Tag Archives: saving

Our values about money are changing and millennials are leading the evolution

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Jay Acharya

By Jay Acharya,  Capital One Canada

Special to the Financial Independence Hub

When my wife and I bought our house, it felt like a massive achievement for us as we had diligently saved our money for the down payment.  When we told people about it, they were full of questions about the neighbourhood, the kitchen and how many bedrooms there were.

We were so proud of ourselves for accomplishing this milestone that we eagerly shared pictures and every detail about our new home.  The funny thing is, no one asks you to tell them the story about how you saved up to buy the house in the first place.  That is where the real drama and the value of the conversation is – then again, you can’t take pictures of the restaurant meal you skipped or the stay-at-home vacation you took and post them on social media.

New car, new house, new clothes – the idea that owning bigger, more expensive things has traditionally been valued by our society as a symbol of status and accomplishment.  Now enter the millennials: the demographic that is challenging the status quo in many areas, including what we value.

Capital One Canada recently hosted the C1NDX, a consumer index roundtable and study that included six of Canada’s leading journalists and industry experts. With a specific focus on the impact of the sharing economy, we dove deep into how the financial values and spending habits of consumers have changed and are continuing to evolve.

We discovered that when it comes to how and why consumers spend their money, the values of many Canadians, particularly millennials, are shifting.

Experiences Are the New Luxury

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2016 RRSP tips – ‘Back to basics’ primer

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Adrian
Adrian Mastracci, KCM Wealth

By Adrian Mastracci, KCM Wealth

Special to the Financial Independence Hub

Understanding the RRSP regime makes it easier to stickhandle your retirement marathon. This workhorse has been delivering on retirements since its introduction in 1957.

It really fits two groups of investors like a glove.
Those without employer pension plans and the self-employed.

Some investors still shun RRSP deposits but three solid reasons to pursue RRSP accumulations stand out for me:

• Long-term, tax deferred investment growth.
• Future withdrawals, ideally at lower tax rates.
• Contributions provide immediate tax savings.

Stay focused on how the RRSP dovetails into your total game plan.
The power of compounding really delivers.

Your RRSP mission is three-fold:

• Keep it simple.
• Treat it as a building block.
• The journey lasts a lifetime.

I summarize six vital “back to basics” RRSP areas for your review:

1.)  Setting saving targets Continue Reading…

Maximizing Finances as a Young Adult

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business, people and money concept - smiling businesswoman with dollar cash money over gray background and forex graph going upBy Jenna Batten

Special to the Financial Independence Hub

For young people seeking to become financially independent, one of the most important underlying principles of frugality is making the most of your existing assets. Put simply, this means learning how to spend only what you must, how to invest strategically, and how and when to save.

Here are a few tips on how to address each of these points:

Spend Wisely

Being frugal with your money is always a good idea, and for some it’s a fairly basic practice: you spend only what you need, when you need to, without gratuitous or unnecessary expenses. However, even those who believe themselves to be strategically frugal with their finances may be surprised to see how many costs they can cut if they really sit down and analyze the situation.

Thankfully, doing so has become easier than ever before thanks to, you guessed it, an app—or rather a whole slew of apps, designed to assist in financial tracking. You can read about a number of these apps at Daily Worth, although the most popular options are Mint and GoodBudget. Both tools help to provide you with a comprehensive, visual display of what you spend and what your overall financial situation looks like.

With these sorts of tool handy, or simply with a detailed financial tracking system of your own, you can effectively create a budget based on your own financial situation and your particular habits. You can then adjust your spending habits wherever possible to ensure that you’re spending no more than you really need to.

Invest Strategically

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A Simple Way To Boost Your Retirement Savings

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pay yourself first, a reminder of personal finance strategy - stack of colorful sticky notes on a cork bulletin boardBy Robb Engen, Boomer & Echo

Special to the Financial Independence Hub 

One of the core tenets of financial planning is to pay yourself first.  Automating your savings is a painless way to save for retirement and, in all likelihood, you’ll barely notice that you’re living on less.

Most experts suggest putting away 10 per cent of your income for retirement, but that number might seem out of reach for many people today.  The key to developing good savings habits, however, is that you need to start somewhere.

That’s why I suggest setting aside what you can afford, be it three or five per cent of your income, and try to increase that amount every year.

Small changes lead to big improvements

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Expanded CPP may not increase retirement income: Fraser Institute

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cpp_image2As the Globe & Mail and Financial Post both  reported Tuesday, a new study by the Fraser Institute finds that an expansion of the Canada Pension Plan (CPP) may not raise incomes of retirees because people will save less on their own.

The report, which is to be released today, found that private savings fell as CPP contribution levels rose between 1986 and 2008. CPP contribution rates were 3.6% of earnings in 1986 (half from employers, half from employees) and rose to the current combined level of 9.9% by 2003.

Impact varies with income and age

The study found the impact of higher CPP contribution rates varies with income and age. So for households with annual income under $34,140, a one percentage-point increase in contribution rate resulted in a 1.56-percentage-point fall in private savings. But middle-income households earning up to $59,920 cut their savings by 0.72 percentage points: less than the full amount of the CPP increase. And high-income earners making over $59,920 were found to have almost no change in their saving rates as CPP rates rose.

The report’s co-author, Charles Lamman told the Globe that relatively few Canadians are under saving for retirement: mostly the elderly, widows and singles, and those without a work history that makes them eligible fort the CPP. So for those people, a CPP expansion would not be helpful.

The Financial Post version of the story can be found here. The Post also ran a piece by the report’s authors on its FP Comment page: Shifting Retirement Savings. You can also view a video commentary on the report on the Fraser Institute’s website, here.