If organizing your finances has moved to the top of your priority list, that’s great news.  If you’re feeling confused & frustrated about your finances and would rather pull your own eyelashes out instead of dealing with them, but, it’s a new year and tips are everywhere you turn, I’m glad you’ve read this far.

The majority of work that I do with clients involves the foundational work related to money in/ money out.  You need to know these numbers before you start making changes.  You need to know what’s happening now to make effective choices that will move you to a better place over time.

If you need a new look at your money and are ready to do some math, this post will give you a framework for understanding where you are now and what changes will improve your situation.

Step One: knowing how much is coming in and when

You need to know how much is deposited to your bank account and when that happens.  When we try to untangle our finances, we often talk about our salary.  In this context, that is not a useful number.  None of can make choices on the full amount of our salary.  There are deductions before any money lands in our bank account.  Sometimes the deductions are large. And valuable.

I recommend that you look back at a payslip from 2022- look for the net amount deposited, or if you have your last payslip, find the year-to-date (YTD) net amount.  That will tell you how much lands in your bank account.  This is the amount that you need to focus on when you’re asking questions about what’s affordable.

Draw out the timing of the deposits so that you can compare your deposits to when your expenses happen.

See the chart below for a list of common deductions and an explanation of the benefits to you.  Need more clarification on what's happening in your specific situation?  Contact Sara for an appointment by booking an initial consultation here 

or send an email

check back on Jan 23 for Step Two: finding your fixed expenses 

Your Will and COVID19

COVID19 has moved 'get a will' from the bottom of our to-do list to the top. How to do that legally and while staying at home? Check out this article for guidelines...and a reminder that a handwritten will is good for now, not a replacement for a full document drawn up by an experienced lawyer. One tip the article left out- please let someone know where your will is stored. Contact me if you have questions.

Financial Planning Week 2017

This is Financial Planning Week in Canada, driven by the Financial Planning Standards Council.  The goal is to catch the attention of Canadians and inspire a beginning of a process that will move more people towards their goals effectively.

The most recent posts on this site have looked at questions you can ask yourself before meeting with a financial planner, as well as some options that may be included as you go through the planning process.

Comprehensive planning is a process; success is dependent on both the client and the planner fulfilling their roles.  The planner is responsible for listening to the client, providing expert information, options and projected outcomes.  The client is responsible for providing information about personal situation and goals, listening to advice, and implementing agreed-upon strategies.  Both planner and client are responsible for following up to make sure that the plan is still relevant to the client’s life circumstances.

The Ontario government has proposed regulating the use of the title ‘Financial Planner’.  My hope is this will provide a starting point for clients to evaluate the source of the advice.  Currently, there are many professions that are offering financial plans.  Some are not prepared by a person with financial planning qualifications.  Some are prepared with a focus on investments, with the other main planning areas taking a back seat.  While these may be adequate for a time, they don’t fulfill the purpose of a comprehensive financial plan.

The Financial Planning Standards Council is a good place to start if you need general information about financial planning and how it should work.  To fill in important areas in your own financial plan, contact Sara at 519-569-7526 or sara@wddevelopment.ca.

A Few More Resources:

With all this technology, do I need a Human Planner?

Executing Changes, Using Your Tools

Over the past few weeks, I’ve written about setting and adjusting your goals and how to use your tools to reach them.  This week, let’s look at how to use all of those things to build a plan.

Your goals are the most important part of your plan.  It can be easy to focus on investments- most advisors are paid on the amount of investments they manage.  There has been an increased discussion about the importance of planning, however not all advisors are interested in, or compensated for, planning.  As clients, sometimes we pull the focus away from planning -  We’re sure that if we own the right investments that provide the right rates of return, we’ll hit our goals.  Sometimes we assume our advisor knows our goals.  In a traditional advisor- client relationship, it can be hard to change focus to look purely at the planning side of things before diving into investment management.

A comprehensive, personalized plan reflects your goals back to you, and shows you a path to reach them.  Sometimes there is more than one way to arrive at your goal; when you work with the right advisor, you get the information you need to choose the best way for you and advice on how to implement the plan.  Sometimes you just need to use what you have, sometimes you need to stop a certain action to make another one happen.  Sometimes, you are likely to reach all of your goals without changing your current behaviour, but you didn’t know that until you had help with a plan.  The value of this scenario, reaching your goals with your current behaviour and tools, is the freedom to develop new goals. 

Increase your likelihood of reaching your goals in 2018 by starting now.  Spending time now to review your goals, detail your tools and work with WD Development on your plan allows you to start 2018 using small, consistent changes that will move you towards meeting your goals.  Contact Sara at 519-569-7526 or sara@wddevelopment.ca

Organizing Your Tools

Last week, I wrote about setting goals, breaking them down and mapping out a plan to meet them.  This week, we look at assessing and understanding the tools that you have to meet your goals.  Understanding how to use our money and assets is best done with both intensity and consistency (see video below).  In a recent survey by the Financial Planning Standards Council, 40% of Canadians don’t feel in control of their financial futures, and 30% of Canadians are overwhelmed by their financial options.  Our goals and plans for our money are attached to our emotions- often our goals are very personal and meaningful to use.  It can be difficult to know how to make choices when there is so much riding on the outcome.

Small to Big

Money coming in and money going out should be understood as much as possible when building a plan to meet your goals.  Understanding the ins and outs on a monthly basis will help you understand what’s available to meet long-term goals.  If adjustments need to happen to create room to meet long-term goals, the adjustments will happen on a monthly, per-item basis.  It’s important to review your priorities before making changes- cutting back on a really important-to-you expense could end up not meeting your long-term goals.

Big to Small

If you have long-term goals, knowing how much you need to meet them and a projection of what is needed will help you develop a plan.  If your long-term goals are still a bit fuzzy, a projection of how your financial future plays out over a long period will help to give you an initial direction.  An initial plan can generate conversations about what you’re comfortable with, what you want to change.  If a career change is on your wish list, take a look at what the new income, benefits, new location (if applicable) does to your long-term plans.

There is a way to clear the uncertainty and evaluate your options.  To start your plan, contact Sara at 519-569-7526 or sara@wddevelopment.ca

Financial Blind Spots

Intensity vs Consistency-Simon Sinek

This was extracted from a talk on organizational culture, but the theory is applicable to our finances as well.  Neither intensity nor consistency alone will get us to our goals

How to Support Your Small Changes and Your Big Changes

This is Part I in a 3 Part series: How to Actually Make the Changes You Want

Change is hard, and can take a long time.  We make goals, promises and wishes, then surrender to our routines rather than step onto a new path.  Your goals aren’t going to go away; this can be the time that you meet them.

Take stock of how 2017 has gone for you so far.  Did you make New Year’s Resolutions in January?  If you did, how have they worked out?  Evaluating the success and failure of past ideas/goals/ commitments has value for us.  If you made a resolution that you soon abandoned, it is helpful to go back and take a closer look.  Maybe the resolution didn’t matter enough to you to commit the time and energy to make it happen.  If that’s the case, let that resolution go and move your attention somewhere else.  If the resolution does still matter to you, take a look at what else you might need to make it to the goal. Resolved to cook at home more and eat out less but you haven’t so far?  Sometimes our goals need to be broken down into steps that we can turn into habits.  You might reach that goal if you signed up for a regular email recipe, chose two a week to cook on your least-busy nights of the week to start and planned to eat chicken burritos every Wednesday (or whatever meal is most popular and easy to make in your house).  Now you’ve turned 7 decisions made daily into 5- Wednesdays are already decided, one day a week you’ll pick 2 recipes to try, and you need to sort out 4 other dinners. Once that pattern becomes a habit, move further into the remaining days until you’re happy with your level of eating out vs eating at home. 

For the resolutions that you’ve kept, evaluate the effect on your life. Did the change meet the goal that you thought it would?  If you committed to exercising more but the early-morning gym run is leaving dark circles under your eyes, perhaps a change in timing is needed. We can’t always predict the outcome of meeting our goals.  We assume that getting what we wanted is good, and it can be.  Sometimes it means we have to make other decisions or adjustments to meet our bigger goals. In a situation that took several years to unfold, spouse A was offered a job approximately an hour from Spouse B’s job.  It was a good offer, in a location that both wanted to live in.  Spouse A took the job, and Spouse B worked on negotiations with his current employer to change his sales territory to include the new home location.  He thought the new territory would leave him closer to home 3 days a week, and the commute to the existing territory would be manageable for 2 days a week.  After setting this up, he realized that the territory was significantly larger than he thought, meaning he was now travelling an hour from home in 2 directions, instead of one; the new territory wasn’t generating the sales he anticipated, and he liked driving less than he thought.  The goal was achieved, but once it was, further evaluation was needed.  Don’t shy away from making decisions that may be adjustments of previous decisions.

Questions to ask:

What did I think my life was going to look like this year?

What areas are different from my expectations, what areas line up with my expectations?

If you had trouble answering the first question, spend some time thinking about what your goals and expectations are.  We all have them, it can be difficult to pull them out of a busy life into conscious thought. 

To discuss your goals, progress and changes and develop your own plan, contact Sara at 519-569-7526 or sara@wddevelopment.ca

Knowing your Own Bottom Line

Changing employers, contract positions and total career changes have become a normal part of our landscape.  Today, we look at the range of information, impacts and decisions that go along with that. Some information and questions are obvious:

• Is the regular compensation higher or lower?
• Is there a bonus structure?
• Is the time commitment higher or lower?  This could involve daily commuting, regular travel or number of responsibilities and resources given to meet them.  Vacation time and flex time may also be considered here.
• Is there a benefits package?  How does it compare to your current package?
• Do you expect opportunities in the future for change to compensation or time commitment?

Something that may be less obvious: Reviewing the above only makes sense if you know what your own needs and goals are.  If your current position pays enough to meet your needs and goals, moving to a  higher pay, less flex time position may not make sense for you.  If you haven’t developed your own plan, there may be a temptation to take the higher pay only to realize that it wasn’t worth it to you later.

Changing employers or careers can also generate options related to the benefits that you are leaving.  Questions about what to do with a Defined Benefit pension plan need careful analysis that draw in your personal situation.  There is often a time limit to make a decision about commuting (moving your benefit amount out of the plan and managing the money yourself) or remaining in the plan.  The impact of this decision may not be felt for many years.

Sometimes, you don’t have a choice in the change; layoff or company closure forced the change.  Understanding your personal goals and financial situation gives you the information that you need to decide what your next step looks like.

In the midst of change, it can feel impossible to call a time-out to review your needs and goals.  Without the relevant information and analysis however, you may find yourself writing a ‘ladder against the wrong wall’ chapter in your life.

“If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.”  Stephen R. Covey

To start your plan, contact Sara at 519-569-7526 or sara@wddevelopment.ca

10 Tips for Changing Careers without Losing Your Mind

When Does It Pay to Go Back to School in Midlife?  This is a U.S. based article, however, the questions are relevant.

Getting and Giving

On this Thanksgiving weekend, many of us will have an opportunity to spend time with family and friends.  This holiday can be a time to reflect on what we are thankful for, or what we have received.  Christmas is only ** days away.  Pre-Christmas can be a season of charitable solicitations, a time when many focus on giving to family, friends and charities.

Recent Statscan statistics reveal that 84% of Canadians claimed a charitable tax deduction, and 44% of Canadians volunteer their time.  Like other areas of your life, taking the time to develop your giving plan can have significant positive impact for you and those that you help.

A meaningful giving plan starts with a discussion about what issues you care about and why you want to support them.  What does community mean to you?  What are your views on international versus local ventures?  Answers to these initial questions will drive the rest of the dialogue about where and how to have an impact on issues that matter most to you.  A deep discussion about your values will connect your giving to the rest of your plan; income, spending, investments and estate planning will all start to reflect your values about who and how you want to be in your community.

To have a conversation that starts with your interests and goals, ending with an executable plan, instead of starting and ending with tax strategies, contact Sara at 519-569-7526 or sara@wddevelopment.ca

Places to Go to Stretch Your Thinking:

Questions and Framework to Evaluate Your Giving

Volunteering and Charitable Giving in Canada

An Answer to Some Headlines Generated by the Above StatsCan report

A Journey from Charity and Donors to an Investment Fund

Planning for Special Needs

Creating and maintaining a family always comes with unexpected highs and lows.  The birth of a child is a joyous event, regardless of the challenges. When a child is born with special needs—whether developmental or medical—parents can face unique challenges that can initially feel overwhelming.

When first learning their child has special needs, parents face a steep learning curve, says Kathy Netten, a social worker with the complex care program at The Hospital for Sick Children (Sick Kids) in Toronto. Parents need to learn medical terms, how to navigate the healthcare system and how to advocate effectively. Because many conditions are discovered in infancy, they are often learning how to be parents for the first time. And, they may also be grieving.

Sick Kids has over 50 social workers like Ms. Netten who provide counselling, therapy and support services for families with special needs children. “We are available to help parents find resources and work effectively with care teams, to problem solve when there are challenges, and for the very difficult decision-making,” she says.

From her experience, Ms. Netten says parents will often push themselves to physical and mental exhaustion to benefit their child. “The key is to find a balance between hope and despair, even under the most difficult of circumstances. Hope will allow parents to take care of their own emotional, psychological and spiritual needs so they can care for the developmental and medical needs of their child.”

Parents must also be mindful that financial questions are not forgotten at this most critical time, only to become an additional burden later on. While it can be difficult to think about long-term financial concerns, a firm financial foundation will not only protect your family, it will also free you to focus on the physical and emotional needs that only you can meet.

For parents of special needs children, this can be even more important. A typical family will see income increase over time. However, for families with special needs children—especially those that have the most complex needs—literature shows that income actually decreases. Medication and equipment costs, time taken from work, and lack of knowledge of available assistance programs are all contributors.

A comprehensive financial plan for families in this situation will:

• Clarify your current financial position and options
• Identify potential future costs and/or obstacles
• Review available government programs and benefits
• Develop your estate plan to protect all of your beneficiaries

To review your situation and explore how a personalized plan would benefit your family, please contact Sara at 519-569-7526 or sara@wddevelopment.ca.

Originally published by Financial Planning Standards Council. Adapted with permission.

You’ve saved it. 

Now you need to know how to spend it.  Which account do you withdraw money from?  How do you reduce the risk of running out of money?

A blog is no place to give individual advice, and I believe everyone should have a personalized plan.  A blog can give an outline of how your income is affected by your withdrawal choices, and how an advisor can help you reach your goals.

During retirement, you may have income from several sources.  Government pensions such a Canada Pension Plan (CPP) and Old Age Security (OAS) are sent monthly once you apply.  These amounts are taxable income to you.  You (and your employer) contributed to CPP during your working career and it not ever clawed back during retirement.  Your OAS amount depends on the amount of time you have lived in Canada and may be partially or totally clawed back depending on your total income declared in a given year.  You do not contribute directly to OAS; it is intended as an income stabilization amount.

You may have a defined-benefit pension plan from your employer.  This amount will also be paid to you monthly once you retire.  This amount is also taxable income to you when it is received.

Retirement Savings Plans (RSP) are common accounts to hold your savings and investments for retirement.  Once you retire, this account is likely to change it’s name to a Retirement Income Fund (RIF).  This is a name change that indicates to Revenue Canada that withdrawals will happen regularly from this account.  You must convert your RSP to a RIF in the year that you turn 71.  As you make withdrawals, the withdrawal amount is taxed in the same way as earned income is taxed.  You will receive a yearly T4RIF from the institution holding your account.  RIF accounts have a required minimum yearly payment; Revenue Canada has never taxed the money in that account, they will only wait so long for the taxes owing.  Remember that RSP contributions are a tax-deferral mechanism, not a tax-avoidance mechanism.

Tax-Free Savings Accounts (TFSA) started in 2009, and have new contribution room available yearly (even through retirement, unlike RSP accounts).  Withdrawals from TFSAs are not taxable as income, unlike income from the above sources.  There are no forced withdrawals from these accounts.

Non-registered investment accounts have no yearly maximum amounts, are taxed yearly on interest, dividends and capital gains received by the holder.  There are no forced withdrawals during retirement, unlike RIF accounts.

A comprehensive plan will help clarify how to withdraw money from savings during retirement in the context of your goals.

A financial plan tailored to your specific goals and family situation will give you the information that you need to make decisions today and in the future.  Contact WD Development at 519-569-7526 or sara@wddevelopment.ca to book an appointment.

Disclaimer: the above is intended for information purposes only.  WD Development recommends a comprehensive financial plan developed by a qualified advisor.  Please consult with your financial and tax advisors before making decisions.