Monday, March 29, 2021
I have many conversations about cash with clients. Most of them fall into 2 buckets- making sure that cash is available on time and doing it’s job & how to manage surprise money.
Make your cash do its job
Setting up your income to meet your expenses first, then your goals can be harder than it seems, for a number of reasons. To straighten this out, I recommend a few steps:
For more information and some excellent stories on how this can work in practice, see Worry Free Money or Living Debt Free by Shannon Lee Simmons.
Why I don't often recommend using your RSP money for the First Time Homebuyers Plan:
In my experience, buyers don’t factor the re-payment amounts into their fixed costs after the house purchase. It often significantly slows down saving for retirement. Some clients have a long time gap between the house purchase and re-starting RSP savings. Clients who have used the First time Homebuyers option often struggle with income & expense management for years after the house purchase. There’s an art and a science to how I advise clients- this is on the art side- I can’t tell you why for sure, but those who withdraw RSP money to purchase a house don’t often build financial stability and net worth the same way as clients who don’t use this option.
Options for Surprise Money
Have more money in your bank account than you expected from a tax return, gift, settlement payment? How do you choose the best way to use that money?
Surprised by how much money you have?
This happens when you have significantly higher income than expenses; you have received gifts/ inheritance money/ large settlement. There can be shame and uncertainty associated with both high income and high net worth. If that is an issue for you, acknowledging that and working with an advisor who understands that is important. If you don’t, you will continue to be stuck in a place that you are uncomfortable and you’re not using the money in a way that is beneficial to you or others. Working through the steps below will help to make decisions:
February 21, 2024
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