Your Wealth, Our Passion

By iA Private Wealth, February 14,^th, 2025

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As the new year begins, it's a perfect time to reassess your personal finances. This annual review can help you understand your financial health, set new goals, and make necessary adjustments to ensure you're on track to meet your wealth planning objectives. Here’s a guide to help you get started and understand how an investment advisor can be instrumental in this process.

1. Review Your Financial Situation
   Start by taking a comprehensive look at your current situation, including:
• Income and expenses: List all sources of income and track your monthly expenses. Categorize your spending to identify areas where you can cut back.
• Debt: Make a list of all your debts, including credit cards, student loans, and mortgages. Note the interest rates and minimum payments for each.
• Savings and investments: Review your savings accounts, retirement funds, and any other investments. Assess their performance and determine if they align with your goals.
• Net worth: Calculate your net worth by subtracting your total liabilities from your total assets. This gives you a snapshot of your financial health.
2. Set Financial Goals
   Once you have a clear picture of your finances, set measurable, achievable, relevant, and time-bound goals. These might include:
• Short-term goals: Building an emergency fund, paying off high-interest debt, or saving for a vacation.
• Medium-term goals: Saving for a down payment on a house, funding education, or purchasing a car.
• Long-term goals: Retirement planning, investing for future wealth, or estate planning.
3. Create a Budget
   A budget is a crucial tool for managing your finances. It helps you allocate your income towards expenses, savings, and debt repayment. Use the 50/30/20 rule as a guideline:
• 50% for needs: Essentials like housing, utilities, groceries, and transportation.
• 30% for needs: Non-essential expenses like dining out, entertainment, and hobbies.
• 20% for savings and debt repayment: Building your emergency fund, retirement savings, and paying off debt.
4. Monitor and Adjust
   Regularly monitor your budget and financial progress. Life changes, such as a new job, marriage, or the birth of a child, can impact your finances. Be prepared to adjust your budget and goals as needed.

How an Investment Advisor Can Help
An advisor can provide valuable guidance and support in managing your finances by way of:

• Professional advice
  Investment advisors have the experience and training to help you make informed decisions. They can provide insights into investment opportunities, tax strategies, and retirement planning. Their knowledge can help you navigate complex financial situations and avoid common pitfalls.
• Personalized Plan
  An advisor can create a plan tailored to your unique goals and circumstances. This plan will outline specific steps to achieve your objectives, such as saving for retirement, buying a home, or funding your children’s education.
• Accountability and Discipline
  Working with an advisor can help you stay accountable to your financial goals. They can provide regular check-ins and updates, ensuring you remain on track. This accountability can be especially helpful in maintaining discipline with your spending and saving habits.
• Stress Reduction
  Managing finances can be stressful, especially when dealing with debt or planning for the future. An advisor can alleviate some of this stress by providing clarity and direction. They can help you prioritize your goals and develop a clear action plan.
• Long-Term Relationship
  Building a long-term relationship with an advisor can be beneficial as your financial needs evolve. They can adjust your wealth plan as your life circumstances change, ensuring your strategy remains aligned with your goals.

Starting the new year with a reassessment of your personal finances is a proactive step towards achieving financial stability and success. By reviewing your financial situation, setting goals, creating a budget, and monitoring your progress, you can take control of your financial future. Enlisting the help of an iA Private Wealth advisor can provide skillful guidance, personalized planning, and the support needed to stay on track. Make this year the year you take charge of your finances and work towards a secure and prosperous future.

By iA Private Wealth, November 15, 2024

Having a child is an exciting time in life. Before the baby arrives, it’s useful to think about your finances, since raising a child can be both incredibly rewarding and very expensive.

While each family is different and costs will vary, the average Canadian family spends almost $300,000 to raise a child from birth to age 17¹. Accordingly, expect to budget roughly $17,000 a year (while also accounting for the impact of inflation) until your child turns 18 – and then the potential for post-secondary education will add to this cost. Aside from expenses related to food, clothing, personal care, toys, activities, etc., your daycare/babysitting costs largely depend on where you live and how many hours of supervised care your child will require.

Funding your family addition

Clearly, the more money you can put away, the better your financial situation will be when the baby enters the picture. You don’t have to do it all on your own, however. Family and friends might be able to help with gifts, babysitting and hand-me-downs, plus you may qualify for government support.

Parents who take time off work to look after their newborn or newly adopted child may receive up to 55% of their earnings in standard Employment Insurance (EI) benefits, to a current weekly maximum of $668. As the chart below illustrates, parents can share the benefits. The eligible period for benefits may last from 55 to 69 weeks (although ‘extended’ benefits beyond 55 weeks provide less support).

Maternity benefits can be followed by parental benefits. You can apply for both at once.

Source: Government of Canada

Canada Child Benefit (CCB)

In addition to EI benefits, your family may qualify for the CCB. Payments are based on your adjusted family net income (AFNI) for the previous tax year, and are indexed to inflation. As an example, for the 2024 benefit period (July 2024 to June 2025), let’s say your family’s 2023 AFNI is below $36,502. You would qualify for the maximum regular CCB of $7,787 per year for children under six years old, and $6,570 annually for children between six and 17 years old. The maximum benefit gradually decreases for AFNIs above $36,502.²

Certain provinces and territories also offer financial assistance to help with child-rearing costs. For example, the Ontario Child Benefit (OCB) pays lower-income families up to $140 per month for each child under the age of 18, for the period from July 2024 to June 2025. If the AFNI exceeds $25,646, OCB may provide a partial benefit.³

Registered Education Savings Plan (RESP)

The cost of post-secondary education continues to rise. It’s good to consider an RESP, which is a savings and investing program designed to cover some of these costs. Currently, the lifetime RESP contribution limit is $50,000 per student (beneficiary). You may invest in many types of securities, from mutual funds and stocks to bonds and GICs, and the investment growth compounds – tax deferred – until the RESP beneficiary begins withdrawing assets.

As an incentive to save, the federal government offers the Canadian Education Savings Grant (CESG) that matches up to 20% of your contributions, to an annual maximum of $500 and a lifetime limit of $7,200.

Each province and territory has some form of student grant or loan, so it’s worthwhile to look into programs available in your area. Talk to your Investment Advisor for more details about how RESP contributions and withdrawals work, as well as questions you may have about EI, CCB or CESG.

Other things to consider

• Review your insurance coverage when preparing to have children. You may want to upgrade your life, disability and critical illness insurance plans to reflect your family addition(s). Also, if you’re covered under a group insurance plan, your children may qualify for certain medical and dental care needs.
• Update your will as your family grows, so you can include your children as estate beneficiaries. You may also use your will to make physical and financial care arrangements for your children in the event they’re still minors when you (or both parents) pass away.

An iA Private Wealth Investment Advisor can help you optimize your wealth plan for your growing family. Find one near you.

¹https://globalnews.ca/news/10001146/canada-family-spending-children-statcan/

²https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview/canada-child-benefit-we-calculate-your-ccb.html

³https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-child-benefit-overview/canada-child-benefit-we-calculate-your-ccb.html