From attending parties to raising kids to running a business, life is busy. Amid the joys and stresses of daily life, staying on top of your finances can be a challenge, let alone finding time to plan for the long term. And even if you had the time, how are you supposed to know what’s important for your financial future and when you need to take action?
As November is Financial Literacy Month (#FLM2018) in Canada, we’ve created the Your Money, Your Life series aimed at addressing these questions and highlighting key financial considerations for different age groups. Every individual is unique, so these aren’t hard-and-fast rules. Instead, they are signposts meant to guide you toward financial decision-making that makes sense for your situation.
The following article addresses financial matters of importance to Canadians in their 30s.
Managing your finances while juggling responsibilities
For many Canadians, your 30s is often when life gets “real.” You’re still having loads of fun – perhaps even more than in your 20s – but you’re also plunging head-first into major life decisions. From starting a family to laying down residential roots, the choices you make now will have significant financial implications for decades to come.
So what are the key financial considerations that should be on your radar at this age? Here are a few of the major financial issues and milestones common among your peers in their 30s:
- Moving ahead in your career and boosting your income
- Buying your first home
- Getting married
- Having children
- Setting aside funds for your children
- Having more discretionary income for travel and leisure
- Saving for retirement
Your life is shaped by the circumstances you face and the decisions you make, which means that your financial needs may differ from those of your peers. Nonetheless, there are basic financial steps that generally make sense for people in their 30s.
Seeking alignment with long-term objectives
From a financial perspective, your 30s are the time for aligning your finances with your long-term personal and family goals. As you juggle various responsibilities – whether that’s career development, home ownership, parenthood or a combination of these – it’s important to keep in mind your long-term financial objectives.
Here are four key steps that you can take in your 30s, in addition to the steps that you took in your 20s , to set yourself on course for a bright financial future:
- Understand your mortgage options. High property prices have made buying a first home more challenging in recent years, and according to Statistics Canada data, homeownership among Canadians aged 20 to 34 declined recently for the first time in 20 years. When buying a house or condo, the mortgage that you manage to negotiate can have financial implications for decades to come. With hundreds of thousands of dollars on the line, seeking assistance from a professional can be well worth your while. A mortgage broker can help you navigate the complex world of mortgages contracts, steer you away from common pitfalls, and secure a better rate and terms than what you might have gotten on your own.
- Invest in your child’s education. If you have a toddler sitting on your knee, it may seem a bit early to start saving for their post-secondary education. In fact, you can open a registered education savings plan (RESP) for your child as soon as they’re born, and doing so is actually a good idea. Why? Because contributions within an RESP can grow tax free, which allows this money to grow faster than if you invested it outside of a registered account. Because the federal government and some provincial governments top up your RESP contributions with grants and bonds. And because post-secondary education will be even more expensive by the time your child is ready for university (results from a recent Macleans survey suggest the total annual cost of a post-secondary education in Canada is already about $19,500), you’ll be grateful that you got a head-start on saving.
- Create a will. Having a will is always a good idea for any adult, and it becomes all the more important when there is a partner or children in your life. Despite this, a recent Angus Reid Institute poll found that 51% of Canadians don’t have a will. Much like insurance, a will is one of those things that many people tend to put off for later – “I’ll deal with it when I’m older” is a common refrain. In reality, we never know when tragedy will strike, which makes it so important to have a will in place to offer protection for those you care about and ensure your wishes are known.
- Brighten the world around you. If an image of an elderly couple donating millions to a hospital pops into you head when you think about philanthropy, you’re not alone. However, in reality, philanthropy isn’t about age or huge sums of money. According to Statistics Canada, 20.5% of all tax filers donated to registered charities in 2016, with a median donation amount of $300. At its core, philanthropy is about a desire to help others, a willingness to act on what you believe in and a smart strategy to bring your plans to life. With your growing life experience and your increasing discretionary income, your 30s can be a good time to start taking action to make the world a better place. The key is to recognize that you don’t have to wait until you’re old and grey to start making a difference.
Making a plan to guide you forward
With so many changes happening in your 30s, it can be easy to lose sight of where you’re headed and what’s most important. Developing a wealth management plan – whether for just you or for your family as a whole – will help ensure that you manage your finances in alignment with your goals and avoid being pushed off course when life gets “real.”
Seeking out support from a trusted financial advisor can help you better understand your options and develop a wealth management plan that is tailored to your needs. For a discussion about how we can help you reach your financial goals, contact Rubach Wealth at (647) 349-7070