Money Matters:
10 Tips to help families make ends meet and plan for the future
by Stephen Whipp

Money matters can be challenging when you are raising a young family. Make it a little easier with the following tips.

1) Know your monthly budget
This is an essential financial planning tool. You have to have a clear picture of where your money is coming from and where it needs to go. You also need to know how much you can realistically save each month, while still meeting your present needs. Track your expenses, even the coffees, for a month or two, stop using the debit card for minor purchases and give yourself a weekly cash budget for specific items. When it’s gone, resist using the debit or credit card.

2) Know your goals
Do you want to save towards buying your first home? Sail around the world in 10 years’ time? Save for your children’s university education? Talk about your goals with your partner to make sure you’re working towards the same things. Achieving financial goals is not easy or else everyone who wanted would be retired at 50.

3) The miracle of compound interest
When you invest money, you earn interest on your original investment, or “capital.” The next year you earn interest on both your capital and the interest from year one. The following year you earn interest on your capital and the first two years’ interest, and so on. The sooner you start investing, the longer you have for the snowballing effect of compound interest to take place.

4) Involve your children in age appropriate ways
Talk to them about your values concerning money and how to save it, make it grow, and spend it prudently—make sure it’s not a taboo subject. Help children differentiate between needs and wants. Help children to set their own financial goals, e.g. saving pocket money for a special day trip or toy. Teach your children about savings and interest.

5) Find an advisor you can trust
Ask about how they get paid and what their qualifications and experience are. Ask if you can speak to a current client to get a reference. Make sure they share your values, particularly if you are interested in socially responsible investing.

6) Save for education
New rules have eliminated the $4,000 limit on annual RESP contributions, and increased the lifetime limit on RESP contributions to $50,000 from $42,000. No matter what your net family income is, the Canada Education Savings Grant provides at least 20 cents for every dollar on the first $2,000 of annual RESP savings made on behalf of a child, annually. Depending on your family income, your child could receive an additional grant on RESP savings that you make after on behalf of a child.

7) Get insured
Most people spend more on their car insurance than they do on their own life and disability insurance. Which do you think is more valuable? Make sure you get someone qualified to review your insurance needs regularly.

8) Invest sustainably
Just as you take care in choosing to buy local or organic food for your family, take the same care in choosing to invest in companies that respect human rights and do not harm the planet. Don’t allow your money to be used for a purpose that you would object to, like cigarette companies.

9) Know your values
What’s important to you? Investing in renewable energy? Avoiding investing in companies that use child labour? To take a free quiz that will help you figure this out, visit www.stephenwhipp.com and click on “Investment Survey.”

10) Get an energy audit of your home
City Green will provide a report that shows where you will get the most for the money you spend on upgrading the energy efficiency of your home, plus a list of grants you can apply for.

Stephen Whipp is a Certified Financial Planner and licensed insurance representative in Victoria. Steve specializes in ethical investing and values-based financial planning. For info visit www.StephenWhipp.com. The opinions expressed are those of the author and may not necessarily reflect those of Berkshire Securities Inc. or Berkshire Insurance services Inc.