Your Financial Future |
Managing your money one generation at a time
Whether you're young and single, married with kids or thinking about retirement, each life stage brings different financial challenges. And no matter what our age, each of us likes to spend money on things that make us happy.
But according to a survey by Mackenzie Investments, 79 per cent of Canadians - from teens to senior citizens - think we're heading for a "consuming crisis," and won't be able to live as well as we would like in the future if our current spending habits don't change.
"The task is to find a good balance between our spending habits and those financial 'best practices' we need to follow if we are to enjoy our lifestyle, and at the same time plan for a prosperous future," says John Dale, senior vice president, Mackenzie Investments. "Managing how quickly we burn through our discretionary spending money is critical whether we're 16 or 65."
Consider these tips for managing your spending and practicing sound financial planning at each life stage:
In your 20s
- Create short, medium and long-term financial goals.
- Start saving early and often with small, consistent amounts. And consider dollar-cost averaging as a way to invest.
- Pay yourself first. A good rule of thumb is to save 10 per cent of your gross income.
- Create a budget. And stick to it!
- Find a way out of debt and improve your cash flow by consolidating credit.
- Find the right insurance for you. Purchasing auto, home or renter's insurance is a good place to start.
In your 30s
- Review and refine your budget and financial plan each year.
- Start a serious savings program for your retirement.
- If you're planning to buy a first home, consider the federal government's First Time Home Buyers' Plan and try to save enough for a 20 per cent down payment.
- Invest in your children's education through a Registered Education Savings Plan and you'll receive a 20 per cent government grant on the first $2,000 contributed each year, to a total of $7,200 per child.
- Cut your tax bill by investing in RRSPs, and, if eligible, make sure to take advantage of tax credits, such as the Universal Child Care Benefit and tax credit for public transit.
In your 40s
- Ask yourself the million-dollar question: how much do I need to retire?
- If you're 40 years old and just starting to save, you should save 20 per cent of your gross income rather than 10 per cent.
- Manage your mortgage by paying down larger amounts when possible, while still maintaining your RRSP contributions.
- Minimize taxes by maximizing RRSP contributions.
- Are you part of the Sandwich Generation? If you're caring or providing for both your parents and your children, plan and budget accordingly for everyone's needs
In your 50s
- Ask yourself again: how much do you need to retire? At what age will you retire? Determine if you're saving enough to get there
- Consider what to do if you've fallen behind. You could, for example, increase your savings and RRSP contributions and cut excess spending.
- Consider all your income options: a combination of your investment income, personal savings and pension income.
- Consider your housing options. Are you paying for a house that is too big for your current needs? Maybe it's time to downsize.
