Stressed-out working CDN’s want to invest in themselves but can’t afford it

Working Canadians are stressed. According to a recent TD survey, two thirds say they experience moderate to high levels of stress at their job. An overwhelming majority of them (95 per cent) consider it important to invest in themselves, but over half (53 per cent) don’t do it as frequently as they’d like.

Canadians working in health care and social assistance, or finance, insurance and real estate are more likely than average to say they experience high or moderate levels of stress at their job. While it’s clear working Canadians want to devote time to themselves, two thirds (67 per cent) of those who don’t invest in themselves as much as they’d like to say they don’t because they can’t afford it. Furthermore, 82 per cent of working Canadians said they would invest in themselves more if they had the financial resources to do so.

“Canadians recognize the importance of taking a break and doing something good for themselves, but often don’t because of the associated cost,” says Jennifer Diplock, Associate Vice President, Personal Savings and Investing, TD Canada Trust. “It’s important to strike a balance in life, and one way to do that is for Canadians to view these expenses as an investment in their well-being.”

While investing in yourself can mean something different to everyone, most working Canadians (81 per cent) say they’d prefer to take a vacation. Millennials, however, are more likely than average to want to start or continue a hobby (54 per cent), further their education (29 per cent) or start a new business or side hustle (17 per cent). Ideally, three quarters of working Canadians (74 per cent) would invest in themselves a minimum of twice per year, and say their top motivators are relaxation (66 per cent), refreshing themselves (62 per cent) and improving their mental health (49 per cent).

“Whichever way you choose to find balance in the daily grind, whether it’s a family vacation or starting a new hobby, investing in yourself doesn’t have to break the bank,” says Diplock. “It’s about setting a goal and managing your savings to ensure you have enough to refresh and re-energize yourself. Try setting up a “me” fund and make regular contributions or, if you will receive a tax refund, use it as a starting point to help you achieve your goals.”

For those looking to strike a balance in life, TD offers the following tips on how to help invest in yourself:

  • Find your passion: Life should be about more than just work, we need play too. Think about the activities you love doing and schedule time in your calendar to do them weekly or monthly. Don’t know what your passion is? Experiment by trying new classes, joining a new team or rec league, or organizing a group of friends to try new activities.
  • Use your tax refund: If you’re fortunate enough to receive a tax refund this year, like the 54 per cent of Canadians who expect to2, why not use it to invest in yourself? Taking a vacation or going back to school can be expensive, but your tax refund can help provide the start you need. For short-term savings goals, consider investing in a safe but flexible product with a guaranteed rate, like Cashable GICs at TD, which will help you achieve your saving and investing goals, or reach your goals faster with a TD High Interest Savings Account, which can help encourage you to save more.
  • Take a staycation: You don’t have to leave the country to experience a relaxing vacation. Plan a vacation closer to home to do the things you’ve always wanted to do but have never gotten around to. For example, book a relaxing afternoon at a local spa, have a leisurely lunch at your favourite restaurant or explore the latest buzzed-about art exhibit. Plus, staying close to home can be a more affordable option if you’re looking for something to help fit within your broader strategy.
  • Start a “me” fund: Investing in yourself should be treated like other items you’re saving for, like a car or new computer. Open a Tax-Free Savings Account that can help build your savings faster with tax-free growth and contribute to it regularly3. You can also set up automatic transfers using any one of TD’s Automated Savings Optionsto help you reach your savings goals sooner.

For more information, please visit www.tdcanadatrust.com.

Bank accounts can be used to teach kids basic financial literacy lessons

By Craig Wong

THE CANADIAN PRESS

OTTAWA _ Omar Abouzaher remembers going to the bank with his daughter so she could make her first deposit into an account that was opened for her when she was just a toddler.

The regional vice-president for the Bank of Montreal’s daughter was four when they took her piggy bank to deposit the coins.

“She’s a banker at heart,” he said.

While RESP accounts can help parents save for a child’s education, opening a savings account for a child can be the first step in teaching basic financial literacy, Abouzaher said.

“I believe sometimes we wait too long until the kids are a bit older and try to cram all this financial information and throw it at them,” he said.

Abouzaher recommends starting with teaching what it means to save and then build on that foundation.

“The older they grow, they’ll understand as well the other components or the other pieces that are maybe a little bit more complex when it comes to understanding debt, understanding what it takes to pay tuition, what it takes to manage your credit,” he said.

Parents hoping to teach their children the power of compound interest on their savings today will have a harder time than parents in the 1970s and 1980s, when interest paid on savings accounts soared above 10 per cent compared with rates today, when even the highest-paying savings accounts sit in the low single digits.

But earning interest isn’t the only reason parents would want to help their children open a bank account of their own.

Abouzaher said children can start to learn the basics of budgeting and saving for something down the road.

Kids can be given a choice, he said, such as, “Do you want to spend it right now and buy whatever you want to buy … or do you want to save it and maybe look at something else in the longer run?”

Parents should keep an eye on fees, just like they would with their own account, or else their children may learn an unwelcome lesson about having a bank account. While accounts for children often do not have a monthly fee, banks may charge for other services such as using a non-bank ATM, depending on where the account is opened.

The amount of interest paid on savings accounts for children also varies by institution. According to rate-tracking website Ratehub.ca, youth accounts at Tangerine, the online bank owned by Scotiabank, pays the highest interest rate for young savers at 1.2 per cent compared with typically less than one per cent at the country’s big banks.

At Tangerine, children hold their accounts jointly with a parent.

If a parent is already a Tangerine customer they can open up an account for their child online by entering the information on the bank’s website, said Oliver Small, a senior manager at Tangerine.

Small said you will need to have a social insurance number as well as one of several different pieces of ID to open the account such as a Canadian passport, a permanent resident identification or Secure Certificate of Indian Status.

For children age 11 or under, parents may also use a birth certificate or a citizenship card or certificate.

Small, who remembers his grandparents and parents teaching him early lessons of money management when he was a boy, said it is never too early to open an account.

“Money management and financial literacy are really critical life skills and we know that if you instill good behaviours early on they can last a lifetime.”

When your parents die broke

By Liz Weston

THE ASSOCIATED PRESS

Blogger John Schmoll’s father left a financial mess when he died: a house that was worth far less than the mortgage, credit card bills in excess of $20,000 and debt collector s who insisted the son was legally obligated to pay what his father owed.

Fortunately, Schmoll knew better.

“I’ve been working in financial services for two decades,” says Schmoll, an Omaha, Nebraska, resident who was a stockbroker before starting his site, Frugal Rules. “I knew that I wasn’t responsible.”

Baby boomers are expected to transfer trillions to their heirs in coming years. But many people will inherit little more than a pile of bills.

Nearly half of seniors die owning less than $10,000 in financial assets, according to a 2012 study for the National Bureau of Economic Research. Meanwhile, debt among older Americans is soaring. It used to be relatively unusual to have a mortgage or credit card debt in retirement. Now, 23 per cent of those older than 75 have mortgages, a four-fold increase since 1989, and 26 per cent have credit card debt, a 159 per cent increase, according to the Federal Reserve’s latest data from the 2016 Survey of Consumer Finances .

If your parents are among those likely to die in debt, here’s what you need to know.

*YOU (PROBABLY) AREN’T RESPONSIBLE FOR THEIR DEBTS When people die, their debts don’t disappear. Those debts are now owed by their estates. Some estates don’t have enough assets (property, investments and cash) to pay all of the bills, so some of those bills just don’t get paid. Spouses may have the responsibility for certain debts, depending on state law, but survivors who aren’t spouses usually don’t have to pay what’s owed unless they co-signed for the debt or applied for credit together with the person who died.

What’s more, assets that pass directly to heirs often don’t have to be used to pay the estate’s debts. These assets can include “pay on death” bank accounts, life insurance policies, retirement plans and other accounts that name beneficiaries, as long as the beneficiary isn’t the estate.

“You take it and go home,” says Jennifer Sawday, an estate planning attorney in Long Beach, California.

*YOU NEED A LAWYER Some parents hope to avoid creditors or the costs of probate, which is the court process that typically follows a death, by adding a child’s name to a house deed or transferring the property entirely. Either of those moves can cause legal and tax consequences and should be discussed with a lawyer first. After a parent dies, the executor must follow state law in determining how limited funds are distributed and can be held personally responsible for mistakes. That makes consulting a lawyer a smart idea _ and the estate typically would pay the costs. (The costs of administering an estate are considered high-priority debts that are paid before other bills, such as credit cards.)

At his attorney’s advice, Schmoll sent letters to his dad’s creditors explaining the estate was insolvent, then formally closed the estate according to the probate laws of Montana, where his dad had lived.

A lawyer also can advise you how to proceed if a parent isn’t just insolvent, but also doesn’t have any assets at all. In that situation, there may not be a reason to open up a probate case and deal with collectors, Sawday says.

“Sometimes, I advise clients just to lay the person to rest and do nothing,” Sawday says. “Let a creditor handle it.”

*YOU NEED TO TAKE METICULOUS NOTES The financial lives of people in debt are often chaotic _ and sorting it all out can take time. As executor of his dad’s estate, Schmoll dealt with over a dozen collection agencies, utilities and lenders, often talking to multiple people about a single account. He kept a document where he tracked details such as the names of people he talked to, dates and times of the conversations, what was said and required follow-up actions as well as reference numbers for various accounts.

*YOU SHOULDN’T BELIEVE WHAT DEBT COLLECTORS TELL YOU Some collectors told Schmoll he had a moral obligation to pay his father’s debts, since the borrowed money might have been spent on the family. Schmoll knew they were trying to exploit his desire to do the right thing, and advises others in similar situations not to let debt collectors play on their emotions.

“Just don’t make a snap decision, because it’s very easy to say, ‘You know what? I need to think about it. Let me call you back,”’ Schmoll says.

_______

This column was provided to The Associated Press by the personal finance website NerdWallet.

The not so golden years – 1 in 4 Canadian retirees living with debt

A worry-free retirement may be a thing of the past as Canadians struggle to manage debt. From living with a mortgage to unpaid credit cards, retirees can find themselves facing financial challenges in their golden years.The Sun Life Financial Barometer, a new national survey, found that one-in-four (25%) retirees are facing such challenges and living with debt.

  • 66% have unpaid credit cards;
  • 26% are making car payments;
  • 7% have unpaid health expenses;
  • 7% owe money on holiday expenses or vacation property; and
  • 6% haven’t paid off home renovations.

“Through our national survey, we took a moment to check-in with Canadians and gauge how they are stacking up when it comes to their finances,” said Jacques Goulet, President, Sun Life Financial Canada. “From credit card debt to a mortgage, retirees are faced with a list of expenses in life after work. We recognize that managing finances can be overwhelming, particularly for those who are no longer working. Seeking sound advice and working with a financial advisor can help you reach your goals.”

At the same time retirees face lingering debt, almost one-quarter (24%) of working Canadians are dipping into their retirement savings. Canadians pulled cash for the following reasons:

  • 63% did so because they needed to (e.g., health expenses, debt repayment);
  • 24% as part of the First Time Home Buyers’ Plan; and
  • 13% because they wanted to (e.g., vacation, car purchase).

“Our survey results highlight the importance of getting ready for retirement,” explains Tom Reid, Senior Vice-President, Group Retirement Services, Sun Life Financial Canada. “Although it can seem far away, retirement creeps up faster than you think – building a financial plan and making meaningful contributions will pay off in the long run. There are helpful tools and resources you can tap into to get on the right track to building the income you want and need to retire.”

The following tips can help Canadians save for a bright retirement:

  1. Start now. Begin saving and investing as early as possible to set yourself up for success.
  2. Don’t leave money on the table. If your employer offers a pension plan and will match your contributions, contribute the maximum amount possible.
  3. Invest wisely. If you do not have access to a defined contribution plan, RRSPs and TFSAs are other great vehicles to consider.
  4. Have a plan and stick to it. It’s never too late to build a financial plan that will get you where you want to be.
  5. Seek valuable advice. A financial advisor can help you create a financial plan, set achievable goals, and guide you through each life stage.

Ready to get started? Find a Sun Life Financial advisor who can support you on your journey to achieve a lifetime of financial security and well-being.

Sun Life Assurance Company of Canada is a member of the Sun Life Financial group of companies.

About the survey
The Sun Life Financial Barometer is based on findings of an Ipsos poll conducted between October 13 and October 19, 2017. A sample of 2,900 Canadians was drawn from the Ipsos I-Say online panel: 2,900 Canadians from 20 to 80 years of age. The data for Canadians surveyed was weighted to ensure the sample’s regional, age, and gender composition reflects that of the actual Canadian population.

The precision of Ipsos online poll is measured using a credibility interval. In this case, the poll is accurate to within +/- 2.1% at 95% confidence level had all Canadian adults been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to methodological change, coverage error and measurement error.

About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing insurance, wealth and asset management solutions to individual and corporate Clients. Sun Life Financial has operations in a number of markets worldwide, including Canadathe United States, the United KingdomIrelandHong Kongthe PhilippinesJapanIndonesiaIndiaChinaAustraliaSingaporeVietnamMalaysia and Bermuda. As of December 31, 2017, Sun Life Financial had total assets under management (“AUM”) of $975 billion. For more information please visit www.sunlife.com.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.

Note to Editors: All figures in Canadian dollars except as otherwise noted. 

Media Relations Contact:
Kim Armstrong
Manager, Media & PR
Corporate Communications
T. 416-979-6207
kim.armstrong@sunlife.com

SOURCE Sun Life Financial Canada

Millennial money dilemma – RBC Poll

As Millennials move into their 30s, they share many of the same life goals as previous generations of Canadians; where they differ is in the challenge they face in financing those goals, according to RBC’s annual Financial Independence in Retirement Poll.

Poll findings indicate several financial disconnects for Millennials aged 25-34. While almost half (48%) of these respondents cited home ownership as a top financial priority, just over one quarter (28%) reported putting money toward this goal in 2017.

Another disconnect appears in responses about saving for their future. While 46% of these Millennials included retirement savings as another top financial priority, only 38% actually put any money into retirement savings last year. In addition, half (50%) don’t have an RRSP. In fact, if they could only afford to contribute to either an RRSP or a TFSA, almost half (48%) opted for a TFSA, compared to less than one-third (30%) for an RRSP.

“TSFAs offer a great savings vehicle, but Millennials can’t overlook RRSPs, particularly as they move into their 30s,” noted Richa Hingorani, Senior Director, Digital Strategy, RBC Mutual Funds Distribution & RBC Financial Planning. “While retirement can seem so far away for these younger Canadians, we want them to know that time can work in their favour. By starting to invest even small amounts on a regular basis into an RRSP now, they can build their future savings through the magic of compounding within their RRSP, with growth through a combination of interest and potential dividends.”

On the flip side, Millennials surpassed one of their financial priorities for last year – saving to reduce/eliminate debt. While under half (47%) identified reducing debt as a priority, over half (51%) actually put money toward that priority.

“Millennials have their eye on the ball – they’re saving for immediate needs. We’d suggest it’s now time they look a bit farther down the road, to save for their future needs too,” explained Hingorani. “We’re here to connect with them however they wish – including through MyAdvisor, our new digital experience, which can help them build a personalized plan online, in just a few minutes.”

MyAdvisor offers clients a way they can connect at their own convenience with a live advisor – online, by live video, by phone or in one of our branches. Clients can also track the progress they are making toward achieving their financial goals, through an interactive dashboard.

“We know Millennials have very busy lives,” added Hingorani. “We want to help ensure their finances keep up with their lifestyle, today and in the future.”

About the RBC 2018 Financial Independence in Retirement Poll
These are a selection of findings of the 28th annual RBC RRSP Poll, conducted by Ipsos from November 9 to 16, 2017 on behalf of RBC Financial Planning, through a national survey of 2,000 Canadians aged 18+ who completed their surveys online. Where appropriate, attitudes and opinions are tracked back to previous years’ surveys. Quota sampling and weighting are employed to balance demographics to ensure that the sample’s composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.4 percentage points had all Canadian adults been polled. The credibility interval will be wider among subsets of the population, such as among Millennials aged 25-34 (± 5.9 percentage points). All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

About RBC’s MyAdvisor and financial planning advice
MyAdvisor provides a new digital experience for RBC clients by using an online advice platform to digitally connect a client to an advisor. MyAdvisor enables both the client and the advisor to view and adjust a dynamic dashboard showing the client’s savings and investment goals and to establish actions to achieve those goals – all in real time. MyAdvisor is a product of RBC’s Toronto-based innovation lab; other labs are located in the U.S., the U.K. and Europe. These innovation labs co-create new products and services based on direct input from RBC clients and employees.

RBC Financial Planning and rbc.com/savingsspot offer planning, budgeting and savings advice and resources and the RBC Retirement Planning website can help you plan for 30 years or more in retirement. In addition, for Canadians who want to get more from their day-to-day banking, protect what’s important, save and invest, borrow with confidence or take care of their businesses, RBC Discover & Learn offers free online advice, resources and tools, including the RSP-Matic Savings Calculator.

SOURCE RBC Royal Bank

What’s love got to do with money?

A national survey, commissioned by Financial Planning Standards Council (FPSC) and Credit Canada in time for Valentine’s Day (February 14), reveals more than one third (36%) of Canadians are victims of financial infidelity.

The two non-profit organizations co-sponsored the Financial Infidelity Survey – a Leger poll that asked Canadians the following question: What is the worst form of financial infidelity you have been a victim of from a former or current partner?”

Here are some of the standout findings:

  • 34 percent of those in a relationship keep financial secrets from their current romantic partner
  • 36 percent of those in a relationship have lied about a financial matter to a partner
  • Younger adults who are not married, aged 18-54, tend to be victims of financial unfaithfulness
  • Women and men are equally likely to become victims of financial infidelity (men: 35% vs. women: 37%), keep financial secrets from their partner (men: 35% vs. women: 34%) and lie about a financial matter (36% both)

“Talking about money can be difficult for an individual, but when in a relationship, whatever issues each of them has is exacerbated,” said author, personal finance educator and FPSC’s Consumer Advocate, Kelley Keehn. “For example, 50 percent of Canadians are $200 away from not being able to pay their bills and we owe $1.71 for each dollar we bring in. That means we owe a lot more than we’d like to think about and that can lead to a great deal of stress and strain on a relationship.”

“Often individuals going into a relationship do not discuss money matters,” states Laurie Campbell, Credit Canada CEO. “It doesn’t seem romantic. As such there may be a lot you don’t know about your partner. You may not know how they handle money, their values around money, or their thoughts on credit and debt. This leaves room for miscommunication and at worst dishonesty and possibly financial abuse of their partner.”

Kelly Keehn’s 6 Step Conversation

Use the following questions and to-dos to get financially naked with your spouse and ensure you are on the same page:

  1. What are our goals?
  2. Write a needs and wants list
  3. Where are we now?
  4. How are we going to get there?
  5. Are there any changes?
  6. Develop an action plan

Also, asking open-ended questions like: What are your financial goals in the next five or 10 years? If one wants to get another degree and travel the world while one partner wants to settle down and buy a home, there’s going to be a major disconnect. Or, ask, what does money mean to you? If one says “Freedom” and the other “Security” – you can guess which one is likely the spender and which is the saver – and can guess at the friction that will cause in the future.

Laurie Campbell and Credit Canada’s Tips to Combat Financial Infidelity

Red Flags:

  • Regular cash withdrawals
  • Unaccounted purchases and expenditures that cannot be explained
  • Partner lies about purchases and expenditures, to you and/or to others
  • A change in behaviour, either in spending habits or attitudes towards you and money, in order to deflect attention away from themselves
  • Spending more, on themselves and/or others
  • A change in mail, such as regular statements or promotions from credit cards you don’t normally use, or investment firms you have never dealt with
  • Less frequent mail from your regular financial services and creditors
  • Partner is very concerned about the mail and doesn’t let you to see it first

What To Do:

  1. No surprises. Have regular discussions with your partner about money, as well as your individual assets and debts, whether in savings, chequing or credit accounts.
  2. Keep a detailed budget and spending plan. So you know exactly how much money is coming in and how much is going out (and on what).
  3. Do not sign any document without reading it first. They say love is blind, but you don’t have to be. Read everything before signing anything. If you’re not sure what something means seek the advice from a professional or expert.
  4. Maintain separate accounts. Have one joint account for all household expenses, which each partner contributes to in proportion to their respective income.
  5. Individual credit cards in your own names. Don’t run the risk of someone else ruining your good credit. Plus, two good individual credit histories are better than one joint history when you apply for a loan. And if one of you has a blemished credit record, the other’s clean record can be an asset.
  6. Speak to a certified credit counsellor. Some non-profit credit counselling agencies can do a free soft inquiry on your credit report to check for any inconsistencies. You can also see a credit counsellor as a couple for advice on managing money together and setting future goals.

The full results of the Financial Infidelity survey can be found here.

About Credit Canada
Credit Canada is a not-for-profit and charitable organization that provides free and confidential credit counselling, personal debt consolidation and resolutions, as well as preventative counselling, educational seminars, and tips and tools in the areas of budgeting, money management, and financial goal-setting. Credit Canada is Canada’s longest-standing not-for-profit credit counselling agency, helping Canadians manage their debt since 1966.  Please visit www.creditcanada.com for more information.

About Financial Planning Standards Council
A professional standards-setting and certification body working in the public interest, FPSC’s purpose is to drive value and instill confidence in financial planning. FPSC ensures those it certifies―Certified Financial Planner® and FPSC Level 1® Certificants in Financial Planning―meet appropriate standards of competence and professionalism through rigorous requirements of education, examination, experience and ethics. With FPSC’s formal partnership with the Institut québécois de planification financière (IQPF), which is the only organization authorized to certify Financial Planners in Québec, there are more than 23,500 Financial Planners in Canada who have met, and continue to meet, FPSC’s standards. More information is available at FPSC.ca and FinancialPlanningForCanadians.ca.

About the Financial Infidelity Survey
Leger conducted a survey of 1550 Canadians between Jan 2 and 5, 2018 using its online panel, LegerWeb. A probability sample of the same size would yield a margin of error of +/-2.5%, 19 times out of 20. Leger’s online panel has approximately 475,000 members nationally – with between 10,000 and 20,000 new members added each month, and has a retention rate of 90%.

SOURCE Financial Planning Standards Council

www.fpsc.ca

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