“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

Cash Flow Changes When Starting A Family

Cash Flow Changes When Starting A Family

Starting a family is probably one of the most complex periods in a person’s financial life. There are changes to income, expenses, insurance, investments (RESPs) etc.

Anticipating and managing all these changes can be overwhelming. It’s good to have a framework to help understand what changes you can expect and how large they may be.

It’s also a good idea to prepare yourself financially for all these big changes. There are a few things you can do to prepare your finances for a decrease in income and an increase in expenses.

Generally you can separate the financial changes when starting a family into six different areas.

There are changes to…

– Income
– One-time expenses
– On-going expenses
– Insurance
– Investments
– Taxes and Gov. Benefits

In each of these areas there are different financial impacts that come with starting a family. Some of these impacts are positive and some are negative.

For example when it comes to Income, most new parents can expect to receive the Canada Child Benefit, one of the most generous benefits in Canada. This government benefit could add thousands to a new parents annual income (plus its non-taxable!) But at the same time a new parent may take 12-18 months off work which has a very negative impact on Income.

There are also many new expenses a new parent will face. There are one-time expenses, on-going expenses and then short lived but high cost expenses like daycare.

To help a new parent plan all these changes we need to look at each area separately to understand what changes we might expect.

read more
A Fool Proof Way To Manage Investment Volatility

A Fool Proof Way To Manage Investment Volatility

With investments values moving up and down 5% to 10% per day this investment volatility can feel like a roller coaster both financially and emotionally. If you’ve been watching your investment portfolio day-to-day you may be feeling a bit nauseated by now.

Thankfully there is a fool proof way to manage this investment volatility, just don’t look.

Not looking at your investment portfolio is simpler said then done of course, but it’s the best way to manage investment volatility.

It’s been proven that we put more weight on negative experiences than positive experiences. We feel the impact of negatives more than we feel positives.

Even when they’re the same size, a loss feels worse than a gain. Losing $50 feels worse than gaining $50.

So with markets jumping up and down 5-10% per day this can lead to some VERY negative emotions. The positives just don’t out weight the negatives and we end up feeling worse and worse with each rise and fall.

But not looking at your investment portfolio can be surprisingly hard to do. So what can the average investor do to help themselves feel better during a market correction? What strategies can they use to avoid looking at their investment portfolio? What routines can they implement?

This post looks at a few different ways to help you manage the emotional impact of investment volatility.

read more
Why You Might Want To Withdraw MORE Than The RRIF Minimum

Why You Might Want To Withdraw MORE Than The RRIF Minimum

At some point every retiree with an RRSP is going to need to make a decision about converting their RRSP to a RRIF. The Registered Retirement Income Fund (RRIF) works very similarly to the RRSP with a couple notable exceptions.

One of those exceptions is that there is a minimum RRIF withdrawal. Retirees need to make this minimum withdrawal from their RRIF each year. This minimum withdrawal escalates each year as the retiree gets older. By the time a retiree reaches their mid-90s they are forced to withdrawal 20% of their RRIF each year!

Because the withdrawal is a minimum, and conversion from a RRSP to a RRIF is mandatory, this often leads retirees to believe that keeping money in a RRIF is a good idea. After all, if they’re being forced to take money out, wouldn’t that suggest that keeping money in is a good idea?

For many retirees, taking out only the minimum RRIF withdrawal each year is actually a bad idea. Many retirees would benefit from a different RRIF withdrawal strategy. Many retirees would benefit from taking out more than the minimum each year. They would increase their financial flexibility, they would decrease the tax on their estate, and they could even qualify for certain benefits late in retirement.

RRIF withdrawal strategy is especially important now. The federal government just announced that the minimum RRIF withdrawal for 2020 will be reduced by 25%. This may lead many retirees to “take advantage” of this opportunity when it’s not necessarily in their best interest.

In this post we’ll look at RRIF withdrawal rules, the minimum RRIF withdrawal percentage by age, and we’ll explore two scenarios where we show how a retiree can benefit from RRIF withdrawals that are larger than the minimum.

We’ll also explore how this strategy is even more impactful now, after a large stock market correction.

read more

Owen Winkelmolen

Fee-for-service financial planner and founder of PlanEasy.ca

“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

Cash Flow Changes When Starting A Family

Cash Flow Changes When Starting A Family

Starting a family is probably one of the most complex periods in a person’s financial life. There are changes to income, expenses, insurance, investments (RESPs) etc.

Anticipating and managing all these changes can be overwhelming. It’s good to have a framework to help understand what changes you can expect and how large they may be.

It’s also a good idea to prepare yourself financially for all these big changes. There are a few things you can do to prepare your finances for a decrease in income and an increase in expenses.

Generally you can separate the financial changes when starting a family into six different areas.

There are changes to…

– Income
– One-time expenses
– On-going expenses
– Insurance
– Investments
– Taxes and Gov. Benefits

In each of these areas there are different financial impacts that come with starting a family. Some of these impacts are positive and some are negative.

For example when it comes to Income, most new parents can expect to receive the Canada Child Benefit, one of the most generous benefits in Canada. This government benefit could add thousands to a new parents annual income (plus its non-taxable!) But at the same time a new parent may take 12-18 months off work which has a very negative impact on Income.

There are also many new expenses a new parent will face. There are one-time expenses, on-going expenses and then short lived but high cost expenses like daycare.

To help a new parent plan all these changes we need to look at each area separately to understand what changes we might expect.

read more
A Fool Proof Way To Manage Investment Volatility

A Fool Proof Way To Manage Investment Volatility

With investments values moving up and down 5% to 10% per day this investment volatility can feel like a roller coaster both financially and emotionally. If you’ve been watching your investment portfolio day-to-day you may be feeling a bit nauseated by now.

Thankfully there is a fool proof way to manage this investment volatility, just don’t look.

Not looking at your investment portfolio is simpler said then done of course, but it’s the best way to manage investment volatility.

It’s been proven that we put more weight on negative experiences than positive experiences. We feel the impact of negatives more than we feel positives.

Even when they’re the same size, a loss feels worse than a gain. Losing $50 feels worse than gaining $50.

So with markets jumping up and down 5-10% per day this can lead to some VERY negative emotions. The positives just don’t out weight the negatives and we end up feeling worse and worse with each rise and fall.

But not looking at your investment portfolio can be surprisingly hard to do. So what can the average investor do to help themselves feel better during a market correction? What strategies can they use to avoid looking at their investment portfolio? What routines can they implement?

This post looks at a few different ways to help you manage the emotional impact of investment volatility.

read more
Why You Might Want To Withdraw MORE Than The RRIF Minimum

Why You Might Want To Withdraw MORE Than The RRIF Minimum

At some point every retiree with an RRSP is going to need to make a decision about converting their RRSP to a RRIF. The Registered Retirement Income Fund (RRIF) works very similarly to the RRSP with a couple notable exceptions.

One of those exceptions is that there is a minimum RRIF withdrawal. Retirees need to make this minimum withdrawal from their RRIF each year. This minimum withdrawal escalates each year as the retiree gets older. By the time a retiree reaches their mid-90s they are forced to withdrawal 20% of their RRIF each year!

Because the withdrawal is a minimum, and conversion from a RRSP to a RRIF is mandatory, this often leads retirees to believe that keeping money in a RRIF is a good idea. After all, if they’re being forced to take money out, wouldn’t that suggest that keeping money in is a good idea?

For many retirees, taking out only the minimum RRIF withdrawal each year is actually a bad idea. Many retirees would benefit from a different RRIF withdrawal strategy. Many retirees would benefit from taking out more than the minimum each year. They would increase their financial flexibility, they would decrease the tax on their estate, and they could even qualify for certain benefits late in retirement.

RRIF withdrawal strategy is especially important now. The federal government just announced that the minimum RRIF withdrawal for 2020 will be reduced by 25%. This may lead many retirees to “take advantage” of this opportunity when it’s not necessarily in their best interest.

In this post we’ll look at RRIF withdrawal rules, the minimum RRIF withdrawal percentage by age, and we’ll explore two scenarios where we show how a retiree can benefit from RRIF withdrawals that are larger than the minimum.

We’ll also explore how this strategy is even more impactful now, after a large stock market correction.

read more

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

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