Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

How cent-sible mothers can give their children financial independence

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Image by Unsplash

By Anna Smith

Special to Financial Independence Hub

As a mother, I know the importance of raising my daughter to be independent and confident. One of the most significant ways I can do this is by instilling in her the value of financial literacy. By teaching her to be financially independent, I am setting her up for a future where she can make sound decisions with money and have the freedom to achieve her dreams. I feel every mother should share this responsibility and nurture the financial skills of their children, especially when we consider the uncertainties of the current global economic climate.

Growing up and learning to manage money through lived experiences, I discovered that some of those life lessons can be painful. My immigrant parents were so focused on working hard to provide the basics for the family, financial literacy lessons weren’t really a priority for my sister and me. All we were taught was to save and keep on saving. In fact, my sister and I would sometimes skip lunch at school just to save the allowance our parents gave us. I learned the hard way that while saving is part of being financially literate, it can’t just stop there; a significant next step is to find safe, reliable methods to growing your wealth.

Not knowing better, when I was 18, one of the earliest financial mistakes I made was getting multiple credit cards, which eventually resulted in a lot of debt (because which teenage girl doesn’t like shopping?). I had to work hard to pay it off and it was a tough lesson to learn, but it was valuable because it made me realize the importance of being smart about money from a young age.

After that, I started seeking support to become more financially literate from any source I could get my hands on. The internet was my best friend and I got into the habit of listening to podcasts about investing and best financial practices. When I started working, I was lucky enough to find a trusted mentor who taught me that putting 75 per cent of my paycheque toward smart investments was smarter than spending the money on any big-ticket item immediately.

As I became better with money, I went from only knowing how to save money to growing my wealth through investing in stocks (ETFs) and real estate and having a diverse portfolio. When it comes to investments, I now know it’s important to maintain both passive and aggressive investments. Having said that, choosing between good investments and bad ones can be daunting and that’s where financial advisors come in. Engaging a trusted advisor who is experienced in investing in different asset classes can make all the difference in the world because they often have access to wealth management tools and data that make investment proposals more reliable and easier to understand.

Teaching children about saving and investing — and the mindset behind both

Although I eventually found my financial footing, others are not so lucky and many have never been able to recover once they get into debt, which can be crippling. Now that I have a family of my own, one of my top priorities is to make sure my daughter has a strong foundation in financial literacy, with all the tools she needs to make better decisions when managing money.

One of the things that we’ve started working on together is to get her to save regularly, like I did as a child. But more than teaching my daughter good saving habits, I believe what’s important is to show her the difference between the money-going-out and money-going-in concept. Very often, children are no strangers to the former because they see us making purchases daily and this makes it easy for them to learn spending (or worse, impulse spending). The latter, however, is more difficult to emulate because they rarely witness the act of saving. This is especially true now that we live in a world where most financial transactions are digital. Though this speaks to the convenience of innovation, how do we curb impulse spending in our children beyond merely saying “no” (and parents, I’m sure you’ll agree that saying “no” doesn’t always elicit the best response from children)? Continue Reading…

Parenthood is unpredictable, but financial planning can eliminate some of the guesswork

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Image: Pixabay

By Christine Van Cauwenberghe

Special to Financial Independence Hub

May marks the arrival of Mother’s Day, a time to recognize the influence and sacrifice that comes in tandem with motherhood. While the old adage of “parenting isn’t easy” rings true, the financial planning component doesn’t have to be hard. Childhood is a series of stages woven together: each brings a new opportunity for parents to maximize key fiscal benefits and underpin good financial habits for the next generation.

Pre-Baby

Before your baby is born, there are pre-emptive financial strategies that you can implement to get your affairs in order. Firstly, you want to arm yourself with knowledge. Get informed about the benefits provided by the government and your employer to determine what your expected income will be while on parental leave. Take time to research childcare costs and calculate whether you have adequate life and critical insurance.

Most importantly, make sure you have a will in place that designates a guardian to care for your minor child, a trustee to manage the money for your child and an executor who will run the administration of your estate. Finally, review your financial plan with your advisor to account for the addition of a new family member.

Infants and Toddlers (0-5 years)

There are a series of government benefits available for parents with young children. In most provinces, you can automatically apply for a Social Insurance Number and the Canada Child Benefit (CCB) when you register your child’s birth. The CCB is a tax-free monthly payment made to eligible families to help with the cost of raising children under 18 years of age.

You should also consider opening a Registered Education Savings Plan (RESP) to help save for your child’s education. To this same point, you may be eligible for a Canada Education Savings Grant, which provides a 20 per cent grant to be paid on yearly contributions up to an annual limit of $500 and a lifetime limit of $7,200. Your family may qualify to receive the Canada Learning Bond based on your family income and other benefits under a provincial education savings program. You may also be able to claim childcare expenses if you (or your spouse or partner) paid someone to look after an eligible child so that one or both of you could work or attend school. Talk to your financial advisor about the options available to you.

Middle Childhood (6-11 years)

While they may not have a wealth of knowledge yet, children at this age can understand basic money concepts and can start developing good habits. Consider opening a savings account for your child and encourage them to make deposits from allowance, holiday or birthday present money.

Teenagers and Adolescents (12-19 years)

At this stage, the Mirror-Window Effect is at its peak. Mirrors offer reflections, while windows open up new views. By practicing wise money management, you can be the mirror your child needs to develop early but strong financial habits. Continue Reading…

How to use YouTube for Financial Independence

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Image by NordWood Themes on Unsplash

By Andre Oentoro

Special to Financial Independence Hub

With more than 2.5 billion users worldwide, YouTube has become a platform where everyone creates and shares content and earns big bucks from it. 

As a financially independent person you can leverage the platform not only to share the knowledge you have but also to keep a steady stream of passive income. Well-crafted YouTube videos can be high-performing assets: they make your money work for you rather than the other way around.

However, using YouTube is so much more than creating a channel, grabbing your camera, and uploading videos to the platform. If you want to go the extra mile, it takes extra effort. We’ll break down some handy ways how you can get the most out of your YouTube channel. 

Focus on niche topics

Creating a niche channel can be an effective way to attract a dedicated and engaged audience. 

While it may seem counterintuitive to limit the scope of your content, focusing on a specific area of personal finance can help you establish yourself as an authority in that area. It can also help you stand out from other personal finance channels and make it easier for viewers to find your content.

For example, you could create a channel focused on investing in dividend stocks or building a real estate portfolio. Whether it’s animated explainer videos or talking-head style video, content that is tailored to a specific audience provides more in-depth analysis and insight that resonates with your viewers.

Share your failures

While it’s natural to want to showcase your successes, sharing your failures can be just as valuable to your audience. Personal finance can be a challenging topic, and sharing your mistakes and what you learned from them can help your viewers avoid making the same mistakes.

Sharing your failures can also help you build trust with your audience. Being honest and transparent about your experiences shows that you are a relatable and authentic creator. This can help you establish a loyal following and create a sense of community around your channel.

Collaborate with other creators

Collaborating with other creators in the personal finance space can be a great way to reach a wider audience and provide a fresh perspective for your viewers. 

By partnering with creators who have complementary areas of expertise or a similar target audience, you can create content that is more engaging and informative.

For example, you could collaborate with a creator who focuses on budgeting or debt reduction, while you focus on investing or building passive income streams. This can help you create a more well-rounded channel that appeals to a wider audience.

Use storytelling

While personal finance can be a dry topic, using storytelling can make your content more engaging and memorable. By sharing personal anecdotes or using case studies to illustrate your points, you can connect with your audience on an emotional level. Continue Reading…

Do you really need an Emergency Fund?

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Photo by Mark König on Unsplash

By Anita Bruinsma, CFA

Clarity Personal Finance

One of the most agreed-upon financial planning concepts is the importance of an emergency fund. Having quick access to money to pay for an unexpected expense or job loss can prevent unwanted credit card debt and can lower stress levels.

Not everyone is on board though. Some people feel that keeping money in cash instead of investing it means you’re sacrificing too much potential growth. This might be a particularly true for people who are targeting financial freedom. Since investing is an important component of reaching financial goals, it’s understandable that you don’t want to drag down your overall rate of return by holding cash.

Having access to money for unexpected expenses, though, is important for pretty much everyone. So do you need an emergency fund and if you do, how much should it be?

Do you need an emergency fund?

If you have a home equity line of credit (HELOC), you might not need funds sitting in a savings account. Whether it’s a good idea to depend on your HELOC as an emergency fund depends on two main factors: if you had to borrow from it, how long would it take you to pay if off and what is the rate of interest you’re paying?

Generally, as long as the rate of interest on the line of credit is below what you could expect to earn in the stock market, and assuming you’re able to pay down the line of credit within a reasonable time period, then using your line of credit isn’t a bad idea. The key is to make sure you are disciplined in paying down the line of credit quickly, otherwise the interest cost will outweigh what you could earn in the market.

How much do you need?

For those who don’t have a HELOC or who prefer to have a safety net in cash, determining the right amount of money to keep in an easy-to-access, low-return account is important.

There are really two kinds of emergency funds: one that will pay your expenses if you lose your job or can’t work for a period of time, and one that will pay for the large, unpredictable expenses that crop up in everyday life.

The job loss emergency fund

Job loss can mean you were laid off or that you can’t work due to illness, an accident, or a personal/family crisis. You might have heard the standard advice that says you need 3-6 months’ worth of living expense to protect against a job loss. Like all personal finance shortcuts, this isn’t necessarily helpful. How much you need in an emergency fund is highly dependent on your situation.

Here are the main factors that influence how much you should have set aside in your job loss emergency fund:

  1. Do you have job stability? If your industry is known for sudden layoffs or if your role might be considered non-essential to an organization, you have a higher risk of losing your job and it might take you longer to find a new one. It would be wise to have a bigger cushion than someone who works in a stable industry or performs an essential role.
  1. Do you have disability insurance? If you have an accident or get really sick, you’ll receive some kind of payment while you have to take time off work. It won’t necessarily be enough but it will help and you’ll need a smaller emergency fund. If you expect to receive no pay if you need to take time off work, you need a bigger emergency fund.  
  1. What kind of lifestyle do you want to maintain? If you are laid off, you’ll need to pare back your spending. But to what extent? What do you consider to be “essential”? Are the kids’ swimming lessons essential? What about your gym membership? Understanding what essential means to you will help you decide how much to set aside.
  1. Do you have a partner or spouse? If you have a partner or spouse with whom you share the financial responsibilities of running a household and they are employed, would they be able to cover the essentials if you lost your job? How would your lifestyle be impacted? What is their job stability like? Do they work in the same industry as you do? If so, there might be a higher risk of both of you being laid off at the same time.
  1. Do you have savings in a TFSA or a non-registered account? If all of your money is in RRSPs or your pension, you don’t have any good options for withdrawing money in an emergency. However, you could choose to rely on your TFSA or non-registered funds for a portion of your needs.

The large expense emergency fund

For your large expense emergency fund, the amount you want to have available depends on how many opportunities for unexpected expenses you are exposed to and what other resources you could draw on. Continue Reading…

Tips for Buying a House for those with Poor Credit

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Image Pixabay

By Brittany Cotton

Special to Financial Independence Hub

For people with bad credit, the experience of buying a home can be quite difficult and daunting. It’s a tricky time that necessitates careful planning and preparation.

However, despite the difficulties that low credit scores may present, there are several tips and strategies you can employ to help you navigate the home-buying process. This article highlights some of these innovative strategies.

How to Buy a Home with Less than Stellar Credit

Here are some pointers to help you buy a home even if you have bad credit:

Consider Special Programs

There are numerous loan programs that do not require a high credit score or a down payment if you are a first-time homebuyer or have a low income. Some options [in the United States] to consider include USDA loans, VA loans, and the Fannie Mae HomeReady and Freddie Mac HomeOne and Home Possible loan programs.

Look for the Best Deal

Different mortgage brokers offer various rates of interest, so shop around to find the best deal. According to studies, trying to compare multiple rate quotes could save you a substantial amount of money in the long run.

Look into Down Payment Assistance

If you’re concerned about saving for a down payment, there are more than 2,500 down payment support programs available across the country for which you could be eligible. However, you need to avoid major financial changes. Taking on new debt or making a large purchase can lower your credit score, so avoid doing so while applying for a mortgage.

Things you should know about the Homebuying Process

Before you start looking for a house, you should educate yourself on the ins and outs of house purchases. Here’s a rundown of some key points to keep in mind:

Recognize why you want to Buy a House

Buying a house is a significant investment that shouldn’t be taken lightly. If you don’t know why you would like to buy a house, you may come to regret your decision later on.

Check your Credit Score

Your credit score will help you in evaluating your payment plans; lenders use it to set loan pricing and determine if you can repay your mortgage. The more favorable your credit history, the better your chances of obtaining financing at the best terms and rates. Continue Reading…