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Financial planning for those with a young family
The financial responsibilities of providing for a young family can feel overwhelming at times and it can be tempting to put off investing for your future or purchasing insurance products in order to just get by from day to day – after all, diapers and college fees really add up.
However, it’s important not to neglect your future needs in favor of the here and now, as the earlier that you start saving for your retirement, the better able you will be to build a retirement savings pot that will offer financial security for you and your family.
Draw up your financial strategy
To begin with, a robust financial strategy will offer structure to your savings and help you to achieve your financial objectives for the future. A qualified financial advisor can help you to make sense of the many options available to you. Ask yourself these questions to establish to what extent an advisor can support you in this process:
- Are you confused or overwhelmed with the choices available to you in relation to how and where to invest your money?
- Do you think you may be overpaying tax?
- Are you concerned about making ends meet or saving enough for the future?
- Do you have time to deal with your finances yourself?
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Consider appropriate insurance policies
Disability insurance offers you financial protection in the event that a chronic disease or disability prevents you from working and provides you with an income during this time so that your family’s lifestyle will not be affected. Similarly, critical illness cover can pay out a lump sum benefit if you are diagnosed with a covered critical illness, helping you to cover any number of costs such as paying down your mortgage or replacing lost income while you take time off to recover.
Life insurance is a crucial policy for those with young families as it aims to cover outstanding debts such as mortgages in the event that you pass away.
Save money on your mortgage
An Independent Mortgage Broker can search the market for the best mortgage deal for your circumstances, potentially saving you thousands of dollars in mortgage interest. As well as saving you money, you can benefit from their expertise in the area and ensure that you are getting the best possible choice of lending providers to make your money go further.
Save your money tax free
A TFSA is a registered savings account which allows you to save free of income tax and is available to all Canadian residents of 18 years and older. You are able to contribute a set amount every year up to your contribution room, which is influenced by the annual maximum, as well as any withdrawals made in the previous year and any unused contributions from the previous year.
RESPS are plans which are suitable specifically for saving for future education needs, tax free. When the student is ready to withdraw the funds, they usually pay little or no tax on the funds. Whatsmore the Canada Education Savings Grant is a fund which can be paid directly into an RESP to boost savings further, depending on your family’s income.
Don’t neglect your will
For those with a family, a clear and up to date will is important to specify your wishes regarding the assets and liabilities of your estate, as well as important matters such as who will have guardianship of your children and who will administer your estate. Having a legally binding written will usually makes matters easier from a procedural perspective if you pass away, as well as protecting your wishes. You may also wish to consider drawing up a living will, which is a way of giving authority to another person to authorize medical events in case you are unable to.
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