Savers versus spenders – the great divide

Five tips to help couples bridge the gap on their financial attitudes

We’re all different when it comes to our perspectives on spending. Some people have no problem saving all their extra pennies, and some people spend what they have without thinking about the future. While differences make the world go round, conflicting thoughts on money matters can lead to tension in relationships. If you and your partner find yourselves at opposite ends of the saving versus spending spectrum, these tips can help you meet in the middle.

1. Understand each other’s differences

You’re buying a new car together. The spender wants all the upgrades, while the saver is just fine with the base model. When emotions run high, it can be difficult to see where your partner is coming from. The truth is, our Budgeting with Partnerattitudes about money are deeply rooted. Perhaps you or your partner is stingier with spending because there was less to go around growing up. Perhaps the person who is free with money gets an emotional reward from spending. Try to take a step back and discuss the reasoning behind your behaviour. It’s always easier to negotiate when you try to validate each other’s feelings, instead of assigning blame.

2. Set goals you can agree on

As a saver, it can seem irritating if your partner is constantly making purchases you deem frivolous. Creating a spending plan as a couple – with shared goals in mind – can help bring you together around common values. For example, say you agree that taking a trip overseas or buying a home is your biggest priority. You may want to consider how much you’ll need for that expense and factor how long it will take you to save that amount. With that savings goal in mind, it will probably be a whole lot easier to pass up unnecessary indulgences.

It is possible for partners with different spending styles to find a middle ground.

3. Establish a system for bill payment

When your bills roll in each month, avoid the last-minute scramble by setting parameters on who will pay each bill if you manage your finances using separate accounts. Perhaps you each cover half of your mortgage or rent, one of you pays the auto insurance and the other covers hydro. Since these expenses are generally fixed, setting up a system for handling bills up-front gives you one less thing to worry (fight) about.

4. Set a threshold for joint purchases

Every couple has a different way of structuring their finances, and sometimes, it takes a bit of trial and error. Some people keep separate accounts and split everything down the middle, while others pool all their resources. Other couples have four accounts between them: one joint for savings, one joint for everyday expenses and two individual accounts for whatever’s left (fun money). Whichever system you decide is best for you, you may want to consider setting a limit on the amount you can spend on a joint purchase without consulting each other. Discussing big-ticket purchases with your partner before you take the plunge is an easy way to avoid a disagreement.

5. Call for backup

Sometimes, reaching out to an impartial third party is the best way to solve financial disputes. I can help by talking to you about your goals and determining the best way to structure your finances to suit your needs. With a customized financial plan in tow, you’ll have a solid foundation for the decisions you make about your money.

With a common vision for your future and the right financial action plan, it’s possible for partners with different spending styles to find a middle ground.

Four things to consider before accepting your first job

As a new graduate, navigating the job market can be a challenge. After the often lengthy search and application process, you might feel accepting your first offer is the only choice. While taking the first position you’re offered may be the right option for you, there are several factors worth considering when evaluating a job offer.

Workload and work-life balance

Throughout the interview process, it’s important to ask questions that will help you evaluate the day-to-day responsibilities of the position. You’ll also want to determine the company’s policies on work-life balance.

Four things to consider before accepting your first job
Four things to consider before accepting your first job

Is this a position that requires you to be connected 24/7 and available at a moment’s notice? Will the stress-level and hours of work be compatible will your lifestyle and personal commitments? What’s the company’s position on flexible working hours? While there may be an element of ‘paying your dues’ associated with your first job, make sure the workload and corporate philosophy on work-life balance is right for you.

Culture and fit

Workplace culture is a key consideration for many millennials who want to feel their work is meaningful and not just a nine-to-five destination. If you fit that profile, it’s a good idea to inquire about things like teamwork, philanthropy and social events.

Does the organization encourage collaboration or will you be working on your own? Does the company participate in charitable giving or give back to the community in other ways? Will there be organized events to socialize with your colleagues to encourage engagement? Remember that determining the right fit is a two-way street. If you don’t gel with your prospective boss or team members, it might be worth continuing your job search.

Establishing good financial habits early in your professional career can help you stay on track for years to come.

Development and progression

While it’s generally accepted that millenials will change jobs more often than previous generations, considering progression opportunities within an organization is an important factor that can impact your future success. You’ll likely also want to consider the organization’s stance on personal and professional development.

It shows initiative to ask about your potential growth trajectory within the company during the interview process. If you see yourself in a leadership role in the future, for example, ask about the potential for in-house leadership workshops, mentorship opportunities or tuition reimbursement to help you get there.

Compensation and benefits

While salary and benefits are top of mind for most job seekers, there may be a gap in reality vs. expectations for recent graduates. In most cases, entry-level salaries aren’t very negotiable and reflect limited experience. If you know you can provide some advanced level of expertise, you may want to consider negotiating for a better offer.

If you feel you’re in a position to negotiate, make sure you can present a strong case as to what you’ll bring to the company. Non-financial compensation including vacation, benefits or bonuses are other elements that can, in some cases, be more flexible than salary. In any negotiation, make your genuine interest in the job known when asking for an increase in salary or benefits. If the offer is firm, consider asking about the frequency of performance appraisals and salary reviews.

Entering the workforce after graduation can be challenging and exciting, both emotionally and financially. When beginning your first professional job, it’s a great time to develop a financial plan that can adapt as your needs change. It’s important to consider how you’ll afford your everyday expenses while setting enough aside for the future. I can help you plan for your financial future and offer you valuable tips about topics like budgeting, saving, investing and the power of compound interest. Establishing good financial habits early in your professional career can help you stay on track for years to come.

Golf tips to line you up for financial success

With golf season upon us, you may be looking for ways to enhance your game for the year ahead. In many ways, golf strategy is a lot like the principles of investing. If you have a love for the links, then you’ve already got a head start on how to manage your investments effectively.

Your golf game and investment portfolio require continued tune ups to help bring you positive results. Here are some tips to set you up for success – both on the course and in the market.

Hire a great coach

Golf is a game of precision. Your clubs, stance and swing all play a part in reaching the green. With so many elements to consider, it’s beneficial to consult a pro to make sure you have a strong foundation. Even seasoned golfers can benefit from lessons now and then for tips and tweaks to improve their performance.

Similarly, when building a financial security plan, there are multiple factors to assess to make sure it works for you. I can give you aGolf Tips and Investing primer in all the investment options available to help you achieve your financial goals. It’s always a good idea to touch base with me a few times each year to keep up to date on your financial progress.

Make a game plan

Consider the course layout, terrain, roughs and other hazards you may encounter. Do you have the right club to make the shot? How much risk are you willing to take given the environment and your competition? Should you play it safe, or can you afford to take some risk? These are all important questions to answer before teeing off.

Just as you select the right club for each shot, you should ensure you pick the right types of investments to reach your goals. Once I have helped you cover the basics, you can work together to create your financial plan. It’s also important to consider other key factors like your tolerance for market fluctuations, debt management and your time frame for investing.

In both golf and investing, there will always be an element of unpredictability. Developing a strong foundation of the basics – and revisiting them regularly – can help you master the game.

Don’t psych yourself out

In the game of golf, you can’t be ruled by your emotions. Maybe the front nine was great, but the conditions changed on the back. Even the best laid plans can go awry when ground or weather conditions change. You may be tempted to make a bold move to compensate, but there’s no guarantee it will pay off. Don’t let one bad hole affect the next or make you change your strategy.

Like a stroke of bad luck on the golf course, changing market conditions can cause investors to make irrational decisions. Emotional investors often panic when markets fluctuate and can be tempted to make hasty decisions. A financial plan that is well diversified and suited to your personal investment style can help you manage the ups and downs of the market. I can help you review your plan so you can focus less on changes in financial markets and keep your eyes on the long game.

Reassess your strategy

What are your goals for this season? Are you looking to master a new shot or try out some more challenging courses? Perhaps you’re slicing the ball too often and you need to meet with your coach to revisit the basics. Even if you’ve been happy with your performance, you can’t always base future success on the past. People who take their golf game seriously understand the importance of continual development.

While a solid financial plan can put you on the right path, it’s important to fine-tune your strategy over time. You may need to adapt your plan as your goals and time horizon change. Maybe you had more disposable income when you started your portfolio, but now you’re starting a family. Perhaps you’re preparing for retirement and are starting to consider your options for creating guaranteed income. Whatever your needs, I can help steer you in the right direction towards your financial goals.

In both golf and investing, there will always be an element of unpredictability. Developing a strong foundation of the basics – and revisiting them regularly – can help you master the game.

Five important money matters to discuss with your partner

When it comes to choosing a partner, everyone has a list of qualities they just can’t live without. A recent poll, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and Discuss Finances with Partnerbaby boomer (92 per cent) survey participants.

Despite the desire for financial compatibility in relationships, money can be a source of friction for both new and established couples. While it’s best to understand your partner’s financial picture before joining accounts, engaging in regular conversation about your finances is always beneficial.

Open communication and setting clear goals for your future can help you avoid conflict on the topic, but it can be overwhelming to start the conversation if you’re not sure where to begin. Here are five fundamental money matters you may want to address with your partner.

A recent poll, revealed that having a financially responsible partner is a priority for both millennial (88 per cent) and baby boomer (92 per cent) survey participants.

1. Discuss your assets

Having a grasp on your total combined assets (including salary, savings, investments, insurance and property) is important to making financial decisions as a couple. This simple discussion is an essential starting point in making a realistic plan for savings, spending and future goals.

2. Understand your debts

Managing debt effectively is a key aspect of wealth building. It’s important to know the total amount of your partner’s debt (such as credit card, line of credit, mortgage and student loan debt), discuss whether the debt will become a joint responsibility, and determine how it will affect your budget. It’s also a good idea to discuss your partner’s credit score, as it will affect your ability to get credit as a couple.

3. Set a spending plan

Creating a joint spending plan may shine a light on any differences between spending styles – perhaps you’re a saver, but your partner opens their wallet a bit more freely. Taking account of your individual and combined monthly expenses can start a realistic discussion about how to allocate any surplus – even if it involves some compromise.

4. Strategize your savings

Defining your individual and joint savings priorities is another essential part of building your budget, and ensuring that you’re well positioned to meet your goals. It’s also important to discuss which type of savings vehicle will best suit your needs; consider factors such as your tolerance for fluctuations in the value of your investments, and the amount of time you have to invest.

5. Plan for your future

Is travel a priority for you and your partner? Perhaps you’re dreaming of buying that cottage you always wanted, or you just want to make sure you can retire comfortably. If you don’t discuss your goals for the future then it’s hard to make them happen. While your dreams may differ, starting a dialogue can help you compromise so you can set your plans in motion.

Get a second opinion

As you consider these factors with your partner, I can provide a professional opinion on the best approach to help you achieve your financial goals. I can provide a holistic assessment of your joint financial picture, and offer a variety of planning services including cash-flow planning and investment analysis.

Freedom from winter – buying a second home down south

Do you dream of becoming a snowbird, flying south every winter? Owning a second home in the American sunbelt is a central part of many Canadians’ retirement dreams – it’s the warm, beckoning light on the horizon.

In recent years, declining U.S. real estate prices have resulted in a wave of Canadians buying winter homes in states like Florida, Texas, Arizona, California and Hawaii. In Florida alone, Canadians spent $2.55 billion on homes between July 2013 and June 2014.1

Buying a non-principal house abroad can create many issues that financial security planning can help resolve. I can help provide invaluable counsel through this process, from financing options to life insurance to estate planning. You should also consult a U.S. tax professional.

Buying a non-principal house abroad can create many issues that proper financial security planning can help resolve.

Things to consider when shopping for a home in the U.S.

The first step is working with your family to figure out what kind of home you want. How many bedrooms? Waterfront or desert? Condo or house? What region?

Condos offer a turnkey lifestyle, meaning you’re not responsible for general maintenance. This could save Second Home Buyingyou money on professional caretakers for the months the place is empty.

Listings are online, so start surfing. Once you narrow your choices to a certain area, visit it and explore the neighbourhood. Local real estate agents will be happy to offer you a no-strings-attached tour.

If you plan to rent the property for part of the year, you may also want to meet with property managers to go over fees and other considerations. It’s also a good idea to check in with an accountant to discuss tax issues.

What to keep in mind when building a budget

When you create your budget, include all annual costs – such as property taxes, utilities, maintenance, condo fees and buying and insuring a vehicle.

Next, you may want to get quotes in writing for house insurance. Coverage may be expensive and hard to secure in areas prone to hurricanes and flooding. Also, make it clear to potential insurers if house will sit empty for several months a year. For vacant properties, some insurance policies may require weekly visits, which will be costly if you have to use a professional service.

If you plan to spend an extended amount of time there, you’ll also need to get quotes for health insurance.

Getting a mortgage in the U.S.

It’s not simple for Canadians to get a regular mortgage in the U.S., though it can be done. Keep in mind that, if you’re paying with Canadian dollars, a fluctuating exchange rate can create uncertainty.

Only eight per cent of Canadians buying in Florida opted for local financing between July 2013 and June 2014.1 If you need to borrow to buy, a flexible, reasonably priced option is to use a home equity line of credit from a Canadian lender. While this option can be a simple and effective way to borrow, it is important to work with me to ensure you fully understand how your home equity line of credit is working for you.

I can help you create a budget and, with the help of a London Life mortgage planning specialist, assist you in determining the preferred way for you to pay for your home. You should consult a lawyer for assistance in determining how to structure the ownership. For example, if you plan to rent the property for part of the year, one option may be to structure the ownership as a limited liability partnership.

Buying and selling south of the border

The process is very similar to Canada. Generally, a U.S. lawyer is hired to do title searches and handle the transaction. In many states, the real estate services sector caters to Canadians.

As for estate planning, you’ll want to provide for disposition of the property through a will that is valid where the property is situated and consult a U.S. tax accountant with respect to taxes payable on death of the property owner.

When selling a property, Canadians or their estates will pay capital gains tax in Canada. I can work with you to look at ways to effectively manage these taxes.

Mind the taxman

Canadians are currently allowed to reside in the U.S. for an average of 120 days per year over a three-year period before they may be considered a U.S. resident for tax purposes by the U.S. Internal Revenue Service (IRS).2 The maximum duration of time snowbirds can spend across the border is 182 days per year. Legislation extending this limit is currently being considered.

People living part of the year in the U.S. should file a “Form 8840 – Closer Connection Exception Statement for Aliens.” It tells the IRS that you’re a Canadian citizen and could help you avoid being considered as a U.S. resident. Consult with a tax professional who works with U.S. taxes.

Other considerations

Organizations that represent snowbirds strongly urge Canadians to hire a U.S. lawyer to construct separate powers of attorney and living wills. This will help prevent any hassles during a medical emergency that takes place while you’re stateside.

Canadian financial institutions offer bank accounts and credit cards in U.S. dollars that avoid high foreign exchange fees. If you have a home in the U.S., you can easily open a local bank account to use for everyday expenses and bill payments.

Buying a home in the southern sun is a big decision, and may be a key objective in your financial security plan. Or perhaps it’s a late addition to your list of things to do. Either way, I can play an invaluable role in helping ensure your financial independence while you make your dream a reality.

Where there’s a will, there’s a way

You spend a lifetime growing your estate so you can leave a lasting legacy to your loved ones. It’s important to complete a will that details what this legacy will look like.

Dying without a will means others will be making key financial decisions about your property that may not represent your wishes. This can also result in increased costs and the time it will take to divide your assets. A better solution is to create a will – the legal document that outlines the assets your loved ones will receive. Although this can be a complicated process, working with professionals (such as lawyers or notaries in Quebec accountants or financial advisors) can help to lower your estate’s taxes and outline exactly how you would like to divide your assets.

Why hire a professional?

Do-it-yourself will kits may seem like a bargain, but the risks can outweigh the benefits. Issues that seem minor, such as the wrong choice of wording, or a failure to adhere to exact legal processes, can derail the best-laid plans. And, the slightest error can result in legal challenges.

Hiring an experienced lawyer or notary for your estate planning doesn’t have to cost a lot and is a worthwhile investment in your estate’s legacy.* You can ask a trusted lawyer, friend or financial advisor for a referral, or you can contact a provincial law society – most have a referral service, which also provides a free 30-minute consultation to help you choose the right lawyer or notary for your situation. These professionals have the expertise to create a will that helps assure your wishes are carried out in a way that can reduce taxes at death and beyond to help support future generations. A financial security advisor can assist you in choosing products to help you reach your financial goals while living and help ensure the loved ones you choose receive these assets after death.

* Fees will vary based on the complexity of estate settlement.

Making a will doesn’t have to be scary or expensive.

Making it easier for your loved ones

Here are some simple steps to help make the probate (estate administration) process (where applicable) less stressful:

  • Create an itemized list of your assets and debts.
  • Create a will that details who will receive your assets, along with other instructions about how you’d Estate Planning & Willslike your estate to be divided.
  • Choose your executor (liquidator in Quebec) and make sure they know where the original copy of your will is located, as well as other important documents (such as a list of your financial accounts, any deeds and any benefits for those who are eligible), along with instructions about who to contact to access them.
  • Consider purchasing a life insurance policy that can give your executor access to cash to pay for end-of-life expenses, such as a funeral or hiring a lawyer or notary.
  • Update your will if your financial or personal situation changes.

Things to consider before making your will

  • A will may not include joint assets such as bank accounts or a house. If joint assets are held with someone other than your spouse, ask your lawyer about a suitable way for you to transfer ownership.
  • Life insurance and registered retirement savings plan (RRSP) assets are typically not included in a will since they have a named beneficiary other than the estate (this process is different in Quebec if the RRSP is not issued by an insurer). Also, by naming a beneficiary, the death benefit proceeds are paid directly to the beneficiary and do not pass through the estate.
  • Executors can hire lawyers and other experts as needed and bill the estate directly. Executors may also charge fees for their services. The executors are also responsible for paying outstanding debts and expenses, such as real estate commissions on sold properties, so it is important to choose one you trust – typically a family member or close friend.
  • Courts may charge probate fees, if any, determined by province, to confirm the will and its executor. You can work with a tax and/or legal advisor to lower the value of the estate and its taxes by transferring ownership of an asset, adding a joint ownership ahead of time, or by giving out your gifts prior to death. Keep in mind; this may incur tax consequences for the recipient.
  • This is also the time to consider making charitable donations to causes and organizations that are important to you. Legacy giving is vital to sustain some charities, especially those doing specialized work that doesn’t gain widespread public support.
  • Do you have children? If your children are under 18 or 19 (depending on the province you live in), you should name guardians (or a tutor in Quebec) in the event both parents pass away. If you’re separated, you can name a guardian who can make financial decisions on a minor’s behalf (not applicable in Quebec).

Everyone’s situation is different but creating a will helps you to shape your legacy and decide how your assets can best support the people and causes that matter to you.