Money is something that not a lot of people talk about. It’s been considered taboo in our society for decades and people tend to shy away from having those tough conversations. What’s astonishing is that is that only 24% of Canadians could find $1000 – $5000 for an emergency. With the downturn in the economy these past few years we’ve seen layoffs, hiring freezes, and wage cuts which makes it even more important for Albertans to take financial literacy seriously.
Getting your financial house in order can be uncomfortable especially if you need to have tough conversations but in the long run it will allow you to sleep easier at night. Minimizing financial stress leads to healthier relationships, as well as reduced stress.
Canadians are confident that they will be able to retire but saving and investing for the future is something a lot of Canadians put on the back burner. Starting to invest as early as possible is imperative if you want to retire by the time you hit 65. Studies suggest that Canadians will need 2 million dollars to retire which would mean for your 40 working years you need to sock away $50,000. If that number scares you understand that investing and earning more than 5% in your portfolio will allow you to decrease how much you need to save. Investing allows your money to work for you, and since we are all living longer you want your money to work as hard as possible. If you aren’t sure where to start there are a number of Canadian Robo Advisers such as WealthSimple, Nest Wealth and Wealth Bar that will allow you to broadly invest your money for a low cost. Canadians can invest through a number of tax sheltered accounts such as TFSA’s, RRSP’s, and RESP’s for their children.
The other way Canadians can work to build their wealth is through paying down their debt. Canadians have one of the highest levels of household debt. With the total Canadian debt sitting around 1.7 trillion dollars, and the average Canadian carrying $22,125 in non-mortgage debt (Alberta sitting at $27,871, which is the highest in Canada). While it’s uncomfortable to face your debt, and paying it down quickly might mean giving up some of life’s little indulgencies; being debt free means that your money is all yours. Implementing a strategy that pays down your highest debts first, and throws any additional cash that comes your way towards your debt means paying less interest in the long run, and will unlock your financial future.
Lastly, the hardest part of getting your financial house in order is getting on the same page as your partner. Having money conversations are challenging but worthwhile. By outlining your financial goals and dreams you and your partner can align yourselves to work together towards financial freedom. Sometimes, life will hit you with unexpected expenses; job loss, car expenses, medical bills, but knowing you have a partner there to support you as well as a financial foundation strong enough to get you through the storm will mean you can rest easy.
Janine Rogan, CPA is a personal finance expert with a passion for teaching financial literacy to Canadians. She teaches financial freedom tactics through her website to individuals and small businesses at JanineRogan.com.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Alberta, CPA Education Foundation or CPA Canada.
Written by: Janine Rogan, CPA