options may be suitable for all individuals depending on age and income.   It is best to investigate each option and ask a financial advisor at your bank.

Saving For School – Things To Remember

Although it is the  last week of July, it is never too late to think about saving money for school.

In this video, you will learn about some tips to assist you in saving cash while in school.   From planning your meals to buying course material, you will discover how to keep money in your pocket rather than spending it.