Tag Archives: saving

Paycheque to paycheque: the fate of half of Canada’s employees

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Living paycheque to paycheque? You’re hardly alone. As my latest Financial Post blog reprises today, almost half of Canadian workers (47%) told the Canadian Payroll Association’s 2017 survey that they’d find it hard to meet their financial obligations if their pay cheque were delayed by even a single week.

You can find the full blog by clicking on the highlighted headline here: Nearly half of Canadians would face a financial crunch if paycheque delayed by even a week, survey shows. The  article also appears in the Thursday print edition, page FP5, under the headline Nearly half of Canadians walk financial tightrope.

As I point out at the end of the FP piece, there’s some irony in that the way out of this savings conundrum is to make an effort to save paycheque by paycheque: a strategy the CPA and other financial experts generally term “Pay Yourself First.”

That means using your financial institution’s pre-authorized chequing arrangements (PACs) to automatically divert 10% of net pay into savings the moment a paycheque hits your bank account. Just like income taxes taken off “at source,” the idea is that you won’t miss what you don’t actually receive.

Pay Yourself First

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How to set your Retirement savings target

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How much to save for retirement depends on the type of lifestyle you’re   aiming for

How much to save for retirement varies for each investor. A fulfilling retirement is not simply a matter of accumulating sufficient wealth to give you peace of mind. It is equally a matter of knowing what you will do — in effect, ensuring that you will be as active and productive with your time as you were during your working days.

These days, more investors suffer from what you might call “pre-retirement financial stress syndrome.” That’s the malady that strikes when it dawns on you that you don’t have enough money saved to be able to earn the retirement income stream you were banking on.

To alleviate this worry, we recommend that you base your retirement planning on a sound financial plan. Here are the four key variables that your plan should address to ensure you have sufficient retirement income:

  • How much you expect to save prior to retirement;
  • The return you expect on your savings;
  • How much of that return you’ll have left after taxes;
  • How much retirement income you’ll need once you’ve left the workforce.

Consider taxes when determining how much to save for retirement

As for the tax structure, it keeps changing. But it’s safe to assume that you’ll pay a lower rate of tax on dividends and capital gains than on interest, and that you’ll generally pay taxes on capital gains only when you sell.

As for the return you expect, it’s best to aim low. If you invest in bonds, assume you will earn the current yield; don’t assume you can make money trading in bonds. For stocks, the market returned 10% or so yearly on average over the past 80 or so years. Aim lower — 8% a year, say — to allow for unforeseeable problems and setbacks.

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How to set long- and short-term financial goals

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By Angela Baker

Finances are always problematic, and everyone struggles to find balance in this field.

At the beginning of our professional careers, we are on a tight budget with little perspective for any progress. As time passes, our financial goals get higher and desires may seem unrealistic.  There are many ways to plan finances and to set long-term and short-term financial goals. Below, we will try to explain steps for success in this activity.

Define goals and objectives

If you decided to set financial goals, start with clear contemplation about what you need and how you will achieve that. This is the first and most important step. Decide how much money you want to possess each day, month or year. Then after you have determined the amount, start to plan the way for realizing the financial goal.

This may include a new activity like running a website, opening a store, renting houses or finding a well-paid job. No matter what is it, you need a lot of planning and counting. Also, you must research a lot, listen to advice from friends, people around you, and acquaintances. Only with fully-planned action will you be on the way to achieve short- and long-term financial goals.

Identify your financial requirements

The second strategy in setting your financial objectives includes identifying personal needs about money. Everyone spends a certain amount of money daily for basic needs as food, car, hygiene, or meetings with friends. If you live alone, it will be easier to recognize personal requirements because we all know our own needs. Otherwise, if you have a big family and  have to maintain all of them, it will cost you days to count how much money you need. Also, you should not leave out extra spending for a holiday, services in the house, clothes, etc. The final list could make you scared or nervous, but you must face it.

Improve your saving habits

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Choosing between Income Protection Insurance and a Savings Account

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By Cathy Habas

Special to the Financial Independence Hub

If you became seriously sick or injured today, would you be able to afford all your bills? Think about not only your medical expenses, but also your monthly payments: utilities, mortgage, car, insurance, loan repayment, etc.

Health insurance might pay for your hospital bills, but if you’re unable to work for an extended period of time, would you feel the pain of lost income?

Most of us certainly would. Fortunately, income protection insurance is designed to help us carry on without too much disruption.

What Is Income Protection Insurance?

In exchange for a monthly premium, you get peace of mind through income protection insurance. If you were unable to work due to an injury or illness, income protection insurance essentially replaces your income.

Specific details will depend on each policy, but in general you can expect to claim your income protection insurance more than once. That means you can benefit from the payouts any time you get sick or injured, and not just the first time you experience a major setback.

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Millennial Money: An experiment in money-saving hacks

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As both a student and a millennial, my eyes are always peeled for helpful tips and advice on how to manage my finances. I recently came across this article from refinery 29 about “10 Bizarre Money Habits Making Millennials Richer.”

While I usually try and avoid this ‘listicle’ format, I was intrigued enough to look into it. The list surprised me in that it actually did include some new tips I hadn’t heard about before, like literally freezing your credit card (See image to the left).

I decided to run a little experiment based on this article, and I’m sharing the results with you now. I didn’t think it would be feasible to try and implement all ten of the habits. Besides, some of them don’t apply to me (I no longer have a car or any recurring payments coming out of my bank account), so I decided to focus on just a few of the tips to see how easy they really were to put into action.

Tip 1: Pick a denomination and save it

The first tip I implemented was to pick a denomination and save it, always. Unlike the article, I don’t get paid in cash (or at all really, apart from payment for blogs like this), so the only time I come into contact with physical cash is when I take it out of an ATM or get cash back at the grocery store.

I thought I’d start small: I would save all my £2 coins [the UK pound is the currency where I currently live, in Scotland] in a jar on my desk. This actually turned out to work quite well for me, as my current wallet is a card carrier without any space for coins. Every time I received change I separated out the £2 coins,  then made sure to move them into the jar every couple of days. After three weeks of this method, though, I had only saved around £12. Turns out, £2 coins aren’t given out that frequently as change.

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