Happy financial 2018!
Life sometimes seems to get in the way of reaching financial targets and, unfortunately, we can never account for the unexpected. We can, however, put barriers in place that will help to mitigate the financial burden; it is enough to have the emotional burden of an illness or death without worrying about depleting you and your family’s savings. In addition to insurance, it is important to have an emergency fund, or source of funds in the case of an emergency. Typically, anywhere from 3-6 months of budgeted costs should be available. This does not necessarily mean to have the money sitting in a bank savings account earning very little, but it certainly does not mean having all of your funds locked in or invested in the stock market. If you are fully invested, ensure you have funds in low or no risk options in case of emergency. Others may choose to have a line of credit available; you have to be disciplined and not use the credit line for normal expenditures. One of the first decisions of the year you may make is whether to invest in a RRSP (Registered Retirement Savings Plan) or a TFSA (Tax free savings account). Both of these investment vehicles are tax-efficient and both may be effective options for you, but these plans are different and have specific advantages and disadvantages. Don’t wait until the last week of February to make your decision.