Tag: Financial Planning

  • Why Financial Planning is Important for teenagers?

    Why Financial Planning is Important for teenagers?

    Getting an early financial plan in place can serve as the ticket to financial independence in days to come. After all, nobody wants to live off bits and pieces of other’s mercy.

    This was the first lesson my parents taught me when I suddenly barged upon them doing the monthly budget one winter afternoon.

    My life was not very different from the other teens of my class. I was going to a government aided school, traveling on public transport and teaching neighborhood children for pocket money. It might be a big shock for you all when I say that my father was the DGM Finance of a top-notch Private Bank and my mother had her own boutique of imported bags. And here I was struggling to make ends meet. No, I was not their STEPSON; they loved me a lot and maybe that was the reason why they instilled the urge of financial planning in me from a very tender age.

    My fellow cousins who were extremely pampered by their parents got a big fat monthly sustenance allowance which they termed Pocket money. It surprised me; they were living off their parents who were looking after all their expenses. Yet they got the allowance and I was working overtime after school to somehow manage a movie with friends. So I decided to confront my father and ask him about the root cause of this inequality. After all my parents were equally rich!

    The two hour long explanation which he gave that day did seem like a never ending lecture from your least favorite teacher, but now that I am a married man having two children of my own, I understand every bit of what my old man tried to say back then. I don’t remember all the minute pointers but still I will try to be as much specific as possible.

    Golden Rules

    Money can’t buy happiness, but it can buy security during rainy seasons which is nothing short of sheer joy. After all won’t we give anything to be able to pay those towering medical bills or home loans? Thus the basic foundation of financial planning does not lie in limiting oneself from enjoying the little pleasures of life; it rather stresses on pooling funds for those days of dire necessity. Teaching teenagers the benefits of financial planning will keep them abreast of every unlikely situation that could crop up and debts which could build up like an impenetrable barrier distancing them from their aims.

    From my Experience Diaries

    • How it helped me in staying focused

    Unlike my father who was contented with a 9-7 job and a fixed salary I wanted to have my own restaurant business. And it was made extremely clear by him that he will in no way help me in accumulating my business capital. But the strict budget I had to adhere to for meeting my weekend movie plans made me understand the real value of money. So very soon I started saving on the movie going part and enrolled into cooking classes with my excess surplus. I became more careful with savings and my eyes served as radar in the lookout for supermarket deals, flash sale and cash back goodies. Well you can say I did miss out on many things which my contemporaries enjoyed but now as I sit back in my plum restaurant and look at the profit figures of a day’s business I feel satisfied with the path I choose back then.

    • How it kept me bubbling with energy

    Every night i used to have the same dream of my dream restaurant and it kept me going throughout the day. Whenever I saw my cousins babbling about their latest restaurant escapades I would smirk to myself thinking I shall reach the apex very soon. My father taught me the benefits of having a bank fixed deposit. Rates very pretty good back then and mutual fund was something we had never heard of. So I opened a bank account with my father as the primary holder and started depositing bits and pieces of whatever I could accumulate. I doubled up giving tuition and tried to walk my way to school which in turn helped a lot in fastening up the fat burning process. It took me 5 years before I could sum up a good bank balance and deposit the same in fixed deposit scheme which compounded to a pretty hefty figure when I took the land lease of setting up my dream project.

    • How I developed my understanding on the full monetary cycle

    I started keeping a diary of my monthly expenses. Well I didn’t have much to record given the fact that I thought twice before spending every penny but yet it helped me in staying in line.
    We didn’t have much investment opportunity variations back then. But with the market filled with plenty options I would advise each and every one of you to go for it. Be it your tuition savings or money accumulated from running errands, start saving. You are young and you have time by your side. Make the most of this opportunity. Trust me, you won’t regret.

  • Feeling the Squeeze: 5 Money Strategies for the Sandwich Generation

    Feeling the Squeeze: 5 Money Strategies for the Sandwich Generation

    Life as it is can be a little hectic. Working full time, taking care of your children and still finding the time to treat yourself can be a chore. For some, it can get even stressful if they have to support their aging parents as well.

    If you are busy raising kids and caring for an aging parent, then you belong in the “Sandwich Generation.” According to a survey by BMO Nesbitt Burns, cited by Huffingtonpost.ca,  more than half of Canadians aged between 45 and 64 are feeling squeezed by the needs of their children, aging parents or both.

    No matter how you slice it, balancing between your family’s needs and your aging parents’ needs can be a burden. Carefully planning a smart money strategy can help you take some of the pressure off.

    Without further ado, here are five financial strategies to help you feel less “sandwiched.”

    1. Save for Your Children’s Education

    If you are a sandwich generation parent, stretching your savings to provide higher education to your children can be extremely difficult. Although you might think there is still enough time to start saving, most parents don’t realize the severity of this problem until it is too late.

    Fortunately, there is a solution. Registered Education Savings Plan, or RESP, is a savings plan sponsored by the Canadian government that encourages parents or other siblings to invest in their children’s post-secondary education. One of the main benefits of RESP is that the government can offer grants to eligible contributions.

    Here’s how this plan works: Imagine you open an RESP account for your newborn baby and contribute $1000 into the account. Your provider will send the account and other information to the government for grant approval. If the grant is approved, then the government adds 20% of your annual contribution, up to $500 per year. Families with lower incomes receive a higher grant from the government.

    When your children enroll to college, they can start taking money from the account, tax-free.

    1. Protect Your Parents in a Smart Way

    Understanding your parents’ needs is the first step to protect and provide for them in a smart way. Although discussing finances with them can be difficult, helping them see that this is the best way for you and them is crucial.

    Your parents might take for granted their capacity to self-function since simple tasks seem easy and automatic. But, when they lose their ability to self-function on a daily basis, they put a lot of stress on you. Long term care insurance is a smart way to protect your aging parents and to reduce future costs. With long term care insurance you will receive at-home nursing for your parents. Also, the insurance will provide for their basic needs, such as feeding, dressing or cleaning.

    1. Protect Your Income

    Protecting your income is a smart money strategy, especially if you have multiple generations counting on you. There are different ways you can protect your income and your loved ones, such as life insurance, disability insurance or critical illness protection.

    With almost half of Canadians being diagnosed with some form of cancer throughout their life and with the ever growing rates of heart disease, protecting your income is a wise decision if such a scenario would unfold.

    1. Look for Ways to Increase Your Monthly Cash Flow

    For many, caring for both, children and aging parents can be stressful. That’s why it is a smart idea to look for new ways to increase your monthly cash flow. Look for passive income opportunities, such as selling old stuff on Amazon and eBay or affiliate marketing. Or you could stretch your mortgage’s amortization for a while to lower your payments. Although this is not a good idea usually, but in the short run can help you balance your finances while providing for your family.

    1. Care for Your Future Needs

    You don’t have to be sandwiched to start planning for your future needs. Early planning can go a long way, and can take some of the financial and emotional pressure off your shoulders. Once you’ve got the basic costs of living covered, start putting money aside for your retirement or for unexpected events. Investing in a retirement account can save you takes and will keep your money from being easily spent. Not to mention that you will be able to cover your own costs of aging.

    Caring for both, your children and your elderly relatives can sometimes feel like a burden. But, with the right financial planning, you can ease the financial and emotional strain.

    Have you implemented any of the strategies above? What other tips do you have for the Sandwich Generation? Share your thoughts in the comments below.

    Author Bio: Ben Rogers, Web Content Manager at Assiniboine Credit Union.