Finally some good news 害羞草研究所� you害羞草研究所檝e landed a major promotion with a huge pay bump, or you害羞草研究所檝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 害羞草研究所� or even just starting the conversation with yourself 害羞草研究所� is worthy of praise, says Brian Himmelman, president and financial planner at Himmelman & Associates Financial Advisors in Halifax.
害羞草研究所淚t害羞草研究所檚 just so easy to 害羞草研究所� treat [a pay raise] like lottery winnings and say, 害羞草研究所極h, I finally want to get that Canada Goose coat, and guess what, I害羞草研究所檓 going to book a five-star vacation害羞草研究所� 害羞草研究所� and boom, that differential is gone,害羞草研究所� 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 害羞草研究所� or not, he says.
害羞草研究所淚 think some of the conversation [around debt] will kind of focus on a couple of different points,害羞草研究所� Wiebe says. 害羞草研究所淥ne: what is the interest rate? How does that compare with what they would possibly be able to expect in returns if they害羞草研究所檙e investing the money instead? And then, how do their student loans make them feel? You know, are they stressful?害羞草研究所�
For some, paying down student debt slower but investing sooner is the smarter move.
Both Himmelman and Wiebe favour the 害羞草研究所渂ucket害羞草研究所� 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 害羞草研究所� a great habit to start early.
Himmelman also recommends saving a few months害羞草研究所� worth of expenses in case of an emergency, before saving more aggressively for a home.
害羞草研究所淎ll these amounts are moving sliders based on the individual, their circumstances, their conviction, and their priorities,害羞草研究所� Himmelman says.
害羞草研究所淪o somebody who害羞草研究所檚 making lesser income now, but they have a career where maybe they害羞草研究所檙e making twice as much in a few years 害羞草研究所� they害羞草研究所檙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.害羞草研究所�
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 害羞草研究所� wanting to stay put, wanting control of their space 害羞草研究所� rather than purely financial.
害羞草研究所淚 do advise people to try and stay away from speculation, that 害羞草研究所業 need to get in now害羞草研究所� type of thing,害羞草研究所� he says about the real estate market.
In Himmelman害羞草研究所檚 experience, clients that bought and invested in real estate tended to havea higher net worth 害羞草研究所� but that doesn害羞草研究所檛 predict the future for everyone.
害羞草研究所淸Some clients] might not just be wired for home ownership, and there害羞草研究所檚 absolutely nothing wrong with that,害羞草研究所� he says. 害羞草研究所淎 person can create a perfectly healthy long-term financial plan without home ownership.害羞草研究所�
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 it害羞草研究所檚 more travel or a nicer car.
害羞草研究所淥nce they害羞草研究所檝e taken care of the responsible part of it,害羞草研究所� he says, 害羞草研究所渢hen they can actually take a look and see which of those financial things 害羞草研究所� brings them happiness.害羞草研究所�
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 they害羞草研究所檙e older, travel and some hobbies are less appealing than they once were.
害羞草研究所淭hey were so paranoid about not having enough money, that they overshot the runway,害羞草研究所� Himmelman says.
害羞草研究所淭here is something to be said about enjoying your money while you害羞草研究所檙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.害羞草研究所�
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