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Sep 15, 2023

Enriched Academy Staff

It’s easy to go online these days and get more free financial advice than you know what to do with. There are blogs like this one, hundreds of financial gurus on YouTube, and plenty of online tools and calculators to help us with for everything from credit card repayment to retirement planning. So why then is it so difficult for us to actually implement some of these ideas and techniques and make meaningful changes in our financial life? Are we predestined to be bad with money, or is just that our money mindset is so engrained that it blocks change and continuously holds us back? We all know that our mindset is an important part of acquiring new skills or succeeding at a given task, and when that task is managing our money, a positive money mindset is more important than ever.

How does your history with money affect your money mindset?
A person's history with money can have a significant impact on their beliefs, attitudes, and behaviors related to money. Your upbringing and early experiences with money, such as how your parents managed finances, their attitudes toward spending and saving, and any financial struggles or privileges you experienced as a child, can influence your beliefs and behaviors as an adult. For example, if you grew up in a household where money was tight, you may develop a scarcity mindset and be more frugal or risk averse. Conversely, if you grew up in a financially comfortable environment, you might have a more relaxed attitude toward spending and saving.

Exposure to financial education or the lack thereof can also impact your money mindset. If you were taught the importance of budgeting, saving, and investing from a young age, you may have a more positive and informed money mindset. On the other hand, if you never received any financial education, you might struggle with financial literacy and make less-informed decisions.

Money Myth

Your past financial successes and failures can shape your beliefs about your ability to manage money. If you've experienced financial setbacks or made poor financial decisions in the past, you might develop a fear of financial failure or become overly cautious. Conversely, if you've achieved financial goals or made successful investments, you may have more confidence in your financial abilities.

What role does mindset play in achieving financial goals?
Cultural and societal factors play a role in shaping your money mindset. Different cultures have varying attitudes toward money, savings, debt, and wealth. These cultural norms can influence your beliefs and behaviors regarding money and can perpetuate some damaging money myths. For example, some cultures may prioritize saving for the future, while others may emphasize conspicuous consumption and status. Your money beliefs can also be influenced by the financial behaviors and attitudes of your friends and social circle. If your peers are big spenders and prioritize material possessions, you may feel pressure to do the same. Conversely, if your friends are financially responsible and encourage savings and investments, you may adopt similar habits.

Major life events, such as a windfall inheritance, a job loss, a divorce, or a significant medical expense, can dramatically impact your money mindset. These events can lead to shifts in your financial priorities, risk tolerance, and overall outlook on money. It's essential to recognize that your money mindset is not fixed and can evolve over time. By reflecting on your financial history and identifying how it has influenced your beliefs and behaviors, you can work toward developing a healthier and more balanced approach to money management.

How can I identify and challenge my own money misbeliefs?
Analyzing and changing your relationship with money is an important step toward achieving financial well-being and making more informed financial decisions. Start by reflecting on your past and current financial behaviors, attitudes, and beliefs. Think about how your upbringing, cultural background, and life experiences have shaped your relationship with money. Consider questions such as: What are my financial goals? What are my spending habits? How do I feel about saving and investing? Am I comfortable with financial risk, or am I risk-averse?

Look for recurring patterns or behaviors in your financial history. Do you tend to overspend during certain times of the year? Do you avoid discussing money with family or friends? Recognizing these patterns can help you understand your money mindset better.

Money Management

Are there any practical strategies to improve my money mindset?
Your starting point should be to identify and write down your short-term and long-term financial goals. These could include getting out of debt, saving for retirement, buying a home, or starting a business. Clearly defined goals drive motivation and direction for your financial decisions.

The next step is to create a budget and track your income and expenses. It’s tempting to focus on earning more money as the solution, but effective money management of the income you have now will have a much greater impact on your financial situation. You need to first understand where you are spending your money before you can start trying to implement solutions. If you identify unhealthy spending habits, take steps to change them. There are lots of online tools and applications to make expense tracking a simple task that requires very little time.  It also pays to invest time in learning about personal finance. There are many books, websites, podcasts, and courses available that can help you improve your financial literacy. We offer free, informative webinars every week on a variety of personal finance topics. Understanding financial concepts will instill confidence and teach you the best ways to manage money.

What are negative financial mindsets?
If you hold negative beliefs like "I'll never be good with money" or "Money is the root of all evil", challenge yourself to turn them into positive and constructive beliefs. Ensure your financial goals are realistic and achievable and break larger goals into smaller, actionable steps. Setting unrealistic goals can cause frustration and disappointment that can sap motivation.

Money Management skill

Create a comprehensive financial plan that include ideas to budget and save money, manage debt, and start investing. This could include cutting expenses, setting up automatic savings, or seeking professional help for debt management. Make sure to regularly review your financial progress and adjust your plan as required. Recognize your achievements even if they seem small and stay motivated. You may also want to consider working with a financial coach to get you started, and don't hesitate to seek support from friends or family. Discussing your financial goals and challenges with others can provide valuable insights and encouragement.

Changing your relationship with money takes time and effort — there are no shortcuts to getting good with money. Remember that your relationship with money is a journey, and it can evolve over time with conscious effort and self-awareness. Setbacks are a natural part of the process so be patient with yourself. By regularly analyzing your financial behaviors and beliefs, and taking proactive steps to make positive changes, you can build a healthier and more sustainable relationship with money.

Sep 01, 2023

Enriched Academy Staff

You don’t have to look very hard to find a survey that highlights the poor state of retirement preparedness many Canadians are feeling. An April 2023 survey from tax specialists H&R block found that 53% claim to be behind on their retirement savings, and that they are planning on working part-time to make up the difference when they do retire. BMO didn’t find much better news — their February 2023 study found only 44% of respondents reporting they’re “confident” they’ll have enough money to retire. This was 10% lower than their 2020 survey!

The fact is that most of us don’t need a survey to tell us we are behind on our retirement savings plan. With the rapidly rising cost of food, gas and other necessities combined with drastically higher interest rates on mortgages, we know there isn’t much left to put towards retirement savings at the end of the month. If you find yourself behind on your retirement planning, it's important not to panic. While starting early is ideal, there are steps you can take to catch up and improve your retirement outlook regardless of where you are at right now.

What is retirement planning?

Retirement planning refers to the process of setting and achieving financial goals to ensure a comfortable and secure retirement. It involves making strategic decisions about saving, investing, and managing your finances throughout your working years so that you can maintain your desired lifestyle and cover your expenses after you stop working. Retirement planning takes into consideration factors such as your age, current financial situation, expected retirement age, desired standard of living, life expectancy, and potential sources of income during retirement.

How to plan for retirement in Canada?

Financial planning for retirement starts with carefully evaluating your current situation, including your savings, investments, debts, expenses.... even your tax bracket! Understanding where you stand is the first step toward making a realistic plan. Increasing our savings is where most of us focus, but it is just one of many considerations. For example, do you invest those savings in a tax-advantaged account like an RRSP or TFSA and are you taking full advantage of these accounts? Do you take the time to review the type of investments you hold and analyze your returns, the fees you pay to hold/manage those investments, and adjust the asset allocation/risk of those investments based on your life situation? If you are 35 years old, the type of investments you hold and the associated level of risk is a lot different than someone who is 62 and expecting to retire in 3 years.

Debt is another key consideration. House prices have risen dramatically over the past 10 years and it is getting increasingly difficult to burn the mortgage before retirement. If you have tapped into your equity with a line of credit, what is your plan for eliminating that debt? If you are carrying debt into retirement just make sure you will have the income to service that debt. For example, if your house has a basement suite and renting could cover a substantial part of the mortgage, then maybe you have solved the problem!

Retirement planning

How much money do you need to retire?

It sounds painfully obvious, but most of us haven’t actually determined how much money we will need in retirement. All of us have retirement dreams (or at least expectations) and it’s time to start assigning some costs to those dreams. A lot of major expenses like your home or the kid’s education may be paid, but there are still lots of other things to eat up your income. Are you planning to travel more, and is that five-star resorts or your favourite campground?  Are you staying in your home or downsizing? Will you carry any debt into retirement? Stats Canada found in 2019 that the average over 65 household spent just under $50,000 annually. Things are a lot more expensive now and that figure could easily be $60,000 in 2023, but the point is that there is no average. Retirement spending varies wildly between households and the only way to gain clarity is to sit down and start figuring out a budget that matches your retirement situation and needs.

Consider what age you plan to retire?

As you near retirement you may find your savings rate going up quickly as your monthly expenses diminish. You may want to consider working for a few more years than originally planned and bolster your retirement savings. Delaying the age you start receiving a pension usually means a higher monthly payout (CPP for example) and gives you a chance to max-out tax-sheltered/deferred investment options like an RRSP or TFSA. Working during retirement is another option and although it seems easy enough, keep in mind that you may not have the health, motivation, or be able to find a suitable employment opportunity.

When should you start saving for retirement?

Anyone who is asking this question needs a quick lesson in the power of compound interest over time. Putting $500 in your RRSP every month from age 25 to 65 with a 5% return would yield $725,000 — starting at age 40 would leave you with only $287,000. Sure, you would have contributed a lot more money ($90,000) but the difference at age 65 is shocking! The answer to when to start saving for retirement will always be as early as possible. The second key point about compound interest is that small differences in your rate of return can really add up over the years. If you increased the rate of return in our above example from 5% to 7%, your nest egg would be $1.2 million instead of $725,000! Any retirement financial advisor will tell you that piling up cash in a savings account is not the best way to grow your money. You should consider a mix of investments based on your risk tolerance, timeline to retirement, and financial objectives. You can take the time to educate yourself and manage your own personal savings and investments or check out our  financial coaching program for expert guidance and education.

RRSP

Can I contribute to both an RRSP and a TFSA?

Both the TFSA and RRSP offer great opportunity for retirement tax savings and you can certainly have both. The issue of course is that it may be difficult to set aside 18% of your annual income to maximize your RRSP, and another $6500 every year to maximize your TFSA (especially when you are younger). The choice can be difficult and the optimal solution for tax efficiency will vary based on your income over your working (and retired) life, whether you are saving for a home, whether you may need to withdraw the funds early, and other factors. Understanding the differences between an RRSP and TFSA is the starting point and a little knowledge will go a long way. For example, early withdrawal from an RRSP can be quite punitive compared to a TFSA, so make sure you do your homework and improve your financial literacy to make an informed decision. The same goes for investing the funds in your RRSP and TFSA — your retirement investment plan and the associated fees will play a huge role in determining the size of your retirement fund.

Preparing for retirement is an overwhelming task, so it’s no surprise that so many of us kick it down the road.  Remember that every small effort you make today will add up over time. Start by defining your long-term goals and current financial situation, then list up a few simple action items you can start right away. It could be something basic like digging into your monthly expenses to find more retirement savings, to something much more involved like digging into your mutual funds and ensuring the risk, return, and investment fees meet your expectations and support your retirement goals. Make sure to revisit your retirement plan regularly, it’s not a static process and it’s critical to make adjustments to keep you on track.

Aug 15, 2023

Enriched Academy Staff

Managing your finances as a student requires discipline, planning, and smart decision-making. Avoiding common budgeting and spending mistakes and developing responsible money habits will help you make the most of your student years.  Graduation will be a lot more promising if you are financially stable and ready to take on your new career. Here's some advice, information, and financial tips for students you can use right now to get your finances in order.

What is the first step to effective money management for students?
While student life may seem temporary, it's important to consider your long-term financial goals and how the total cost, and any debts you take on to fund your education, will affect your lifestyle and long-term financial goals post-graduation. For example, if you are planning to buy a home or even finance a car after your studies, you should at least do some basic calculations on what your student loan repayments will be. You have to start repaying them six months after graduation and although Canada Student Loans now carry no interest, repayment of the principal can still be substantial.

Focusing on the present and loading up on student debt while counting on a high-paying job after graduation to bail you out is a recipe for disaster. That job may not materialize and even if it does, you may find that salary doesn’t go near as far as you thought it would once you start living in the real-world. While financial aid is helpful, relying too heavily on it can lead to overspending and financial strain after graduation. If you need to take out student loans, borrow only what you truly need and understand the terms and interest rates associated with them.

How can I handle my student loans responsibly?
The average Canadian student loan (not just the federal portion) for a 2-year college is around $15,000 and $28,000 for a 4-year degree. Student loan repayment terms are flexible and you can adjust the amount and frequency of payments along the way as long as you meet the minimum requirements. If you are thinking bankruptcy might be a way out, keep in mind that this will have very serious repercussions on your credit availability and lifestyle for many years. Student loans are not forgiven if bankruptcy is declared within 7 years of graduation.


While too much debt is a danger, there is no need to completely avoid debt to fund your education. It is often the only option to pay for our studies and education usually provides an excellent, lifetime return on your investment. However, your income as a student is very low and keeping costs to a minimum will put you in a much better position to save, invest, and reach your financial goals once you graduate and enter the work world. It should go without saying, but one of the most common money management tips for students is to continuously search for scholarships, grants, or financial aid opportunities to help limit your student debt.

What are some common budgeting mistakes students should avoid?
The biggest mistake is not having a budget at all. Without a budget, it's easy to overspend and lose track of your finances. A lot of students start out the year in September with a big pile of cash either from a loan, a summer job, or maybe the bank of mom and dad. Ideally, you should pay for your big-ticket necessities right away – tuition or other school fees, dorm fees and meal plan if in student housing, and textbooks or other school supplies. You should also consider some travel costs at this point, are you planning to fly home for the holidays or go on a ski trip at spring break? After you have the big items taken care of, then you can look at how to allocate what’s left on a monthly (or weekly) basis. You don’t want to be out of cash in late February when final exams aren’t until mid-April!

What should I prioritize in my student budget?
The problem with budgets is sticking to them and knowing exactly where and when your spending has gone off the rails. It isn’t that difficult to set up a student budget and assign certain amounts on a weekly or monthly basis. Some expenses like rent, a transit pass, or your cell phone plan are the same every month and you can easily slot in the amount. Other expenses like groceries vary more but you can probably dial in the amount after a couple of months. The real problem is entertainment, dining out, travel, hobbies, or other leisure time activities — spending on these can quickly spiral out of control and leave your budget in pieces.


How do I create a realistic student budget?
The key to effective money management is to track all your expenses and categorize them according to your budget, so you can always see a running total of where you are at. Small, frequent purchases can add up quickly. There are lots of apps to manage finances, or you can use a Google sheet or Excel file... even paper will work! Just makes sure your expense tracking system is quick and easy and get in the habit of updating it at least every few days.

After a few months, your monthly budget planner may need some adjustments.  Your expense tracking may show your original cost estimates are not realistic or maybe you got a part-time job. Your budget is not written in stone and needs to be achievable, so feel free to make changes — as long as you are living within your means and not racking up any additional, unplanned debt.

Impulse buying can easily sink your budget, so take some time to consider if a purchase is really necessary. Be strict with yourself when differentiating between essential and non-essential items and stick to your budget. Take advantage of discounts available to students. Many campus events and activities are free or low-cost. They provide entertainment and opportunities to socialize without straining your budget. Many businesses offer reduced rates for students on transportation, technology, software, entertainment, and more. One of the best way to save money is to cook meals at home or eat in your dormitory cafeteria and limit your restaurant budget to a few special occasions.  If you do split household expenses with roommates, make sure the division of shared bills is fair and worked out beforehand, and that everyone pays on time.

How can I build and maintain a good credit score as a student?
That shiny new student visa card you got from the bank is a great thing to have, but you need to pay it off every month by the due date. In fact, using your credit card for a few purchases each month and paying it off on time will help to establish your credit rating. Paying back your student loans after graduation will also help greatly with your credit rating. On the other hand, not paying off your credit card balance in full is a lot more costly than most people (especially those new to credit cards) realize. If you splashed out $1000 for a spring break trip to Florida and can now only cover the minimum monthly payments, you are going to be paying for that trip for the next 131 months and be on the hook for almost another $1000 in interest charges!

What are some practical ways to save money as a student?
Saving may seem like a luxury as a student, but contributing even a small amount to a tax-free savings account each month from age 18 could be a life-changing habit. They are free and easy to open at an online brokerage and the annual contribution limit of $6500 is the same for everyone and not dependant on employment income. If you ever need the money down the road a few years it can easily be withdrawn and even $100/monthly over the course of your working life from age 18 will compound into hundreds of thousands of dollars by retirement age.

If your schedule allows, consider getting a part-time job or freelancing gig to supplement your income. Just be careful not to overload yourself to the detriment of your studies. Be conservative when estimating your income to avoid budget shortfalls and try to set aside a portion of your income for an emergency fund to cover unexpected expenses and reduce the need to rely on credit cards or additional debt.

Failure to manage your money as a student doesn’t bode well to manage your finances as an adult. Remember, the habits you develop as a student are hard to change and will shape your financial future. Self-discipline and making informed decisions are key to effectively managing your money. Financial education pays and improving your financial literacy will only become more important and more valuable as you grow older. Developing good money management skills as a student will benefit you long after you graduate.

Aug 01, 2023

Enriched Academy Staff

As adults, we all know the critical importance of managing money wisely and the impact our financial situation has on our overall well-being. By equipping our children with financial literacy from an early age, we empower them to make informed decisions, set financial goals, and build financial independence.

As parents we do our best, but there are lots of life lessons we need to teach, and teaching about money doesn’t always top the list. We may also not be the best person for the job since around 50% of adult Canadians live paycheque-to-paycheque! Case in point, many well-meaning parents set their kids up with a bank account, but they should actually open two accounts, one for spending and another for saving (just like adults should be doing!). So how do we choose what financial lessons, habits, and tactics to teach our children, especially if our own money management skills may be lacking?

For many years, Enriched Academy has been working with provincial governments, education boards, colleges, and universities across Canada to support students and teachers with an informative and entertaining package of learning resources to help youth get money smart. We are continuously refining our school programs based on student and teacher feedback, changes in the economy or legislation, and the latest trends in personal finance. We know that learning about money management from an early age will set them up for a lifetime of good financial habits. Financial education for kids is what we do, and we have compiled the following list of lessons, techniques, and the factors you should be considering when it comes to teaching your kids about money.


What are some age-appropriate money lessons for young children?
Give your child a regular allowance, just don’t call it an allowance! Weekly ‘pay’ starting around age seven is a good idea but be careful — it’s not something that’s received, it’s earned — and children need to know the difference.  A checklist of weekly tasks and some amount of pay attached to each one is a great way to instill this idea. Reinforce the concept by designating a regular ‘payday’ each week. This allows children to learn from a young age that that work is the basis for earning money. When they get a little older, encourage them to allocate a portion of their ‘pay’ for spending, saving, and giving to others or charitable causes.

Wants vs needs & cost vs value
Teach children to differentiate between needs and wants and how to prioritize what they spend their money on. Value and cost are two more important concepts to differentiate. A top-of-the-line iPhone or a carbon-fiber mountain bike will really impress their teenage friends, but a cheaper version may perform very similarly and provide a lot more value, especially given the limited amount of funds they have. Kids are bombarded by marketing messages, and they need to learn how to avoid hype and be objective, so they can make smart financial decisions. There is a reason plenty of rich folks (even billionaires like Warren Buffett) drive basic cars – it’s all they really need.   If your teen or tween wants the latest and greatest must-have item, challenge them to explain the value beyond being new, trendy, or fashionable. When they want to buy something, encourage them to research the product, read reviews, and compare prices to make informed decisions.

For younger children, don’t always limit them to buying things that meet your threshold for play value or quality – let them buy some junk once in a while and use the opportunity to turn it into a lesson about quality and value. A mood ring is usually interesting for about a day-and-a-half, and $5 won’t break the bank. If someone learns to better evaluate their purchases in the future, it was a cheap lesson.

Introduce basic investing concepts
As kids get older, introduce them to basic investing and the concept of how to make money with money. Explain how investments can grow over time and the power of compound interest. Should you buy a stock (or an ETF, GIC, mutual fund or some other financial product) for a 12-year-old… absolutely!  There are lots of kids out there with parents who invested the time to explain shareholding and how it works at a level they can understand. Kids are very familiar with many publicly traded companies like Disney, Roblox, Mattel and McDonalds. Holding a few shares (in an informal trust account or simply in your name) may not return enough to put them through college, but it will teach them the basics of investing, risk and return for managing their finances in the future. 


It sounds so cliched to say, “make savings a habit” and it really is only half the picture — your teenagers should be saving and INVESTING a portion of their income regardless of how insignificant it may seem. Developing a saving mindset early in life will pay back over the course of a lifetime, but developing an investing mindset will pay back HUGE over the course of a lifetime and set your kids up for long-term financial security and wealth building. As soon as your kids turn 18, have them open a tax-free savings account (TFSA) even if they can only muster $50 or $100 monthly to contribute.

Teach about credit and debt:
Introduce the concept of credit and debt in age-appropriate terms. Explain how credit cards work, the importance of responsible credit card use, and the consequences of accumulating debt. Don’t give an advance on their allowance! The number one financial problem in Canada from young adults to retirees is spending money they don’t have – usually with a high-interest credit card. The need for instant gratification is an ongoing battle but developing resistance at an early age will help keep the urge under control in adulthood. Practice delayed gratification and help your kids understand that they cannot always get what they want immediately.

Why is it important to teach kids about money management?
Credit is very easy to access these days and even first-year post-secondary students are often able to get a credit card. Easy access to credit cards (with generous spending limits and 20% or more interest!) and a few spontaneous/poorly thought-out spending decisions can derail a future before it even gets started. Failing to understand the impact and obligations of a student loan can also lead to a nasty surprise when it comes time to repay that money or get a car loan or mortgage down the road. Although federally issued Canada Student Loans are now interest-free, provincial loans may still carry interest. Either way, your kids need to realize that a student loan isn’t free money and that paying it back will definitely crimp their post-graduation lifestyle. Many parents are quite literally paying the price for their kid’s financial mistakes, and it can continue long after they are no longer children!

How can I explain the concept of saving money to my kids?
Help your kids set short-term and long-term financial goals. Whether it's saving for a new toy or saving for college, having goals encourages discipline and delayed gratification. For large-ticket items, set up a savings goal and create a tracking chart together with your kids so they can visualize their progress. Celebrate financial milestones and acknowledge their financial achievements, such as reaching savings goals or making smart financial choices. Positive reinforcement encourages good financial habits.

Should I involve my child in family financial discussions?
While you may not want them balancing the cheque book, involving your kids in family financial discussions is a great way to see what they know (and don’t know!) and provide a few timely lessons. It will also encourage them to come to you when they have money questions and need some guidance. Planning a family vacation together is great for teaching teens about budgeting and balancing wants versus needs. They will learn a lot about tradeoffs and how a nicer hotel with an amazing pool may come at the cost of eliminating a particular excursion.... or find other solutions such as grabbing lunch at a supermarket or convenience store instead of a sit-down restaurant.


Open one bank account for spending and one for saving
Bank accounts are free and easy to get online, and having two accounts is one of the best ways to manage money. It’s a very effective and easy way to control spending and ensure your offspring are hitting their savings goals. Whether it’s a birthday cheque from grandma or earnings from a part-time job, make an agreement with your kids to ‘pay themselves first” and put 15% (or more) into a high-interest savings account. The balance of the funds can go into a daily chequing account with a debit card, and they can spend that as they like. Don’t let them dip into their savings account (unless they are parking cash there for a pre-determined, ‘big-ticket’ item).

Teach teens about financial scams
Education and awareness about common financial scams and how to protect themselves from fraud and identity theft is a critical aspect of money management for teens. Our seemingly computer savvy youth often take for granted the importance of safeguarding their financial information. Passwords and PIN numbers need to be protected, never shared, and changed on a regular basis. Young adults also need to be able to detect the proliferation of increasingly sophisticated telephone and online scams.

Conclusion
Remember that financial education is an ongoing process, and it's essential to tailor your approach to your child's age and level of understanding as they learn about money. The key is to make financial education practical, relatable, and enjoyable, so they can build a strong foundation for their financial future. Encourage openness about money and create an environment where youth feel comfortable discussing money matters with you. Starting to instill good money habits from an early age and being a supportive resource as they develop their financial skills will help your money-savvy kids grow into financially responsible, money-savvy adults.

Jul 15, 2023

Enriched Academy Staff

Traditional real estate investing for most small investors means investing in a property (home, condo, etc.) outright and becoming a landlord. Whether you choose to manage the day-to-day duties or farm them out to a property management company is up to you. Either way, you have to come up with the funds/financing to purchase the home and that may be more money than you can get your hands on or more risk than you are willing to take. This approach may still be viable and suit some investors, but there are several options when it comes to real estate investment opportunities.

Can you still make money from a rental property?

Until the sharp rise in interest rates, low mortgage rates combined with escalating home prices (and an increasing pool of equity to borrow from) made buying a rental property in Canada a viable and profitable investment for homeowners. Even if you failed to generate positive cash flow based on your rental income and expenses, the increase in the value of the home would have likely made up for your miscalculations and made it a good investment. Fast forward to the present and we now see a very different situation. Variable rate mortgages that were around 2% are now closer to 7% and investment property mortgage rates may be even higher. Although home prices have rebounded sharply in many areas since the lows of early 2023, rising interest rates may once again slow down demand and there is a lot of uncertainty on which way home prices may go.

On the other hand, rents continue to rise in almost every market and over the last two years have increased by around 20% according to Rentals.ca. The housing shortage in many Canadian markets may put continued upward pressure on both rent and home valuations going forward. Investors will have to contend with higher financing costs and a lot of short-term uncertainty around which way home prices will go, but things may be looking up if you are thinking of entering the rental property market. Your financing costs, home valuations and rent trends/prices in your targeted market all need to go into your calculations.

Registered Education Saving Plan (RESP)

What are some potential risks or challenges associated with real estate investments?

Don’t be swayed by those reality TV programs that show how you can't miss at buying a fixer-upper and after a few renos, start raking in “easy money”. It can be done for sure, but there is a lot more that goes into evaluating an investment property than simply comparing the monthly rent cheque to the mortgage payment.

For example, property taxes can rise 5% (or more) annually in many municipalities and repairs and maintenance costs can be hard to estimate. If you have had any work done on your house lately, you already know the cost for both labour and materials has gone through the roof!

Managing rental homes is time consuming and you will also have to consider whether you have the skills to find great tenants, collect the rent, and take care of the maintenance. Relying on the convenience of a property management company is an option, but how do you find a reliable one and how much of your profits will that drain away?

Although the demand for rental housing is super strong in most markets, major repairs or delays with finding/vetting tenants could leave you with no rental income for a few months and some hefty bills to cover. Investing in homes is no guarantee of a steady stream of payments.

It is more important than ever to crunch the numbers and ensure your projected cash flow remains positive because those enviable gains in equity of the past few years may not be there to bail you out. You should hedge that bet by remaining cashflow positive every month and taking a long-term view when it comes to cashing in on any potential increase in the value of the property.

Registered Education Saving Plan (RESP)

Can I participate in real estate investment without owning property?

A lot of money and time goes into owning a rental property and that represents a significant barrier to entry. You will need a 20% down payment to get a mortgage if you don't plan on living in the property and that that may be more than you can get (or want to risk), especially if you are leveraging the value in your current home to source the funds. Being a landlord can also be time consuming and stressful. Fortunately, if you would like to dabble without going “all-in” there are few non-ownership real estate investment options.

What is a Real Estate Investment Trust (REIT) and what are the benefits?

A REIT is a company that owns and/or manages a portfolio of properties that could include commercial buildings, apartments, shopping centers, residential homes, offices, and other types of real estate. The diversity and mix of properties vary from one REIT to the next and there are currently around 35 REITS trading on the TSX. A REIT can be held in your RRSP or TFSA.

REITS are unlike stocks in that investors are usually paid a monthly distribution (dividend) based on the performance of the properties. There is also the chance for gains through appreciation of the share price. REITs are a convenient option to add more diversity to your stock portfolio. Unlike owning a property, REITs are completely liquid and can be easily bought and sold — you could start investing with a few shares purchased through an online brokerage.

The disadvantages are that you may not be able to find a REIT with a mix of properties you like, and your investment is only going to be as good as the REIT management. There are also Exchange-Traded Funds (ETFs) that hold a pool of REITs to help diversify exposure and lower the risk compared to owning an individual REIT.

How does real estate crowdfunding work?

Fractional property ownership or crowd-funded ownership is a relatively new real estate investment strategy where investors join together to collectively own a particular real estate asset — it could be an apartment building, commercial property, or even a residential home. It is different from a REIT in that you invest and own a share of a specific asset.

The property is sold in individual units and there are terms and conditions specific to each offer. Investors gain from sharing of rental revenues and the eventual sale of the property. Although you can get started with a very small investment, the maximum investment may also be capped, so you may have to find several opportunities.

The disadvantage of fractional ownership is that individual real estate assets can fluctuate greatly in value, and you can only sell and cash out your shares after the date prescribed in the ownership offer – they are not liquid.

Are there other alternatives to owning property for real estate investment in Canada?

Another alternative real estate investment which can offer exceptionally good returns is "playing the role of banker" and lending money to a private party, usually with your loan backed by the value of real estate. There are various reasons why some people have trouble getting a real estate loan or mortgage from a bank — they may be self employed or newly employed for example. Others may need some kind of bridge financing to tide them over for a few months and the situation doesn’t fit the bank’s rigid requirements. They will pay a premium to any lenders willing to help them out.

While due diligence is extremely important and you have to do your homework (and get expert advice), these types of opportunities do allow you to manage risk to a large degree and offer exceptional returns, especially as mortgage rates climb higher and banks get increasingly strict with their lending requirements. It’s a flexible real estate investment option that allows you to select opportunities that match your investing amount and timeline. For example, you may be able to find a short-term deal for $20,000 if that is what you need to match your investing situation.

Which of the above options will provide the best real estate investment depends completely on your situation. Property investment in Canada can be done a number of different ways and your first task should be to get some real estate investment education and grow your knowledge.

Jul 01, 2023

Enriched Academy Staff

Are you an optimist when it comes to your financial outlook? Soaring prices, rising interest rates, and a possible recession are making it increasingly difficult to keep a positive money mindset and believe that things will get better for the remainder of 2023 and beyond.

In addition to economic conditions, common money myths can also affect your mindset by perpetuating misinformation or misconceptions about personal finance, investment strategies, and wealth management techniques. Negative money myths can significantly inhibit personal financial growth and wealth building by creating limiting beliefs and behaviors.

On the other end of the money mindset spectrum is the belief in financial abundance and that there is enough money and financial resources available to achieve your goals and live a comfortable life. People with this view tend to focus on solutions rather than problems and see opportunities for growth and abundance in every situation.

The problem is that circumstantial factors weigh heavily on our money mindset. If you were raised in an environment of scarcity or when times are tough like they are now, you can easily feel defeated when it comes to improving your financial situation. Overcoming this mindset is a huge roadblock and the starting point for improving your financial life.

Registered Education Saving Plan (RESP)

What are money myths?

Money myths often perpetuate a scarcity mindset, where individuals believe that money is limited and hard to come by. This mindset can lead to fear, anxiety, and an inability to see and seize opportunities for financial growth. Believing in these myths can lead to poor financial decisions, such as relying solely on how to save money without considering investing, neglecting to diversify one's income streams, or falling prey to get-rich-quick schemes. Lack of financial literacy can further enhance the negative impact of financial myths.

To overcome these limitations, it is crucial to challenge money myths, seek financial education, and develop a mindset that focuses on abundance, growth, and informed decision-making. By adopting a realistic and empowered perspective towards money, individuals can overcome these inhibiting factors and create a foundation for personal financial growth and wealth building.

What are some common money myths that people believe?

  • You need money to make money. It’s true that $10,000 invested the exact same way as $1000 will give you proportionally larger returns, but the power of compound investment returns is very strong and often overlooked. The sooner you get started investing with whatever spare funds you have, the closer you will be to achieving your long-term financial goals.
  • Money is too complicated. Managing money is actually a lot less complicated than many other day-to-day tasks. We spend hours learning how to use the hundreds of functions in a mobile phone or researching online to find the perfect hotel for our vacation, but we don’t prioritize learning about money management.
  • Investing is too risky. Investing can definitely be risky, but that risk can be managed according to your needs and risk tolerance. Investing all your money in cryptocurrency is risky, investing in an S&P 500 index fund and holding it for 5 years.... not so much. You need to learn to evaluate and manage risk, not avoid it altogether.
  • It’s someone else’s job to figure my finances out for me. You could rely 100% on a financial advisor, but it’s expensive and a leap of faith that many of us are not comfortable with, despite their fiduciary duty to serve in your best interest. Even if you do rely heavily on professional advice, teaching yourself the basics of personal finance will help you to make informed decisions and give you much better peace of mind.
  • It’s too late for me. A lot of Canadians are way behind on their retirement planning, and this is an often-heard money problem. The reality is that it is never is too late to get good with money. Trying to pick stocks and get rich quick when you are in your late 50’s could easily put you in trouble, but investing in an index ETF will usually give a nice boost to your retirement fund, even if you are only 5 or 10 years from retirement.
Registered Education Saving Plan (RESP)

How can money myths impact our financial decisions and mindset?

Money myths can reinforce the fear of failure and the belief that taking financial risks is inherently dangerous. This fear can discourage individuals from pursuing entrepreneurial ventures, investing in stocks or real estate, or even negotiating for better salaries or promotions. By avoiding risks, individuals may miss out on the best ways to manage money.

Money myths often instill limiting beliefs about wealth and success. For example, the belief that "rich people are greedy" or "money corrupts" can create subconscious resistance to wealth accumulation. These beliefs can lead to self-sabotaging behaviors, such as avoiding financial success or subconsciously sabotaging efforts to make money.

Money myths often promote unrealistic expectations and comparisons with others' financial situations. Believing that everyone else is financially better off can lead to discontentment and poor financial choices, such as overspending or accumulating debt to maintain a certain lifestyle. These comparisons can also contribute to feelings of inadequacy and a sense of being trapped in a cycle of financial struggle.

How can I change my money mindset and overcome money myths?

A positive financial mindset is a powerful tool that can shape our financial reality, allowing us to navigate challenges, seize opportunities, and build a secure and prosperous future. It involves developing money beliefs that promotes abundance, wise financial decision-making, and a healthy relationship with money. To create a positive financial mindset, it's essential to examine and reshape your beliefs about money. Start by identifying any negative thoughts or limiting beliefs you hold regarding money, such as "money is scarce" or "rich people are greedy." Challenge these beliefs and replace them with positive affirmations that align with abundance and prosperity.

  • Embrace gratitude and abundance. Practicing gratitude for your current financial situation is a powerful way to shift your mindset. Take time each day to reflect on the things money has provided for you, such as shelter, food, and opportunities.  Additionally, cultivate an abundance mindset by focusing on opportunities rather than limitations. Recognize that the world is full of possibilities, and wealth and success are not limited resources.
  • Set clear financial goals. Establishing clear and specific financial goals is crucial for developing a wealth mindset. Whether it's saving for a down payment on a house, starting a business, or paying off debt, clearly defined goals give you a sense of purpose and direction. Break down your goals into smaller milestones and celebrate each achievement along the way. This process will motivate and inspire you to continue making progress.
  • Focus on solutions instead of problems when it comes to your finances. When faced with a financial challenge, look for ways to overcome it rather than dwell on not being able to get what you want. Reframe negative thoughts and beliefs about money into positive ones. Instead of thinking "I can't afford it," try thinking "How can I afford it?"
  • Educate yourself and seek knowledge. Knowledge is power when it comes to financial matters. Take the time to educate yourself the facts about money management, investing, budgeting, and other relevant topics. By becoming financially literate, you'll gain confidence in making informed decisions and seizing opportunities that align with your goals. The more you know, the more empowered you will feel to take control of your finances.
  • Practice Mindful Spending and Saving. Before making any purchase, consider if it's a need or a want, and if it will truly bring long-term satisfaction. Implement money saving tips and focus on ways to save money that reflect your financial goals. Don’t neglect tracking your expenses. Prioritize saving money over spending money and automate your saving process as much as possible. By being mindful of your financial choices and having strategies to save money in place, you will enhance your sense of financial well-being.
  • Surround yourself with people who have a positive attitude towards money and who have achieved financial success — a relative? co-worker? celebrity? YouTuber?
  • Be open to new opportunities and ways to make more money. Keep your eyes open for ways to increase your income.
Registered Education Saving Plan (RESP)

Can changing my money mindset lead to greater financial success?

It’s easy to focus too much on the facts of personal finance and overlook the importance of your mindset. For example, self-directed investing requires you to learn about risk management, diversification, fees and ROI, and many other factors. However, if you can’t overcome your initial mindset that investing is too risky, you will never invest in the stock market. Changing that mindset is a critical first step, and it can be pretty hard to do!

Creating a positive financial mindset is a transformative journey that requires dedication, self-awareness, and consistent effort. Changing your mindset is not an overnight process, but a lifelong commitment. Stay persistent, surround yourself with positive influences, and celebrate each step forward. With a positive financial mindset as your foundation, you can navigate challenges, embrace opportunities, and become financially free.

Jun 15, 2023

Enriched Academy Staff

As we near the end of another school year, your kids are another step closer to graduation. For many, that will lead to some form of post-secondary education and whether it is a far-away university campus or a nearby vocational school, it isn’t likely to be cheap. Education is usually a wise investment, and it would be nice to be able to help your kids out with the cost.... but what is the best way to go about saving for your child’s education?

What are the benefits of opening a RESP?

Worried parents can take some relief in that Canada’s Registered Education Savings Plan (RESP) is extremely helpful. It offers annual grants of 20% of your annual contributions for 14 years and allows you to invest all the funds in the account, so you can grow that education nest egg... at least until your kids head off to further their education. Just like the RRSP and TFSA, it is a registered account so there are rules and regulations on contributions and withdrawals, but they aren’t that onerous and are pretty easy to abide by.

Are there any contribution limits for a RESP?

There is no RESP maximum contribution per year, but there is a RESP lifetime contribution limit of $50,000 per child (beneficiary). It’s also important to note that unlike an RRSP, there is no RESP tax deduction. The primary benefit is that regardless of income, annual contributions up to $2500 receive a 20% Canada Education Savings Grant (CESG) from the federal government. The government deposits these CESG grants into your RESP every year so you can invest it along with the other funds.  You may also qualify for additional education savings programs depending on your household income or province of residence.

The CESG age limit is 18 and there is a lifetime maximum of $7200. It’s best to start early if you want to max out the benefits, although there is a carry forward rule. This allows you to catch up on unused grant room of up to $1,000 per year, for previous years in which you were eligible but did not receive the full grant. There are no official RESP deadlines for annual contributions, but CESG grants are awarded on a calendar basis, so you need to get the money in by December 31st each year to take full advantage of that offer.

What type of education can I use my RESP for?

It isn’t just for university, eligible post-secondary educational institutions also include colleges, trade schools, vocational schools, and other educational institutions that are recognized by the Canadian government.

RESP money can be used to support apprenticeship programs approved by the provincial or territorial apprenticeship authority. These programs typically involve a combination of on-the-job training and classroom instruction. RESP funds can also be used for eligible distance education programs offered by recognized educational institutions. These programs allow students to study remotely without being physically present on campus. In some cases, RESP funds can even be used for educational programs offered outside of Canada. However, specific requirements and restrictions may apply, and it's important to consult with your RESP provider and the Canada Revenue Agency (CRA) to ensure eligibility.

Registered Education Saving Plan (RESP)

How to save for a RESP

Learning the ins and outs of how the program works is a critical first step, but it won’t help you with the $2500 required (per child) to maximize your grant opportunities. Start by determining how much you would like to save for the child's education. Consider factors such as the estimated cost of tuition, books, accommodation, and other expenses. Tuition fees for Canadian universities now runs $5000 to $10,000 per year. You could be looking at $40,000 and your child would still needs books and supplies, not to mention food and a place to live if they are heading out of town to pursue that education.

As we mentioned, there are provisions to catch up with your RESP contributions and claim the associated grants if you fail to max them out in a given year. However, playing catch up is hard and it will also shorten your investment timeframe.

The key is to contribute regularly. Many providers offer automatic contribution plans, allowing you to set up automatic transfers from your bank account to the RESP. One source of funds is your monthly CCB payment — taking $100 monthly from that would get you $250 in annual CESG grants. Keep track of your RESP's performance and make adjustments to your investment strategy periodically to ensure it aligns with your goals and risk tolerance. Stay updated on any changes to RESP rules, government grants, or regulations that may impact your savings plan.

RESP Investment?

Just like an RRSP or TFSA, the funds in a RESP can be invested and could grow substantially by the time your kids head off to school. Money management options may include individual stocks, ETFs, mutual funds, GICs, cash, bonds, etc.  Consider your risk tolerance, time horizon, and financial goals when doing your RESP investment planning. RESP investments can range from conservative options with lower potential returns to more aggressive options with higher potential returns but also higher risk. RESP providers offer a range of investment options, although it is limited with some providers.

Consider the time until the beneficiary will need the funds for their education. A longer time horizon allows for a potentially higher-risk investment strategy, as there is more time to recover from market downturns. As the beneficiary approaches the start of their post-secondary education, it may be prudent to shift to more conservative investments to protect the principal.

Make sure to also take into account the fees and expenses associated with the investment options offered by your RESP provider. These costs can seriously impact your overall returns, so it's important to understand and compare the investment options and fees across providers. It is possible to change providers along the way, so if you find you are unhappy with your initial decision or see a better option it isn’t a big problem — many providers will help you facilitate the swap.

If you are not into self-directed financial planning, an investments advisor could also be consulted to help you with your RESP.

Are there any restrictions on using RESP funds?

Eligible expenses for a RESP are typically related to a beneficiary's post-secondary education. Here are some common expenses:

Tuition fees: The cost of tuition for a post-secondary educational institution, including universities, colleges, trade schools, and vocational schools.

Books and educational materials: Expenses for textbooks, workbooks, study guides, and other educational materials required for the beneficiary's program of study.

Accommodation and living expenses: If the beneficiary is enrolled as a full-time student and living away from home, a portion of their living expenses, such as rent, utilities, and groceries, may be considered eligible.

Transportation costs: Expenses for commuting between the beneficiary's residence and the educational institution, such as public transportation fares, gasoline, parking fees, and vehicle maintenance.

Computer and related equipment: The cost of purchasing a computer, laptop, tablet, or other electronic devices that are required for the beneficiary's education.

Special needs services: Expenses related to special needs services that support the beneficiary's education, such as tutoring, specialized educational programs, and equipment for students with disabilities.

How do I withdraw funds from a RESP and how are RESPs taxed?

RESP withdrawal rules basically divide your money into two amounts. Post-secondary education amounts (PSE) are made up of the money contributed and can be withdrawn by the subscriber (mom & dad) and sent to your kids (the beneficiary) anytime for any reason with no tax implications. Any funds arising from government grants or investment income are taxable to the beneficiary and are paid out in the form of an Education Assistance Payment (EAP). Most plans let you control the amount and timing of EAP, but your RESP provider may have some limitations. Although there is no direct RESP tax benefit, students normally have a low income with a low marginal tax rate and may also qualify for student tax credits, so the tax burden is often minimal.

What happens to the money if you don't use a RESP for school?

The RESP age limit is 35, so you don’t have to move quickly. However, the funds are a mixture of contributions, grants and investment growth and there are tax implications when withdrawn depending on their source. Grants like the CESG must be repaid. There are provisions to transfer up to $50,000 of RESP contributions to an RRSP if you have the contribution room. You may simply withdraw your contributions tax-free, but any investment earnings withdrawn will be taxed at your marginal rate plus a 20% penalty. Your RESP provider may also tack on additional fees to close out an RESP.

An investment in education or job training usually turns out to be wise decision and pays a lifetime of great returns, and a RESP is a great tool to make that happen. By understanding the key aspects of a RESP and following the right strategies, you can make the most of this savings plan. The earlier you get going with one the better it will work out, and the more relief you will feel with every passing school year.

Jun 01, 2023

Enriched Academy Staff

There are lots of reasons people fall into debt but only one way out — and it’s going to require a combination of planning, discipline, and persistence. Here are the basic steps for effective debt management to help you get started.

Start by gathering information about all of your debts — student loans, credit cards, lines of credit, car loans, overdue bills — everything. Make a list of all the debts with the details of the amounts owed, interest rate, and minimum monthly payments. This will help you set goals, create a timeline, and prioritize your repayments.

Creating a Debt Management Plan

Your first goal is to make sure everyone gets paid the minimum amount required to avoid your debts going into arrears. Overdue bills and missed payments are going to play havoc on your credit score and it can take a lot of time and effort to rebuild. Although paying the minimum on a credit card balance will keep your credit score intact, it won’t get you out of debt. A $1000 balance will take well over 10 years to payback and incur another $1000 in interest if you only pay the minimum 3% payment.


The next step is to figure out how much more you can allocate from your current income for debt repayment. At this point, a lot of people will quickly deduce that more income is the solution, and immediately go out and get a second job to make extra money to pay off the debt. While more money will definitely help you reduce debt and is one option, it isn’t the first step. In fact, for most people, the more you make, the more you spend! Working more will also cause a number of other issues — less free time or time with friends and family, more stress, higher income taxes and possibly reduced government benefits like CCB.

The most important step is to create a realistic budget. Reducing the expense side of your monthly budget is going to free money to pay off debt much faster than pumping up your income on the top line. You need to identify areas where you can reduce expenses and channel those savings to your debt repayment fund. It’s critical to start accurately tracking your expenses and get the actual data on your spending, not just a guesstimate based on your feeling.

You also have to use a zero-based approach. What you currently spend shouldn’t be a basis for future budgeting. Just because you spent $500/ month at bars and restaurants doesn’t mean that cutting back to $250 is going to solve your debt problem. If you spent only $100/monthly at the pub and channeled another $150 to your credit card payment, your interest savings would pile up quickly and you would eliminate the balance many months, if not years faster. 

Whether you use the latest budgeting app, a Google spreadsheet, or a pen and paper to analyze and track expenses doesn’t matter. You can eliminate what you can’t see, and expenses are no exception. Even if you think you have a pretty good handle on your spending, go through the exercise and you may be surprised.


Debt reduction strategies               

Once you go through your expenses and identify a realistic number you need to get by, it’s time to commit and lock away your debt repayment amount from each paycheque. One way to stay on track is to set up another account and just have a portion of your paycheque deposited straight into it, then you can just go in that account and dole out the funds according to your repayment plan.

When it comes to who to pay first, there are two commonly used strategies for prioritizing debts: the debt avalanche method and the debt snowball method. With the avalanche method, you focus on paying off the debt with the highest interest rate first while making minimum payments on other debts. The snowball method involves paying off the smallest debts first, regardless of interest rates, and then moving on to larger debts.

From a financial perspective, the avalanche method is the best way to pay off debt, especially if the interest rate differential is large. It makes no sense to pay off a small amount on a home equity loan at 6% if you have credit card debt at 20%. However, if you are paying credit card bills with similar interest rates then the snowball method could give you motivation and momentum. However, if you write a clear debt management plan and use that to track your progress towards goals and gain motivation, then the snowball method has little to offer.

While you're working to pay off debt, it's critical to avoid adding further debt to the pile. If your willpower is waning, put a temporary hold on your credit cards and focus on making cash or debit card purchases within your budget. It isn’t a problem to continue using your credit card as cash is pretty inconvenient for some transactions, just make sure you go into your online banking and pay any new credit card charges right away.

Tricks to paying off credit cards

For most if us, there isn’t anything more expensive than credit card debt and this is where you should focus. Most cards charge around 20% and even the so-called “low interest” cards are usually around 10%. This is still higher than most car loans, student loans or lines of credit. The other problem with credit cards is the ridiculously low minimum payment. The fact is that making the minimum payment is almost futile and will keep you indebted for many years. You need to make the minimum payment plus and additional amount, and it is surprising how much of a difference that small additional amount can make. This calculator is a great tool for analyzing credit card repayment options and you can easily see for yourself how paying the minimum plus $50 on a $1000 balance will cut the repayment period from 131 months to just 18 months.

If you have been making payments and your credit rating is not too bad, you may be eligible for a credit card balance transfer offer with a promotional 0% interest rate for a specific period. This allows you to consolidate your balance on one card and pay off credit card debt credit without accumulating additional interest. The key issue is to make sure you can completely eliminate the debt before the 0% period expires, otherwise you will face penalties and other charges that are likely to put you in an even worse situation than before! Makes sure you have a realistic plan and are disciplined before you sign up for any balance transfer options or credit card consolidation loans. They are one of the best ways to manage credit card debt as they defer the interest, but you need to stay very disciplined.


If you're struggling to meet your debt obligations, consider contacting your creditors to discuss potential options. They may be willing to negotiate lower interest rates, a reduced payment plan, or even a settlement amount. Exploring these options can help you make your debt more manageable. Even a slight reduction in interest can save you money over time and accelerate your debt repayment. Alternatively, you can explore debt consolidation loans from reputable financial institutions or some form of debt counseling.

While it may seem counterintuitive to be paying off debt and saving money, having an emergency fund will help you to stay on target. Make sure to set aside a small amount each month until you have enough to cover unexpected expenses. This prevents you from relying on credit cards or loans when emergencies arise, helping you avoid accumulating more debt.

Paying off debt is a long-term commitment that requires discipline — there is no quick way out. Being aware of the true cost of your debt and visually tracking your progress are great motivators. Try making a spreadsheet or some form of debt payoff chart to keep you committed. Once you get started and see some progress, your mindset will begin to shift, and a huge weight will start to lift. Becoming debt-free or at least in a position where debt stress doesn’t consume your life will do as much for your mental health as it will for your financial health.

May 16, 2023

Enriched Academy Staff

Almost everyone in Canada has heard of the Tax-Free Savings Account (TFSA), but if you already have a savings account or maybe you are younger and don’t have a lot of money, is there any reason to get one?

The short answer is yes — and the sooner the better!

You may believe a TFSA is something to start when you get older or mistakenly think that it is something for locking away long-term retirement savings. The fact is that TFSAs are actually quite flexible when it comes to deposits and withdrawals, they can save you a lot on your taxes, and you can use one to save for a house or a car, or yes, even your retirement.

What is a TFSA and how does it work?

A TFSA isn’t anything like your regular bank account. The main differences are that it is registered with the government and the money in the account doesn’t have to be held in cash. Registered accounts like the TFSA (and the RRSP) track the funds going in and out for tax purposes and although you can hold cash in them, you can also hold investments like stocks, mutual funds, ETFs and many others.

Although a TFSA is unlike your regular account and isn’t for daily banking, you can open a TFSA at most banks and credit unions as well as online brokerages. You have to be at least 18 years old to get one, but there is no fee and no minimum amount required to get started.

What are the benefits of a TFSA?

The main reason to get a TFSA as the name implies, is to save on your taxes. The catch is that if you don’t invest the money in your TFSA, you won’t be saving much. Simply putting money in your TFSA and then letting it sit there in cash won’t do anything for you. This is very different from an RRSP which delivers an immediate reduction in your income tax. However, down the road when you take money out of your RRSP you have to pay the tax, but you can take all the money you want out of your TFSA at anytime and pay absolutely no tax.

So, the secret is to make as much money as possible by investing with your TFSA because all that money will be tax free. If you buy a share of Google for $100 and sell it 5 years down the road for $500, you have $400 tax free profit in your jeans. If you bought those Google shares outside of your TFSA in a cash trading account, you would be on the hook for a pretty big chunk of tax — 50% of that $400 gain would be fully taxable!

How much should I contribute to my TFSA?

The best part of a TFSA is that everyone gets to put in the same amount regardless of how much money you earn and unlike an RRSP, you don’t need to be working and making an income to contribute. In 2023, you can put up to $6500 into your RRSP. But if you missed a couple of years and now suddenly find yourself flush with cash, you can use the carried over amounts from each year since you turned 18. In fact, if you are now 25 and have never had a TFSA, you can drop in over $45,000 since you have 7 years of contributions carried over.

What is the minimum I can put in my TFSA?

Chances are you won’t be able to max out your TFSA contributions, especially when you are young. Only 10% of Canadians of all ages actually max out their TFSA. However, this doesn’t mean that a TFSA is just for rich people. If you could only come up with $100 monthly for your TFSA from the time you were 18 until you retired at 65 and received historical average stock market returns of 7%, you would have $438,643. If you upped the monthly amount to $225 you would retire a millionaire!

Of course, 47 years is a long time and things will cost a lot more, but don’t underestimate the power of compounded investment returns. There are a number of self-directed investing options (like broad-based index funds or all-in-one ETFs) you can use to invest your TFSAs that don’t require a lot of time or investing knowledge to use. Of course, some funds will do better than others, but the real secret is to get started early! Unfortunately, only around 5% of TFSA are held by Canadians under 25.

How do I withdraw money from my TFSA?

If you don’t want to wait until your 65 to start spending those TFSA investment gains, you don’t have to. In fact, you can take as much money as you want out of your TFSA anytime you want. You won’t have to pay any tax and the only downside is that you may have to wait until the following year if you want to put that money back into your TFSA — you cannot re-contribute the amount of the withdrawal until the following calendar year, unless you have available contribution room. If you do overcontribute to your TFSA you need to correct the mistake as soon as possible as you are subject to a penalty tax of 1% per month on the excess amount until it is withdrawn. It's important to keep track of your contribution room to avoid over-contributing.

What are the disadvantages of a TFSA?

You may be thinking a TFSA is the greatest thing since sliced bread and for most Canadians, it is! However, there are situations where another registered account may be a more optimal choice. For example, if your income is high and you are in a high tax bracket, contributing to an RRSP may be a better choice if you don’t have the money to max out both. Another case may be if you are saving for a home, the new First Home Savings Account (FHSA) offers the advantages of a tax reduction like the RRSP and the tax-free investment growth of a TFSA and is a great choice if you are saving up for your first home.

One additional caveat to be aware of with a TFSA is that there are limits on how actively you can trade the investments held in the account. For example, day trading is not allowed, and it could cause the CRA to determine that the income in your TFSA is from carrying on a business and is taxable. Rules and tax interpretations for day trading with regard to TFSAs are different than for RRSPs and the CRA uses a number of factors to make a determination.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're on the right track. Make sure the money is invested and confirm your annual return (net of fees) to ensure your investments are performing up to expectations.

If you haven't yet opened a TFSA, get out there and open one today! A few years from now you will be happy you did. If you're still somewhat confused, scared, excited, nervous, and looking for some support, we have a one-on-one coaching program that clients say is a financial game-changer. You can schedule a free financial assessment call HERE to get some feedback on how to improve your finances and the programs we have available, including one-on-one coaching.

May 01, 2023

Enriched Academy Staff

Saving up the down payment for your first home in Canada can be a daunting task. At the very minimum, you are going to need 5% and even in a comparatively inexpensive city like Edmonton with an average price of $400K, you are looking at $20,000. There are lots of tips and tricks on how to save for your first house, but this article isn’t about personal budgeting, it’s about where to park your savings along the way to purchasing your new home.

The good news is there are several home buyer incentives and a few savings options when saving for your first house! You could put your money under the mattress, in a savings account at your local bank, or take advantage of one of the government’s “registered” savings accounts. These include the Registered Retirement Savings Plan (RRSP), the Tax-Free Savings Account (TFSA), and the new kid on the block, the First Home Savings Account (FHSA). The main advantage of these three accounts is the option to invest and grow your savings while cashing in on some serious tax advantages, allowing you to reach your home ownership goal even faster. It is also possible to use a combination of these accounts, but that may require a lot more income than you have at your disposal.


My retirement plan has a home buying option?

RRSPs are quite well known for punishing early withdrawals — ideally you would keep your money in your RRSP account until you retire and can then draw out the money you need at a nice, low tax rate during your retirement years. However, the Home Buyers’ Plan (HBP) is an exception to the rule. Under this plan, you can withdraw up to $35,000 from your RRSP to buy a home. Although you won’t be taxed on that withdrawal and have avoided one caveat, the catch is that you have to begin paying that money back to your RRSP starting a couple of years down the road. If you don’t pay it back on schedule over the next 15 years, the tax man will come calling as that withdrawal becomes fully taxable! It’s a good benefit, but you need to follow the rules and make sure the repayment schedule fits your budget.

To be eligible for the HBP, you must be a first-time home buyer, which means you or your spouse/common-law partner cannot have owned a home in the four years before the withdrawal. You must also have a written agreement to buy or build a qualifying home. If you're buying a home with your spouse or common-law partner, you can both withdraw up to $35,000 for a total of $70,000.

The home you purchase, or build must be a qualifying home, which includes most types of housing, including single-family homes, semi-detached homes, townhouses, condos, and mobile homes. It must also be located in Canada and must be used as your principal place of residence within one year of buying or building it.

In many cases, using your RRSP for a down payment under the Home Buyers' Plan is a good option. However, it's important to understand the rules and requirements of the program before making a withdrawal from your RRSP.


How can I use a TFSA to buy a home?

In case you missed the memo, Canadians 18 and over can deposit up to $6500 annually into a TFSA. You contribution limit also caries over from year-to-year, so you already have a sizeable contribution limit if you are in you are in your mid-twenties and have never had a TFSA before! The advantage here is that you could invest your down payment savings and would not be taxed on those returns. As the name says, after growing your portfolio for a few years, you could take those tax-free savings and head right down to the bank and put it down on a new home. The only real consideration is that you will have to wait until next year if you want to put that money back into your TFSA account. However, if you just bought a house, you are likely to be tapped for a couple of years anyways, so it may be a non-issue. A TFSA can also be used by anyone who fails to meet the criteria for a first-time homebuyer as required by the HBP and the FHSA.

Although this all sounds straightforward so far, the issue gets complicated when you start to think about using both an RRSP and TFSA. The most you could take out of your RRSP to buy a home is $35K, so once you hit that mark should you start putting your money into a TFSA? If you are looking to get into a home sooner rather than later, the immediate tax savings from an RRSP will help you reach your down payment goal faster than a TFSA providing they were invested the same way (and you reinvest those RRSP tax savings instead of spending a week in Cancun!). Beyond that, you might want to consult a financial coach for some expert advice and do an in-depth analysis of your TFSA/RRSP contribution strategy.

FHSA: The new kid on the block!

As of April 1, 2023, there is a new contender for your down payment savings dollars — the tax-free First Home Savings Account (FHSA or sometimes TFHSA). This is yet another tax-advantaged account from the federal government that takes a stab at combining the best of both the TFSA and RRSP. Although it is not 100% confirmed and the rules could still be tweaked, it basically allows you to do this:

  • Make a tax-deductible contribution of up to $8000 annually (maximum $40,000 lifetime).
  • Invest the contributions in stocks, various funds, fixed income securities, etc.
  • Withdraw the money anytime within 15 years of opening your FHSA to buy a qualifying home with no need to pay back the funds.
  • Carry forward unused contribution room, and also carry forward tax deductions and apply them in future years (if suspect your income is on the way up).
  • Transfer funds to an RRSP or withdraw the funds anytime and pay the tax if you don’t buy a home with in 15 years.

Just like the HBP, the home must be your principal residence within one year of purchase and be located in Canada.

If you have been piling up your money in an RRSP or TFSA and think the FHSA suits you better, it looks like you will also be able to transfer RRSP and TFSA funds into an FHSA. In the case of a TFSA, you would also get a tax deduction on the amount transferred (subject to the rule of course!). Moreover, at this time it is also possible to take advantage of both the FHSA and the HBP allowing a couple to withdraw up to $150,000 of combined RRSP/FHSA funds for a down payment. There are still a few other details to be worked out, but at this point, the FHSA looks like a great down payment option for first-time home buyers.


Which down payment savings account is right for me?

At Enriched Academy we are all about financial education and helping you make the best decision. We equip you with the knowledge and facts you need, but at the end of the day you are in charge of your financial life. Our goal is to always encourage our clients to make an informed decision. There is no clear winner in the RRSP vs TFSA vs FHSA debate as it depends on a myriad of other factors which only you are privy to.

One thing we do know is that when it comes to investing, procrastination is your biggest enemy and saving for a home is no exception. Buying your first home is increasingly difficult right across Canada as prices and interest rates are at record levels and there appears to be no relief in sight. There are programs in place to make it easier to save for a home, and the sooner you start taking advantage of one, two or all three of these plans the better!

The other factor that comes into play is risk and investment planning. Some people see their down payment savings as untouchable and may limit their holdings to low-risk investments or fixed income securities. On the other hand, some folks may have a shorter buying timeline or be naturally less risk-averse and try to fast track saving for a down payment with a more aggressive investment strategy.

Homebuying in Canada has become increasingly difficult in many regions. Sound financial planning and a good credit score will help you save money and obtain financing, but don’t neglect the tax advantages and investing options of the RRSP, TFSA and FHSA.

Apr 15, 2023

Enriched Academy Staff

If you are looking for ways to better your financial situation, one of the first tasks you should be focusing on is how to build your credit score. Your credit score is a measure of your demonstrated ability to meet your loan commitments and other bills in a timely manner. It is one of the key metrics to measure your financial progress. The higher your score, the more likely a lender is to loan you money and the lower the interest rate you will receive.

What is a good credit score?

In Canada, your credit score is derived from a credit report issued by either TransUnion or Equifax and the credit score range is between 300 and 900. The Canadian average is around 650. Good credit scores over 750 offer a higher chance of loan approval, greater borrowing limits, and lower interest rates and insurance premiums. If you want to get the lowest advertised mortgage rates you are going to need a top-notch credit score. At the other end of the scale, a low credit score of under 600 may make it very difficult to get a mortgage from a Canadian bank.

Potential interest savings from an excellent credit score are huge on big-ticket items. Qualifying for a preferential rate on your mortgage could easily save you tens of thousands of dollars. For example, an excellent credit score could qualify you for a $500,000, 5-year fixed mortgage at 4.5%, while a low credit rating could see you paying near 6%. You would save $20K+ during that 5-year period! Vehicle loans offer even greater variation depending on your credit rating and are another area where a bad credit score will take a lot more money out of your pocket every month.


Understanding how to boost your credit score and building the highest score possible will open doors to many opportunities and save you money. If you are looking for a quick hit to improve your financial literacy around credit scores, take 3 minutes of your time and watch, “How Does Your Credit Score Work” on the Enriched Academy YouTube channel.

How to check your credit score?

The first thing to note is that a credit report and a credit score are not the same. Your credit report is available free online from either credit bureau in Canada (TransUnion or Equifax) and contains a summary of your credit history. Your credit report does not contain your credit score. The credit bureau determines your score using a formula based on a number of credit factors, but they don’t share that formula. Although we can guesstimate, It is impossible to know exactly how much your credit score will change based on the actions you take.

You can check and monitor your actual credit score from a number of different sources — banks, finance companies, credit unions and specialty “credit score providers” can all provide your score. They often include it free if you are an existing customer or if you are willing to register and provide an email address.

Who looks at your credit score?

Credit scores are used for a lot more these days than just whether you qualify for a loan. Insurance companies, potential employers, and landlords are just a few of the people that will often check your credit score and use it for decision making.

Employers may request a background check and a credit check before they will formally offer employment. It is legal in Canada to make this request and it is often a requirement for jobs in government, finance, and many other industries.

Landlords will often ask for a credit check before offering you a lease; even utility providers may review your credit history to decide whether or not you need to pay a security deposit to connect to their services.

If you have your eye on the perks that go with obtaining one of those premium credit cards or are looking to increase the limit on your credit card, obtain a business loan, or secure a personal line of credit, your credit score is going to be a big factor in whether or not you are successful.


What affects your credit score?

There are 5 credit score factors:

1. Payment history (35%)

This is the largest determinant of your score and the most critical factor to manage. You need to always make the minimum payments and avoid anything ever getting to the “collections” stage – this includes parking tickets, mobile phone or other utility bills, student loans, and credit cards.

2. Credit utilization (30%)

If all your credit cards are maxed out, your credit utilization rate is 100% and it indicates to potential creditors that you are overextended. Carrying some credit card debt won’t lower your score (as long as you make the payments each month) but try to keep your balance under 30% of your credit limit at all times.

3. Length of credit history (15%)

It takes time to build your credit score, so get a credit card when you turn 18, use it, and pay it off in full each month. A car loan or student loan will also help greatly with your credit history check — but only if you stay current with the payments!

4. Credit mix (10%)

Using a mix of different types of credit will increase your score. When you are young the only credit available may be a credit card, but as you grow older adding a car loan, student loan, or line of credit to the mix will help improve your score.

5. Credit application frequency (10%)

Applying for a lot of new credit in a short timeframe will negatively affect your score. Potential lenders do what is called a “hard pull” on your credit history when you apply. You want to avoid having a number of hard credit pulls in succession as it may look like you are desperately seeking more credit.

How do I fix my credit score?

Credit scores are continuously evaluated and adjusted. If you have "errored" in the past, rest assured that the damage is not permanent! There are ways to improve your credit score over time if you use credit responsibly, but it is much easier to avoid mistakes that lower your score in the first place.

The time required for your credit “indiscretions” to disappear varies. Unpaid debts may not be legally collectible after a couple of years (depends on the province) but can stay on your credit report for five or more years. If you have filed for bankruptcy, that will stay on your credit report for seven years.

If you have mended your financial ways and have reached out to your creditors and are now paying your bills on time/making the minimum payments, perhaps using a secured (pre-paid) credit card — how long does it take to improve a credit score? The answer varies widely from case to case, but you should see your credit score start to rise between four and eight months down the road — don’t expect to boost your credit score fast!

Check your credit score regularly!

If you are looking for some simple financial advice that pays huge dividends — check your credit score on a regular basis! It will allow you to track fluctuations and overall improvement, detect errors, and prevent identity fraud. Checking your own score does not form part of your credit application history and does not affect your credit score!

Errors and omissions are not uncommon in credit reports, and it is a good idea to confirm the details of your report. Both TransUnion and Equifax have a process to report mistakes and get them corrected. It can take up to six months to resolve disputes with a credit bureau as there may be some time-consuming back and forth with you, the creditor, and the bureau.

Helping you increase your credit score often falls outside the scope of services for financial advisors, even though it is one of the most critical aspects of building wealth. Although it is something you are going to have to manage yourself (or tackle it together with your financial coach), the reality is that it isn’t all that difficult.

There is a lot of confusion and plenty of urban myths when it comes to credit scores, so make sure to do your research and more importantly, pay attention to your credit score. If you see it has gone up or down significantly, you may be able to pinpoint a cause or specific action that caused the change. The worst mistake you can make is to ignore your credit score. Sooner or later you are going to need it and the better it is, the more favourable the outcome is going to be.

Mar 31, 2023

Enriched Academy Staff

Financial wellness is fast becoming the latest buzzword as soaring inflation and interest rates pile the financial pressure on Canadians. There is also a strong connection between mental health and finances and financial stress is taking a heavy toll.... so, what exactly does it mean to be “financially well”?

Financial wellness is described as a state of well-being where an individual or a household has achieved financial stability and is able to meet their current and future financial obligations without undue stress.

Financial wellness is not about being rich, having a certain amount of net worth, or achieving a specific financial goal. Rather, it is about having a sense of security and confidence in your financial capability and being able to manage financial issues, challenges and opportunities as they arise over time.

Financial wellbeing is a function of many different factors. Income is obviously a critical element, but it also depends heavily on how well we are able to manage our money. These tasks include budgeting, managing debt, and investing and planning our retirement. The degree to which we are able to handle these tasks successfully depends on our level of personal financial literacy and our ability to make informed decisions, solve financial problems, and manage financial risk.


What is making Canadians so financially unwell?

Lack of financial literacy: Many Canadians lack the financial knowledge and skills to manage expenses and cashflow, save money, and invest and grow their savings for a secure financial future. This makes it difficult to effectively manage their financial life and can lead to financial instability and plenty of financial stress.

Better financial understanding by itself will not solve your money issues, but the importance of financial literacy cannot be overstated. We have seen over and over again at Enriched Academy how just a little pre-emptive knowledge can make a huge difference. For example, understanding the benefits of a TFSA and starting from a younger age.... or investing in an index fund instead of letting cash pile up for years in an RRSP.

High levels of debt: Canadians struggle with credit literacy and have some of the highest levels of household debt in the world. This debt is primarily driven by mortgage debt, but Canadians also carry significant amounts of credit card debt, car loans, lines of credit (often secured by home equity) and student loan debt. The average non-mortgage debt in 2020 was around $23,000. Rising interest rates have seriously exacerbated this problem and there is spiking demand for credit counseling and debt consolidation services.

Income inequality: Income inequality is a significant issue in Canada, with a widening gap between the richest and poorest Canadians. This can make it more difficult for lower-income Canadians to achieve financial stability and security.

Housing affordability: Housing affordability is a major concern in many Canadian cities, with rising housing costs making it difficult for many Canadians to purchase homes or afford rental housing.

What are the costs of poor financial wellness?
Poor financial wellness can have significant costs, both for individuals and for society as a whole.

  • Stress and anxiety: Financial health and mental health go hand-in hand and financial stress can lead to depression, insomnia, and other health problems.
  • Poor performance in the workplace: Financial stress can also affect an individual's job performance and productivity. It can lead to absenteeism, reduced work quality, and lower job satisfaction.
  • Relationship problems: Financial problems can cause tension and conflict in personal relationships. It can lead to arguments, breakups, and divorce.
  • Increased debt: Poor financial wellness can lead to increased debt, which can be difficult to repay and can lead to financial instability.
  • Higher interest rates: Individuals with poor credit scores may face higher interest rates on loans and credit cards, which can make it more difficult to manage debt and improve their financial situation.
  • Limited opportunities: Poor financial wellness can limit an individual's opportunities for education, career advancement, and other life goals.
  • Economic costs: Poor financial wellness can have broader economic costs, such as reduced economic growth, increased demand for social services, and higher rates of poverty.

Overall, poor financial wellness can have far-reaching consequences for individuals and society, underscoring the importance of promoting education and financial literacy to support individuals in achieving financial stability and well-being.

Workplace financial stress in Canada
Financial stress in the workplace is a significant issue in Canada and according to one survey, Canadians worrying about their finances while on the job could have cost as much as $40 Billion dollars in 2022! Employee productivity, employee performance, and employee mental health are all being negatively impacted by financial stress at home and are common reasons for poor performance at work.

Some employers are starting to recognize the effects of poor financial health in the workplace and are implementing programs to support employee financial wellness. Financial wellness benefits may include free financial literacy courses, counseling, employee benefits such as retirement savings plans, and flexible work arrangements to help employees balance work and personal financial responsibilities.

Overall, workplace financial stress is a growing concern in Canada, and employers and policymakers are increasingly looking for financial stress help to support employees in achieving financial wellness.


How do you measure financial wellness?
Financial wellness can be measured in a number of ways, but it is often a feeling rather than some sort of tangible number. While we can easily take some steps to improve our credit score, improving financial wellness is much more complex.

A financial health assessment is a comprehensive evaluation of an individual's or household's financial situation. It typically involves reviewing income, expenses, debt, savings, investments, insurance coverage, and other financial assets and liabilities. A financial health assessment can help identify areas of strength and weakness and provide insights into how to improve overall financial well-being. Enriched Academy offers a complimentary financial assessment call for anyone looking for advice on how to better their financial situation.

A financial stress tests involve evaluating an individual's or household's ability to withstand financial shocks or unexpected events, such as a job loss or medical emergency. Financial stress tests can help identify potential vulnerabilities in one's financial situation and provide insights into how to build financial resilience.

Financial behavior analysis involves examining an individual's or household's financial behavior and decision-making processes. It can help identify patterns of behavior that may be contributing to financial stress or instability, such as overspending or not saving enough.

Surveys and self-assessments can be used to measure an individual's or household's financial wellness. These tools often include questions about financial knowledge, attitudes, and behaviors, and can provide insights into areas where individuals may need additional education or support.

Overall, measuring financial wellness is a complex process that requires taking into account multiple factors and indicators. Different methods may be appropriate for different individuals or households, depending on their specific financial circumstances and goals.

How can I improve my financial wellness?
There are plenty of options for improving your financial wellness and most of them revolve around bettering your financial literacy skills.

Budgeting: Creating a household or personal budget is an important first step towards achieving financial wellness. A budget can help individuals track their income and expenses, prioritize their spending, and identify areas where they can cut back. Most of us are already have the financial knowledge and skills to create a simple budget — the real issue is having the commitment and making the hard choices that are often required to stick to a budget.

Debt management: Developing a plan to manage debt, such as creating a debt repayment plan or debt consolidation and interest rate reduction can help individuals reduce their debt load and improve their financial stability.

Savings: Building an emergency fund and setting savings goals can help individuals prepare for unexpected expenses and achieve long-term financial goals, such as saving for retirement or a down payment on a home.

Financial literacy education: Improving financial literacy can help individuals make informed financial decisions and better understand the impact of their financial choices. Enriched Academy offers free financial literacy in our weekly webinar series, and we also provide learning resources to support financial literacy for young adults to educational institutions across the country.


Seeking professional help: Working with a financial coach, financial planner or financial advisor can provide individuals with personalized guidance and support in achieving their financial goals.

In addition to individual action, there are also broader solutions that can support financial wellness at the societal level. These may include policies that promote income equality, affordable housing, and access to financial services, as well as employee financial wellness programs and education initiatives.

2023 is shaping up to be another tough year financially for Canadians and financial wellness will continue to be elusive, especially if your financial literacy is lacking. The good news is there are a lot of resources available and many of them are free or low-cost. The largest hurdle for most of us is willpower and maintaining our motivation — achieving financial wellness is not a sprint. It can be a time-consuming, slow process and you may not see the results from your efforts until many months or many years down the road!

Mar 15, 2023

Hal Kenty
(Enriched Academy Financial Coach / CFP)

I was very fortunate that my career eventually evolved into a role that provides a sense of personal satisfaction while allowing me to help others in a very direct way. First, as a financial planner of 21 years with Investors Group and now as a financial coach with Enriched Academy.

I would like to offer my insights on financial advice based on my various career and life experiences over the past seven decades. By the end of this post, I hope you will be better educated and motivated to take the necessary steps to create your own lasting wealth.

If you want help to grow your wealth in Canada, you have a few options when it comes to getting financial advice.

Large Wealth Management Firms

The large wealth management firms and banks dominate the financial advice industry in Canada. They mostly deal in mutual funds but also have capability to help you invest in individual stocks and other types of funds as well. As a CFP with a large investment firm for over twenty years, I became quite familiar with the various services and products these types of wealth advisors can provide.

At the firm I worked at, the expectations were that every client should have a financial plan and retirement plan and that they should be updated on an annual basis. Financial consultants are required to pass the Mutual Fund License Course in order to join the company and are expected to study to become a Certified Financial Planner within three years.

The following list is what you can expect to receive in terms of service from the financial professionals at large wealth management firms:

  • Initial discovery meeting.
  • Annual financial plan and retirement plan updated on an annual basis.
  • Risk tolerance assessment and corresponding investment strategy to achieve your financial goals.
  • Rebalancing of portfolio on a regular basis.
  • Goal setting for debt reduction and growing net worth.
  • Estate needs analysis and planning.
  • Insurance needs analysis.
  • Encouragement to move ALL your investments to their firm.

What are the drawbacks of a financial advisor?

The main drawback of large wealth management firms is their advisors usually get paid on the sale of financial products under their management. This limits the investment advisor’s income options and lowers their motivation to work with lower net worth individuals, particularly those new to investing with smaller portfolios or those who may be struggling with debt. Don’t be surprised if one of their first questions is, how much money do you have to invest? This type of advisor is more suited for higher net worth clients who want a hands-off approach and do not mind paying higher financial advisor fees.


For individuals who want to become financially literate and get more involved with decision making or pursue alternative investing strategies (real estate, private lending etc.) they will find very little emphasis on education and training with the large wealth management firms. In fact, promoting alternate investing is not usually allowed.

Should you get a personal financial advisor?

The main advantage of a personal financial advisor is they provide comprehensive service with very little work required on your behalf.  Although they often rely heavily on mutual funds and you need to be wary of MER and other fees, they are financial experts with whom you can build a long-term, trusting relationship. Clients get a comfortable feeling that they are dealing with a professional and reliable advisor.

How about the financial advisors at my Bank?

The big Canadian Banks can offer a range of wealth management services that is similar to those offered by the large investment firms. They have the added advantage of offering a comprehensive range of banking products and services and conveniently integrating them with their investing services.

What are the drawbacks? Banks are in the business of taking in money and lending it back out for a profit, hence the same issue arises as with wealth management firms.  If you don’t have a lot of money, you may not get a lot of attention and nothing in the way of personalized service. Their financial advisor services are mostly provided for high-net-worth clients and their insurance offerings focus on critical insurance products that are primarily intended to pay off mortgages.


What is a fee-only financial advisor?

Fee-only financial advisors are just as their name implies, they charge a fee for handling the services you request, rather than trying to generate commissions by selling you financial products. Their list of services can be comprehensive — they may act as an investment planner or retirement advisor, or they may provide financial planning, debt consolidation, insurance analysis or many of the other services you can get from a full-service wealth management firm.

How much do fee-only financial advisors charge?

Paying only for the services and financial guidance you need and ask for sounds attractive. You will not have any ongoing management fee or bias toward a specific financial product. However, the quality and price of their financial planning advice may vary greatly. If you google “fee-for-service advisor”, you will see hourly rates from as low as $10/hour to over $200/hour. A typical service will advertise a generic review and recommendation for around $800 and a customized plan for around $1800.

The other issue is how to choose a good financial advisor? If you choose an advisor who isn’t very competent or doesn’t take the time to properly understand your situation or explain things, you may not fully understand the risk or lack confidence in their plan. In addition, every time you have a question or need a follow up, it may end up costing you more.  


Financial advisor vs financial Coach

There are several key reasons that I am passionate about the Enriched Academy financial coaching program. The first is that I am able to offer the same level of professional service to every individual who signs up, regardless of their financial situation. The program costs the same and offers the same high-quality financial advice for high net-worth individuals as it does for those who are in debt or living paycheque to paycheque.

The fees for our one-on-one coaching program are relatively low compared to the annual management fees of a wealth management firm or fee-only financial advisor. The Enriched Academy program also provides lifetime access to a continuously updated training portal with all sorts of analytical tools at no additional cost.

Financial coaching also covers the entire spectrum of your financial situation: cash flow and expense management, budgeting, saving strategies, all types of investing (RRSP, TFSA, income properties, other passive income investments), debt management, building credit, wills, insurance, and retirement planning. If we see a particular need, we can go into more detail on any particular area.


While cost and the scope of services are important differentiators, the biggest benefit of a having a financial coach is that you become financially literate. You will learn to understand and analyze your financial situation and the available options, so you can make highly informed decisions regarding your financial future. This knowledge is very valuable for your confidence and peace of mind, even if you do come to rely on a professional for at least some of your financial advice. Issues like estate planning can be very complex and seeking quality professional advice is never a bad idea.

A financial coach is both educator and advisor. A coach teaches you the facts and provides a structured plan, an impartial opinion, and plenty of motivation and inspiration – but the decisions are ultimately up to you. The focus is on equipping you with the confidence and knowledge to make solid financial decisions.  If you want to be 100% hands-off money management and leave the decision making up to someone else, coaching is not a good fit for you.

Aside from the education and financial guidance, there are also intangible benefits to a money coach. Many people have trouble shifting from the learning phase (like reading this blog) to the action phase (purchasing an index fund online for example). A coach provides the motivation, structure and accountability to boost confidence and helps  turn complacency into actions that build a robust financial plan.

In Summary

Becoming successful financially starts with the knowledge that to earn more, you must learn more. The journey to financial freedom is not a get-rich-quick scheme. As evidence, a high percentage of people who win the lottery end up having less money three years later than what they had before they hit the jackpot. Professional athletes make millions of dollars but are disproportionately likely to end up bankrupt compared to your average citizen.

The missing factor in both cases is poor knowledge and a lack of learned financial responsibility that would have equipped them to protect and grow their wealth. It is precisely this financial knowledge and literacy that Enriched Academy is focused on providing to their clients.

Feb 27, 2023

Matt Dewey 
(Enriched Academy Financial Coach / AFCC)

Investing is something most of us should be a lot more focused on to ensure our money outbattles inflation, grows over time, and provides us plenty of options on how we spend our retirement years. Compound interest and investment returns work wonders — but only if you invest the funds in your Tax-Free Savings Account (TFSA) or your Registered Retirement Savings Plan (RRSP). However, there are many options and considerations when it comes to deciding how to invest your money. Even if you have done your homework and decided to make the switch and graduate from a financial advisor to a self-directed account, the process can still be intimidating.

Considerations for self-managed investments
The first thing that you need to establish before setting up a self-directed investment account are your parameters for risk tolerance, then you can move on to determining your asset allocation. Risk tolerance varies widely from person to person and also depends on your current financial position, your time horizon for needing the money, and how comfortable you are with market volatility.

RRSP and TFSA eligible investments include equities (individual stocks, mutual funds, ETFs) and fixed income assets such as bonds, GICs, cash — even gold and silver. For the purpose of this article, we will focus on equities and fixed-income assets for your asset allocation.

Let’s pretend you have 20 years until retirement, and you are comfortable with market volatility, so you decide on 80% equities and 20% fixed income for your asset allocation.  Great, first big step completed!

Where to invest your money?
You’ve decided on DIY investing and determined your asset allocation, so now it’s time to move on to deciding what you want to invest in. If we stick with the example allocation above — the 80% portion for equities could be split among individual stocks, broad-based exchange-traded funds (ETFs) which tracking a particular country or even the whole world, or focused ETFs which may track a particular aspect of the economy like technology, energy or infrastructure. The 20% portion dedicated to fixed income could be in GICs, cash, corporate bonds, short-term bonds, long-term bonds, or even a blended bond fund.

Before you decide to invest by yourself and make all the decisions, you must be comfortable doing so. If you want to be in control of how your money gets divided up that’s great, but you are likely in the minority of the population. The majority of us do not feel confident in knowing which country, region or industry to invest, or the optimum ratio of short-term bonds to long-term bonds. If you fall into this camp, there are a few simpler alternatives to consider.

All-in-One ETFs
The pressure to decide on which investments will meet your asset allocation may be too much for some and can cause analysis paralysis and a lot of stress. It may even force them to stick with their high-fee mutual funds out of comfort and ease.

Fund providers have noted that this is a very common problem and have started offering all-in-one ETFs that as the name implies, are designed to offer one-stop shopping for maintaining a given asset allocation and risk profile. Percentages differ, but most providers offer five choices ranging from 100% equity on the high end of risk – down to 20% equity and 80% fixed income at the low end of the risk scale.

All you need to do as an investor is decide on the all-in-one ETF that matches your asset allocation and risk tolerance!

How an all-in-one ETF works
The ETF provider’s investment management team monitors the economy and many other factors and makes all the investment decisions to rebalance your portfolio, so you don’t need to! For example, if you decided to invest 80% in equities and 20% fixed income and bought an all-in-one ETF, that 80% would likely be split between the US, Canada and international markets. The 20% fixed income would also be split between corporate bonds, government bonds, treasury bonds — all with varying maturity dates.

The beauty of this is that you are making the decision to buy a product that rebalances to your risk tolerance, but also has the benefit of relying on the ETF provider to move your money to different countries and/or sectors to adapt to changing risks. This is an excellent option for those looking to take control over their investing, but do not have strong enough skills/interest to reallocate their portfolio between regions or industries or adjust the type of bonds you are holding as interest rates change.

For example, an all-in-one ETF could have the equity portion allocated 35% US, 25% Canada, and 20% international one month, but after analyzing the latest data could flip to 25% US, 40% Canada, and 15% international the following month. This doesn’t affect your asset allocation in terms of equity versus fixed income, but you can take comfort knowing that actions are being taken on your behalf to keep everything aligned to your asset allocation and risk profile.

Invest with a Robo-Advisor
Similar to all-in-one ETFs, robo-advisors manage your portfolio based on the risk tolerance you set when you open an account. They adjust the actual investments you hold, but robo investing will always automatically rebalance to your equity versus fixed income percentage.

The main difference here is that you don’t need to make any decisions on an ETF investment strategy – that is done 100% for you by the robo-advisor account. The robo-advisor will also immediately reinvest any new funds you add, so you do not need to devote any ongoing maintenance to this plan — aside from adding more money on a regular basis!

Self-directed vs all-in-on vs robo advisor fees
We’ve outlined 3 investing options:  1) A 100% DIY approach where you pick all your own stocks and ETFs. 2) An all-in-one ETF where you choose one ETF based on your asset allocation. 3) A robo-advisor that manages a portfolio of ETFs continually rebalanced to match your asset allocation.

The DIY option should come with the lowest fees (MER or management expense ratio) as you can buy a balanced portfolio of ETFs for under 0.2% annually. Please note that every online brokerage platform has different fees for buying and selling ETFs and stocks.

The all-in-one option should come with slightly higher fees than 100% DIY since there is a slightly higher charge to rebalance your portfolio – but most seem to fall between 0.2% to 0.3%.

The robo advisor option would be the most expensive as most of their MERs are around 0.15% to 0.25% and they charge an additional management fee of 0.2% to 0.75% to automate the process for you.

Basically, the more you do yourself, the more money you can save. However, it is important that you take an honest assessment of yourself and whether saving a small percentage is worth it for you.

Other Considerations
Time – how many hours per week, day, month are you realistically able to devote to your investing plan? If you are going to go with 100% DIY, this should be established before you begin.

Knowledge and confidence – if you are leaning towards a 100% DIY approach, what factors would you be monitoring for changes to your asset allocation or where your money is invested.

Have a plan – if you are going DIY, come up with an investment plan and write it down before you begin. Set rules for yourself to follow, so you don’t start buying stocks based simply on emotion or other factors. For example “Invest in no more than five individual stocks at any one time totalling less than 15% of my portfolio. There has to be at least 75% in broad-based ETFs and I can only  hold up to 10% in focused ETFs that target particular industries. I will review my plan once a year and adjust as my circumstances change.”

Summary
Self-directed investing is great to help you save money on mutual funds MER fees and keep more of your money in your investments, but you need to make sure you set yourself up for success before you begin. Be honest with yourself about your ability and discipline to set and follow your rules because there will be no one holding your hand. A financial coach can discuss your goals, but your asset allocation will come down to you and your comfort level with the ups and downs of the financial markets.

Feb 07, 2023

Maegen Kramer  
(Enriched Academy Financial Coach / CFP)

It’s RRSP (Registered Retirement Savings Plan) season again as the March 1 contribution deadline is looming. All over your news feed you can see articles popping up about what is an RRSP? how does an RRSP work? and how much to contribute to your RRSP? There is a ton of information floating around and we have outlined a few of the basics below, but you may also want to seek professional financial advice on how to take advantage of the specifics of your situation. Either way, we'd like to provide you with some important factors to consider when deciding if, and how much to contribute to your RRSP this year.   

RRSP Basics

RRSPs are a type of registered account that allow you to invest the funds you deposit into the account. Your contributions are tax deductible and investment earnings in the account can grow tax-sheltered until withdrawal, at which point they are taxed as income. The idea is that you can grow your money through investing and then withdraw the funds during retirement when your income tax rate is lower, thus putting more money into your pocket.

RRSP contributions are limited by a yearly maximum amount depending on your income, although you can carry forward unused amounts to reduce taxable income in future years. There are also limitations and possible penalties on withdrawals and overcontributions to an RRSP. Withdrawals from an RRSP prior to age 71 are subject to income tax and an additional withholding tax. A further caveat is that when you withdraw money from an RRSP, the contribution room you used to deposit that money is gone forever. One exception is the Home Buyers’ Plan, which allows you to borrow up to $35,000 tax-free from your RRSP to buy a house with no penalty — although it is a loan and must be paid back within 15 years to avoid taxes.

Unlike a Tax-Free Savings Account (TFSA) which has a minimum age of 18, there is no minimum age limit to open an RRSP, as long as you have earned income. RRSP accounts must be closed and the funds withdrawn or converted to a Registered Retirement Income Fund (RRIF) at age 71. A RRIF provides a steady stream of income since you must withdraw some of the funds on a regular basis, but you still receive tax-sheltered growth of the remaining funds. The minimum amount that must be withdrawn each year is determined by the holder's age and the value of their RRIF account, and the withdrawals are taxed as income in the year they are received.

Plan for retirement by contributing during peak earning years

Peak earnings are the years in which you earn the largest amount of income. Keep in mind that your income doesn’t just come from your employer’s paycheque or your earnings as a contractor. It’s also made up of things like rental income, some government benefits, and growth on any non-registered investments you may hold. These are the years where you can likely take the largest advantage of all the benefits of an RRSP. Typically, individuals earn less in retirement than in their peak earning years. This allows you to not only benefit from deferring tax, but also from withdrawing retirement savings in a lower tax bracket. 


How do I know my income is peaking?  

No one knows exactly what the future holds. You may get promoted, get a big raise, change careers, go down to part-time work, retire early, purchase an investment property, or a combination of the above. This means, like most things financial planning related, we need to make a best guess based on what we know today. Base your assumptions on what you have planned and what you hope and/or are working towards in the future.

If you are just starting out in the work force, or in a new career it’s likely that these aren’t your peak earning years. If you have a significant amount of experience in your industry, are in the position you expect to remain in until retirement or are focused more on work/life balance than doing anything it takes for that next promotion, you may be at or near your peak earning years. 

What happens if I contribute to my RRSP in lower earning years? 

You will still receive your RRSP contribution tax deduction and defer taxes on both the contribution and growth. However, you could be deferring tax now only to pay a higher tax rate on withdrawals from your retirement fund in the future. You’ll also be using up contribution room that would be more beneficial to use in your peak income earning years due to being in a higher tax bracket at that time.  

My income is low – What retirement savings account is best for me?  

A Tax-Free Savings Account (TFSA) is another retirement fund option. It differs from an RRSP account by offering tax-free growth, meaning you won’t pay taxes when you pull money out of this account at any time. Money withdrawn from a TFSA doesn’t count as income.

The money you contribute to this account has already been taxed and the value of the tax benefits is derived from the growth — making it really important to invest the money according to your risk tolerance and maximize the tax benefits from this account. If you’ve already utilized all your TFSA contribution room and still have additional retirement savings, you may want to consider contributing to your RRSP account and deferring the RRSP tax deduction.  


Why would I defer an RRSP deduction?  

At tax time you can select what to do with the RRSP contributions you’ve made that year – take the deduction in the current tax year or defer the deduction to a future tax year by completing schedule 7. By making the contribution now, you are still benefiting from the tax deferral on both the contribution and growth, but by deferring the deduction you can now wait and use it in year peak income earning years when you are in a higher tax bracket.  

How much can I contribute to my RRSP?

Your contribution room (deduction limit) for this year can be found by logging in to your CRA “My Account” and scrolling to the bottom of the page. Your RRSP contribution room is also indicated on your previous year’s notice of assessment. Each year’s unused contribution room is carried forward indefinitely. It increases by an additional 18% of your prior year's earnings up to an annual maximum ($29,210 for 2022). Your notice of assessment provides a detailed breakdown of the calculations used in your specific situation to arrive at your contribution room each year.  

How to open a RRSP account?  

You can open an RRSP account with a financial services institution or through a self-directed investing platform – they'll provide the option to make a lump sum deposit and/or regular contributions. If you already have an RRSP you can make additional contributions to that account. If you’re not satisfied with your current institution/planner, you can open an RRSP account with a different institution. Keep in mind that the more accounts you have open the harder it is to track/manage.

If you’re opening a new account, it’s typically easiest to transfer any other accounts you have to the new RRSP. You just need to submit a transfer form and they can take care of the transfer for you. Transferring will not impact your contribution room, but it's very important to use the transfer form and not withdraw from your RRSP and then contribute (this will have tax consequences). You’ll also want to consider your RRSP investment options and ensure the institution you select offers those options.  

What are my RRSP investment options?

An RRSP can hold “qualified” investments. Common types of qualified investments include: cash, individual stocks (if they trade on a major domestic or foreign stock exchange), government bonds, corporate bonds, savings bonds, mutual funds, index funds, exchange-traded funds (ETFs), segregated funds, mortgages & mortgage-backed securities, shares in Canadian small businesses, gold & silver.

If you’re currently holding cash in your RRSP you are losing out on the biggest advantage — tax deferred growth. You’re also losing to annual inflation! This can have a devastating impact on your retirement savings over the long term. It’s also important to note that just because an investment qualifies under the RRSP rules doesn’t mean it’s the right investment for your situation. It’s important to assess your risk tolerance and invest accordingly in a well-diversified portfolio that aligns with your goals.  

Pay back debt or add to retirement savings?  

This depends on the type of debt and your interest rate. It typically makes sense to pay down debt before investing because of the high cost of carrying that debt. It’s hard to get ahead by saving when your return on your investments is less than the interest you are paying. For example, if you invest according to your risk tolerance and your average rate of return ranges from 3% to 7%, it doesn’t make sense to pay 19% interest on a credit card balance or 8% on a line of credit.  You would get much further ahead by paying down the debt and ensuring you have a plan, so you don’t just rack it back up again!

Emotion and human behaviour can play a large role in financial decisions. It's important to research the facts, seek professional advice if your situation warrants it (preferably from someone who doesn’t benefit from selling investments), and carefully consider all the factors of your situation to make a decision that works best for you.

Jan 17, 2023

Enriched Academy Staff

Do you feel like you need to be part money coach, banker, accountant and economist just to manage your money?

Should it really be so hard to cover the household bills, make the payments on the car and mortgage, put away a little for the kid’s education, and make some solid investments that will hopefully leave you with enough left over for a reasonably comfortable retirement?

Money management might have seemed a lot easier a couple of years ago – before inflation and interest rates went into overdrive and the stock markets and real estate values nosedived 15%. Most of us were just trying to get by financially in 2022 and being buried by an avalanche of ideas and alternatives on how to survive the financial tsunami got very overwhelming and made it hard to decide on anything!

Why is financial planning so hard?
If you are retirement planning and looking for options on where to invest those hard-earned RRSP contributions, there are around 5000 mutual funds and 1000 ETFs in Canada to choose from! But that's only if you are already up to speed on the differences between mutual funds and ETFs, all-in-one ETFs, MERs and other investment fees, asset allocation, portfolio diversification, how RRSPs (and TFSAs) actually work and their many rules and regs, DIY online investment platforms, robo advisors... and the list goes on!

Unfortunately, personal finance management is likely to get more difficult and more complicated in the future. If you are lucky, some employers are now offering financial wellness programs as part of their benefits. Enriched Academy is also working with schools, colleges and universities in several provinces to ensure that students learn the basics of personal finance before they start their career path. This is great news for your kids and their financial future, but it isn’t going to help you…. unless you want to put your kids in charge of the household budget?


The key to a good financial plan
The biggest issue we see over and over at Enriched Academy is focusing way too much time and effort on making money. What really moves the needle is spending more time looking at where your money goes, and how to manage it better and make it work for you. Earning more money won't solve your financial problems if you continue to spend too much, make poor spending decisions, fail to invest, and have no goals to help guide you and measure your financial progress.

The reality is that most of us are on our own when it comes managing our money. The good news is that mastering the basics is a lot simpler than most of us realize. You can still use a pencil and paper to track your expenses and one of our free weekly webinars can teach you a lot in 60 minutes – from how to improve your credit score to how to pay off student loans. There are plenty of excellent learning resources, tools and apps out there that can save you a ton of time.

8 Easy ideas to start your financial plan
If you are ready to dive into your finances and looking for some basic fixes that don’t require a ton of research or knowhow to get rolling, we have eight suggestions for you.

1. TFSAs & RSSPs.
If you don’t have a TFSA or RRSP, take it off your wish list and get one (or both). There is no excuse for not having these accounts; they are free, can easily be opened online, and there is no minimum deposit amount required with many institutions. RRSPs allow you to defer paying tax until you withdraw the funds — ideally when you are retired, and your tax rate is low. The deadline to contribute to your RRSP and take the deduction on your 2022 income taxes is March 1, 2023.

A TFSA contribution doesn’t offer any immediate tax reduction, but you don't pay any tax when you withdraw that money. Furthermore, any income generated by investing your contributions can be withdrawn without any tax. You can open a TFSA and add money to it at any time throughout the year. The maximum you can contribute does not depend on your income like an RRSP, everyone over the age of 18 can contribute up to $6500 to their TFSA in 2023. If you have never had an RRSP or TFSA, you may find that you have a lot of unused contribution space because the annual limits carry over from year to year.


2. Reduce your expenses.
As proven by a never-ending stream of bankrupt celebrities and athletes who “lost it all”, regardless of how much money you have coming in, not tracking where and how much is going out the door is a recipe for disaster.

Countless articles are churned out every day on how to spend less, and they may yield some good tips that are practical for your situation. Look for easy hacks to supercharge your personal budgeting, like taking advantage of grocery store bargains, re-evaluating your mobile phone or cable services, collecting points or discounts on a credit card (but paying the balance in full every month!), or even clipping coupons!

There is no end to money-saving ideas and hacks, but the first step of your financial plan is to know your costs. You can’t kill what you can’t see, and household expenses are no exception. You need to track all your expenses for at least a month and analyze where your money is going. Don’t forget interest charges, memberships, and any other miscellaneous expenses — you need to include everything!

3. Automate your savings.
Making it invisible is the fastest and easiest way ever when it comes to how to start saving money.  Setting up automatic transfers every payday to a savings account (and then investing it!) will remove the guesswork and excuses from how best to stash your cash. It probably doesn’t need to be said, but money left in your daily chequing account has a way of disappearing!

4. Learn to manage debt.
If you are carrying a balance on your credit card, it's time to map out a realistic payment plan for an all-out attack on credit card debt. The average credit card balance in Canada as of September 2022 was $2121. Paying the minimum on that amount will require 187 months to eliminate the balance and cost you almost $2400 in interest. Paying the minimum plus $50/month will cut it down to 27 months and $518 in interest charges! If you have options to borrow more cheaply through a home equity loan and pay off your card, what are you waiting for? Balance transfer cards are another option as long as you investigate your obligations, create a strict repayment plan, and are disciplined.

5. Do I need a financial advisor?
A "high-interest" savings account is a huge misnomer, even with the recent increase in interest rates. You might get over 3% in a new account for a limited period, but chances are you are currently earning under 2%. The same goes for any cash sitting in your RRSP, TFSA, or your child's RESP. Financial markets were way down in 2022 and have been volatile, but stock have always recovered over the long term.  

You may not need a financial advisor if you have the time and motivation to handle your own financial education. Self-directed investing in financial markets is very do-able and will help keep fees to a minimum. Make sure you understand the risk and how it is mitigated, regardless of who is making your investment decisions and financial plan.

6. Understand your mortgage.
Investigate you mortgage options and how recent interest rates hikes will affect your payment when you renew. The average for a 5-year fixed mortgage in 2018 was around 4.5%, so you are likely looking at 1% to 2% more if you are renewing in 2023. That will add between $200 to $400 monthly to a $400K mortgage.

If you have a variable rate mortgage you are already feeling the pain unless you have a fixed-payment variable rate mortgage? If you do, you could be in for a shock, so make sure to confirm the situation and allow for the higher payment in your financial plan. Some of these mortgages have already reached their trigger rate while others have payments that are barely covering the interest and not making any dent in the principal.

7. How much should I spend on a car?
Cars can easily be bought and sold and there is almost always a cheaper option. Attachment to a car is usually much more emotional than rational, so it's less about giving up a real need and more about feeling good behind the wheel. If you are comparing car alternatives, make sure you factor in gas, insurance, parking, snow tires, oil changes, and any repairs not under warranty in addition to the monthly payment. You should be aiming for around 15% of your take home pay for all your car expenses combined.

8. What is a RESP?
You don’t need a financial advisor to understand that a Registered Education Savings Plan (RESP) is hands down the easiest money you will ever make on an investment. Deposits up to the $2500 annual limit receive a 20% grant from the federal government. If you miss a year, you are allowed to overcontribute to some extent in future years but playing catch-up is hard — just dump in whatever you can every year.

If you are short of cash, try taking a $100/month from your child’s CCB payment. Just like your RRSP and TFSA, you should be looking to invest the funds in your RESP rather than let it sit in cash. You can get a CDIC-guaranteed GIC at around 5% these days if you need a risk-free alternative until you get up to speed and feel comfortable investing in the financial markets.

Choosing a financial planning solution
Although it may seem daunting at times, learning how to manage your money and save and invest for the future will pay huge dividends over the course of your lifetime. Even if you come to rely on a professional for advice (some financial issues are very complex and consulting an expert is a wise move), a little financial education will help you evaluate their recommendations and make sound decisions, as well as provide an extra layer of reassurance and confidence.

2022 has been a financial disaster for many Canadians with high inflation, high interest rates, falling home prices in many markets, and stagnant wages. There is no easy financial fix for 2023 and it could be another tough year, especially if your financial knowhow is lacking.

We hope taking some concrete actions to improve your financial literacy and putting that knowledge to practical use to develop a sound financial plan is top of your resolution’s list. The choice of how you improve your financial literacy is up to you. Our advice is simple — make it a priority in 2023 and just dive-in!

Nov 29, 2022

Enriched Academy Staff

It’s a fact; retirement planning is an overwhelming task that is all too easy to kick down the road! There are so many “ifs” in the planning process it’s hard to know where to start, and just getting by for the near term may be taking up all of your time… and most of your money! However, the result of procrastination when it comes to retirement planning is also a fact —getting started too late will severely restrict your retirement lifestyle and is the number one regret for retirees.

To that end, we have assembled a list of quick tips and busted a few myths to help get you going on the essentials and highlight some additional factors you should be considering.

There is no magic amount for a savings target or a simple rule of thumb to base your retirement plan. There is no shortage of variables to consider when trying to figure out how you are going to fund your retirement dreams: How long will I live? Will my health or my spouse’s health fail? How much will my current assets and investments grow in value? How will inflation impact the next 5,10 or 20 years? There is also no magic number — often quoted numbers like $1,000,000 or formulas like six times your annual salary at age 50 have no basis in fact, especially not your facts.

The truth is there is only YOUR number, which results from making a plan based on the kind of retirement life you envision, carefully calculating how much it might cost, and creating a saving and investing roadmap to fund it. If you must have some kind of number for reference, 2019 Federal Government data showed the average annual spend for a household over 65 (including taxes) was $64,461.

CPP, OAS and other government programs will get me through. The maximum amount of CPP you can currently receive is $1254, but the average CPP payment at age 65 is only around $750. OAS will add another $685. You need to pay the maximum yearly CPP contribution for 39 years in order to max out your benefit! Both CPP and OAS are indexed for inflation but that is a pretty tight budget by any standard and you will definitely need to supplement these benefits with some retirement savings of your own. You can get an estimate of your CPP and OAS payments HERE.

If you don’t yet have a TFSA and/or a RRSP, waiting is costing you a lot more than you think! Maxing out your TFSA every year from age 25 to 65 with an index fund returning 5% (TSX 15-year average) would yield $725,000. Starting at age 40 would leave you with only $287,000. You could try and compensate by taking on riskier investments with higher returns, but your downside risk would also be higher.

Saving as much as possible is the only retirement plan I need. This might work if you are super disciplined, but it does leave a lot to fatalism! Having a written plan will help you track progress and let you know when it’s time to make adjustments. Putting the savings away is only half the battle, you also need a plan to invest and track the growth of your nest egg as well as one for how much money you will need post-retirement.

A financial advisor is the golden ticket. A financial advisor can offer information and advice, but they don’t do miracles. They may also play a limited role (e.g. investing) and their market returns may not be any better than what you could get with a lower cost DIY solution like a robo-advisor or all-in-one ETF. A financial coach or financial planner offers more comprehensive planning and are good choice if you don’t have time or motivation to dig into retirement planning on your own.

The value in my home is going to make up for my lack of saving. It might if house prices remain elevated, but how will you get cash for day-to-day out of your home? You could sell it and rent or downsize, rent a part of it (or do short-term rentals like Airbnb), or get a reverse mortgage. There are options but each one has limitations, so do your homework before you retire and see which one might work for you. For example, there may be no market for Airbnb in your area. A reverse mortgage may make financial sense if you absolutely need to stay in your home, but they are currently running over 8% interest and you can only borrow to 55% of value.

I will spend a lot less after I retire. Another maybe! Some of your big-ticket expenses should be gone (mortgage, kid’s college) but your day-to-day will depend a lot on where you live and how you plan on keeping yourself busy. Your home may be paid for, but it could need major repairs down the road and property taxes go up continuously.

As for entertainment, are you content with the length of the Canadian golf season in your area, or do you hope to spend a couple of the winter months polishing your game down in Arizona? If you have retirement dreams, the first step is to sit down and make a best guess budget at how much they are going to cost and where that money is going to come from every month.

If you are planning to rely on a side hustle, spouse and/or inheritance for some extra cash to get you through retirement, just be aware that those options can be easily derailed. If your spouse dies, your survivor’s pension could be considerably lower. Side hustles are great, but your health may fail or maybe you can’t find something – only 10 to 20% of retirees report doing some sort of work. As for inheritance, your parents may live to be a 100, they may make some bad investments, or they may even get remarried.

I will be free as a bird and can move somewhere cheap. If you currently live in Vancouver or Toronto, you have options. If you currently live in rural Saskatchewan, your choices are definitely more limited! Moving from one place to another within Canada may yield savings, but it may also put you far away from familiar people and places that will keep you happy and content during retirement.

Moving to a “cheaper” country overseas sounds exotic, but it’s a huge commitment if you are thinking permanently, and you have to consider health and safety issues, cultural differences, and the fact you may simply get tired of it! You may need to (medical reasons?) or want to (homesick?) come back at some point. Despite the cold, we think Canada is a great place to be!

High interest rates will let me live safe and secure on the interest and keep my capital intact… I’m set! If you are nearing retirement age and looking for safe and secure investments, being able to buy a GIC at over 5% is a nice option that we haven’t had for a long time. However, there is no guarantee that we are entering a long-term high interest rate period. A quick look at this graph shows the BOC overnight rates was under 2% for 13 years from 2009 until earlier this year! With the average retirement now stretching 20 to 25 years, economic conditions are likely to change, and you need to plan accordingly.

The factors affecting your retirement planning are constantly changing — savings rate, inflation, investment performance, interest rates, real estate values, retirement age, job loss or illness, etc. Some degree of uncertainty will always be there but knowing your options and laying down a roadmap to get you started and stay on track will help alleviate a lot of that uncertainty.

Nov 02, 2022

Enriched Academy Staff

You don’t have to look at the news for very long before you see a headline about the debt problems of the average Canadian – and the numbers can be quite shocking!

• Average consumer (non-mortgage) debt: $21,000

• Average household debt to disposable income: $1.82

• Most indebted age group: 46 to 55 years ($36,241 non-mortgage)

• Average credit card debt: $5679

The only positive has been that over the past couple of years, carrying debt (credit cards aside) in Canada has been pretty cheap. Anyone with access to home equity could have easily cashed in on rising house valuations and gone on a major spending spree at a pretty manageable cost somewhere between 2% and 3%.

Unfortunately, the consensus now is that those rates were once-in-a-lifetime bargains and aren’t likely to be repeated anytime soon. Interest rates have already risen sharply in 2022 and we are not through yet. The Bank of Canada overnight rate which is used as the benchmark for most loan agreements has risen from 0.25 % at the start of 2022 to 3.75% in October and is likely to rise again in December.

Despite the daily headlines about rates rising at a record clip, many people remain in the dark about just how much they are paying (or will soon be paying) to service their debts. Part of the reason for our nonchalance might be that we have all forgotten how interest (both simple and compound) can add up!

Car loans are a good example. The days of ultra-cheap financing have all but disappeared and according to Stats Canada the average car loan is now at 6.62%. While a lot of us can borrow at a lower rate depending on our credit score and the dealership, a 7-year loan on a $35,000 car at 5% is going to cost you $6554 in interest charges. Shortening the term to 5 years (what used to be the norm for car loans!) will reduce that down to $4630 and save you almost $2000 in interest charges.

Before you convince yourself a shiny new ride is well within reach by simply adding a couple of years to the financing term, make sure to calculate and then rationalize the added interest cost, not just whether the bi-weekly payment is do-able. Don’t forget to factor in depreciation (currently very low thanks to the shortage of cars) as well as the total operating costs including gas, insurance, parking, tires, oil changes, car washes, etc. — which are getting more expensive by the day!

If you do the math on your house, the pain is much worse, and you need to start budgeting for when your current mortgage agreement expires. If you are renewing a fixed rate mortgage from 5 years ago, you are likely looking at somewhere around 2% more. On a 25-year, $400,000 mortgage, moving from 4% to 6% will cost you about $500/month more. If you have a variable rate mortgage, you have probably seen it increase by the full 3.75% increase this year and that works out to a bump of almost $900! If you have a variable rate mortgage with a fixed payment, you are in for a huge increase and you may have to adjust your amortization schedule when you renew as your current payment may barely be covering the interest.

Home equity backed lines of credit are another area where borrowing costs have increased dramatically and will very likely continue to rise. A quick Google search shows these rates are now hovering in the mid 5% range, about double what they were 2 years ago. We agree that not all debt is bad, and home equity is often a great option to draw funds and pay down higher interest debts. However, it is no longer a source of super cheap cash for vacations, home renos, cars, furniture, etc.

If you are eyeing home equity to fund a $100,000 kitchen and bath renovation for example, make sure the accompanying $5500 in annual interest expense (assuming you pay interest only) is within your means. Also ensure you fully understand the terms and conditions for repayment and have a solid plan in place for paying it back and/or refinancing. Don’t forget that interest rates are most likely going higher and home prices may continue to fall — a double whammy that would easily slam the value of that $100K kitchen investment and put it way underwater very quickly!

The perils of credit card debt are well documented, but it bears repeating as the average Canadian owes their card company around $6000. Not all credit cards have high rates, but most are pushing 20% and even “low-rate credit cards” are seldom below 10%. The good news is that credit card rates don’t usually move with other interest rates and are bound by your cardholder agreement, so you may not see much change. The bad news is that credit cards are quite unique in that the interest charges are compounded daily, and the minimum monthly payments are shockingly low.

Paying the 3% minimum on a $1000 balance at the usual rate of around 20% will take around 11 years to pay off and cost you another $1000 in interest charges. Even the so-called “low-rate” card at 10% interest will require almost 8 years before you eliminate the balance. Paying the minimum balance on a credit card is an almost a never-ending debt cycle. Adding even a small amount ($50) to the minimum can make a big difference — learn just how much here.

Student loans are another type of debt that could see a dramatic increase when the interest-free period imposed during the pandemic on Canada Student Loans (federal) comes to an end in March 2023. If you elected to pay back your student loan at a fixed rate (prime +2%) you were likely paying around 4.5% in April of 2021. Based on current interest rates (which are expected to go higher] the interest rate on your Canada Student Loan will rise to almost 8% when the interest resumes in April of 2023. There has been some talk of loan forgiveness programs, but the current Repayment Assistance Plan is quite limited, and nothing has been announced so far on any other assistance programs.

A lot of people struggle with debt because they don’t really understand the details. Do yourself a favour and take the time to learn why paying the minimum on your credit card balance is futile and costing you a fortune, or how those fixed payments on your variable rate mortgage are fast becoming a huge liability as interest rates rise.

Not all debt is bad and it is a fact of life if you are eyeing a new car or buying a home. However, that’s no excuse to sign on the dotted line without fully understanding your obligation to repay that money an under what terms and conditions. There is no way to reliably forecast which way interest rates may go but they were historically low through the first quarter of 2022, and it isn’t likely they will be returning to those levels anytime soon — understanding the details of your debt will help you cope with future changes and find solutions.

Sep 30, 2022

Enriched Academy Staff

Research by the Financial Consumer Agency of Canada has revealed that financial worries are the leading cause of stress for Canadians, surpassing the amount of stress stemming from either relationships or their jobs. The tables have turned and rather than focus on how our job is affecting our personal life, the focus is shifting to how our personal life (especially finances) are affecting our job performance.

Some research has been done and the new isn’t good for employers. Employees dealing with financial stress are twice as likely to report poor health issues including sleep problems, headaches and other illnesses. They are also more likely to be absent, use sick leave or quit altogether; have lower morale and engagement; poor working relationships; and show lack of focus and poor decision making. For businesses, this can result in administrative and financial errors, workplace accidents, production errors and poor customer service.

The consequences of financial stress have a very real cost to your organization. A 2019 study by the Canadian Payroll Association (CPA) revealed that 46% of all Canadian employees admit to being distracted by financial stress at work causing an average 8.1% loss in productivity. Extrapolating that data to an organization of 300 people making and average of $64,000 results in almost $700,000 in lost productivity over the course of a year!

Keep in mind that the CPA study was done prior to the pandemic and does not reflect the financial stress the average Canadian is now facing due to rapidly increasing interest rates driving up mortgage and loan payments, skyrocketing prices due to inflation and supply chain constraints, and most recently, volatile financial markets.

If you need more proof of mounting financial stress, the National Payroll Institute just released survey results that show a 26% increase in the number of Canadians living paycheque-to-paycheque in just the last year. The average non-mortgage debt is now over $21,000 with the latest household debt-to-income ratio (the amount of debt to disposable income) at an all-time high of 181.7% according to the latest figure from Statistics Canada.

Many Canadians are struggling financially and the question all employers should be asking themselves is, “how much is poor financial wellness impacting the success of our business?”

While organizations across the country are bolstering employee assistance programs to improve the overall well-being of their staff, one area that has been widely ignored is the effect of financial stress in the workplace. It is very ironic that despite the intensifying focus on employee wellness, the #1 concern of employees themselves is receiving scant attention.

Many employers already provide pensions, matching RRSP contribution schemes, and various other financial benefits as part of their EAP. A financial literacy education program greatly complements these benefits by raising awareness and helping employees understand how to take full advantage of the available benefits and leverage their impact. For example, teaching employees how to invest and grow their RRSP rather than just helping out with matching contributions. A lot of Canadians are unfamiliar with even basic investing knowledge such as the effects of compound interest, investment fees, index funds and ETFs, risk management, or how to use RRSPS and TFSAs to defer/reduce taxes and grow their retirement nest egg… or help purchase their first home.

Retirement planning is another complex issue for employees. A company pension plan is a great asset to have but adding an education program to help employees make good decisions now and lay down a roadmap for retirement will give them a lot more assets down the road. Gaining the financial knowhow to manage your retirement plan and feel comfortable about your financial future will also allow employees to focus much better on the job at hand.

When you invest in the financial well-being of your employees, your business will benefit from higher productivity, better morale, lower absenteeism and turnover, and better talent attraction. A 2017 study by Sun Life Financial showed that 70% of employees feel their employer should support their employees financially and 84% would be interested in financial education programs in the workplace.

By implementing a comprehensive financial education program and not just paying lip service to the issue with a “lunch & learn” (they are just one of many tools) you demonstrate a lasting commitment to your employees and their families. Effective financial education programs for employees offer a number of training resources and options including live or virtual sessions, self-guided online programs, and options to consult and seek advice from financial professionals.

The timing of when employees need financial advice may range from imminent (i.e. they are fending off calls from bill collectors while at work) to long-term (i.e. they are unsure of how best to start planning their retirement) and companies need to be prepared to support with either of these timelines. Even your best/irreplaceable employees can get into financial difficulties (they may be creative geniuses or masters of other tasks… but miserable with money) and it is in the company’s best interest to do what you can to help them get through their financial issues.

Financial pressures have seriously mounted in 2022 and a lot of employees are turning to their employers to help out, and the first place they look is to bolster their household income with higher wages and salaries. While more income is certainly going to help, it isn’t always feasible based on the company’s financial situation. More money will also never become a long-term solution if employees continue to make poor spending decisions or overspend, fail to adequately save and invest, and put off their long-term financial/retirement planning until later in life.

There are lots of bankrupt athletes and entertainers who have clearly demonstrated that you can always spend more than you make, regardless of your income! Focusing only on the top line (income) when it comes to your finances is a common mistake. Anyone who has followed Enriched Academy knows that we teach the skill of saving and investing is much more important than the skill of earning.

Millionaire Teacher author Andrew Hallam has been a regular guest over the years in our live webinars. His book is proof that a steady income and some knowledge of basic investing principles combined with a high school English teacher’s salary can lead to early retirement and a very comfortable life post retirement.

Companies are increasingly caught in the trap of having to offer more money to keep their employees happy and stop them from bolting to the competition for slightly more salary (especially as inflation bites).  However, they should also be looking at adding proactive education measures to help improve their employees’ financial life and stop them from job shopping in the first place.

The reality is that personal finance is likely to get even more difficult and more complicated in the future and helping your employees master their financial life will pay increasingly valuable benefits to both employees and employers. If you would like to learn more about how programs from Enriched Academy can help your organization get ahead of the curve, please reach out to [email protected]

Aug 29, 2022

Enriched Academy Staff

We often hear the mantra, “pay yourself first” when it comes to financial advice. This concept of automatically routing some of your salary every payday (before you can spend it!) into an investment account like a TFSA or RRSP isn’t hard to understand, but it’s hard to implement if you need every nickel just to survive until your next paycheque.

Discipline and dedication to the cause will help, but they are only part of the savings solution. The fact is that to succeed at saving in today's world, most of us will need to earn more and spend less.

It’s obvious that a higher income will help you mow down expenses and leave you with more money in your jeans at the end of the month. However, any size paycheque will go a lot farther when supplemented with restraint and monitoring to control expenses at their source... before they vacuum up your potential savings.

Making more money is often the preferred approach as cutting back on spending can be painful, but there are definitely some drawbacks. More income means more taxes and it may also lower benefits like your GST rebate or CCB benefits. If your tax rate is around 20%, an extra hour at $15 hour will have the same effect as cutting about $12 from the household budget.

Working more will also rob you of precious free time, so there are significant social costs as well. If you have to incur additional expenses such as a babysitter or dining out more because you have less time or energy to cook, those costs need to be factored in as well.

Perhaps the biggest problem with working more is the very strong tendency to spend more! This is where discipline and determination come into play — make sure you earmark that extra income for saving and keep your expenses at the current level. Making more money won’t solve your problems if you don’t monitor your expenses, make poor spending decisions, delay investment planning, and have no goals to help motivate you and measure your financial progress.

You should also look at your debt cost to see if you should be saving in the first place! If you carry a credit card debt for example, you should definitely be throwing everything you have at it instead of saving. Even with the recent rise in interest rates, you would be lucky to get 4% on cash savings — most credit cards have rates four or five times that figure. You could also invest any extra money, but you have to add in the risk factor, and you would be hard-pressed to get returns that exceed the interest rate on most credit cards.

Turning to defensive savings strategies, there are countless articles churned out every day on how to trim the household budget. They may yield some good tips that are practical for your situation. Look for easy to implement ideas like comparing grocery store prices and stocking up on bargains, collecting points or discounts on a credit card (but paying the balance in full every month!), or clipping coupons.

There is no end to the money-saving ideas and hacks, but the first step is to know your costs. You can’t kill what you can’t see, and household expenses are no exception. You need to track all your expenses for at least a month and analyze where your money is going.

You may find some low-hanging fruits like a lightly used membership you could cancel, or maybe you didn't realize how much those nights out on the town are adding up to every month. On the other hand, you may find the low-hanging fruit is long gone and that making more money is your only way forward! Make sure to track your expenses first and give yourself a realistic starting number before you dive into a more austere budget.

For life’s necessities and things we need to survive, there is no need to ward-off the temptation to spend. We can focus on straightforward techniques that work for our situation and allow us to get the items we need at the best price, whether that’s clipping coupons or visiting a few different supermarkets to get the best deals for your weekly food shopping.

However, even the tightest of budgets include some discretionary spending and that is where some alternative strategies for spending less come into play that are quite different from the simple tips and tricks we see every day.

For example, maybe your “go-to” coffee shop has a stamp-card type offer where you buy ten and get one free. Rather than focus on that future free one, maybe some other thoughts would help you skip that coffee altogether? You could try mentally calculating the cost of your take-out coffee habit into time spent working, or simply pause to ask yourself, “do I really need it, or just want it?” You could also remove the temptation altogether by making coffee at home, taking a route that doesn’t pass by the shop, or throwing away their stamp card altogether.

For discretionary spending in particular, psychology is an important aspect when it comes to controlling urges. Spending can be triggered by a number of factors that affect are psyche — advertising and social media; comparing to our friends, neighbors or colleagues; habitual behaviour; lifestyle creep; the pursuit of happiness.

While it may be possible to limit your exposure and/or do your best to ignore these types of influences, there are financial self-control strategies that can really help put the bite on spending. A lot of personal finance research has focused on these tactics and the summary below has some practical ideas you could start using today.

  • Avoid tempting people, places, and activities (restaurants, malls, online browsing)
  • Eliminate spending temptations (e.g. make your own coffee/meals at home)
  • Use a shopping list and stick to it
  • Make regular savings automatic (set up payday bank transfers)
  • Set financial goals, track savings, and use a budget or conscious spending plan
  • Make funds difficult to access (lock or limit credit/debit cards)
  • Always consider your long-term financial goals (retirement, kid’s education, buying a home)
  • Reconsider your needs versus wants — we all did without many “needs” during the pandemic!
  • Use a “cooling-off” period before making a major purchase
  • Rely-on others for support and self-control (spouse, partner, friend, relative)
  • Convert the cost of an item into time spent working to earn that money
  • Choose to pay now rather than pay later or installment options
  • Use a retirement savings projections plan to understand how your current spend affects that plan.
  • “Lock” your savings away using term-deposits or registered accounts like an RRSP
  • Save before spending and not vice-versa
  • Always consider the reasons for your financials goals (family, retirement, etc.)
  • Use rewards for self-motivation (e.g. reward yourself with a take-out lunch after 20 days of brown-bagging)

At the and of the day, it doesn’t matter whether you save money through self-analysis and careful justification of spending decisions, or by picking up a sale-priced, jumbo size can of coffee and firing up the kitchen coffee maker every morning... whatever works for you!

Rising inflation and higher prices don’t appear to be a short-term trend, so now is the time to dig into your financial habits and maybe add a little anti-spending psychology to your mental money game.

Finding the cash to move from a paycheque-to-paycheque existence to a situation where you are saving and investing is becoming increasingly difficult these days. More income will certainly help, but you will also need to continuously manage your expenses and make smart buying decisions to really pile up the savings.

Jul 15, 2022

Enriched Academy Staff

Household budgets are under siege across Canada as inflation spikes prices on gas, food, and almost everything else we need to record levels. In addition, rising interest rates have added hundreds of dollars to the mortgage if you have a variable rate or are looking at renewing a fixed mortgage. Many Canadians have been forced to cut back on their monthly spend to try and make ends meet but don’t have the financial education they need to get started.

Budgets have a reputation for being difficult to sustain and it isn’t unjust, almost everyone has tried and failed at budgeting at least once. There are a lot of reasons for this, your budget may have been too strict and not realistic or maybe it was simply because it took too much of your time.

A lot of people start the budgeting process with trying to figure out how much they think they spend or might need and then try to live within those amounts. The fact is, most people don’t really know (or vastly underestimate) how much they spend. So, the first step to creating a realistic, sustainable-over-the-long-term budget is to track your current spending. You can do this in a number of ways; a mobile app or a piece of paper both work fine. It doesn’t matter which method you choose, just make sure it is easy and convenient to do so you don't forget.

Once you start tracking expenses you will soon see some that a whole pile of them are quite stable and don’t vary much (if at all) from month-to-month. This list includes the mortgage or rent, car or student loan payments, most utilities (some like gas or electric do vary seasonally), car or life insurance, and childcare. A second class of expenses are necessary items that fluctuate a little from month-to-month, like food, gasoline, and (essential) clothing.

The final class of expenses fluctuate wildly and are items that are discretionary or nice-to-haves.... but you could survive without. These include eating out, vacations, concerts or sports events, recreation, and non-essential clothing.

You can determine a basic monthly spend by adding up all the items in the first two expense categories. Put that amount of money into a chequing account every month and pay all those bills from that account. You don’t have to bucket each purchase to a category if you don't want to, but if you are running short from month-to-month and you are not cheating and using that money for non-essentials, you may have to up the amount. If you use a credit card instead of cash, make sure to pay those charges by the payment deadline with money from this account — no cheating!

Any money leftover after filling your basic expense bucket is not what you can spend, because you haven't saved anything yet! You need to fill two more buckets — your savings bucket and your discretionary or fun-money bucket. This is where it all goes sideways for most people. Taking from one bucket obviously robs from the other, so you need to find a balance between short-term gratification and long-term financial security. You also need to stick to the plan and lock away these amounts every month to succeed.

It isn't reasonable to follow some guideline that says put away "xx" percentage of your discretionary income because saving 30% of $500 is a lot harder than saving 30% of $5000. You are going to have to come to a conclusion yourself on what is livable when choosing between what you save and what you spend and aligning that to other financial goals like funding your retirement. Our only advice is that even if what you can save at the moment seems negligible, make that commitment! Did you know that just $100 month invested at 5% for a period of 30 years will give you an extra $100K for your retirement?

If your expense tracking shows that you are running out of money just trying to cover the basics, you need to go back and dig into your spending on necessities. There are some low hanging fruits here…. cable packages and cell phone plans are much easier to eliminate or lower than the water bill, and food is a huge expense that offers a ton of savings opportunities.

Food prices fluctuate wildly from week-to-week and from store-to-store. There are also cheaper substitutes on everything from what you BBQ (rib steak vs. pork steak... or marinade a cheap cut!) to your morning coffee (a large tub of Folgers vs those pricey Starbucks beans). Make sure you know your food prices so you can recognize a bargain when you see one (big-ticket items like laundry soap can be up to $8 cheaper from week-to-week) and constantly assess alternatives – there are lots of options at the grocery store.

What you consider essential clothing is also a grey area, your kids grow out of winter boots and need new ones — mom and dad can likely get another season out of their still functional but not so stylish boots.

If you are seriously in the red each month before even getting to your discretionary spend, then you need to dig into your fixed expenses. Number one on the hit list and a primary source of overspending is the car. Ideally, you want to keep the car payment and the related expenses (gas, insurance, oil changes, tires parking, etc.) to around 15% of your take home. Most people can afford much less car than they currently drive and turn to the never-ending lease or monthly payment to make it happen.

The other option for some families is to go from two cars to one. Before you say impossible; at least look at how you might make it work and how much money you could save. Car prices are extremely high at the moment and there has never been a better time to unload a used car.

Finding a cheaper place to live is an option and you can easily look around at what’s available if you are renting. If you own a home, there may not be many alternatives unless you really went overboard on your current home and there are viable options that make sense given the costs and effort involved. An easier option than selling would be to try and rent some portion of your home (a basement suite?) or maybe offer a spare room through Airbnb or as a homestay to an international student.

If you are already struggling with the mortgage payment, keep in mind that it could get much worse depending on your current rate, whether it is fixed or variable, and when you have to renew. The Bank of Canada interest rate hike on July 13 is expected to add about $55 a month for every $100,000 held on a variable rate mortgage and more interest rates increases are expected.

Credit card debt is another expense that is often overlooked because most people don’t fully realize how much of their money goes out the window each month on potentially unnecessary interest payments. If you are tapped out and need to use your card just to get by then you need to dig into your fixed expenses. However, if a review of your credit card statement reveals a number of discretionary purchases over the past few months (or years!) that you are financing at 19.99% then you need to do two things.

The first is to get a budget in place and a system to keep your card purchases under control. Whether you give up on the card and switch to a monthly cash envelope is up to you, but you need to know exactly how much fun money you have at any given time and a system to keep that spending in check.

The second step is to reduce that card balance as soon as possible. Cutting spending is the first place to look for generating funds, but you may also be able to draw on the equity in your home or have some investments that you could liquidate. For reference, paying the minimum on a $1000 credit card bill will require more than 10 years and another $1000 in interest before you finally get it paid off.

Lines of credit are another area where discretionary spending may also go unchecked. Many LOCs are backed by home equity and have carried a very low variable interest rate over the past two years (especially compared to credit cards). The problem is that as interest rates spike higher, the interest on these loans will also start to bite more and more. At best, these loans will add years to your mortgage free date and at worst, you could lose your home entirely. A decline in home prices like we are seeing now may also cause lenders to look a lot more closely at equity-backed loans in the future.

If you are having trouble making ends meet and up until now have been getting by with fairly lose monitoring of your spending, it is time to dig in and put some controls in place. Tracking your monthly expenses and getting a handle on your monthly spend is a good idea even if you don’t have financial issues.

You don’t need to bucket every purchase into a complicated spreadsheet (unless that works for you!) but you do need to get a good idea of the total amount you absolutely have to spend each month. After that, you can figure out how to start saving money and how much you have left over to enjoy.

Jun 27, 2022

Enriched Academy Staff

There are volumes of information out there explaining every aspect of Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs). Articles on how to optimize your contributions to each based on your tax bracket and expected future earnings, details of the TFSA over contribution rules and penalties, why the age of 71 is a big deal for your RRSP…. and plenty more.

We like getting the facts, but this information overload isn’t much help if you are simply wondering, “what is an RRSP account?” or “what does tax-free saving really mean?”. The mountain of details available is not only confusing, it may also discourage you from investigating more — and that would be a huge mistake!

Everyone should be aware of three things about RRSPs and TFSAs:

1. They are free to open and it’s not difficult to get one.

2. The TFSA age limit is 18, but there is no minimum age for an RRSP.

3. The younger you start, the more money you are going to make.

The biggest RRSP/TFSA mistake is procrastination; it has nothing to do with the minutiae of the TFSA rules or which investment fund is best for your RRSP. Do not put off getting your TFSA and/or RRSP until you are “older” and/or “have more money” — and don’t think these accounts are just for your retirement fund. You will definitely get older, but having “more” money is a pretty vague goal and that situation many never materialize. Keep reading this article to learn the essential facts, but make sure you put your newfound knowledge into action.

While TFSA and RRSP both have "savings" in their name, they are actually designed for investing your money, not saving cash.

After you put money into a TFSA or RRSP, you should be investing it, not just letting the cash sit there. Inflation will eat away at your cash pile over the years, so you need to invest to fight back against inflation and grow your retirement investments. Fortunately, you have a lot of options for investing your money.

Most Canadians invest the money in their TFSA and RRSP in some type of funds (mutual funds or exchange-traded funds) as part of their retirement savings plan. These funds are basically a basket of different stocks, bonds, and other financial instruments — there are thousands of funds available. Some are broad-based and include many companies across multiple industries, while others focus on a particular industry or region. The risk varies greatly from one fund to the next and you will need to factor your risk tolerance into the funds you choose.

Funds are professionally managed and you need to be wary of the built-in management fee (called an MER), but they make it easy for anyone to get invested. You don’t have to pick individual stocks and you don’t need anyone to help you if you want to do it yourself. Many Canadians handle their own investments and there are number of online options to self-manage the funds you hold in your TFSA or RRSP. There are also "all-in-one funds" with varying degrees of risk that are very convenient for beginning investors. There is even a fully automated online option called a robo-advisor that continuously adjusts the funds you hold to match your financial situation and goals — all you have to do is deposit the money!

While you don’t need a financial advisor to choose investments that are right for you, you are responsible for learning the basics of investing and making sure you understand the risks involved, regardless of whether you do it yourself or seek professional advice.

No one should be discouraged from opening a TFSA and/or RRSP because they only have a "little bit" to spare, and it wouldn’t seem to make much difference.

The first argument against this belief is that building a savings habit requires the right mindset and is a skill you need to practice. No one is born with a genetic predisposition to savings. You may be influenced as a child by the savings habits (or lack of) from those around you, but getting into the habit early will get you started down a very long, profitable road due to the wonders of something called ‘compound returns’.

Investing $200/month from age 18 to 65 at a 7% return (compounded for 47 years) in your TFSA would give you $790,139 tax-free at retirement. The same $200 invested with the same 7% return from age 28 to 65 (compounded for 37 years) would yield just $384,810. Sure, you would be contributing $24,000 more over those extra 10 years, but your nest egg when you retired would be almost double.

A lot of young people get discouraged by the sheer amount you are allowed to contribute — and for good reason! If you make $60,000/year, your annual contribution maximums are $6000 for your TFSA and around $10,800 for your RSSP. That’s $16,800; a pretty big chunk of your take home pay! The good news is that your yearly contribution limits can be carried over and as you grow older (and theoretically have more disposable income) you can catch up.

There is no need to choose between and RRSP or TFSA.

As your financial situation grows and changes you can definitely benefit from having both. The main reason is that the timing and impact of the income tax benefits is very different.

In short, you delay paying tax by putting money into your RRSP. When you fill out your tax return, you get to deduct the money you put into your RRSP from income — and that will result in a very noticeable reduction of your income taxes for that year. The higher your tax rate, the more you will save! However, before you go out and spend these tax savings, make a mental note that you are only delaying or deferring that tax to later in life.

Your RRSP should grow substantially over time if you are invested. However, you need to make sure your retirement budget reflects the fact that any money you plan to take out of your RRSP down the road is fully taxable in the year it is withdrawn. The primary advantage is that if you are retired, your income and associated tax rate could be substantially lower than when you were working. This will reduce the impact of taxes, but only to some degree! A lot of retirement advice focuses on maxing out your RRSP, but this could create a hefty tax bill if your retirement income is high.

If you had put the cash into a TFSA instead of an RRSP and invested it the same way, you would have the same amount of money, but you would be able to take it out and spend it tax free. You would have received no reduction in your taxes when you put the money into your TFSA, but you don’t have to pay tax on that money when you take it out of your TFSA.

An RRSP will put more money in your jeans today than a TFSA because of those immediate tax savings, but the opportunity to invest and grow tax-free money for the future in your TFSA is also very attractive. There are lots of other considerations (flexibility of withdrawals & your tax rate for example), but we will leave that debate for another article, just get one, or both accounts, and get started!

It is relatively easy to get started. The TFSA age limit is 18 but there is no minimum age to open an RRSP.

Both accounts require a social insurance number to open. You can open them in-person or online at most banks, credit unions and investment brokers. There are no fees to open one, although some institutions require a minimum balance. Both the TFSA and RRSP are a type of "registered account" and are not used for daily banking. They differ from your savings or chequing account because the cash flowing in and out is tracked to make sure you follow the rules and the tax implications can be managed.

You can put funds into an RRSP and TFSA anytime throughout the year, but there are annual limits.

For a TFSA, the amount is the same for every Canadian regardless of their income. For 2022, the maximum contribution limit is $6000. For an RRSP, you can put away up to 18% of your income up to a maximum of around $28,000.

If that sounds like way more than you can spare, the good news is that you can carryover unused contributions and catch up later. In fact, if you are over 18 and are just now eyeing your first RRSP or TFSA, you already have unused TFSA contribution room available. You may also have some RRSP contribution room as well depending on your income. You can confirm these amounts on your most recent income tax assessment. Just remember that catching up on contributions will be harder than you think and as we already mentioned, your nest egg will have less time to grow.

Although you can contribute funds anytime during the year, there are some deadlines for tax purposes. For an RRSP, you need to get the money deposited (not invested!) by the end of February in order to claim a RRSP deduction on your taxes for the preceding year. If you miss the deadline (even by a day) you will have to wait until next year to reduce your taxes. For a TFSA, the official deadline is December 31, but since the contribution limit can be used in any subsequent year and there is no tax deduction, there really is no deadline. There are also penalties for overcontributing to either your TFSA or RRSP, so make sure you understand the rules.

Even if you are not forgetful, it is a great idea to set up your bank account to automatically transfer a fixed sum every payday into your TFSA and RRSP. You can’t spend what you can’t see, and it will force you to save. You also won’t have to run around like a lunatic every year trying to find the cash and meet the contribution deadline.

The last thing to know is that TFSAs and RRSPs are not just for saving for retirement.

You can use your RRSP to save up cash for a down payment on a home and then "borrow" up to $35,000 ($70,000 for a couple) from your RRSP to purchase the home under the Home Buyers’ Plan. You do have to repay the borrowed funds over a period of years, but you do not have to pay tax when you withdraw the funds.

TFSAs offer even more flexibility with no tax due on withdrawals and you get to keep your contribution room. If you don’t know how much to save for retirement, maxing out your TFSA every year is a good place to start. If your plans change and you need that money before retirement, it is available. You do have to wait one year before you can replace any of the funds you took out so be careful, there are penalties if you run afoul of the rules!

There is a lot more that can be said about TFSAs and RRSPs but the short story is, if you don’t have one, you are seriously missing out. It’s time to get moving!

May 23, 2022

Enriched Academy Staff

It’s difficult to find timeless advice in the ever-changing world of personal finance but these five are about as close as you can get.

1. Start small and start early with investing

Starting small could be as little as $100 month and starting early means now! Invest what you can and don’t think a $100 monthly will never amount to anything. Only around 5% of Canadians under 25 have a TFSA, which means 95% have already missed out on 7 years of compounded returns! Investing that "measly" $100 month at 5% for 47 years (18-65) will give you $68,754 more than someone who did the same for 40 years starting from age 25. Time really is money when it comes to compounded returns, so get started as soon as possible.

2. Make more or spend less?

Our advice would be to do both, but there are limits on how much income you can generate and cutting back on expenses has a larger impact on your bottom line. You may even be able to cut back without a huge pain factor by first auditing your expenses and keeping track for a couple of months. You may find some expenses you could do without, like that "lightly used" gym membership or seldom watched 300-channel cable package. A part-time job or side hustle isn’t a bad idea, but it comes with its own pain factors. You will spend more time working and less time enjoying life, and any extra income is fully taxable — you might need to earn around $10 in order to get the same result as a $7 spending cut.

3. Re-evaluate your wants and needs

A 1200 square foot, 3-bedroom bungalow used to be the standard for many young Canadian families back in the early 1970’s. A lot of us grew up in a house like that with our parents, brothers, sisters, even the family cat managed to squeeze in! Houses are much bigger now (over 2000 square feet on average) and often come with a lot of high-end finishes. They call this trend lifestyle creep, and it is not limited to housing, it has inundated every part of our life. From what we drive to how often we eat out to where we go for vacation, we are constantly presented with a new norm as our wants slowly transition to needs. Being able to satisfy your wants later in life will only come from making smart spending decisions on your “needs” earlier in life and freeing up the cash to start saving and investing.

4. Understand credit and debt

131 months — that’s how long it takes to pay off a $1000 credit balance paying only the minimum amount — and it will cost you another $1000 in interest charges! Many people carry a credit card balance and are blissfully unaware of just how much it is costing them each month. Car loans are another area where the financing costs are often a lot more than most people realize. It is also important to realize that not all debt is bad, and mortgages are a great example. Even with recent increases in interest rates, 5-year variable mortgages are still a bargain at under 3%.

The key is to be knowledgeable about your debt. Track what you owe and what it is costing you as well as any alternatives that may lower that cost. For example, refinancing your mortgage or drawing on home equity to pay off higher interest loans or credit cards. If you struggle with debt, then it's time to bear down on expenses and draw up a strict repayment plan.  

5. Get financially literate

Managing your money has become more difficult as we have a lot more spending, saving, and investing options, but we also have access to a lot more information and tools to help us. Some things like a Registered Education Savings Plan (guaranteed 20% annual return for your child’s education) are a no brainer and can easily be understood with an hour or two spent online. Understanding the fees on your investments and how much they will cost you over the life of those investments is another need-to-know piece of information that can be easily confirmed.

Managing your retirement savings is more complicated because there are a lot of variables (lifespan, health, income, taxes, lifestyle) as well as options (TFSA, RRSP, investment properties, pensions) to consider. You may want some professional advice at some point but arming yourself with as much financial knowledge as you have the time and motivation to learn will help you better evaluate any advice you do get.

Enriched Academy offers complimentary, informative webinars every week on a wide variety of personal finance issues to help you become more financially literate. We don't sell or recommend financial products and we do our best to provide reliable advice and information that is easy to understand, practical and unbiased. Check out our events page to see the webinars coming your way over the next few weeks.

Apr 19, 2022

Enriched Academy Staff

Financial literacy has many different aspects and most of what we teach focuses on methods and strategies to either generate more income, or better manage and control our expenses. A third area which doesn’t always get the attention it requires is protecting our financial assets and income streams against unforeseen circumstances.

Insurance is the primary tool to help us in this regard, but the details are often overlooked and many of us take it for granted that we are sufficiently protected in the case of an emergency. Reading an insurance policy is not for the uninitiated and most of us would struggle to understand one even if we made the effort.

Insurance can be complicated due to the many types and variations available as well as plenty of confusing jargon to go along with it. The appropriate amount of coverage required can also be difficult to determine. Most of us are familiar with car insurance and understand the coverage we have, but that certainly isn’t always the case, especially when it comes to life or disability insurance.

A survey from online insurance specialists Policy Me found that only 33% of parents with children under 18 had term life insurance. This was quite a surprising result given term life insurance is the most cost-effective means of protecting your family. The survey also showed that many parents rely solely on employer-provided insurance benefits that can be expensive and may not provide sufficient coverage in the case of an emergency.

In addition to holding permanent (universal/whole life) insurance instead of term life insurance, other common misbeliefs are centered around mortgage life insurance and holding life insurance on your children. Mortgage life insurance actually pays off directly your creditors and not to your family, so term-life insurance would allow more flexibility for your family and may also be cheaper for the equivalent coverage.

Insuring your children with some sort or permanent life plan is often pitched as a way to save for their future, but the reality is that these plans are expensive and there are more cost effective alternatives for anyone looking to create a nest egg for their child’s future.

Your home is your biggest asset and there are also a few insurance caveats there to be aware of. Most homes insurance policies now use Guaranteed Replacement Cost. This is the amount required to rebuild your home as it was, on the same site — not the market value of your home. Make sure you have replacement cost insurance and let your provider know if you have done anything that would significantly increase you rebuild cost.

Fire is the primary threat for most homes, but we are seeing more and more flooding these days as weather patterns change and covering your home against water damage — whether it is overland (surface flooding) or from a backed-up sewer — has become an issue. Cost, availability, and pricing will vary but you should inquire if flooding is a possibility in your area.

One final caveat with home insurance is making sure you are covered if you rent your home (or part of it) regardless of whether it is long-term or short-term (like Airbnb). Talk to you agent and let them know the details of your rental situation so they can adjust your coverage accordingly.

You most likely have a lot more types of insurance than we could cover in this article, but the key takeaway is simply to be knowledgeable about your insurance products — they play a key role in wealth management. Make sure you confirm the details of your employer benefits like life and disability insurance and call your agent with any questions about the details of your home or car insurance. You will get peace of mind knowing there won’t be any surprises when you least need a surprise, and you might even save yourself some money.

Mar 21, 2022

Enriched Academy Staff

Rising inflation combined with a strengthening post-pandemic economy gives both reason and opportunity for the Bank of Canada (BOC) to raise interest rates aggressively in 2022. The 0.25% increase to its benchmark overnight rate in early March likely went unnoticed by most of us. However, it could be that interest rates are 1% or even 2% higher by this time next year, and that would definitely not go unnoticed! Don’t forget that the BOC dropped rates by a whopping 1% in just a few weeks at the height of the pandemic in March of 2020.
 
One common point of misunderstanding about variable rate loans is their basis on the prime rate. The prime rate is currently 2.2% higher than the BOC overnight rate and is determined by the major banks. Although the rates are much different, the key takeaway is the prime rate moves in lockstep with any changes to the BOC rate, usually within a few days. 
 
Now that we have the background knowledge out of the way, just how will future BOC rate hikes affect your debt? 
 
1. Variable rate mortgages 
The percentage of Canadians holding a variable rate mortgage surged in 2021 and now stands at about 50%. Any rise in the BOC rate is met by an equal rise in variable rate mortgages, so the impact is almost immediate. If rates rise 1% over the next year, a $500K mortgage payment will increase by over $200 month. 
 
2. Home Equity Line of Credit (HELOC) 
HELOCs usually have a variable interest rate that will rise in conjunction with any BOC rate hikes. A $100,000 balance carried on your HELOC will cost you about $20 more each month for every 0.25% increase by the BOC, so you could easily be looking at an extra $100 monthly a year from now. 
 
3. Credit card debt 
Credit cards have fixed interest rates, and you would have to dig into your card-holder agreement to see the details of how the rate can be changed. However, credit card rates are already so astronomically high that it is unlikely you would even notice a 1% increase! Our advice is to attack any outstanding credit card balance ASAP. Paying the minimum each month is futile and only keeps your creditors at bay. It requires over 10 years of minimum payments to eliminate a $1000 balance (at 20%) and will cost you another $1000 in interest charges! 
 
4. Personal lines of credit 
There are fixed and variable rate options out there. If you selected the lower variable rate when you signed the agreement, expect to pay more going forward on any outstanding balance. 
 
5. Car loans 
Car loans can be either fixed, variable, or sometimes have a combination where they change to a variable rate after a few years. You will need to check your loan agreement for any variable interest portion to see if your payment is going up…. in addition to those skyrocketing gas prices! 
 
6. Student loans 
The default choice for Government of Canada student loans is variable interest "at prime" with a fixed rate option at "prime + 2%". The point is mute right now as interest charges are currently suspended, but variable rate student loan holders will see a significantly higher payment when interest charges resume in April of 2023.


The bad news is that you will likely be paying more interest as we move through 2022, but the silver lining is that you will become more aware of just how much your debt is costing you. Not all debt is bad, but the cost of your debt can vary greatly, so make sure you understand your interest expense and adjust your repayment priorities accordingly.

Feb 08, 2022

Enriched Academy Staff

The worst financial mistake you can make is believing that Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA) are something to look into when you are a little older and more able to set some money aside. The fact is, you don't use these accounts for saving at all, you use them for investing. Your retirement fund could grow to seven figures, even if you only contribute a fraction of the allowable yearly maximums. They also come with huge tax-saving benefits.

A lot of people get discouraged by the sheer amount that you are allowed to contribute to these registered accounts and the mere pittance they may be able to come up with — don’t fall into that mindset!

If you make 60,000/year from your job, you could contribute over $10,000 to your RRSP and another $6000 to your TFSA every year. Considering you are only going to have about $45K in your jeans after taxes, finding a spare $16K would require almost 40% of your pay-packet!

The good news is that your yearly contribution limits can be carried over and as you grow older (and theoretically have more disposable income) you can catch up. The bad news is that playing catch up isn’t going to happen unless you are very disciplined with your spending. Sure, you may earn more, but you will spend more... kids, cars, a house, vacation — even the family cat is going to cost you $800 year and he may hang around for 20 years!

That extra disposable income you were envisioning may not materialize until you are in your mid 50’s — if ever! You need to scrape together whatever investment savings you can now; even saving just 5% ($200/month) of a $60K salary would make a huge impact.

Putting off getting started is going to cost you way more than you ever imagined in lost investment returns. Ignore the pitiful interest rates you see on bank savings accounts, holding cash will actually cost you money at current interest and inflation rates. However, the average annual return on many stock indexes (S&P, TSX, DSJ) over the past 40 years is around 9%. If you do a little math, you are soon going to realize that even on a relatively small investment of $200 month, the difference between starting when you are 18 versus starting at age 28 is jaw dropping.

Investing $200/month from age 18 to 65 at 9% would give you $1,504,471. The same $200 at the same rate from age 28 to 65 would yield just $620,102. Sure, you would be contributing $24,000 more over that extra 10 years, but your nest egg at 65 would be almost $1,000,000 higher — more than enough to keep you poolside at a nice resort in the tropics a few months every winter while those “late starters” are stuck in the snow.

There are plenty of rules, regulations and strategies to consider and as the March 1 RRSP contribution deadline looms, the media will examine and re-examine every TFSA vs RRSP angle and option known to man. You need to understand the basics of how they work, but the goal for the vast majority of us is simply to put something, anything into one (or both) of these accounts on a regular basis and start investing — you can’t go wrong!

Dec 13, 2021

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

If you are trying to get your financial life in shipshape, one of the first tasks you should be focusing on is how to improve your credit score. Your credit score is a measure of your demonstrated ability to pay your loan commitments and other bills in a timely manner. It is derived from a credit report issued by either TransUnion or Equifax and ranges between 300 and 900. The Canadian average is 650.

Credit scores of 700+ are considered "good" and offer a higher chance of loan approval, greater borrowing limits, and lower interest rates and insurance premiums. If you want to get one of those super-low advertised mortgage rates you are going to need a top-notch credit score. Potential interest savings are huge on big-ticket items; qualifying for a preferential rate on your mortgage could easily save you tens of thousands of dollars. Vehicle loans are another area where a good credit score can let you keep a lot more money in your jeans every month.

However, credit scores are used for a lot more these days than just whether you qualify for a loan. Insurance companies, potential employers, and landlords are just a few of the people that will often request your credit score and use it for decision making. Understanding how to improve your credit score and ensuring you have the highest score possible is going to open doors to many opportunities and save you money. For a great overview of your credit score “must know” information, take 3 minutes of your time and watch ”How Does Your Credit Score Work” on our YouTube channel.

Five factors that affect your credit score:

  • Length of credit history (15%) It takes time to build your credit score, so get a credit card when you turn 18, use it, and pay it off in full each month. A car loan or student loan will also help greatly — but only if you stay current with the payments!

  • Credit utilization (30%) If all your credit cards are maxed out, your credit utilization rate is 100% and it indicates to potential creditors that you are overextended. Try to keep your balance under 30% of your credit limit at all times.

  • Credit mix (10%) Using a mix of different types of credit will increase your score. When you are young the only credit available may be a credit card, but as you grow older adding a car loan, student loan, or line of credit to the mix will help improve your score.

  • Credit application frequency (10%) Applying for a lot of new credit in a short timeframe will negatively affect your score. Potential lenders do what is called a “hard pull” on your credit history when you apply. You want to avoid having a number of hard credit pulls in succession as it may look like you are desperately seeking more credit. Please be mindful of this if you want to get more credit cards or are rate shopping for a mortgage.

  • Payment history (35%) This is the largest determinant of your score and the most critical factor to manage. You need to always make the minimum payments and avoid anything ever getting to the “collections” stage – this includes parking tickets, mobile phone or other utility bills, student loans, and credit cards.

Credit scores are continuously evaluated and adjusted. If you have "errored" in the past, rest assured that the damage is not permanent! Your score can be raised/rebuilt over time by using credit responsibly, but it is much easier to avoid mistakes that lower your score in the first place.

Errors and omissions are not uncommon in credit reports and it is a good idea to confirm the details of your report. Both TransUnion and Equifax have a process to report mistakes and getting them corrected.

Monitoring your credit score regularly is a great financial habit that will allow you to track improvements, detect errors, and prevent identifying fraud. Please note that checking your own credit score is a "soft" inquiry and will not affect your score.

If you want to learn all the details about managing your credit score, make sure to check out How to Increase your Credit Score on the Enriched Academy YouTube Channel. Alanna Abramsky, our head of financial coaching and resident credit score expert, has packed everything you need to know into an easy-to-understand, informative session.

Nov 24, 2021

Enriched Academy Staff

You don’t need a money coach or financial advisor to learn the basics of how to start saving money, Financial Literacy Month is all about educating yourself. This 3-minute DIY workout will help build your financial fitness and steer you around eight of the most common pitfalls we see every day.

  1. Spending too much on a car.
    You should be aiming for 15% of your take-home pay for the car payment, insurance and gas. The monthly operating costs of a brand-new Hyundai Santa Fe (base-model $33,284 at 3.19%) would be minimum $800 month for 84 months. You would need to take home over $5K/month after tax ($90 to $100K in salary) to “afford” one. Slightly used cars are still very reliable and offer a lot more value.
     
  2. Investing before paying off debt.
    Make sure you pay off the right debts first! If your only debt is a mortgage at 3%, relax and go ahead and invest. Any loans or lines of credit up around 7% or higher (credit cards are around 20%) should be on your hit list before you even think about investing.
     
  3. Spending more than you have.
    It hurts to write something so obvious, but how can something so simple in theory be so difficult in practice? Too many “wants” is the root cause, but easy credit (not cheap, just easy!) and failure to track your spending and see just how big a hole you are digging every month with that credit card debt facilitates this downward spiral.
     
  4. Putting off saving, investing and retirement planning.
    Maxing out your TFSA ($6000 year deposited to an index ETF) from the time you are in your early twenties to when you retire at 65 could easily make you a millionaire. Never underestimate the power of compound interest when it is working for you! And don’t forget, the TFSA and RRSP also offer huge tax sheltering benefits on top of the compound interest!
     
  5. Not understanding your student loan agreement.
    Many students are not fully aware of their loan details and mistakenly assume their interest rate will be low. They also underestimate the future monthly payment and how long it will take to completely pay off student loans. Repayment of student loans will put a bigger dent in post-graduation lifestyle than most students ever imagine! Education has great value, just make sure you do the math, confirm that value, and know what to expect down the road.
     
  6. Not creating and using a workable, realistic household budget.
    Have you ever failed at budgeting? Of course you have, everyone does! The problem is not budgeting itself, it’s your process for creating a budget and your system for tracking household expenses. Relying on guesswork and not your actual spending, ignoring an emergency fund, not leaving any "wiggle room", too time-consuming – these are all fatal flaws for a budget.
     
  7. Getting caught up in "lifestyle creep".
    “The more you make, the more you spend”. It’s an old saying that rings true for most of us, but why not enjoy the fruits of your hard work? How much of your cash you can afford to use for enjoyment depends on your situation and you need to constantly re-assess your lifestyle. If you were just getting by before (and not saving for retirement) and get a $500 a month raise – do you get a shiny new car or a TFSA?
     
  8. Failure to build credit and ignoring your credit score.
    Completely eschewing credit will keep you debt-free, but do nothing for your credit score. And make no mistake, a good credit score will save you a ton of money over the course of your life! You can easily learn how to improve your credit score — simply using your credit card and paying it off in full every month; or financing a car (IF the dealer offers a great rate) are two ways to send your score soaring.

If these tips sound familiar, your financial literacy may be better than you think, or maybe you have been attending our free webinars? We offer great webinars on all sorts of topics and there isn’t a better way to improve your financial literacy with so little time. We do the research, present the facts, answer your questions, and get you motivated to act – all in 60 minutes!

Why not subscribe to our Financial Friday newsletter— you get all the details on our upcoming webinars, and it’s also crammed with practical, need-to-know personal finance facts, tips and advice.

Oct 04, 2021

Enriched Academy Staff

You might have heard Enriched Academy Co-founder Kevin Cochran explaining how YOLO (You Only Live Once) is the most expensive word in the English language. Kevin has a great point – justifying clearly unaffordable purchases with a YOLO attitude usually leads to a pile of very expensive credit card debt and more than a little regret down the road.

However, YOLO has a contender for the expensive word title, and that contender is procrastination. We are huge believers in education, fact finding, and analysis before making any important financial decisions, but at some point, you have to take action. Whether it’s opening an online brokerage account, meeting with a financial coach, or simply inputting your monthly household expenditures into a spreadsheet, you need to get moving.

The cost of procrastination when it comes to getting your finances in order is easy to overlook, so we are making it crystal clear by highlighting six issues where failing to act is definitely going to come back and haunt you!

Attacking your debt problem
Throwing everything you have to pay off a 3% mortgage doesn't make financial sense for most people. However, if you have higher interest credit card debt, car loans, or a line of credit that you are in no hurry to eliminate, you need to look at how much it is costing you. Once you see how much money you are wasting on interest every year and how many years (not months) it will take to pay back, your laissez-fair attitude to eliminating that debt will likely change.

Starting your retirement planning
Too little, too late is the story for many Canadians when it comes to funding their retirement. CPP and OAS aren’t enough to save you. The good news is you don’t need a comprehensive plan to get started. For now, if you have no plan or don’t know what to do first, open a TFSA and focus on maxing out the contributions every year and invest in an index fund. You can even automate the process with a robo-advisor and make it as easy as paying the phone bill.

Analyzing expenses and budgeting
Next month is not the time to start figuring out where your money goes every month and where you could/should/need to cut back on spending. The time to get started is today, and it has never been easier with hundreds of online applications and spreadsheet software, or you can go old school with pen, paper and calculator. Enriched Academy has a number of easy-to-use proprietary tools in our programs to help you crunch the numbers.

Getting started with investing
For many of us, it’s hard to get over the risk-aversion and fear of loss that goes with putting our hard-earned dollars into the markets. You need to be comfortable with your decision to invest and knowledgeable of strategies to mitigate the risk, but you also have to realize that holding cash at the interest rates we have seen over the last several years is not going create much of a retirement fund. The TSX was hovering around 5000 in August of 1996 and is just over 20,000 today. Had you invested $300/month for that 25-year period and achieved average market returns, you would have upwards of $500K today.


 

Creating an emergency cash reserve and a will
Two things you never know when you might need, but if the pandemic taught us anything, it was to prepare for the worst. Your income could unexpectedly and very easily disappear for a number of reasons, so you need to have enough cash on hand to tide you over for a few months. As for a will, they are pretty easy to get these days and there isn't any valid excuse for not having one, especially compared to the mess it leaves behind for your loved ones if you die without one.

Our goal at Enriched Academy is to educate and inspire you to take control of your financial life. We do our best to prepare you and get you moving, but it’s up to you to ensure procrastination and YOLO are not holding you back from reaching your financial goals!

Oct 04, 2021

Enriched Academy Staff

We scrimp and save to fund our RRSP and TFSA contributions and meet the goals of our retirement plan, so why is it that so few of us really understand the fees we are paying on our investments? Despite increased transparency and fee disclosure, many investors remain in the dark about fees and how much of a bite they take out of long-term returns.

It’s only 2%, that’s just a couple of bucks out of a hundred!”

When it comes to investment fees, you are about to see these are very costly words!

Assume you are 25 years old and maximize your 2021 annual TFSA contribution limit of $6000. You are busy and don’t know much about investing, so you stop by your local bank and they recommend one of their “top-performing” mutual funds.

The bank gives you a glossy brochure highlighting the fund managers vast experience and dutifully informs you of the “management expense ratio” (MER) built into the fund. This 2.35% annual fee seems reasonable to you. Everybody has to get paid and you tip a restaurant server 15%, so this is a relative bargain! No one does any math; the whole matter is soon forgotten and becomes routine. In fact, you barely notice this built-in fee on your annual statement.

Fast forward 35 years and you are now 60 years old and ready for retirement. Your $6000 in that “top- performing” mutual fund has returned 5% annually (before fees) and grown into the tidy sum of $14,987.

Unfortunately, your lack of financial knowledge meant that you had no idea of an alternative investment; something called an index ETF. Buying an index ETF is dead easy and you could have done it yourself with an online brokerage account. Your annual fee would have been much lower at around 0.35%.

If we re-do the math with the same parameters ($6K for 35 years at 5%) and use a 0.35% annual fee, you can see that your investment in an index ETF would have grown into the much tidier sum of $29,446!

Doing some much simpler math ($29,446 minus $14,987) reveals that your retirement fund is $14,459 lower than what it could have been – half of your total gain has disappeared with that little 2.35% fee!

But wait…. How can a mostly set-and-forget index fund return the same as a highly managed “top performing” mutual fund? The answer is that index funds often match or outperform “managed funds” with much higher fees regardless of whether the market is stable or volatile. In our example, the mutual fund would have had to beat the index fund by at least 2% every year in order to return the same amount.

You can always find exceptions and some managed funds may have success over a couple of years. However, very few are consistently able to beat the returns of the index over the long term. When you factor in their low cost and ease of maintenance, the decision to rely heavily on index ETFs is a no-brainer for most investors.

Canadian DIY investment guru Larry Bates has created this online calculator to instantly show how fees can cut into your investment returns.

Our passion at Enriched Academy is to inspire everyone to improve their financial literacy and take control of managing their money. In this example, a little financial education would have done wonders for your retirement planning. The same can be said for many aspects of personal finance – saving, budgeting, passive income generation – so make sure to get the financial knowledge you need to make the right choices for today as well as build your plan for a secure financial future.

Oct 04, 2021

Enriched Academy Staff

Financial planner? Money coach? Financial advisor? There are several titles for the people who can help you manage your money, but it isn’t always clear what each one does, and more importantly, which one is right for you?

With the exception of Quebec, anyone in Canada can call themselves a financial advisor or a financial planner —there is no guarantee of expertise. The level of experience, education, professional accreditation and the range of products and services offered varies greatly. Some advisors focus only on investments and will help purchase and manage a portfolio of stocks, bonds, ETFs, mutual funds, etc. Others take a broader financial view and will advise you on investing as well offer advice on issues such as taxes, insurance, or retirement planning.

A financial coach is both educator and advisor. They use a holistic approach and take a deep dive into all aspects of your financial situation. It includes cash flow management, budgeting, savings, investing (RRSP, TFSA, income properties, other passive income investments), debt management, building credit, wills and estate planning, insurance, and retirement planning. The program is customized to each client's needs, and you have the option to go into more detail on any aspects that are particularly relevant to your case.

In addition to the scope of their advisory services, the other primary difference is that a financial coach teaches you as you move through the program. The focus is on equipping you with the confidence and knowledge to make a lifetime of informed financial decisions. A coach teaches you the facts and provides a structured plan, an impartial opinion, and plenty of motivation and inspiration – but the decisions are ultimately up to you.

Aside from the education and guidance, there are also intangible benefits to a coach. Many people have trouble shifting from the learning phase (like reading this blog) to the action phase (purchasing an index fund online for example). As with any sport or activity, the presence of a coach is super motivational, and the structure and accountability built into the coaching sessions really helps to boost confidence. A coach can definitely help turn financial complacency into actions that build a robust financial plan.

The best way to highlight how coaching helps is to look in more detail at one of our Enriched Academy clients. “Stacey” and her husband called themselves “middle-class professionals” and they are in their 30's with three kids. They were looking for solutions on how to pay back debt and build a fund for their future. Stacey felt she did not have a good understanding of their overall financial picture and was unsure where their money was going every month.

After six months of working with a coach, she felt like they had made some “serious progress” and the results supported her feelings. Their net worth climbed by $16,388.62 and they also paid-off or consolidated a lot of high-interest debt. They saved almost $3400 in interest charges over the 6-month coaching period.

Stacey noted their gains easily covered the initial cost of the program and it will continue to provide positive returns for many years into the future. She also noted that the results were "super motivating" and she is looking forward to seeing how their financial situation changes for the better over the next two to three years.


 

Coaching is not for everybody, and Stacey pointed out that she did spend a fair amount of time studying the self-help resources her coach provided as well as drilling down into the details of their finances. Enriched Academy coaches have access to a huge library of proprietary teaching resources and tools to help their clients learn, but you will need to put in a few hours each month to maximize the effectiveness of the program.

For those who would like to have more control of their finances or take over management of them completely, coaching is a great way to transition and get the ball rolling. You get a period of expert support and guidance when you may be lacking the confidence or knowledge you need, and you are steadily preparing yourself for more independent decision-making down the road.

If you would like to read more about Stacey's review of her experience with the Enriched Academy Coaching Program, click here

Learn more about our financial coaching program

Aug 02, 2021

Enriched Academy Staff

Why hello there!

Have you been wondering about our coaching program since we launched in October 2017? Well, wonder no more! 

We took a few readers from Million Dollar Journey and took them through our 6 months of Financial Freedom coaching. They achieved some really amazing results, and THEN they wrote a really amazing review about us. 

If you've ever been looking for a completely unbiased review of our coaching program, you can read about it here

Enjoy:)

Feb 26, 2021

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

And no, the holidays did not come early this year. It’s RRSP season and the most exciting time of the year when you need to start preparing to file your taxes.

If you haven’t made a contribution towards your 2020 year yet, you only have until March 1 to do so. This date hasn’t really ever changed, so it always amazes me to see how many people are always scrambling in the last week to put money away into their RRSP’s. This is something that you can set up, and contribute to, at any time during the year. You don’t just have to wait until February when everyone starts marketing that the RRSP deadline is coming up.

If you don’t know what an RRSP is, let me tell you as simply as I can.

It’s a government-regulated account (registered) where any contribution that you make will give you an immediate tax deduction. Within your RRSP you can invest in things such as ETFs, stocks, bonds, mutual funds, real estate, etc.

Example: if your income at the end of 2020 was $75,000, and you contributed $10,000 into your RRSP throughout the 2020 year, then you are only being taxed as if you made $65,000 in 2020. This would bump you down into a lower tax bracket, and either provide you with a bigger tax refund, or would reduce the amount of taxes owed.

Keep in mind as well, that when you invest in a healthy and diversified portfolio within your RRSP, that your contributions grow tax-free until you start to withdraw them. And most people withdraw their RRSP when they need the income in retirement, so they’re typically in a lower tax bracket. You do eventually pay tax on your withdrawals, but if you’re retired and farting around the golf-course or sipping Pina Coladas on a beach somewhere, chances are you won’t be in a high tax bracket already, because most retirees don’t work. If you start young, build your portfolio up to $1,000,000, and only need $50,000 in retirement, then you’re only paying tax on your $50,000 withdrawals.

How Do I Get Started?

Well, to be honest, you should contribute to your RRSP throughout the year, but if you haven’t been contributing then you should do so before March 1. The contribution room that you have available to you can be found through your CRA My Account, or on your NOA from the previous year. Your accountant should also have that number somewhere. So don’t delay, start today.

Here are the three main ways that you can open an RRSP;

1. Managed: Personalized investment portfolios that are managed by advisors and professional money managers at financial institutions. Portfolios are tailored to the specific needs of the client depending on a number of factors such as your age, risk tolerance, and short and/or long-term goals. There are typically high fees associated with managed accounts since a human is deciding what securities to hold within that account and are actively managing it.

2. Robo-Advisor: A new class of financial advisors. It uses algorithms to provide investment management and advice with little human supervision. Using a certain type of software, a Robo-Advisor is able to automatically buy, sell, and rebalance assets in your portfolio. Don’t know the first thing about investing but want to invest in ETFs? Don’t you worry. Robo-advisors will do it all for you. So, if you’re new to investing, and want to reduce the fees you’re paying, then a Robo-Advisor may be a perfect fit for you.

3. Self-Directed: You have full control over the buying and selling of securities in your account. By managing your own account, you can reduce the amount of fees that you pay, putting more money in your pocket at the end of each year. With a self-directed account, you do all of the dividend re-investing and rebalancing of your portfolio.

We’ve helped 100’s of clients in our Financial Freedom Coaching program set up an RRSP and use it as an investment vehicle throughout the year. And we can help you too. If you’re ready to set up a Free Coaching Assessment call with our team to see if you’d be a good fit for our coaching program, then sign up here.

We can help you build a solid budget, set you up on a plan where you’re making weekly-monthly contributions into your RRSP, and save you from pulling your hair out every February as you scramble to find money to contribute.

Jan 22, 2021

Enriched Academy Staff

Happy New Year to all of you. I LOVE January.

Why, do you ask?

Because it marks the beginning of my personal financial year. This is where I sit down, complete my Net Worth Tracker, organize my budget, and fill out my Financial Freedom calculator so that I can figure out how much to set aside for the year ahead. My current financial goal is to retire by 45, and I seem to be on the right track (right now). Wish me luck.

I thought I would take this opportunity to write a post for parents out there who are wanting to motivate and teach their kids about financial literacy and money management. We get a lot of clients in our  Financial Freedom coaching program who take the education that they’ve learned and pass it on to their little ones. Financial literacy should start as young as possible!

Growing up, my grandparents always gave me Israeli Savings Bonds for birthdays and holidays instead of physical presents. I never understood why, and to be honest, it always pissed me off. Until I hit 18. Around my 18th birthday, all of the bonds had matured, and I was presented with a cheque for $10,000. I couldn’t believe my eyes when I saw all of those zero’s! I kept thinking about all of the things that I could buy with that money, but my mom had another plan in place for me. I’m so glad that I listened to her advice. Looking back now, I don’t think I’d be where I am today without my mom’s guidance and financial education.

She immediately took me into the bank and had me open up a self-directed TFSA where all of the money was invested into Index funds. At this time, I had NO idea what any of these words meant. I just thought that there was a savings account and a chequing account. But my mind was blown after my mom had taught me about the different types of accounts one could have – and this was at the young age of 18.

For the entire year after, I didn’t think about or look at the TFSA. I just let it sit there and allowed the market to take its course. One day, I decided to take a peek and see what was happening. I had made just over $800! And I literally did nothing all year with that money. It just sat in the account, made a 7.5% return, and compounded interest while invested in these Index funds. Seeing the $800 return sparked my interest in investing. I had a conversation with my dad afterward about the money I had made, and about investing in general. He told me to “make your money work for you, and don’t work so hard for it”. That saying has stuck with me to this day.

Three years ago, I hit a milestone. I turned 30 (I’m currently 33). And since I’ve been tracking my Net Worth for the last 3 years, I remember taking a look at my savings and investment portfolio and having just over $100,000, at the age of 30. I’m now 33, and my investment portfolio has doubled in growth over the last 3 years. What’s the secret you ask? I’ll tell you how I did it.

Keep in mind that I am not a homeowner. I choose to rent. But I do have a partner, a car, and a lovely 2-year-old Bernese Mountain dog (named George). We live a great life in Toronto (one of the most expensive cities in Canada. So yes, it is possible to save).

  1. Set goals for yourself and work hard. After that first year of investing, it became a personal goal to max out my RRSP and TFSA every year. And I can happily say that I’ve completed this financial goal since the age of 19. Before working for Enriched Academy as the head of their coaching program, I worked as a freelancer in the entertainment industry, and prior to that, worked in the restaurant industry.
  1. Pay yourself first, and have fun after. I know that I have a different mentality about money than other people my age do. I don’t spend a lot on material things. I go out for dinners and drinks with friends, have a great apartment in Toronto, and bike/walk almost everywhere I can. I spend the majority of my money on experiences, food, and travel. I have the mentality that I need to pay myself first by maxing out my RRSP and TFSA, and then I can have fun afterwards. Knowing that I have that money in an account makes me sleep like a newborn baby every night.
  1. Educate yourself and invest! I know that I wouldn’t be where I am now without investing. Learn the basics, take a course (like our one-on-one coaching program), and put some money into diversified investments so you begin to understand the principles. It doesn’t need to be a lot! Start with $10/week. A majority of my portfolio is invested in Index ETF’s, but I hold a few blue-chip stocks that pay out a dividend.
  1. Budget, budget, budget. This is so important and will be the basis of your financial plan. Once you have a budget in place, you will see where your income is coming from, and what you’re spending money on. And if you have any “leftovers”, you can start putting it into your savings/investment account. This is really where you’ll start to see your Net Worth grow.

I know that I’m not like the majority of Canadians. And that’s ok. I'm incredibly thankful to both of my parents who took the time to educate me about money. It’s never too late. So make sure that you take the 2021 year as a teaching opportunity and start to make the financial changes that you need to yourself. Your kids will thank you later.

Dec 07, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

What a Year.

How did you manage? What did you learn? What are you bringing with you into 2021?

2020 was tough. Emotionally. Mentally. Physically. The pandemic has definitely taken its’ toll on my emotional and mental well-being. Not being able to freely walk around, see friends and family, and be constantly mindful of the people around me has really made this quite the year. It’s definitely been hard, but I think after all of this, there are probably a few things that we’ve learned in regard to our finances.

Here are a few things to bring with you into 2021. 

  1. We don’t need a lot to live. I think for the majority of our coaching clients, the thing we hear the most is that the pandemic really taught them about the most important things in life. It wasn’t about the car they drove, the clothes they had in their closets, any other material object they once had, or even going to get their hair done bi-weekly, we’re surviving without all of it. There are always going to be things that we like to have. But when you really get down to the nitty-gritty of it, we don’t truly need a lot to live. Head into 2021 by taking a good hard look at your finances, cut out those things that may not be bringing you joy, and focus on those things that matter most to you.
  2. You can manage your cash flow, regardless of your financial situation. This one was SO interesting to me. We had a number of coaching clients who had joined us back in February, and then lost their jobs because of the pandemic and had to take a paycut or live off of the CERB. And guess what? They still managed. By working one-on-one with our coaches, our clients were able to re-work their budgets and focus on the priorities of putting food on the table and a roof over their head. It just goes to show that it’s not the money you make, but the way you manage it.
  3. Pay off your high-interest debts – ASAP. Being in debt can be hard. Being in debt during a pandemic can be even harder. But I hope (if you were one of the 1000’s of Canadians who had debt before the pandemic) that you had some ah-ha moments. Our coaching clients certainly did. Always pay off high-interest debts (above 5%) every month, or as fast as you can. Nobody knows what’s going to happen in the future, and I think the pandemic made a lot of us realize that our finances are not finite. Manage your income, dollar by dollar, and get out of the weeds when you have the ability to.
  4. Have money set aside for an emergency fund. Remember how we always talk about having 3-6 months of necessary living expenses in an account that you can dip into for emergency purposes? I’m sure that really came in handy back in March if you were someone who lost your job. Figure out what your absolute necessities are, and keep a 3-6 month emergency fund in an out of sight, out of mind account that pays some kind of high interest.
  5. Invest, Invest, Invest. Once you’ve gotten rid of all of those high-interest debts (above 5%), you can start to invest. Back in March, I was in the airport heading to Belize when the markets were crashing. I kept seeing them drop. Lower and lower and lower. Do you know what I did? I didn’t sell my investments. No, no, no. This was the opportunity that I’ve been waiting for. Everything went on sale! I maxed out my TFSA, RRSP, and had my partner do the same. To this date, our investments are up over 30%. Now, I’m not telling you to time the markets, because nobody can. But if you can keep costs low throughout the year, manage your cash flow, and have cash set aside for these kinds of opportunities, then you’re all set. Buy low, sell high, remember? Don’t panic. If you’re properly invested and diversified, you’ll never lose all of your money. Yes, it may be volatile, but if you can think of the future, you’ll come out on top.

"Be Greedy When Others' are Fearful and Fearful When Others' are Greedy" - Warren Buffet

At the end of all of this, it’s been really interesting to see our clients throughout this pandemic. Regardless of their financial situation, they’re excited about getting their financial house in order for a healthy and successful 2021.

Are you ready to join them? Sign up for your free Coaching assessment call here. Having someone else to give you a completely non-judgmental and non-biased view of your financial situation may just be what you need for your own successful year ahead. After everything is said and done though, make sure to not take any moment for granted. Hugged your loved ones. Take time away from technology, work, and enjoy every minute.

Happy Holidays and New Year from Enriched Academy

Oct 09, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

What Are You Thankful For?

As we approach one of my favourite holidays of the year (aside from Passover, and Christmas, and Hanukkah, and my birthday), I’d like to check in with you to see what you’re thankful for?

I’ll start. I’m thankful for the health of myself and my family and friends, and also the financial education that my parents taught me at a young age, which now has provided me with the financial freedom to not stress about money. And I’m 33 years old. How many 33-year-olds do you know who can say that?

As the head of coaching for our Financial Freedom program, our program sees 1000’s of clients every year who are in really difficult situations because of a lack of financial education. Just remember, this is not your fault. We live in a broken system. But there is a way that you can make a change, and that change starts with altering your behaviours and habits.

How To Make Habits Stick

We all know bad habits are easy to pick up and hard to drop. Good habits on the other hand? Well, if it was easy, we would all be wealthy and fit (and able to wear the same jeans that we did in high school). I’m currently struggling to fit into the same pants that I was wearing before COVID hit. Damn you quarantine.  
 
But I’m going to let you in on a super easy secret that can help you create strong, lasting habits.
 
Make those habits as easy as possible. 

If you sat down and made a list of habits that you go through in a day, you can probably come up with around 10-20 of them. Here are a few of mine that may help you to create your list.

  • Wake up and make coffee.
  • Review budget.
  • Read finance blog.
  • Walk the dog.
  • Brush my teeth.
  • Make breakfast.
  • Clean dishes.
  • Get dressed in workout clothes.
  • Work out.
  • Do yoga.
  • Shower.
  • Make lunch.

Pretty crazy eh? It’s not even 1 pm yet and I’ve already gone through 11 habits that I don’t think about. I’ve gotten into a routine where I just do them.  

Atomic Habits is our favourite book on creating winning habits. The author, James Clear, outlines a few tips you to follow... 

Use this formula: I will (behavior) at (time) in (location). For example, instead of saying, “I will budget each month.” Try, "I will budget on the 1st of each month at 5 PM in my office." 

Every habit is initiated by a cue. The cue triggers your brain to initiate a behavior because it predicts a reward. We are more likely to notice cues that stand out. Setting an alarm on your phone for 5 PM monthly is a cue that you need to budget. 

Forming a new habit is hard so Make it Easy. We really strive for that in our Enriched Academy Programs.

And now I’d like to share with you:

5 Money Habits of Wealthy People 
 

These concepts are honestly so easy, and they truly are the key to building wealth. We see most of our successful Financial Freedom clients live by these means, and you can start to see results today if you follow the list below.

  1. Live below your means. Spend less than what you earn. It’s as easy as that. Sit down and go through all of your sources of income, and everything that you spend money on. If you have money left over every month, and are putting money into an investment account, you’re beyond the majority of Canadians. If you’re overspending though, then you need to make some cutbacks unless you want to end up in debt for the rest of your life. It’s not about making more money. It’s about living with what you have and being smart with it. If Warren Buffett is worth over 70 billion dollar and lives in the same home that he bought 50 years ago for $31,000, and drives a modest Cadillac, then you can live within your means as well.
  2. Learn one new thing a day. No one has ever gone broke buying books. I read a daily personal finance blog that keeps me up to date with what’s going on in the world. If your new thing is a recipe, or a craft, or a new trade, then that’s awesome. But just force yourself to learn something new.
  3. Small steps each day. Have you ever read a book or taken a course but quickly found your motivation evaporated? Wealth is given to those that take small consistent actions daily. Ask yourself, what is one small thing I can do today to help me make progress with my finances? 
  4. Track your net worth and budget monthly. You cannot improve what you don’t measure. These two numbers are the foundation for financial and time freedom. 30 minutes per month, that's all it takes. This is one of the biggest ways that we measure our clients in our Financial Freedom coaching program. We get them to track their Net Worth month and start to track their cashflow as much as possible. This way, they can see the correlation between the two. When you start to track your cash flow, and you spend less than what you earn, then your Net Worth goes up.
  5. Learn to say “no”. Only spend money on things that bring you an immense amount of joy and happiness. Everything else, say no to. 

Once you’ve got the top 5 habits above in place, you’ll start to see dramatic results with your finances. You’ve just laid down the foundation to becoming financially successful. Congratulations. But there’s still more work to do! You need to review your financial goals and plan each month. Step 1 is creating that plan. Step 2 is constantly reviewing and making changes to your plan as things change. If you are not constantly reviewing your plan you could be headed in the wrong direction and not even know it. 

When COVID-19 hit and our economy, we worked with all of our coaching members to revise their financial plans because so many things were changing all at once. Some of our clients had lost their employment, their investment portfolios were going down, their kids were home from school, among many other things.

The one thing that we’ve heard over and over again is how thankful our Financial Freedom clients have been for having us work with them throughout COVID-19. Even though some of our clients have seen a decrease in income, they’ve seen an overall increase in their Net Worth. This education that we provide is something that will be with you forever. And we can help you change your habits.

Just the other day I received a note from one of my past students. It made my heart go all warm and fuzzy inside.

“I am not exaggerating when I say that what you all do is life-changing! You helped us so much and we are forever grateful ????”.

So, if you’re ready to take control of your finances and join the 1000’s of Canadians who have gone through our Financial Freedom Coaching, sign up here for your coaching assessment to see if we can help you.

You’ll be thankful.

Happy Thanks giving!

Aug 31, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Have you ever gone through your bank to take a look at your credit score and haven't been super happy with the results? Or have you ever looked into getting a mortgage or needing to borrow money, and nobody will give you a loan? It's likely because you don't have a credit score that's in tip-top shape. This article will explain what a credit score is, and how to increase it. 

What is a Credit Score?

You credit score is a number (typically between 300-900) that is based on your credit report. Your credit score your financial report card, and it’s used by lenders to predict the likelihood that you will repay any future debt. Your credit score is based off of your credit report, which is a summary of how you pay your financial obligations. Lenders use your credit report to verify information about you and how you have been paid off your financial obligations in the past.

Why is This Important?

Your credit score will determine if you are a risk to lenders and it will affect the interest rates you pay on any loans you applying for. If you have a “poor” or “fair” credit score, and are looking at securing a mortgage, you may not qualify through a bank or credit union. You may have to go with a B-grade lender or even a private lender, where you’re looking at interest rates 3-6% higher than a traditional A-lender.Your Credit Score is one of the metrics that we track in our Coaching program, and if you can believe it, we’ve helped our average coaching client increase their credit score by 21 points over a 6-month period.

How Can I Increase My Credit Score?

There are 5 ways to increase your Credit Score. All of these ways need to be monitored and effectively managed in order to work.

  1. Payment History: This is the most crucial factor in your credit score, and it makes up to 35% of it. Creditors want to know that you’re going to pay back the money you are asking to borrow from them, so they will look at what your payment history has been like from previous consumer debts. ALWAYS make your payments on time and make the full (or at least minimum amount owed) payment each time.
  2. Amounts Owed: This makes up about 30% of your overall score, so it’s an important one. Try to keep your credit utilization rate less than 35% of your available amount, and don’t max out all your available debt options. If you use a lot of your available credit on your debts, lenders see you as a greater risk, EVEN if you pay your balance off in full by the due date. For example, if you have a credit limit of $10,000, you should not carry a balance of more than $3,500.   
  3. Length of Credit History: This makes up about 15% of your score. Creditors and lenders like to see that you’ve been able to handle credit accounts correctly over a period of time. Newer accounts will lower your average account age, which may negatively impact credit scores. Never cancel one of your oldest cards because that marks the beginning of your credit history. 
  4. New Credit Applications or Credit Checks: Every time you apply for more credit, your score will be affected, so try to limit hard inquiries. There is a difference between a soft credit check (checking your credit score) and a hard credit check (looking for more credit). Every time you do a hard credit check, your credit score will be lowered. This takes place when you apply for a mortgage, loan or credit card. 
  5. Use Different Types of Credit: You should have at least two credit vehicles open (credit cards, LOC’s, car loans and mortgages.) Showing you can manage different types of credit will have a positive impact on your score. 

You should check your credit report and score once per year. One small error can have a significant long-term impact on your credit score. Your credit score is like your financial report card and having a bad score can have a negative affect on your long-term financial plan. We’ve helped 1000’s of clients increase their score. If you feel like you need a little one-on-one help, make sure to sign up for our free Financial Assessment Call.

Jul 26, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

It’s been a few years now since the term robo-advisor has surfaced, and we get a lot of questions. So many in fact, we have an entire webinar dedicated to explaining what they are and how they work. No time for a webinar? No worries, we have answered most of the common questions below.

What is a robo-advisor?

A robo-advisor is an automated, online financial advisor. It combines a questionnaire or text chat regarding your investing preferences with a lot of high-tech software and algorithms to figure out an ideal asset allocation. It then builds a portfolio of exchange-traded funds (ETFs) for you and continuously manages this portfolio as necessary based on your investor profile — buying, selling, and re-investing dividends. If you don’t want to do DIY investing but still want the simplicity and convenience of investing in ETFs, a robo-advisor may be perfect for you.

What are the fees?

Robo-advisors don't use a lot of human management and have relatively low fees. They charge an MER fee (management expense ratio) on assets under management of anywhere from 0.30% to 0.60% for their services, and then you have to add on the ETF fees of around 0.10% to 0.30%. At the end of the day, you may be paying around 0.7%. This is probably going to save you a bundle compared to the other options.

Let’s break down how robo-advisors compare to actively managed funds (mutual funds) from the big banks. Canada has some of the highest mutual fund fees in the world and the MER fee can be as high as 2.3%. If you have a portfolio of $100,000 with a financial advisor, you could be paying more than $2000 in MER fees regardless of how your fund performs. But if you're using a Robo-advisor, you're only paying around 0.7%, or approximately $700. That extra $1300+ you're not paying in fees every year will really add up as your investment returns compound.

Which robo-advisor is best for me?

Good question! This depends on your preferences, goals, and the portfolios the robo-advisors use. Each robo-advisor offers something different, so it’s important to take a look at which one works best for you. Here are some of the different things to look into:

  • Fees (although this isn’t the only factor!)
  • ETFs that make up the portfolio.
  • The dashboard.
  • Other benefits. Some robo-advisors provide you with a dedicated financial advisor, estate planning, insurance needs, tax-loss harvesting, etc. This may be something that you require, so it’s good to look into your own personal needs.

What next?

There is no better time than the present! If your returns have been less than stellar over the last few years, it may be time to rethink your current investment strategy and take a hard look at why you are paying the fees you do. Or maybe you’re ready to grab the bull by the horns yourself and start to

secure your financial future, especially if you don’t have any high-interest debts that should be taken care of first! If you feel like you’re still lost, and need some guidance, you can always check out one of our upcoming livestreams or sign up for one of our free financial assessment calls.

Jun 17, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Crush Your Debt – For Good

Have you heard about our brand spankin’ new program that we launched in May? It’s for all of you out there that have a little (or a lot) of debt to pay off. And we’re not just talking mortgage debt. This goes a little bit deeper than that. This program is tailored specifically for those who have credit card debt, line of credit debt, personal loans, and debts to family members. Interested in finding out more? You can take a look at the program here: https://enrichedacademytraining.com/debt-sales-page

Why did we create this program?

Getting out of debt is hard if you’re not educated on a wide range of topics. After launching our coaching program back in 2017, we saw a need for continual education surrounding debt. We kept seeing the same debt patterns time and time again, and we wanted to help our followers get out of debt by being able to use the same tools and worksheets that we use with our one-on-one clients. Introducing…….our Debt Elimination Program.

What’s so great about this program?

I think the question is, what is NOT great about this program? It’s specifically constructed to provide you with the education, tools, and resources that you need to get rid of your debt. These are proven methods that we teach to our one-on-one clients, but now you can have access to the education, the resources, and the worksheets to feel more empowered and confident in the next steps. The principles work, so long as you’re willing to do the work yourself.

The other thing that is really great about this program, is that we wanted to make it affordable because we know that getting out of debt can feel really daunting. We priced this at $197+tax. That’s it. And you get 7 modules, tools, resources, and an exclusive Facebook group to ask questions and get support.

What do you cover in the program?

Here are the 7 modules that we cover:

  1. Creating Your Net Worth Tracker and Analyzing For Quick Fixes
    1. This is probably the most important thing that you can do to help organize your finances. We’re going to teach you how to go through all of your assets and liabilities with a fine-tooth comb and figure out any opportunities you can go through to get rid of your debts faster.
  2. Understanding Your Cash Flow and Creating Your Budget
    1. My personal favourite module is all about creating your budget, and figuring out different way to manage your cash flow moving forward so you can prioritize your spending towards what matters most (getting out of debt).
  3. Creating New Goals and Tracking Your Spending
    1. Chances are that you got yourself into this debt because you didn’t track your money coming in and money going out. We’re going to help you create some realistic goals that you can stick to moving forward so you can get our of debt faster.
  4. Using the Debt Crusher Tool
    1. We have this really amazing tool on our website that calculates how much you need to put onto debts to get rid of them by a certain time. This really looks into goal setting.
  5. Organizing Your Debts and Understanding Different Paydown Methods.
    1. Consolidation? Debt Avalanche? Debt Snowball? If you don’t know what these methods are, it’s difficult to focus on one thing at a time. This module teaches you all about those different method.
  6. Understanding Compound Interest and How Your Credit Score is Calculated.
    1. Do you know your credit score? Do you know how your credit card or line of credit calculates interest? If you don’t, this module is for you.
  7. Financial Freedom
    1. Ahhhh yes. Finally, debt-free. Now what? This module will take you through how to become financially free and what the next steps are.

So, if you’re unsure of any of the module breakdowns mentioned above, it sounds like you’ll get LOTS of value out of this course. Come check it out. You can learn more about it here.

May 15, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

We’ve been in isolation now for what seriously seems like forever. But the time is flying by, isn’t it? Our coaching division has been working diligently with our clients to help them navigate through this time, and I’ve compiled a list of ways to help clients cut back and think outside of the box to stretch their dollars the furthest. Here are some that may help you if you’re finding that funds are tight.

Take This Opportunity to Clean the House and Sell Your Unused Stuff: Have you ever taken a step back and thought about how much stuff you have but never use? Craigslist, LetGo, Kijiji, Bunz, Facebook Marketplace are some of the amazing platforms out there that allow you to sell and buy used (if you need anything). Not only will it feel amazing to get rid of everything, but if you can free up some cash, it will help in the long run. One person’s trash really is another person’s treasure!

Do You Have Any Reward Points That You Can Use?: I don’t know about you, but I’ve been accumulating PC Points for years. I signed onto my PC Points last week and found that I had $500 worth of free groceries. WINNING! So, then I started to look at some of my other rewards points that I’ve been accumulating all of these years and found that I had $100’s of dollars in reward points. This is the PERFECT time to use those points if you find that you’re strapped for cash. Air Miles? Coffee rewards? Points from your bank? Sign onto your platforms and see what you have and start to use them if you need. Also take a look at unused gift cards!

If You Absolutely NEED to Shop: Have you Heard of Rakuten? We all have things that we absolutely need right now. Perhaps those necessities can be purchased through Rakuten. It’s a website that gives you cash back on purchases that you’d be making in-store anyways. And if you use this link, you'll get $5 cash back on your first purchase!

Take a Look at Your Insurance: Do you have insurance on two or more cars that you’re not driving right now? Time to call your provider and cut one of the monthly car insurance premiums. If you’re able to drive one car between a family, you might as well scrap the monthly cost for the time being. Have you read the fine print of your insurance premiums? Maybe you haven’t taken a look at your insurance policies in a while. There are a few really awesome websites out there such as PolicyAdvisor and PolicyMe that will provide you with a quote in minutes. You can compare them to the policies you currently have. Maybe you can save a few bucks every month by making the switch.

Get Rid of Those Pesky Monthly Bank Fees: I've always asked my friends why they're paying a financial institution a monthly bank fee to take out their own hard-earned money? Unless you actually need a service that a No-Fee bank cannot provide you with, this idea has never made sense to me. Bank fees typically range anywhere from $5-$30/month, but it doesn't need to be that way. There are TONS of no-fee banking options out there that also offer high-interest savings accounts. Here are a few of them; Simplii Financial, Tangerine, and EQ Bank.

I know that times are tough right now, but with a little more thinking outside of the box, I’m sure there are a few other ways that you can think of. Feel free to share them with us!

Apr 21, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Looking for a few extra ways to cut back during COVID19? We’ve compiled our top 5 list of proven ways that you can cut back on your spending to allocate your finances to what’s most important to you during these tough times.

  1. Call current utility providers and ask for a better deal. I recently called my car insurance provider and cut back on my annual premiums by $150. It took me 5 minutes on the phone, and I was able to cut back on my car insurance since I’m no longer driving anywhere. You can do the same with all of your recurring bills. You just have to make time to call. And most of us now have the time! This is always something that you should always do on a yearly basis. Negotiate, negotiate, negotiate. 
  2. A lot of the restaurants are no longer open, so your dining out and coffee bills are probably minimal. This is a good thing. Take this as an opportunity to get ahead of your spending and cut back in dining out as much as possible. This should also be a good opportunity to learn about your habits and how much you spend on a monthly basis on areas that may leave your wallet empty.
  3. Sell unwanted stuff on Craigslist, Kijiji, Facebook Marketplace, or other apps like LetGo and Bunz. This is the PERFECT time to organize your house and go through your stuff to figure out what you need, and what you could sell for a little extra cash in your pocket.
  4. Negotiate your Mortgage or look into a refinance. With dropping interest rates in Canada, it would be a good time to take a look at your mortgage and look into refinancing at a lower rate if it makes sense. Talk to your bank representative or connect with a mortgage broker.
  5. Organize your pantry and make a shopping list when grocery shopping. If you already have lots of dry goods in your pantry, this will assist in not repurchasing it. Use up when you need and organize your pantry so that you know exactly what you have. On top of that, when you go grocery shopping, there is often a discount section for produce at the grocery store where products can be anywhere from 30-50% off. If you’re anything like me, I like to do my grocery shopping on Sundays which is also when I prepare my food for the week. I always hit up this discount section first to fulfil whatever I can in my shopping list. That extra 30-50% in money saved goes a long way and you’ll see this reflected in your grocery bill.

Some of these techniques have helped our own coaching clients save $1000's per month by executing on these tasks. It's a good time to start to analyze your credit card bills to make sure that you're not spending money on something you're not using. 

And now is the perfect time to do so, since we all have a little bit more time on our hands. 

Apr 04, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

In light of everything that’s going on in the world right now, I thought there was no better time to write about managing your cash flow. Hundreds of thousands of Canadians have lost their jobs and income over the last few weeks, and they’re scrambling. This is not good. And from what I’m seeing, I think this is going to be a wakeup call for a lot of people. I wish things didn’t have to be this way, but this should be a learning lesson that money is not infinite. It comes and goes. But when it comes, it’s important to manage the crap out of it, and set yourself up for anything that may come.

I find it fascinating (and also scary) that a number of Canadians couldn’t financially support themselves until the end of the month. The amount of calls that the big five banks have received in regard to mortgage deferrals is incredible. Almost 300,000 as of today (April 4, 2020). And the number of people who couldn’t pay their rent on April 1 was through the roof (I’m sure).

However, regardless of where everyone is right now in their financial situation, it’s important to take a step back, look at what you do have, and stretch your dollars as far as you possibly can. Here’s a step by step breakdown on how to approach the next few months. More on managing cash flow in weeks to come, but here’s where to start.  

  1. Sit down and organize your finances. Take a look at your deposit and investment accounts (or look at your Net Worth Tracker if you have one), and understand which accounts are easy to take money from, and which ones aren’t worth touching right now. Write down the total amount of money that you have in all of these accounts.
  1. Figure out how much income you have coming in every month. If you had to apply for EI, or will be applying to any government assistance programs, write down these amounts. If you have other income from other sources, include those as well. I don’t care if it’s a few dollars here and there – every dollar counts.
  1. Print out the last 3-6 months of your credit and debit statements and add up the averages in each category that applies to your spending. Figure out what you spend on a monthly basis. Write it down somewhere.
    1. Fixed Expenses don’t change on a monthly basis (rent/mortgage, insurance premiums, bank fees, etc).
    2. Variable Expenses change every month (grocery bills, dining out, utility bills, etc).
    3. Irregular Expenses are those expenses that happen infrequently (holidays, vacations, car maintenance, annual membership fees, etc).
  1. Analyze. On a monthly average, are you spending more than you currently make? If you are, it means that you have some serious cutting back to do. You have to rework your numbers and completely change your lifestyle around for the time being (and maybe for a little while after that if you didn’t have an emergency account). On top of that, once you have your monthly expenses figured out, does the money in your accounts from Step 1 cover those expenses for the next 3-6 months? Example: if you spend $3000/month on average on everything, do you have $9000-$18,000 sitting somewhere that you can live off of?

Just remember that what we are going through is not permanent. There are going to be sunnier days, and hopefully, we’ve all taken something away from this. There are lessons to be learned, and mindsets to shift. There is no better time than now to actively start learning about personal finance because of how important of a role that it plays in our society.

If you're interested in learning more, please take a look at our website and find some upcoming webinars. www.enrichedacademy.com

Mar 17, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Unless you've been living under a rock within the last week, or have completely shut yourself out from the outside world, you've probably heard that a majority of the services, restaurants, schools, and a majority of Canada, has seen a drastic shift due to COVID19. 

So - what does this mean for your finances? A lot. No need to panic, but it's very important that you grab this bull by the horns and understand how this shut-down will affect the economy.

I'm hoping though, with a little bit more information and education through this blog post, that I'll be able to give you a few tips and exercises that I urge you to do NOW to ensure you can stretch your dollars as far as possible. 

1. Figure out your Net Worth: the best thing to do right now is to sit down and organize all of your finances. What are the values of the assets that you have? Where are they? How easy are they to liquidate? Now, take a look at your liabilities. What do you owe? What are the interest rates?

2. Once you've gotten pretty organized with what you own (assets), and what you owe (liabilities), it's time to look at your cash flow. I suggest (now that we all have some extra time at home), that you print out the last 3-6 months of your credit card and debit transactions, and get real with your spending in as much detail as possible. I want you to figure out what you spend on housing, services, interest rates on outstanding debts, transportation, etc. When you add it all up, what do you spend on a monthly basis? 

3. Time to cut back. There are always ways to cut back in your spending, and there's no better time to do it than now. Restaurants are closed, your favourite coffee shop is cutting back on tables and chairs to socialize at, and we're being told to stay at home. Listen to this advice. It will not only keep you healthy, but it will keep your wallet healthy as well. Take this opportunity to only spend money on the absolute essentials; your mortgage/rent, groceries, monthly services such as internet and cell phone, insurance premiums etc. Nobody knows what the future holds, but it's important that we understand our cash flow as best as we can now so that we can understand how long our savings and assets can sustain us. 

I really wish I had a crystal ball and could tell you when this will all be over. Unfortunately, I can't. But what I can do is urge you to take action with your finances now. Nobody knows what will happen next week, next month, or next year, but let this be a wake-up call for all of us. Make sure that you're always saving for a rainy day, putting money into your emergency fund, and spending less than what you make. Your finances are always evolving and will continue to do so throughout your lifetime. What you do with those finances, at the end of the day, is really what matters. 

Be smart. And stay healthy. 

Feb 09, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

A what?

A Tax-Free Savings Account (TFSA) is a Registered Investment Account that has a whack-load of financial benefits. Want to know why I bolded and underlined the word investment? Because this account will benefit you the most when you hold investments in it, and not use it as a day-to-day savings account. 

Here are some of the main benefits of the TFSA and why you should open one (and use it) right now.  

The Benefits of the TFSA:

  • Any income that you make from investments within this account is tax-free (hence the name). This means that you don't have to claim any income you've made from your investments on your tax return at the end of the year. I'm talking about free investment income here people.

    • Let's take an example - shall we?: Mary Lou Cannary contributed $10,000 into her TFSA on January 1, 2019, and invested it into the S&P500 ETF (VFV). In all of 2019, VFV made a whopping 25.13% return. WEO. What does this mean for Mary Lou Cannary at the end of the year? Well, her investment of $10,000 now has a current market value of $12,513 as of December 31, 2019. Now, because she invested this money within her TFSA, she could withdraw her investment income of $2,513 without paying a gosh-darn penny of income tax. Pretty neat huh? 

  • You can contribute to your TFSA from the age of 18 and do not need a job to open one (unlike the RRSP). The contribution limits change every year, based on inflation (mostly). As of January 1, 2020, you can contribute up to $69,500. If you're unsure of what your contribution room is, you can sign onto your CRA My Account for Individuals and find out. 

    • If you don't have a CRA My Account for Individuals, you should get one. Sign up here

  • The money that you contribute to your TFSA is used with after-tax dollars so there are no taxes to be paid when you withdraw the funds, making the TFSA a relatively liquid investment account (depending on the investment holdings within the account itself). This is a great account to use if you need money on a short or long-term basis; travelling, getting married, downpayment on a house, sending the little ones off to school, beefing up retirement income, etc.

What the TFSA is not:

  • It is NOT a type of investment (contrary to some peoples' belief). You cannot purchase a TFSA. It is an account that is registered with the CRA which has tax benefits to it. Don't just put money into your account and have it sitting there. The whole point is to have your money working for you by investing it in stocks, bonds, mutual funds, ETFs, Reits, etc. 

  • It should not be used as an everyday bank account. Although you can deposit and withdraw into your account when you want, there are some rules surrounding this so make sure you understand them. The CRA really breaks that down here.

    • When I first started investing in my TFSA, I made the mistake of not understanding the rules (because I was an 18-year-old and nobody was there to teach me). Unfortunately, I was taxed by the CRA and had to pay a big chunk of money ($300 buckaroos!). I don't want this happening to you so make sure you know your limits, and play within it. (See what I did there?)

Where Can My TFSA Be Held?

  • At a financial institution of your choice. Your financial advisor will be able to open up a TFSA for you where they actively manage it (just be aware of the fees that you may be incurring as these can sometimes be hidden). 

  • With a Robo-Advisor. This is a great option for those who are trying to get away from the bigger financial institutions, want lower fees, and are big believers in ETFs. 

  • You can Self-Direct it. I do this. And I love it. Low fees, freedom to choose the investments I want, and the money that I make within my TFSA are completely made due to my efforts.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're doing good things (so long as your investments are making money). If you have a TFSA, have money sitting in one of those "high-interest savings accounts",  and you do not need that money any time soon, you may want to rethink your strategy.  

If you haven't opened one yet, get out there and open one up today. You'll be happy you did. If you're still somewhat confused, scared, excited, nervous, and potentially need some one-on-one coaching, contact us for information on our coaching program

Jan 19, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Happy New Year to you. And you. And you and you and you. 

I don't know about you, but I LOVE January 1. 

Why do you ask?

It's the first day of the year when there is not much else to do except set myself up for financial success for the year ahead. 

Our finances are always changing. Every. Single. Day. And it's important to evolve and change along with our finances and ensure that we're adapting as our circumstances change. 

Here are the top 3 things that I accomplished on January 1.

1. I updated my Net Worth Tracker. I love a good Net Worth tracker. It allows me to analyze and understand where all of my finances are, and how they've improved over the last year. 

2. I filled out the Financial Freedom calculator. Every year, I fill out a calculator that determines how much I need to save for the year ahead in order to reach financial freedom. I also use the CRA retirement calculator, which helps me determine what kind of CPP and OAS I'll be receiving when I hit a certain age. You can find that calculator here. https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html. Once I've figured out my CPP and OAS income, then I can go back and fill in the rest. Easy peasy lemon squeezy. Once I have my Financial Freedom number, it's time for me to set up my financial plan. 

3. Go through my budget and understand my cash flow for the year ahead. We all have financial goals. We also all have expenses. It doesn't matter if we work or not, at the end of the day, it costs money to live, and it's important that we understand our expenses on a monthly basis. Personally, this is a big year for me. I just bought a car, I'm going on a trip to Belize in March, and I'm getting married in August. There are a lot of expenses coming up, but I'm not worried. I have a solid understanding of my expenses for the year ahead, and I will have to change my lifestyle for a few months so I can accommodate all of those upcoming expenses. I track every single dollar that I have coming in, and every dollar coming out. I know that most people brush this idea of a budget aside, but what better way to manage your finances than to track it? 

So before you spend another day heading into work, I suggest sitting down and doing some of the above. It will not only help relieve some of the financial stress that you may be facing, but it will help put your finances into perspective and will allow you to focus on what's a priority. 

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

People. Let me bring you up to speed here. Are you still paying the big banks to take out your hard-earned money? How often do you really use a bank teller anymore? You're probably using the ATM and doing most of your banking online, right? And you're still paying monthly bank fees for a Chequing account?

The thought of all of this craziness makes me feel like this...YOU'RE NOT ALONESince launching The Budget Babes back in January; I've had just over 45 consultations and see the same pattern over and over again. People are spending a lot of money on their daily banking fees! Almost 95% of my clients have some kind of monthly fee that they pay without thinking twice about it. And if you do the math, you'll find that you're spending a lot every year. Are your bank fees worth it? If they are, then keep on banking. But if you find that your bank isn't doing that much for you, maybe it's worth making the switch to a no-fee bank account like PC Financial, Tangerine, EQ Bank, or a Credit Union of your choice.

2017 COMPARISON OF BANK FEES
TD CANADA TRUST : 
The TD Minimum Chequing account will cost $3.95/month but can be waived if you keep $2000 or more in your account at the end of each day in the month. You'll get 12 transactions per month ($1.25/each for additional transactions), and access to their online/telephone banking. TD also offers an Every Day Chequing account for $10.95/month. This gives you 25 transactions (anything over $1.25/transaction), free Interac e-transfers and access to their online/telephone banking. TD will waive this $10.95 fee if you keep $3000 or more in your account at the end of each day of the month.  CIBC: Their Everyday Chequing account is $3.90/month. This gives you 12 free transactions (anything over that limit is $1.25/transaction), access to their online/telephone banking, and, well.... that's pretty much it. They also have a Smart Account that is more flexible and charges you based on the number of transactions you make. You could pay as low as $4.95/month up to $14.95/month. This account gives you unlimited transactions, unlimited Interac e-transfers and access to their online service. CIBC will waive this fee if you keep $3000 or more in your account, and you make a recurring transaction or 2 pre-authorized payments each month.

 RBC:
Charges for RBC's day-to-day bank account are $4.00/month. This gives you 12 free transactions (anything over $1.00/transaction), access to their online/telephone banking, and unlimited Interac e-transfers. They also have a No Limit Banking account for $10.95/month which gives you unlimited transactions, unlimited Interac e-transfers, and access to their online/mobile service.  SCOTIABANK: With fees starting at $3.95/month, Scotiabank's Basic Bank account gives you 12 free transactions (anything over $1.25/transaction), 2 free Interac e-transfers, access to their online/telephone banking, and you'll earn SCENE rewards. Their Basic Plan is $10.95/month which includes 25 transactions ($1.25/transaction after you've used the 25), 2 free Interac e-transfers, you'll earn SCENE rewards, and they waive the $10.95 fee if you keep a $3000 minimum as a closing balance after each day. And of course, you receive access to their mobile and online banking.

BMO: 
BMO's Practical Plan will give you 12 free transactions (anything over $1.25/transaction) at a cost of $4.00/month which they waive if you keep a minimum of $2000 in your account at the end of each day. You'll receive unlimited Interac e-transfers, and of course, access to their telephone/online banking. Their Plus Plan will run you $10.95/month which will be waived with a minimum balance of $3000 in your account. This plan allows you 30 transactions, unlimited Interac e-transfers, and telephone/online banking.

Conclusion:
 Do the math! How much are you spending on bank fees? $50/year? $180/year? It really adds up quick and this is for most basic banking plans! There are still premium/small business plans that are offered. Keep in mind that the above information doesn't even include overdraft protection, the cost of paper statements, cheques, and the charges that apply when using a different branded bank machine. The big banks are making billions of dollars every year. Although it's not all from bank fees, it's definitely helping with some profits. Do you need some help getting your personal finances under control? Contact me for a budgeting consultation! Bank fees are one of many tips that I often give to my clients to save money over the long term, but there are so many more tips that I'd love to share with you.

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

People. Let me get real with you for a second. Tax season is upon us, and there is this magical unicorn of an account in Canada called an RRSP (Registered Retirement Savings Plan). It will help you reduce the amount of tax that you owe the government, and/or increase your tax return. Interested? I thought you'd be! I just maxed out my RRSP before the March 1, 2018, deadline. So get on it, open your account, and start contributing!

"BUT ALANNA, I DON'T KNOW WHAT AN RRSP IS?"
Funny you should say that out loud! I had an infographic created last year about the RRSP. Note that the date on the infographic is for 2017 and this year's deadline is March 1, 2018!) And if you're like, "Alanna, I don't want to look at this cool and helpful infographic you made for your readers", then read on Donkey Kong.

What is an RRSP and why should I have one?
A registered retirement savings plan is an account that will help you save for a happy and financially stress-free retirement. Want to live on a boat in the middle of the ocean, scuba diving all day, surrounded by Great White Sharks? Yes. Please. Mountain climb in the middle of Vancouver Island feeding freshly caught salmon to Grizzly bears every day? Fuck, yes - who wouldn't? The RRSP will help you achieve your dream retirement, but you need to start right NOW. There are two main reasons why:
1. The money that you contribute to your RRSP is deductible from your taxable income.
Um.... what?
Example time! Say you made $40,000 in 2017, and contributed $3000 to your RRSP. When it comes time to file your taxes, you can claim that $3,000 contribution as a deduction and can calculate your income as if you’ve made $37,000. This will likely put you in a lower tax bracket, saving you money and/or increasing your tax return. Cool, huh?
Yes. Yes, it is cool.
2. The savings in your RRSP are able to grow tax-free. Within your RRSP you can invest in stocks, mutual funds, ETFs, bonds, and other investments. If you make profits from these investments, they are not taxable until you withdraw the funds, which ideally occurs when you retire. And when you retire and have very little income, you will be in a lower tax bracket than you are now (hopefully) and will have to pay less tax on your withdrawals. Kapeesh?
YAS QUEEN.
sweet BOULDER HOLDERS. how do I start?
You can set up a managed RRSP through a Robo-Advisor like Wealthsimple (which helps to reduce your MER fees, rebalance your portfolio, and is just all around awesome), or you can open one up through your bank, credit union, trust, or insurance company. You can also have your RRSP self-directed, and manage it all on your own (that's what I do!) However, if you'd like to go that route, I'd suggest contacting me for more information on how to do this.
I'm sold! But I need some more facts.

• If you work and file an income tax return, are under 71 years old, and have a social insurance number, you should definitely consider opening up an RRSP. • Your RRSP contribution room changes every year, and is calculated based on the following: ◦ 18% of your earned income from the previous year, with a maximum of $26,230 for the 2017 tax year;
◦ Whatever remaining amount is available after any company contributes to your RRSP. If your company contributes 10% of your earned income from the previous year, you can only contribute the remaining 8%.
• You can withdraw up to $25,000 for a down payment on your first home, and not pay any tax under the Home Buyer’s Plan. However, you have up to 15 years to repay the full amount back into your RRSP. • Wanna go back and hit the books? You can withdraw up to $10,000/year, or up to $20,000 in total to help pay for your education using the Lifelong Learning Plan. All you have to do is repay at least 10%/year for up to ten years.
• It isn’t mandatory that you deduct your RRSP contribution on your tax return in the same year that you made the contribution. You can hold off and deduct it in a future year if you think you will be making more money down the road. So, if you have room in your RRSP and just want to generate some kind of income through an investment, you can just leave it in your RRSP and let that shit grow. Yay compound interest!
• You can set up a spousal/common-law RRSP, which you can contribute to, but your common-law partner/spouse owns. This reduces their taxable income with your help.

RRSP vs TFSA - CONCLUSION
The RRSP and TFSA are great accounts for all Canadians and you should definitely consider opening up one or both of them and start contributing ASAP. Depending on your financial situation and short/long-term goals, one account may be more beneficial than the other. If you are only making $25,000/year and are in a low tax bracket, you'd probably be better off with a TFSA. But let’s say you get a raise and go from making $25,000/year to $60,000/year, it would probably be worth contributing to your RRSP to put yourself into a lower tax bracket, saving you some money at the end of the year.

So there you have it! Everything you need to know about the RRSP. If you're still hella confused and need some more guidance, please contact me! I've helped over 100 millennials and Gen-Y'ers figure out what's best for them and how to get started - and I can help you too!

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Greetings from Wiesbaden, Germany! I've been here for the past week and a half for my Oma's 80th birthday. This is me stuffing my face with the Thanksgiving dinner that we prepared for our German family. Do you know how hard it is to find a Turkey in this country? It's not easy - let me tell you!

Travelling is an important part of my life, and it’s something that I try to do at least once a year. However, it can get expensive, and it’s something that definitely needs to be budgeted for. I’ve met lots of travellers who end up stressing during or after a trip because they’ve dug themselves so deep into debt.One of my personal goals is to help others create and manage their personal finances and budget for short or long-term goals. So, this post is a list of some handy tips to ensure that you have financially stress free travels.

1. Plan and research: 
It’s always smart to have some kind of idea as to where you want to travel to so you can start looking into flights and accommodation. This will be the most expensive part of your travels. Sites like Google Flights, Kayak, Momondo, and Cheapoair will scrounge the Internet for the cheapest flights possible. And with so many great accommodation websites like Airbnb, Couchsurfing, Booking.com, Agoda, Priceline, and Hostelworld, it’s always great to give yourself enough time to find the cheapest nights available in parts of the city you want to explore. It’ll also be helpful to read some travel bloggers who have recently travelled to your destination as they often discuss how much money they spent. On top of your flight and accommodation, you’ll also want to budget enough money for your food and drink, daily excursions, transportation, and a small emergency fund in case anything goes wrong.

2. Budget:  Just like your food, clothes, rent/mortgage, car etc., travel should be a line item in your budget. If it’s something that you foresee doing in the near future, add it into your yearly budget and account for it from the get-go. That way you won’t be scrambling a few weeks/months before you leave, and you’ll have already had some money set aside.

3. Save, Save, Save: When I saved $20,000 for my trip to South America and Southeast Asia in 2015, I took 15% of my paycheques and put it into a high-interest savings account that I didn’t touch. If I had any money left over after all of my bills were paid and my fun was had, it went into a TFSA where I invested in Index Funds. These funds paid out a dividend and gave me between a 5-10% return for that particular year. It’s one thing to save, but investing your savings will help you make money even faster, getting you one step closer to take off.

4. Open a Separate Account: Once you have a rough idea as to how much money you’ll need, open up a separate bank account that’s out of sight, out of mind. A TFSA and/or high-interest savings account is great because it will accumulate interest faster than an everyday savings account. For those who don’t know the first thing about investing, Wealthsimple is a really great platform that makes saving and investing easy and effortless.

5. Be Flexible and Open: When I was in Brazil, I was complaining to this Irish girl that the flight from Chile to Thailand was $2300. She suggested that I try to be a little more flexible with my timing and not look for a direct flight, but rather create my own trip around the world and book different lags of the flight myself. At first, I was a little skeptical but she helped me research some different itineraries and I booked 3 separate flights. Although it took me 48 hours to reach my final destination, I ended up saving over $900. It’s definitely worth being flexible and having an open mind because you can find some really great deals if you just think outside of the box.

  Conclusion? be smart with your money
For those of you who are as gung-ho about seeing the world as I am, be sure to work hard so you can play hard when on the road. The worst thing that could happen is that you start to travel and realize that you don’t have enough money to do the things that you want to do. This is a once in a lifetime opportunity for most. Make sure you’re smart with your money before you takeoff so you can leave your financial stresses on the runway. And as always, if you're planning a trip and need some personal finance guidance, please contact me!

Nov 06, 2019

This is the day that Canadians fell in love with Enriched Academy!

Sep 15, 2023

Enriched Academy Staff

It’s easy to go online these days and get more free financial advice than you know what to do with. There are blogs like this one, hundreds of financial gurus on YouTube, and plenty of online tools and calculators to help us with for everything from credit card repayment to retirement planning. So why then is it so difficult for us to actually implement some of these ideas and techniques and make meaningful changes in our financial life? Are we predestined to be bad with money, or is just that our money mindset is so engrained that it blocks change and continuously holds us back? We all know that our mindset is an important part of acquiring new skills or succeeding at a given task, and when that task is managing our money, a positive money mindset is more important than ever.

How does your history with money affect your money mindset?
A person's history with money can have a significant impact on their beliefs, attitudes, and behaviors related to money. Your upbringing and early experiences with money, such as how your parents managed finances, their attitudes toward spending and saving, and any financial struggles or privileges you experienced as a child, can influence your beliefs and behaviors as an adult. For example, if you grew up in a household where money was tight, you may develop a scarcity mindset and be more frugal or risk averse. Conversely, if you grew up in a financially comfortable environment, you might have a more relaxed attitude toward spending and saving.

Exposure to financial education or the lack thereof can also impact your money mindset. If you were taught the importance of budgeting, saving, and investing from a young age, you may have a more positive and informed money mindset. On the other hand, if you never received any financial education, you might struggle with financial literacy and make less-informed decisions.

Money Myth

Your past financial successes and failures can shape your beliefs about your ability to manage money. If you've experienced financial setbacks or made poor financial decisions in the past, you might develop a fear of financial failure or become overly cautious. Conversely, if you've achieved financial goals or made successful investments, you may have more confidence in your financial abilities.

What role does mindset play in achieving financial goals?
Cultural and societal factors play a role in shaping your money mindset. Different cultures have varying attitudes toward money, savings, debt, and wealth. These cultural norms can influence your beliefs and behaviors regarding money and can perpetuate some damaging money myths. For example, some cultures may prioritize saving for the future, while others may emphasize conspicuous consumption and status. Your money beliefs can also be influenced by the financial behaviors and attitudes of your friends and social circle. If your peers are big spenders and prioritize material possessions, you may feel pressure to do the same. Conversely, if your friends are financially responsible and encourage savings and investments, you may adopt similar habits.

Major life events, such as a windfall inheritance, a job loss, a divorce, or a significant medical expense, can dramatically impact your money mindset. These events can lead to shifts in your financial priorities, risk tolerance, and overall outlook on money. It's essential to recognize that your money mindset is not fixed and can evolve over time. By reflecting on your financial history and identifying how it has influenced your beliefs and behaviors, you can work toward developing a healthier and more balanced approach to money management.

How can I identify and challenge my own money misbeliefs?
Analyzing and changing your relationship with money is an important step toward achieving financial well-being and making more informed financial decisions. Start by reflecting on your past and current financial behaviors, attitudes, and beliefs. Think about how your upbringing, cultural background, and life experiences have shaped your relationship with money. Consider questions such as: What are my financial goals? What are my spending habits? How do I feel about saving and investing? Am I comfortable with financial risk, or am I risk-averse?

Look for recurring patterns or behaviors in your financial history. Do you tend to overspend during certain times of the year? Do you avoid discussing money with family or friends? Recognizing these patterns can help you understand your money mindset better.

Money Management

Are there any practical strategies to improve my money mindset?
Your starting point should be to identify and write down your short-term and long-term financial goals. These could include getting out of debt, saving for retirement, buying a home, or starting a business. Clearly defined goals drive motivation and direction for your financial decisions.

The next step is to create a budget and track your income and expenses. It’s tempting to focus on earning more money as the solution, but effective money management of the income you have now will have a much greater impact on your financial situation. You need to first understand where you are spending your money before you can start trying to implement solutions. If you identify unhealthy spending habits, take steps to change them. There are lots of online tools and applications to make expense tracking a simple task that requires very little time.  It also pays to invest time in learning about personal finance. There are many books, websites, podcasts, and courses available that can help you improve your financial literacy. We offer free, informative webinars every week on a variety of personal finance topics. Understanding financial concepts will instill confidence and teach you the best ways to manage money.

What are negative financial mindsets?
If you hold negative beliefs like "I'll never be good with money" or "Money is the root of all evil", challenge yourself to turn them into positive and constructive beliefs. Ensure your financial goals are realistic and achievable and break larger goals into smaller, actionable steps. Setting unrealistic goals can cause frustration and disappointment that can sap motivation.

Money Management skill

Create a comprehensive financial plan that include ideas to budget and save money, manage debt, and start investing. This could include cutting expenses, setting up automatic savings, or seeking professional help for debt management. Make sure to regularly review your financial progress and adjust your plan as required. Recognize your achievements even if they seem small and stay motivated. You may also want to consider working with a financial coach to get you started, and don't hesitate to seek support from friends or family. Discussing your financial goals and challenges with others can provide valuable insights and encouragement.

Changing your relationship with money takes time and effort — there are no shortcuts to getting good with money. Remember that your relationship with money is a journey, and it can evolve over time with conscious effort and self-awareness. Setbacks are a natural part of the process so be patient with yourself. By regularly analyzing your financial behaviors and beliefs, and taking proactive steps to make positive changes, you can build a healthier and more sustainable relationship with money.

Sep 01, 2023

Enriched Academy Staff

You don’t have to look very hard to find a survey that highlights the poor state of retirement preparedness many Canadians are feeling. An April 2023 survey from tax specialists H&R block found that 53% claim to be behind on their retirement savings, and that they are planning on working part-time to make up the difference when they do retire. BMO didn’t find much better news — their February 2023 study found only 44% of respondents reporting they’re “confident” they’ll have enough money to retire. This was 10% lower than their 2020 survey!

The fact is that most of us don’t need a survey to tell us we are behind on our retirement savings plan. With the rapidly rising cost of food, gas and other necessities combined with drastically higher interest rates on mortgages, we know there isn’t much left to put towards retirement savings at the end of the month. If you find yourself behind on your retirement planning, it's important not to panic. While starting early is ideal, there are steps you can take to catch up and improve your retirement outlook regardless of where you are at right now.

What is retirement planning?

Retirement planning refers to the process of setting and achieving financial goals to ensure a comfortable and secure retirement. It involves making strategic decisions about saving, investing, and managing your finances throughout your working years so that you can maintain your desired lifestyle and cover your expenses after you stop working. Retirement planning takes into consideration factors such as your age, current financial situation, expected retirement age, desired standard of living, life expectancy, and potential sources of income during retirement.

How to plan for retirement in Canada?

Financial planning for retirement starts with carefully evaluating your current situation, including your savings, investments, debts, expenses.... even your tax bracket! Understanding where you stand is the first step toward making a realistic plan. Increasing our savings is where most of us focus, but it is just one of many considerations. For example, do you invest those savings in a tax-advantaged account like an RRSP or TFSA and are you taking full advantage of these accounts? Do you take the time to review the type of investments you hold and analyze your returns, the fees you pay to hold/manage those investments, and adjust the asset allocation/risk of those investments based on your life situation? If you are 35 years old, the type of investments you hold and the associated level of risk is a lot different than someone who is 62 and expecting to retire in 3 years.

Debt is another key consideration. House prices have risen dramatically over the past 10 years and it is getting increasingly difficult to burn the mortgage before retirement. If you have tapped into your equity with a line of credit, what is your plan for eliminating that debt? If you are carrying debt into retirement just make sure you will have the income to service that debt. For example, if your house has a basement suite and renting could cover a substantial part of the mortgage, then maybe you have solved the problem!

Retirement planning

How much money do you need to retire?

It sounds painfully obvious, but most of us haven’t actually determined how much money we will need in retirement. All of us have retirement dreams (or at least expectations) and it’s time to start assigning some costs to those dreams. A lot of major expenses like your home or the kid’s education may be paid, but there are still lots of other things to eat up your income. Are you planning to travel more, and is that five-star resorts or your favourite campground?  Are you staying in your home or downsizing? Will you carry any debt into retirement? Stats Canada found in 2019 that the average over 65 household spent just under $50,000 annually. Things are a lot more expensive now and that figure could easily be $60,000 in 2023, but the point is that there is no average. Retirement spending varies wildly between households and the only way to gain clarity is to sit down and start figuring out a budget that matches your retirement situation and needs.

Consider what age you plan to retire?

As you near retirement you may find your savings rate going up quickly as your monthly expenses diminish. You may want to consider working for a few more years than originally planned and bolster your retirement savings. Delaying the age you start receiving a pension usually means a higher monthly payout (CPP for example) and gives you a chance to max-out tax-sheltered/deferred investment options like an RRSP or TFSA. Working during retirement is another option and although it seems easy enough, keep in mind that you may not have the health, motivation, or be able to find a suitable employment opportunity.

When should you start saving for retirement?

Anyone who is asking this question needs a quick lesson in the power of compound interest over time. Putting $500 in your RRSP every month from age 25 to 65 with a 5% return would yield $725,000 — starting at age 40 would leave you with only $287,000. Sure, you would have contributed a lot more money ($90,000) but the difference at age 65 is shocking! The answer to when to start saving for retirement will always be as early as possible. The second key point about compound interest is that small differences in your rate of return can really add up over the years. If you increased the rate of return in our above example from 5% to 7%, your nest egg would be $1.2 million instead of $725,000! Any retirement financial advisor will tell you that piling up cash in a savings account is not the best way to grow your money. You should consider a mix of investments based on your risk tolerance, timeline to retirement, and financial objectives. You can take the time to educate yourself and manage your own personal savings and investments or check out our  financial coaching program for expert guidance and education.

RRSP

Can I contribute to both an RRSP and a TFSA?

Both the TFSA and RRSP offer great opportunity for retirement tax savings and you can certainly have both. The issue of course is that it may be difficult to set aside 18% of your annual income to maximize your RRSP, and another $6500 every year to maximize your TFSA (especially when you are younger). The choice can be difficult and the optimal solution for tax efficiency will vary based on your income over your working (and retired) life, whether you are saving for a home, whether you may need to withdraw the funds early, and other factors. Understanding the differences between an RRSP and TFSA is the starting point and a little knowledge will go a long way. For example, early withdrawal from an RRSP can be quite punitive compared to a TFSA, so make sure you do your homework and improve your financial literacy to make an informed decision. The same goes for investing the funds in your RRSP and TFSA — your retirement investment plan and the associated fees will play a huge role in determining the size of your retirement fund.

Preparing for retirement is an overwhelming task, so it’s no surprise that so many of us kick it down the road.  Remember that every small effort you make today will add up over time. Start by defining your long-term goals and current financial situation, then list up a few simple action items you can start right away. It could be something basic like digging into your monthly expenses to find more retirement savings, to something much more involved like digging into your mutual funds and ensuring the risk, return, and investment fees meet your expectations and support your retirement goals. Make sure to revisit your retirement plan regularly, it’s not a static process and it’s critical to make adjustments to keep you on track.

Aug 15, 2023

Enriched Academy Staff

Managing your finances as a student requires discipline, planning, and smart decision-making. Avoiding common budgeting and spending mistakes and developing responsible money habits will help you make the most of your student years.  Graduation will be a lot more promising if you are financially stable and ready to take on your new career. Here's some advice, information, and financial tips for students you can use right now to get your finances in order.

What is the first step to effective money management for students?
While student life may seem temporary, it's important to consider your long-term financial goals and how the total cost, and any debts you take on to fund your education, will affect your lifestyle and long-term financial goals post-graduation. For example, if you are planning to buy a home or even finance a car after your studies, you should at least do some basic calculations on what your student loan repayments will be. You have to start repaying them six months after graduation and although Canada Student Loans now carry no interest, repayment of the principal can still be substantial.

Focusing on the present and loading up on student debt while counting on a high-paying job after graduation to bail you out is a recipe for disaster. That job may not materialize and even if it does, you may find that salary doesn’t go near as far as you thought it would once you start living in the real-world. While financial aid is helpful, relying too heavily on it can lead to overspending and financial strain after graduation. If you need to take out student loans, borrow only what you truly need and understand the terms and interest rates associated with them.

How can I handle my student loans responsibly?
The average Canadian student loan (not just the federal portion) for a 2-year college is around $15,000 and $28,000 for a 4-year degree. Student loan repayment terms are flexible and you can adjust the amount and frequency of payments along the way as long as you meet the minimum requirements. If you are thinking bankruptcy might be a way out, keep in mind that this will have very serious repercussions on your credit availability and lifestyle for many years. Student loans are not forgiven if bankruptcy is declared within 7 years of graduation.


While too much debt is a danger, there is no need to completely avoid debt to fund your education. It is often the only option to pay for our studies and education usually provides an excellent, lifetime return on your investment. However, your income as a student is very low and keeping costs to a minimum will put you in a much better position to save, invest, and reach your financial goals once you graduate and enter the work world. It should go without saying, but one of the most common money management tips for students is to continuously search for scholarships, grants, or financial aid opportunities to help limit your student debt.

What are some common budgeting mistakes students should avoid?
The biggest mistake is not having a budget at all. Without a budget, it's easy to overspend and lose track of your finances. A lot of students start out the year in September with a big pile of cash either from a loan, a summer job, or maybe the bank of mom and dad. Ideally, you should pay for your big-ticket necessities right away – tuition or other school fees, dorm fees and meal plan if in student housing, and textbooks or other school supplies. You should also consider some travel costs at this point, are you planning to fly home for the holidays or go on a ski trip at spring break? After you have the big items taken care of, then you can look at how to allocate what’s left on a monthly (or weekly) basis. You don’t want to be out of cash in late February when final exams aren’t until mid-April!

What should I prioritize in my student budget?
The problem with budgets is sticking to them and knowing exactly where and when your spending has gone off the rails. It isn’t that difficult to set up a student budget and assign certain amounts on a weekly or monthly basis. Some expenses like rent, a transit pass, or your cell phone plan are the same every month and you can easily slot in the amount. Other expenses like groceries vary more but you can probably dial in the amount after a couple of months. The real problem is entertainment, dining out, travel, hobbies, or other leisure time activities — spending on these can quickly spiral out of control and leave your budget in pieces.


How do I create a realistic student budget?
The key to effective money management is to track all your expenses and categorize them according to your budget, so you can always see a running total of where you are at. Small, frequent purchases can add up quickly. There are lots of apps to manage finances, or you can use a Google sheet or Excel file... even paper will work! Just makes sure your expense tracking system is quick and easy and get in the habit of updating it at least every few days.

After a few months, your monthly budget planner may need some adjustments.  Your expense tracking may show your original cost estimates are not realistic or maybe you got a part-time job. Your budget is not written in stone and needs to be achievable, so feel free to make changes — as long as you are living within your means and not racking up any additional, unplanned debt.

Impulse buying can easily sink your budget, so take some time to consider if a purchase is really necessary. Be strict with yourself when differentiating between essential and non-essential items and stick to your budget. Take advantage of discounts available to students. Many campus events and activities are free or low-cost. They provide entertainment and opportunities to socialize without straining your budget. Many businesses offer reduced rates for students on transportation, technology, software, entertainment, and more. One of the best way to save money is to cook meals at home or eat in your dormitory cafeteria and limit your restaurant budget to a few special occasions.  If you do split household expenses with roommates, make sure the division of shared bills is fair and worked out beforehand, and that everyone pays on time.

How can I build and maintain a good credit score as a student?
That shiny new student visa card you got from the bank is a great thing to have, but you need to pay it off every month by the due date. In fact, using your credit card for a few purchases each month and paying it off on time will help to establish your credit rating. Paying back your student loans after graduation will also help greatly with your credit rating. On the other hand, not paying off your credit card balance in full is a lot more costly than most people (especially those new to credit cards) realize. If you splashed out $1000 for a spring break trip to Florida and can now only cover the minimum monthly payments, you are going to be paying for that trip for the next 131 months and be on the hook for almost another $1000 in interest charges!

What are some practical ways to save money as a student?
Saving may seem like a luxury as a student, but contributing even a small amount to a tax-free savings account each month from age 18 could be a life-changing habit. They are free and easy to open at an online brokerage and the annual contribution limit of $6500 is the same for everyone and not dependant on employment income. If you ever need the money down the road a few years it can easily be withdrawn and even $100/monthly over the course of your working life from age 18 will compound into hundreds of thousands of dollars by retirement age.

If your schedule allows, consider getting a part-time job or freelancing gig to supplement your income. Just be careful not to overload yourself to the detriment of your studies. Be conservative when estimating your income to avoid budget shortfalls and try to set aside a portion of your income for an emergency fund to cover unexpected expenses and reduce the need to rely on credit cards or additional debt.

Failure to manage your money as a student doesn’t bode well to manage your finances as an adult. Remember, the habits you develop as a student are hard to change and will shape your financial future. Self-discipline and making informed decisions are key to effectively managing your money. Financial education pays and improving your financial literacy will only become more important and more valuable as you grow older. Developing good money management skills as a student will benefit you long after you graduate.

Sep 15, 2023

Enriched Academy Staff

It’s easy to go online these days and get more free financial advice than you know what to do with. There are blogs like this one, hundreds of financial gurus on YouTube, and plenty of online tools and calculators to help us with for everything from credit card repayment to retirement planning. So why then is it so difficult for us to actually implement some of these ideas and techniques and make meaningful changes in our financial life? Are we predestined to be bad with money, or is just that our money mindset is so engrained that it blocks change and continuously holds us back? We all know that our mindset is an important part of acquiring new skills or succeeding at a given task, and when that task is managing our money, a positive money mindset is more important than ever.

How does your history with money affect your money mindset?
A person's history with money can have a significant impact on their beliefs, attitudes, and behaviors related to money. Your upbringing and early experiences with money, such as how your parents managed finances, their attitudes toward spending and saving, and any financial struggles or privileges you experienced as a child, can influence your beliefs and behaviors as an adult. For example, if you grew up in a household where money was tight, you may develop a scarcity mindset and be more frugal or risk averse. Conversely, if you grew up in a financially comfortable environment, you might have a more relaxed attitude toward spending and saving.

Exposure to financial education or the lack thereof can also impact your money mindset. If you were taught the importance of budgeting, saving, and investing from a young age, you may have a more positive and informed money mindset. On the other hand, if you never received any financial education, you might struggle with financial literacy and make less-informed decisions.

Money Myth

Your past financial successes and failures can shape your beliefs about your ability to manage money. If you've experienced financial setbacks or made poor financial decisions in the past, you might develop a fear of financial failure or become overly cautious. Conversely, if you've achieved financial goals or made successful investments, you may have more confidence in your financial abilities.

What role does mindset play in achieving financial goals?
Cultural and societal factors play a role in shaping your money mindset. Different cultures have varying attitudes toward money, savings, debt, and wealth. These cultural norms can influence your beliefs and behaviors regarding money and can perpetuate some damaging money myths. For example, some cultures may prioritize saving for the future, while others may emphasize conspicuous consumption and status. Your money beliefs can also be influenced by the financial behaviors and attitudes of your friends and social circle. If your peers are big spenders and prioritize material possessions, you may feel pressure to do the same. Conversely, if your friends are financially responsible and encourage savings and investments, you may adopt similar habits.

Major life events, such as a windfall inheritance, a job loss, a divorce, or a significant medical expense, can dramatically impact your money mindset. These events can lead to shifts in your financial priorities, risk tolerance, and overall outlook on money. It's essential to recognize that your money mindset is not fixed and can evolve over time. By reflecting on your financial history and identifying how it has influenced your beliefs and behaviors, you can work toward developing a healthier and more balanced approach to money management.

How can I identify and challenge my own money misbeliefs?
Analyzing and changing your relationship with money is an important step toward achieving financial well-being and making more informed financial decisions. Start by reflecting on your past and current financial behaviors, attitudes, and beliefs. Think about how your upbringing, cultural background, and life experiences have shaped your relationship with money. Consider questions such as: What are my financial goals? What are my spending habits? How do I feel about saving and investing? Am I comfortable with financial risk, or am I risk-averse?

Look for recurring patterns or behaviors in your financial history. Do you tend to overspend during certain times of the year? Do you avoid discussing money with family or friends? Recognizing these patterns can help you understand your money mindset better.

Money Management

Are there any practical strategies to improve my money mindset?
Your starting point should be to identify and write down your short-term and long-term financial goals. These could include getting out of debt, saving for retirement, buying a home, or starting a business. Clearly defined goals drive motivation and direction for your financial decisions.

The next step is to create a budget and track your income and expenses. It’s tempting to focus on earning more money as the solution, but effective money management of the income you have now will have a much greater impact on your financial situation. You need to first understand where you are spending your money before you can start trying to implement solutions. If you identify unhealthy spending habits, take steps to change them. There are lots of online tools and applications to make expense tracking a simple task that requires very little time.  It also pays to invest time in learning about personal finance. There are many books, websites, podcasts, and courses available that can help you improve your financial literacy. We offer free, informative webinars every week on a variety of personal finance topics. Understanding financial concepts will instill confidence and teach you the best ways to manage money.

What are negative financial mindsets?
If you hold negative beliefs like "I'll never be good with money" or "Money is the root of all evil", challenge yourself to turn them into positive and constructive beliefs. Ensure your financial goals are realistic and achievable and break larger goals into smaller, actionable steps. Setting unrealistic goals can cause frustration and disappointment that can sap motivation.

Money Management skill

Create a comprehensive financial plan that include ideas to budget and save money, manage debt, and start investing. This could include cutting expenses, setting up automatic savings, or seeking professional help for debt management. Make sure to regularly review your financial progress and adjust your plan as required. Recognize your achievements even if they seem small and stay motivated. You may also want to consider working with a financial coach to get you started, and don't hesitate to seek support from friends or family. Discussing your financial goals and challenges with others can provide valuable insights and encouragement.

Changing your relationship with money takes time and effort — there are no shortcuts to getting good with money. Remember that your relationship with money is a journey, and it can evolve over time with conscious effort and self-awareness. Setbacks are a natural part of the process so be patient with yourself. By regularly analyzing your financial behaviors and beliefs, and taking proactive steps to make positive changes, you can build a healthier and more sustainable relationship with money.

Sep 01, 2023

Enriched Academy Staff

You don’t have to look very hard to find a survey that highlights the poor state of retirement preparedness many Canadians are feeling. An April 2023 survey from tax specialists H&R block found that 53% claim to be behind on their retirement savings, and that they are planning on working part-time to make up the difference when they do retire. BMO didn’t find much better news — their February 2023 study found only 44% of respondents reporting they’re “confident” they’ll have enough money to retire. This was 10% lower than their 2020 survey!

The fact is that most of us don’t need a survey to tell us we are behind on our retirement savings plan. With the rapidly rising cost of food, gas and other necessities combined with drastically higher interest rates on mortgages, we know there isn’t much left to put towards retirement savings at the end of the month. If you find yourself behind on your retirement planning, it's important not to panic. While starting early is ideal, there are steps you can take to catch up and improve your retirement outlook regardless of where you are at right now.

What is retirement planning?

Retirement planning refers to the process of setting and achieving financial goals to ensure a comfortable and secure retirement. It involves making strategic decisions about saving, investing, and managing your finances throughout your working years so that you can maintain your desired lifestyle and cover your expenses after you stop working. Retirement planning takes into consideration factors such as your age, current financial situation, expected retirement age, desired standard of living, life expectancy, and potential sources of income during retirement.

How to plan for retirement in Canada?

Financial planning for retirement starts with carefully evaluating your current situation, including your savings, investments, debts, expenses.... even your tax bracket! Understanding where you stand is the first step toward making a realistic plan. Increasing our savings is where most of us focus, but it is just one of many considerations. For example, do you invest those savings in a tax-advantaged account like an RRSP or TFSA and are you taking full advantage of these accounts? Do you take the time to review the type of investments you hold and analyze your returns, the fees you pay to hold/manage those investments, and adjust the asset allocation/risk of those investments based on your life situation? If you are 35 years old, the type of investments you hold and the associated level of risk is a lot different than someone who is 62 and expecting to retire in 3 years.

Debt is another key consideration. House prices have risen dramatically over the past 10 years and it is getting increasingly difficult to burn the mortgage before retirement. If you have tapped into your equity with a line of credit, what is your plan for eliminating that debt? If you are carrying debt into retirement just make sure you will have the income to service that debt. For example, if your house has a basement suite and renting could cover a substantial part of the mortgage, then maybe you have solved the problem!

Retirement planning

How much money do you need to retire?

It sounds painfully obvious, but most of us haven’t actually determined how much money we will need in retirement. All of us have retirement dreams (or at least expectations) and it’s time to start assigning some costs to those dreams. A lot of major expenses like your home or the kid’s education may be paid, but there are still lots of other things to eat up your income. Are you planning to travel more, and is that five-star resorts or your favourite campground?  Are you staying in your home or downsizing? Will you carry any debt into retirement? Stats Canada found in 2019 that the average over 65 household spent just under $50,000 annually. Things are a lot more expensive now and that figure could easily be $60,000 in 2023, but the point is that there is no average. Retirement spending varies wildly between households and the only way to gain clarity is to sit down and start figuring out a budget that matches your retirement situation and needs.

Consider what age you plan to retire?

As you near retirement you may find your savings rate going up quickly as your monthly expenses diminish. You may want to consider working for a few more years than originally planned and bolster your retirement savings. Delaying the age you start receiving a pension usually means a higher monthly payout (CPP for example) and gives you a chance to max-out tax-sheltered/deferred investment options like an RRSP or TFSA. Working during retirement is another option and although it seems easy enough, keep in mind that you may not have the health, motivation, or be able to find a suitable employment opportunity.

When should you start saving for retirement?

Anyone who is asking this question needs a quick lesson in the power of compound interest over time. Putting $500 in your RRSP every month from age 25 to 65 with a 5% return would yield $725,000 — starting at age 40 would leave you with only $287,000. Sure, you would have contributed a lot more money ($90,000) but the difference at age 65 is shocking! The answer to when to start saving for retirement will always be as early as possible. The second key point about compound interest is that small differences in your rate of return can really add up over the years. If you increased the rate of return in our above example from 5% to 7%, your nest egg would be $1.2 million instead of $725,000! Any retirement financial advisor will tell you that piling up cash in a savings account is not the best way to grow your money. You should consider a mix of investments based on your risk tolerance, timeline to retirement, and financial objectives. You can take the time to educate yourself and manage your own personal savings and investments or check out our  financial coaching program for expert guidance and education.

RRSP

Can I contribute to both an RRSP and a TFSA?

Both the TFSA and RRSP offer great opportunity for retirement tax savings and you can certainly have both. The issue of course is that it may be difficult to set aside 18% of your annual income to maximize your RRSP, and another $6500 every year to maximize your TFSA (especially when you are younger). The choice can be difficult and the optimal solution for tax efficiency will vary based on your income over your working (and retired) life, whether you are saving for a home, whether you may need to withdraw the funds early, and other factors. Understanding the differences between an RRSP and TFSA is the starting point and a little knowledge will go a long way. For example, early withdrawal from an RRSP can be quite punitive compared to a TFSA, so make sure you do your homework and improve your financial literacy to make an informed decision. The same goes for investing the funds in your RRSP and TFSA — your retirement investment plan and the associated fees will play a huge role in determining the size of your retirement fund.

Preparing for retirement is an overwhelming task, so it’s no surprise that so many of us kick it down the road.  Remember that every small effort you make today will add up over time. Start by defining your long-term goals and current financial situation, then list up a few simple action items you can start right away. It could be something basic like digging into your monthly expenses to find more retirement savings, to something much more involved like digging into your mutual funds and ensuring the risk, return, and investment fees meet your expectations and support your retirement goals. Make sure to revisit your retirement plan regularly, it’s not a static process and it’s critical to make adjustments to keep you on track.

Aug 15, 2023

Enriched Academy Staff

Managing your finances as a student requires discipline, planning, and smart decision-making. Avoiding common budgeting and spending mistakes and developing responsible money habits will help you make the most of your student years.  Graduation will be a lot more promising if you are financially stable and ready to take on your new career. Here's some advice, information, and financial tips for students you can use right now to get your finances in order.

What is the first step to effective money management for students?
While student life may seem temporary, it's important to consider your long-term financial goals and how the total cost, and any debts you take on to fund your education, will affect your lifestyle and long-term financial goals post-graduation. For example, if you are planning to buy a home or even finance a car after your studies, you should at least do some basic calculations on what your student loan repayments will be. You have to start repaying them six months after graduation and although Canada Student Loans now carry no interest, repayment of the principal can still be substantial.

Focusing on the present and loading up on student debt while counting on a high-paying job after graduation to bail you out is a recipe for disaster. That job may not materialize and even if it does, you may find that salary doesn’t go near as far as you thought it would once you start living in the real-world. While financial aid is helpful, relying too heavily on it can lead to overspending and financial strain after graduation. If you need to take out student loans, borrow only what you truly need and understand the terms and interest rates associated with them.

How can I handle my student loans responsibly?
The average Canadian student loan (not just the federal portion) for a 2-year college is around $15,000 and $28,000 for a 4-year degree. Student loan repayment terms are flexible and you can adjust the amount and frequency of payments along the way as long as you meet the minimum requirements. If you are thinking bankruptcy might be a way out, keep in mind that this will have very serious repercussions on your credit availability and lifestyle for many years. Student loans are not forgiven if bankruptcy is declared within 7 years of graduation.


While too much debt is a danger, there is no need to completely avoid debt to fund your education. It is often the only option to pay for our studies and education usually provides an excellent, lifetime return on your investment. However, your income as a student is very low and keeping costs to a minimum will put you in a much better position to save, invest, and reach your financial goals once you graduate and enter the work world. It should go without saying, but one of the most common money management tips for students is to continuously search for scholarships, grants, or financial aid opportunities to help limit your student debt.

What are some common budgeting mistakes students should avoid?
The biggest mistake is not having a budget at all. Without a budget, it's easy to overspend and lose track of your finances. A lot of students start out the year in September with a big pile of cash either from a loan, a summer job, or maybe the bank of mom and dad. Ideally, you should pay for your big-ticket necessities right away – tuition or other school fees, dorm fees and meal plan if in student housing, and textbooks or other school supplies. You should also consider some travel costs at this point, are you planning to fly home for the holidays or go on a ski trip at spring break? After you have the big items taken care of, then you can look at how to allocate what’s left on a monthly (or weekly) basis. You don’t want to be out of cash in late February when final exams aren’t until mid-April!

What should I prioritize in my student budget?
The problem with budgets is sticking to them and knowing exactly where and when your spending has gone off the rails. It isn’t that difficult to set up a student budget and assign certain amounts on a weekly or monthly basis. Some expenses like rent, a transit pass, or your cell phone plan are the same every month and you can easily slot in the amount. Other expenses like groceries vary more but you can probably dial in the amount after a couple of months. The real problem is entertainment, dining out, travel, hobbies, or other leisure time activities — spending on these can quickly spiral out of control and leave your budget in pieces.


How do I create a realistic student budget?
The key to effective money management is to track all your expenses and categorize them according to your budget, so you can always see a running total of where you are at. Small, frequent purchases can add up quickly. There are lots of apps to manage finances, or you can use a Google sheet or Excel file... even paper will work! Just makes sure your expense tracking system is quick and easy and get in the habit of updating it at least every few days.

After a few months, your monthly budget planner may need some adjustments.  Your expense tracking may show your original cost estimates are not realistic or maybe you got a part-time job. Your budget is not written in stone and needs to be achievable, so feel free to make changes — as long as you are living within your means and not racking up any additional, unplanned debt.

Impulse buying can easily sink your budget, so take some time to consider if a purchase is really necessary. Be strict with yourself when differentiating between essential and non-essential items and stick to your budget. Take advantage of discounts available to students. Many campus events and activities are free or low-cost. They provide entertainment and opportunities to socialize without straining your budget. Many businesses offer reduced rates for students on transportation, technology, software, entertainment, and more. One of the best way to save money is to cook meals at home or eat in your dormitory cafeteria and limit your restaurant budget to a few special occasions.  If you do split household expenses with roommates, make sure the division of shared bills is fair and worked out beforehand, and that everyone pays on time.

How can I build and maintain a good credit score as a student?
That shiny new student visa card you got from the bank is a great thing to have, but you need to pay it off every month by the due date. In fact, using your credit card for a few purchases each month and paying it off on time will help to establish your credit rating. Paying back your student loans after graduation will also help greatly with your credit rating. On the other hand, not paying off your credit card balance in full is a lot more costly than most people (especially those new to credit cards) realize. If you splashed out $1000 for a spring break trip to Florida and can now only cover the minimum monthly payments, you are going to be paying for that trip for the next 131 months and be on the hook for almost another $1000 in interest charges!

What are some practical ways to save money as a student?
Saving may seem like a luxury as a student, but contributing even a small amount to a tax-free savings account each month from age 18 could be a life-changing habit. They are free and easy to open at an online brokerage and the annual contribution limit of $6500 is the same for everyone and not dependant on employment income. If you ever need the money down the road a few years it can easily be withdrawn and even $100/monthly over the course of your working life from age 18 will compound into hundreds of thousands of dollars by retirement age.

If your schedule allows, consider getting a part-time job or freelancing gig to supplement your income. Just be careful not to overload yourself to the detriment of your studies. Be conservative when estimating your income to avoid budget shortfalls and try to set aside a portion of your income for an emergency fund to cover unexpected expenses and reduce the need to rely on credit cards or additional debt.

Failure to manage your money as a student doesn’t bode well to manage your finances as an adult. Remember, the habits you develop as a student are hard to change and will shape your financial future. Self-discipline and making informed decisions are key to effectively managing your money. Financial education pays and improving your financial literacy will only become more important and more valuable as you grow older. Developing good money management skills as a student will benefit you long after you graduate.

Aug 01, 2023

Enriched Academy Staff

As adults, we all know the critical importance of managing money wisely and the impact our financial situation has on our overall well-being. By equipping our children with financial literacy from an early age, we empower them to make informed decisions, set financial goals, and build financial independence.

As parents we do our best, but there are lots of life lessons we need to teach, and teaching about money doesn’t always top the list. We may also not be the best person for the job since around 50% of adult Canadians live paycheque-to-paycheque! Case in point, many well-meaning parents set their kids up with a bank account, but they should actually open two accounts, one for spending and another for saving (just like adults should be doing!). So how do we choose what financial lessons, habits, and tactics to teach our children, especially if our own money management skills may be lacking?

For many years, Enriched Academy has been working with provincial governments, education boards, colleges, and universities across Canada to support students and teachers with an informative and entertaining package of learning resources to help youth get money smart. We are continuously refining our school programs based on student and teacher feedback, changes in the economy or legislation, and the latest trends in personal finance. We know that learning about money management from an early age will set them up for a lifetime of good financial habits. Financial education for kids is what we do, and we have compiled the following list of lessons, techniques, and the factors you should be considering when it comes to teaching your kids about money.


What are some age-appropriate money lessons for young children?
Give your child a regular allowance, just don’t call it an allowance! Weekly ‘pay’ starting around age seven is a good idea but be careful — it’s not something that’s received, it’s earned — and children need to know the difference.  A checklist of weekly tasks and some amount of pay attached to each one is a great way to instill this idea. Reinforce the concept by designating a regular ‘payday’ each week. This allows children to learn from a young age that that work is the basis for earning money. When they get a little older, encourage them to allocate a portion of their ‘pay’ for spending, saving, and giving to others or charitable causes.

Wants vs needs & cost vs value
Teach children to differentiate between needs and wants and how to prioritize what they spend their money on. Value and cost are two more important concepts to differentiate. A top-of-the-line iPhone or a carbon-fiber mountain bike will really impress their teenage friends, but a cheaper version may perform very similarly and provide a lot more value, especially given the limited amount of funds they have. Kids are bombarded by marketing messages, and they need to learn how to avoid hype and be objective, so they can make smart financial decisions. There is a reason plenty of rich folks (even billionaires like Warren Buffett) drive basic cars – it’s all they really need.   If your teen or tween wants the latest and greatest must-have item, challenge them to explain the value beyond being new, trendy, or fashionable. When they want to buy something, encourage them to research the product, read reviews, and compare prices to make informed decisions.

For younger children, don’t always limit them to buying things that meet your threshold for play value or quality – let them buy some junk once in a while and use the opportunity to turn it into a lesson about quality and value. A mood ring is usually interesting for about a day-and-a-half, and $5 won’t break the bank. If someone learns to better evaluate their purchases in the future, it was a cheap lesson.

Introduce basic investing concepts
As kids get older, introduce them to basic investing and the concept of how to make money with money. Explain how investments can grow over time and the power of compound interest. Should you buy a stock (or an ETF, GIC, mutual fund or some other financial product) for a 12-year-old… absolutely!  There are lots of kids out there with parents who invested the time to explain shareholding and how it works at a level they can understand. Kids are very familiar with many publicly traded companies like Disney, Roblox, Mattel and McDonalds. Holding a few shares (in an informal trust account or simply in your name) may not return enough to put them through college, but it will teach them the basics of investing, risk and return for managing their finances in the future. 


It sounds so cliched to say, “make savings a habit” and it really is only half the picture — your teenagers should be saving and INVESTING a portion of their income regardless of how insignificant it may seem. Developing a saving mindset early in life will pay back over the course of a lifetime, but developing an investing mindset will pay back HUGE over the course of a lifetime and set your kids up for long-term financial security and wealth building. As soon as your kids turn 18, have them open a tax-free savings account (TFSA) even if they can only muster $50 or $100 monthly to contribute.

Teach about credit and debt:
Introduce the concept of credit and debt in age-appropriate terms. Explain how credit cards work, the importance of responsible credit card use, and the consequences of accumulating debt. Don’t give an advance on their allowance! The number one financial problem in Canada from young adults to retirees is spending money they don’t have – usually with a high-interest credit card. The need for instant gratification is an ongoing battle but developing resistance at an early age will help keep the urge under control in adulthood. Practice delayed gratification and help your kids understand that they cannot always get what they want immediately.

Why is it important to teach kids about money management?
Credit is very easy to access these days and even first-year post-secondary students are often able to get a credit card. Easy access to credit cards (with generous spending limits and 20% or more interest!) and a few spontaneous/poorly thought-out spending decisions can derail a future before it even gets started. Failing to understand the impact and obligations of a student loan can also lead to a nasty surprise when it comes time to repay that money or get a car loan or mortgage down the road. Although federally issued Canada Student Loans are now interest-free, provincial loans may still carry interest. Either way, your kids need to realize that a student loan isn’t free money and that paying it back will definitely crimp their post-graduation lifestyle. Many parents are quite literally paying the price for their kid’s financial mistakes, and it can continue long after they are no longer children!

How can I explain the concept of saving money to my kids?
Help your kids set short-term and long-term financial goals. Whether it's saving for a new toy or saving for college, having goals encourages discipline and delayed gratification. For large-ticket items, set up a savings goal and create a tracking chart together with your kids so they can visualize their progress. Celebrate financial milestones and acknowledge their financial achievements, such as reaching savings goals or making smart financial choices. Positive reinforcement encourages good financial habits.

Should I involve my child in family financial discussions?
While you may not want them balancing the cheque book, involving your kids in family financial discussions is a great way to see what they know (and don’t know!) and provide a few timely lessons. It will also encourage them to come to you when they have money questions and need some guidance. Planning a family vacation together is great for teaching teens about budgeting and balancing wants versus needs. They will learn a lot about tradeoffs and how a nicer hotel with an amazing pool may come at the cost of eliminating a particular excursion.... or find other solutions such as grabbing lunch at a supermarket or convenience store instead of a sit-down restaurant.


Open one bank account for spending and one for saving
Bank accounts are free and easy to get online, and having two accounts is one of the best ways to manage money. It’s a very effective and easy way to control spending and ensure your offspring are hitting their savings goals. Whether it’s a birthday cheque from grandma or earnings from a part-time job, make an agreement with your kids to ‘pay themselves first” and put 15% (or more) into a high-interest savings account. The balance of the funds can go into a daily chequing account with a debit card, and they can spend that as they like. Don’t let them dip into their savings account (unless they are parking cash there for a pre-determined, ‘big-ticket’ item).

Teach teens about financial scams
Education and awareness about common financial scams and how to protect themselves from fraud and identity theft is a critical aspect of money management for teens. Our seemingly computer savvy youth often take for granted the importance of safeguarding their financial information. Passwords and PIN numbers need to be protected, never shared, and changed on a regular basis. Young adults also need to be able to detect the proliferation of increasingly sophisticated telephone and online scams.

Conclusion
Remember that financial education is an ongoing process, and it's essential to tailor your approach to your child's age and level of understanding as they learn about money. The key is to make financial education practical, relatable, and enjoyable, so they can build a strong foundation for their financial future. Encourage openness about money and create an environment where youth feel comfortable discussing money matters with you. Starting to instill good money habits from an early age and being a supportive resource as they develop their financial skills will help your money-savvy kids grow into financially responsible, money-savvy adults.

Jul 15, 2023

Enriched Academy Staff

Traditional real estate investing for most small investors means investing in a property (home, condo, etc.) outright and becoming a landlord. Whether you choose to manage the day-to-day duties or farm them out to a property management company is up to you. Either way, you have to come up with the funds/financing to purchase the home and that may be more money than you can get your hands on or more risk than you are willing to take. This approach may still be viable and suit some investors, but there are several options when it comes to real estate investment opportunities.

Can you still make money from a rental property?

Until the sharp rise in interest rates, low mortgage rates combined with escalating home prices (and an increasing pool of equity to borrow from) made buying a rental property in Canada a viable and profitable investment for homeowners. Even if you failed to generate positive cash flow based on your rental income and expenses, the increase in the value of the home would have likely made up for your miscalculations and made it a good investment. Fast forward to the present and we now see a very different situation. Variable rate mortgages that were around 2% are now closer to 7% and investment property mortgage rates may be even higher. Although home prices have rebounded sharply in many areas since the lows of early 2023, rising interest rates may once again slow down demand and there is a lot of uncertainty on which way home prices may go.

On the other hand, rents continue to rise in almost every market and over the last two years have increased by around 20% according to Rentals.ca. The housing shortage in many Canadian markets may put continued upward pressure on both rent and home valuations going forward. Investors will have to contend with higher financing costs and a lot of short-term uncertainty around which way home prices will go, but things may be looking up if you are thinking of entering the rental property market. Your financing costs, home valuations and rent trends/prices in your targeted market all need to go into your calculations.

Registered Education Saving Plan (RESP)

What are some potential risks or challenges associated with real estate investments?

Don’t be swayed by those reality TV programs that show how you can't miss at buying a fixer-upper and after a few renos, start raking in “easy money”. It can be done for sure, but there is a lot more that goes into evaluating an investment property than simply comparing the monthly rent cheque to the mortgage payment.

For example, property taxes can rise 5% (or more) annually in many municipalities and repairs and maintenance costs can be hard to estimate. If you have had any work done on your house lately, you already know the cost for both labour and materials has gone through the roof!

Managing rental homes is time consuming and you will also have to consider whether you have the skills to find great tenants, collect the rent, and take care of the maintenance. Relying on the convenience of a property management company is an option, but how do you find a reliable one and how much of your profits will that drain away?

Although the demand for rental housing is super strong in most markets, major repairs or delays with finding/vetting tenants could leave you with no rental income for a few months and some hefty bills to cover. Investing in homes is no guarantee of a steady stream of payments.

It is more important than ever to crunch the numbers and ensure your projected cash flow remains positive because those enviable gains in equity of the past few years may not be there to bail you out. You should hedge that bet by remaining cashflow positive every month and taking a long-term view when it comes to cashing in on any potential increase in the value of the property.

Registered Education Saving Plan (RESP)

Can I participate in real estate investment without owning property?

A lot of money and time goes into owning a rental property and that represents a significant barrier to entry. You will need a 20% down payment to get a mortgage if you don't plan on living in the property and that that may be more than you can get (or want to risk), especially if you are leveraging the value in your current home to source the funds. Being a landlord can also be time consuming and stressful. Fortunately, if you would like to dabble without going “all-in” there are few non-ownership real estate investment options.

What is a Real Estate Investment Trust (REIT) and what are the benefits?

A REIT is a company that owns and/or manages a portfolio of properties that could include commercial buildings, apartments, shopping centers, residential homes, offices, and other types of real estate. The diversity and mix of properties vary from one REIT to the next and there are currently around 35 REITS trading on the TSX. A REIT can be held in your RRSP or TFSA.

REITS are unlike stocks in that investors are usually paid a monthly distribution (dividend) based on the performance of the properties. There is also the chance for gains through appreciation of the share price. REITs are a convenient option to add more diversity to your stock portfolio. Unlike owning a property, REITs are completely liquid and can be easily bought and sold — you could start investing with a few shares purchased through an online brokerage.

The disadvantages are that you may not be able to find a REIT with a mix of properties you like, and your investment is only going to be as good as the REIT management. There are also Exchange-Traded Funds (ETFs) that hold a pool of REITs to help diversify exposure and lower the risk compared to owning an individual REIT.

How does real estate crowdfunding work?

Fractional property ownership or crowd-funded ownership is a relatively new real estate investment strategy where investors join together to collectively own a particular real estate asset — it could be an apartment building, commercial property, or even a residential home. It is different from a REIT in that you invest and own a share of a specific asset.

The property is sold in individual units and there are terms and conditions specific to each offer. Investors gain from sharing of rental revenues and the eventual sale of the property. Although you can get started with a very small investment, the maximum investment may also be capped, so you may have to find several opportunities.

The disadvantage of fractional ownership is that individual real estate assets can fluctuate greatly in value, and you can only sell and cash out your shares after the date prescribed in the ownership offer – they are not liquid.

Are there other alternatives to owning property for real estate investment in Canada?

Another alternative real estate investment which can offer exceptionally good returns is "playing the role of banker" and lending money to a private party, usually with your loan backed by the value of real estate. There are various reasons why some people have trouble getting a real estate loan or mortgage from a bank — they may be self employed or newly employed for example. Others may need some kind of bridge financing to tide them over for a few months and the situation doesn’t fit the bank’s rigid requirements. They will pay a premium to any lenders willing to help them out.

While due diligence is extremely important and you have to do your homework (and get expert advice), these types of opportunities do allow you to manage risk to a large degree and offer exceptional returns, especially as mortgage rates climb higher and banks get increasingly strict with their lending requirements. It’s a flexible real estate investment option that allows you to select opportunities that match your investing amount and timeline. For example, you may be able to find a short-term deal for $20,000 if that is what you need to match your investing situation.

Which of the above options will provide the best real estate investment depends completely on your situation. Property investment in Canada can be done a number of different ways and your first task should be to get some real estate investment education and grow your knowledge.

Jul 01, 2023

Enriched Academy Staff

Are you an optimist when it comes to your financial outlook? Soaring prices, rising interest rates, and a possible recession are making it increasingly difficult to keep a positive money mindset and believe that things will get better for the remainder of 2023 and beyond.

In addition to economic conditions, common money myths can also affect your mindset by perpetuating misinformation or misconceptions about personal finance, investment strategies, and wealth management techniques. Negative money myths can significantly inhibit personal financial growth and wealth building by creating limiting beliefs and behaviors.

On the other end of the money mindset spectrum is the belief in financial abundance and that there is enough money and financial resources available to achieve your goals and live a comfortable life. People with this view tend to focus on solutions rather than problems and see opportunities for growth and abundance in every situation.

The problem is that circumstantial factors weigh heavily on our money mindset. If you were raised in an environment of scarcity or when times are tough like they are now, you can easily feel defeated when it comes to improving your financial situation. Overcoming this mindset is a huge roadblock and the starting point for improving your financial life.

Registered Education Saving Plan (RESP)

What are money myths?

Money myths often perpetuate a scarcity mindset, where individuals believe that money is limited and hard to come by. This mindset can lead to fear, anxiety, and an inability to see and seize opportunities for financial growth. Believing in these myths can lead to poor financial decisions, such as relying solely on how to save money without considering investing, neglecting to diversify one's income streams, or falling prey to get-rich-quick schemes. Lack of financial literacy can further enhance the negative impact of financial myths.

To overcome these limitations, it is crucial to challenge money myths, seek financial education, and develop a mindset that focuses on abundance, growth, and informed decision-making. By adopting a realistic and empowered perspective towards money, individuals can overcome these inhibiting factors and create a foundation for personal financial growth and wealth building.

What are some common money myths that people believe?

  • You need money to make money. It’s true that $10,000 invested the exact same way as $1000 will give you proportionally larger returns, but the power of compound investment returns is very strong and often overlooked. The sooner you get started investing with whatever spare funds you have, the closer you will be to achieving your long-term financial goals.
  • Money is too complicated. Managing money is actually a lot less complicated than many other day-to-day tasks. We spend hours learning how to use the hundreds of functions in a mobile phone or researching online to find the perfect hotel for our vacation, but we don’t prioritize learning about money management.
  • Investing is too risky. Investing can definitely be risky, but that risk can be managed according to your needs and risk tolerance. Investing all your money in cryptocurrency is risky, investing in an S&P 500 index fund and holding it for 5 years.... not so much. You need to learn to evaluate and manage risk, not avoid it altogether.
  • It’s someone else’s job to figure my finances out for me. You could rely 100% on a financial advisor, but it’s expensive and a leap of faith that many of us are not comfortable with, despite their fiduciary duty to serve in your best interest. Even if you do rely heavily on professional advice, teaching yourself the basics of personal finance will help you to make informed decisions and give you much better peace of mind.
  • It’s too late for me. A lot of Canadians are way behind on their retirement planning, and this is an often-heard money problem. The reality is that it is never is too late to get good with money. Trying to pick stocks and get rich quick when you are in your late 50’s could easily put you in trouble, but investing in an index ETF will usually give a nice boost to your retirement fund, even if you are only 5 or 10 years from retirement.
Registered Education Saving Plan (RESP)

How can money myths impact our financial decisions and mindset?

Money myths can reinforce the fear of failure and the belief that taking financial risks is inherently dangerous. This fear can discourage individuals from pursuing entrepreneurial ventures, investing in stocks or real estate, or even negotiating for better salaries or promotions. By avoiding risks, individuals may miss out on the best ways to manage money.

Money myths often instill limiting beliefs about wealth and success. For example, the belief that "rich people are greedy" or "money corrupts" can create subconscious resistance to wealth accumulation. These beliefs can lead to self-sabotaging behaviors, such as avoiding financial success or subconsciously sabotaging efforts to make money.

Money myths often promote unrealistic expectations and comparisons with others' financial situations. Believing that everyone else is financially better off can lead to discontentment and poor financial choices, such as overspending or accumulating debt to maintain a certain lifestyle. These comparisons can also contribute to feelings of inadequacy and a sense of being trapped in a cycle of financial struggle.

How can I change my money mindset and overcome money myths?

A positive financial mindset is a powerful tool that can shape our financial reality, allowing us to navigate challenges, seize opportunities, and build a secure and prosperous future. It involves developing money beliefs that promotes abundance, wise financial decision-making, and a healthy relationship with money. To create a positive financial mindset, it's essential to examine and reshape your beliefs about money. Start by identifying any negative thoughts or limiting beliefs you hold regarding money, such as "money is scarce" or "rich people are greedy." Challenge these beliefs and replace them with positive affirmations that align with abundance and prosperity.

  • Embrace gratitude and abundance. Practicing gratitude for your current financial situation is a powerful way to shift your mindset. Take time each day to reflect on the things money has provided for you, such as shelter, food, and opportunities.  Additionally, cultivate an abundance mindset by focusing on opportunities rather than limitations. Recognize that the world is full of possibilities, and wealth and success are not limited resources.
  • Set clear financial goals. Establishing clear and specific financial goals is crucial for developing a wealth mindset. Whether it's saving for a down payment on a house, starting a business, or paying off debt, clearly defined goals give you a sense of purpose and direction. Break down your goals into smaller milestones and celebrate each achievement along the way. This process will motivate and inspire you to continue making progress.
  • Focus on solutions instead of problems when it comes to your finances. When faced with a financial challenge, look for ways to overcome it rather than dwell on not being able to get what you want. Reframe negative thoughts and beliefs about money into positive ones. Instead of thinking "I can't afford it," try thinking "How can I afford it?"
  • Educate yourself and seek knowledge. Knowledge is power when it comes to financial matters. Take the time to educate yourself the facts about money management, investing, budgeting, and other relevant topics. By becoming financially literate, you'll gain confidence in making informed decisions and seizing opportunities that align with your goals. The more you know, the more empowered you will feel to take control of your finances.
  • Practice Mindful Spending and Saving. Before making any purchase, consider if it's a need or a want, and if it will truly bring long-term satisfaction. Implement money saving tips and focus on ways to save money that reflect your financial goals. Don’t neglect tracking your expenses. Prioritize saving money over spending money and automate your saving process as much as possible. By being mindful of your financial choices and having strategies to save money in place, you will enhance your sense of financial well-being.
  • Surround yourself with people who have a positive attitude towards money and who have achieved financial success — a relative? co-worker? celebrity? YouTuber?
  • Be open to new opportunities and ways to make more money. Keep your eyes open for ways to increase your income.
Registered Education Saving Plan (RESP)

Can changing my money mindset lead to greater financial success?

It’s easy to focus too much on the facts of personal finance and overlook the importance of your mindset. For example, self-directed investing requires you to learn about risk management, diversification, fees and ROI, and many other factors. However, if you can’t overcome your initial mindset that investing is too risky, you will never invest in the stock market. Changing that mindset is a critical first step, and it can be pretty hard to do!

Creating a positive financial mindset is a transformative journey that requires dedication, self-awareness, and consistent effort. Changing your mindset is not an overnight process, but a lifelong commitment. Stay persistent, surround yourself with positive influences, and celebrate each step forward. With a positive financial mindset as your foundation, you can navigate challenges, embrace opportunities, and become financially free.

Jun 15, 2023

Enriched Academy Staff

As we near the end of another school year, your kids are another step closer to graduation. For many, that will lead to some form of post-secondary education and whether it is a far-away university campus or a nearby vocational school, it isn’t likely to be cheap. Education is usually a wise investment, and it would be nice to be able to help your kids out with the cost.... but what is the best way to go about saving for your child’s education?

What are the benefits of opening a RESP?

Worried parents can take some relief in that Canada’s Registered Education Savings Plan (RESP) is extremely helpful. It offers annual grants of 20% of your annual contributions for 14 years and allows you to invest all the funds in the account, so you can grow that education nest egg... at least until your kids head off to further their education. Just like the RRSP and TFSA, it is a registered account so there are rules and regulations on contributions and withdrawals, but they aren’t that onerous and are pretty easy to abide by.

Are there any contribution limits for a RESP?

There is no RESP maximum contribution per year, but there is a RESP lifetime contribution limit of $50,000 per child (beneficiary). It’s also important to note that unlike an RRSP, there is no RESP tax deduction. The primary benefit is that regardless of income, annual contributions up to $2500 receive a 20% Canada Education Savings Grant (CESG) from the federal government. The government deposits these CESG grants into your RESP every year so you can invest it along with the other funds.  You may also qualify for additional education savings programs depending on your household income or province of residence.

The CESG age limit is 18 and there is a lifetime maximum of $7200. It’s best to start early if you want to max out the benefits, although there is a carry forward rule. This allows you to catch up on unused grant room of up to $1,000 per year, for previous years in which you were eligible but did not receive the full grant. There are no official RESP deadlines for annual contributions, but CESG grants are awarded on a calendar basis, so you need to get the money in by December 31st each year to take full advantage of that offer.

What type of education can I use my RESP for?

It isn’t just for university, eligible post-secondary educational institutions also include colleges, trade schools, vocational schools, and other educational institutions that are recognized by the Canadian government.

RESP money can be used to support apprenticeship programs approved by the provincial or territorial apprenticeship authority. These programs typically involve a combination of on-the-job training and classroom instruction. RESP funds can also be used for eligible distance education programs offered by recognized educational institutions. These programs allow students to study remotely without being physically present on campus. In some cases, RESP funds can even be used for educational programs offered outside of Canada. However, specific requirements and restrictions may apply, and it's important to consult with your RESP provider and the Canada Revenue Agency (CRA) to ensure eligibility.

Registered Education Saving Plan (RESP)

How to save for a RESP

Learning the ins and outs of how the program works is a critical first step, but it won’t help you with the $2500 required (per child) to maximize your grant opportunities. Start by determining how much you would like to save for the child's education. Consider factors such as the estimated cost of tuition, books, accommodation, and other expenses. Tuition fees for Canadian universities now runs $5000 to $10,000 per year. You could be looking at $40,000 and your child would still needs books and supplies, not to mention food and a place to live if they are heading out of town to pursue that education.

As we mentioned, there are provisions to catch up with your RESP contributions and claim the associated grants if you fail to max them out in a given year. However, playing catch up is hard and it will also shorten your investment timeframe.

The key is to contribute regularly. Many providers offer automatic contribution plans, allowing you to set up automatic transfers from your bank account to the RESP. One source of funds is your monthly CCB payment — taking $100 monthly from that would get you $250 in annual CESG grants. Keep track of your RESP's performance and make adjustments to your investment strategy periodically to ensure it aligns with your goals and risk tolerance. Stay updated on any changes to RESP rules, government grants, or regulations that may impact your savings plan.

RESP Investment?

Just like an RRSP or TFSA, the funds in a RESP can be invested and could grow substantially by the time your kids head off to school. Money management options may include individual stocks, ETFs, mutual funds, GICs, cash, bonds, etc.  Consider your risk tolerance, time horizon, and financial goals when doing your RESP investment planning. RESP investments can range from conservative options with lower potential returns to more aggressive options with higher potential returns but also higher risk. RESP providers offer a range of investment options, although it is limited with some providers.

Consider the time until the beneficiary will need the funds for their education. A longer time horizon allows for a potentially higher-risk investment strategy, as there is more time to recover from market downturns. As the beneficiary approaches the start of their post-secondary education, it may be prudent to shift to more conservative investments to protect the principal.

Make sure to also take into account the fees and expenses associated with the investment options offered by your RESP provider. These costs can seriously impact your overall returns, so it's important to understand and compare the investment options and fees across providers. It is possible to change providers along the way, so if you find you are unhappy with your initial decision or see a better option it isn’t a big problem — many providers will help you facilitate the swap.

If you are not into self-directed financial planning, an investments advisor could also be consulted to help you with your RESP.

Are there any restrictions on using RESP funds?

Eligible expenses for a RESP are typically related to a beneficiary's post-secondary education. Here are some common expenses:

Tuition fees: The cost of tuition for a post-secondary educational institution, including universities, colleges, trade schools, and vocational schools.

Books and educational materials: Expenses for textbooks, workbooks, study guides, and other educational materials required for the beneficiary's program of study.

Accommodation and living expenses: If the beneficiary is enrolled as a full-time student and living away from home, a portion of their living expenses, such as rent, utilities, and groceries, may be considered eligible.

Transportation costs: Expenses for commuting between the beneficiary's residence and the educational institution, such as public transportation fares, gasoline, parking fees, and vehicle maintenance.

Computer and related equipment: The cost of purchasing a computer, laptop, tablet, or other electronic devices that are required for the beneficiary's education.

Special needs services: Expenses related to special needs services that support the beneficiary's education, such as tutoring, specialized educational programs, and equipment for students with disabilities.

How do I withdraw funds from a RESP and how are RESPs taxed?

RESP withdrawal rules basically divide your money into two amounts. Post-secondary education amounts (PSE) are made up of the money contributed and can be withdrawn by the subscriber (mom & dad) and sent to your kids (the beneficiary) anytime for any reason with no tax implications. Any funds arising from government grants or investment income are taxable to the beneficiary and are paid out in the form of an Education Assistance Payment (EAP). Most plans let you control the amount and timing of EAP, but your RESP provider may have some limitations. Although there is no direct RESP tax benefit, students normally have a low income with a low marginal tax rate and may also qualify for student tax credits, so the tax burden is often minimal.

What happens to the money if you don't use a RESP for school?

The RESP age limit is 35, so you don’t have to move quickly. However, the funds are a mixture of contributions, grants and investment growth and there are tax implications when withdrawn depending on their source. Grants like the CESG must be repaid. There are provisions to transfer up to $50,000 of RESP contributions to an RRSP if you have the contribution room. You may simply withdraw your contributions tax-free, but any investment earnings withdrawn will be taxed at your marginal rate plus a 20% penalty. Your RESP provider may also tack on additional fees to close out an RESP.

An investment in education or job training usually turns out to be wise decision and pays a lifetime of great returns, and a RESP is a great tool to make that happen. By understanding the key aspects of a RESP and following the right strategies, you can make the most of this savings plan. The earlier you get going with one the better it will work out, and the more relief you will feel with every passing school year.

Jun 01, 2023

Enriched Academy Staff

There are lots of reasons people fall into debt but only one way out — and it’s going to require a combination of planning, discipline, and persistence. Here are the basic steps for effective debt management to help you get started.

Start by gathering information about all of your debts — student loans, credit cards, lines of credit, car loans, overdue bills — everything. Make a list of all the debts with the details of the amounts owed, interest rate, and minimum monthly payments. This will help you set goals, create a timeline, and prioritize your repayments.

Creating a Debt Management Plan

Your first goal is to make sure everyone gets paid the minimum amount required to avoid your debts going into arrears. Overdue bills and missed payments are going to play havoc on your credit score and it can take a lot of time and effort to rebuild. Although paying the minimum on a credit card balance will keep your credit score intact, it won’t get you out of debt. A $1000 balance will take well over 10 years to payback and incur another $1000 in interest if you only pay the minimum 3% payment.


The next step is to figure out how much more you can allocate from your current income for debt repayment. At this point, a lot of people will quickly deduce that more income is the solution, and immediately go out and get a second job to make extra money to pay off the debt. While more money will definitely help you reduce debt and is one option, it isn’t the first step. In fact, for most people, the more you make, the more you spend! Working more will also cause a number of other issues — less free time or time with friends and family, more stress, higher income taxes and possibly reduced government benefits like CCB.

The most important step is to create a realistic budget. Reducing the expense side of your monthly budget is going to free money to pay off debt much faster than pumping up your income on the top line. You need to identify areas where you can reduce expenses and channel those savings to your debt repayment fund. It’s critical to start accurately tracking your expenses and get the actual data on your spending, not just a guesstimate based on your feeling.

You also have to use a zero-based approach. What you currently spend shouldn’t be a basis for future budgeting. Just because you spent $500/ month at bars and restaurants doesn’t mean that cutting back to $250 is going to solve your debt problem. If you spent only $100/monthly at the pub and channeled another $150 to your credit card payment, your interest savings would pile up quickly and you would eliminate the balance many months, if not years faster. 

Whether you use the latest budgeting app, a Google spreadsheet, or a pen and paper to analyze and track expenses doesn’t matter. You can eliminate what you can’t see, and expenses are no exception. Even if you think you have a pretty good handle on your spending, go through the exercise and you may be surprised.


Debt reduction strategies               

Once you go through your expenses and identify a realistic number you need to get by, it’s time to commit and lock away your debt repayment amount from each paycheque. One way to stay on track is to set up another account and just have a portion of your paycheque deposited straight into it, then you can just go in that account and dole out the funds according to your repayment plan.

When it comes to who to pay first, there are two commonly used strategies for prioritizing debts: the debt avalanche method and the debt snowball method. With the avalanche method, you focus on paying off the debt with the highest interest rate first while making minimum payments on other debts. The snowball method involves paying off the smallest debts first, regardless of interest rates, and then moving on to larger debts.

From a financial perspective, the avalanche method is the best way to pay off debt, especially if the interest rate differential is large. It makes no sense to pay off a small amount on a home equity loan at 6% if you have credit card debt at 20%. However, if you are paying credit card bills with similar interest rates then the snowball method could give you motivation and momentum. However, if you write a clear debt management plan and use that to track your progress towards goals and gain motivation, then the snowball method has little to offer.

While you're working to pay off debt, it's critical to avoid adding further debt to the pile. If your willpower is waning, put a temporary hold on your credit cards and focus on making cash or debit card purchases within your budget. It isn’t a problem to continue using your credit card as cash is pretty inconvenient for some transactions, just make sure you go into your online banking and pay any new credit card charges right away.

Tricks to paying off credit cards

For most if us, there isn’t anything more expensive than credit card debt and this is where you should focus. Most cards charge around 20% and even the so-called “low interest” cards are usually around 10%. This is still higher than most car loans, student loans or lines of credit. The other problem with credit cards is the ridiculously low minimum payment. The fact is that making the minimum payment is almost futile and will keep you indebted for many years. You need to make the minimum payment plus and additional amount, and it is surprising how much of a difference that small additional amount can make. This calculator is a great tool for analyzing credit card repayment options and you can easily see for yourself how paying the minimum plus $50 on a $1000 balance will cut the repayment period from 131 months to just 18 months.

If you have been making payments and your credit rating is not too bad, you may be eligible for a credit card balance transfer offer with a promotional 0% interest rate for a specific period. This allows you to consolidate your balance on one card and pay off credit card debt credit without accumulating additional interest. The key issue is to make sure you can completely eliminate the debt before the 0% period expires, otherwise you will face penalties and other charges that are likely to put you in an even worse situation than before! Makes sure you have a realistic plan and are disciplined before you sign up for any balance transfer options or credit card consolidation loans. They are one of the best ways to manage credit card debt as they defer the interest, but you need to stay very disciplined.


If you're struggling to meet your debt obligations, consider contacting your creditors to discuss potential options. They may be willing to negotiate lower interest rates, a reduced payment plan, or even a settlement amount. Exploring these options can help you make your debt more manageable. Even a slight reduction in interest can save you money over time and accelerate your debt repayment. Alternatively, you can explore debt consolidation loans from reputable financial institutions or some form of debt counseling.

While it may seem counterintuitive to be paying off debt and saving money, having an emergency fund will help you to stay on target. Make sure to set aside a small amount each month until you have enough to cover unexpected expenses. This prevents you from relying on credit cards or loans when emergencies arise, helping you avoid accumulating more debt.

Paying off debt is a long-term commitment that requires discipline — there is no quick way out. Being aware of the true cost of your debt and visually tracking your progress are great motivators. Try making a spreadsheet or some form of debt payoff chart to keep you committed. Once you get started and see some progress, your mindset will begin to shift, and a huge weight will start to lift. Becoming debt-free or at least in a position where debt stress doesn’t consume your life will do as much for your mental health as it will for your financial health.

May 16, 2023

Enriched Academy Staff

Almost everyone in Canada has heard of the Tax-Free Savings Account (TFSA), but if you already have a savings account or maybe you are younger and don’t have a lot of money, is there any reason to get one?

The short answer is yes — and the sooner the better!

You may believe a TFSA is something to start when you get older or mistakenly think that it is something for locking away long-term retirement savings. The fact is that TFSAs are actually quite flexible when it comes to deposits and withdrawals, they can save you a lot on your taxes, and you can use one to save for a house or a car, or yes, even your retirement.

What is a TFSA and how does it work?

A TFSA isn’t anything like your regular bank account. The main differences are that it is registered with the government and the money in the account doesn’t have to be held in cash. Registered accounts like the TFSA (and the RRSP) track the funds going in and out for tax purposes and although you can hold cash in them, you can also hold investments like stocks, mutual funds, ETFs and many others.

Although a TFSA is unlike your regular account and isn’t for daily banking, you can open a TFSA at most banks and credit unions as well as online brokerages. You have to be at least 18 years old to get one, but there is no fee and no minimum amount required to get started.

What are the benefits of a TFSA?

The main reason to get a TFSA as the name implies, is to save on your taxes. The catch is that if you don’t invest the money in your TFSA, you won’t be saving much. Simply putting money in your TFSA and then letting it sit there in cash won’t do anything for you. This is very different from an RRSP which delivers an immediate reduction in your income tax. However, down the road when you take money out of your RRSP you have to pay the tax, but you can take all the money you want out of your TFSA at anytime and pay absolutely no tax.

So, the secret is to make as much money as possible by investing with your TFSA because all that money will be tax free. If you buy a share of Google for $100 and sell it 5 years down the road for $500, you have $400 tax free profit in your jeans. If you bought those Google shares outside of your TFSA in a cash trading account, you would be on the hook for a pretty big chunk of tax — 50% of that $400 gain would be fully taxable!

How much should I contribute to my TFSA?

The best part of a TFSA is that everyone gets to put in the same amount regardless of how much money you earn and unlike an RRSP, you don’t need to be working and making an income to contribute. In 2023, you can put up to $6500 into your RRSP. But if you missed a couple of years and now suddenly find yourself flush with cash, you can use the carried over amounts from each year since you turned 18. In fact, if you are now 25 and have never had a TFSA, you can drop in over $45,000 since you have 7 years of contributions carried over.

What is the minimum I can put in my TFSA?

Chances are you won’t be able to max out your TFSA contributions, especially when you are young. Only 10% of Canadians of all ages actually max out their TFSA. However, this doesn’t mean that a TFSA is just for rich people. If you could only come up with $100 monthly for your TFSA from the time you were 18 until you retired at 65 and received historical average stock market returns of 7%, you would have $438,643. If you upped the monthly amount to $225 you would retire a millionaire!

Of course, 47 years is a long time and things will cost a lot more, but don’t underestimate the power of compounded investment returns. There are a number of self-directed investing options (like broad-based index funds or all-in-one ETFs) you can use to invest your TFSAs that don’t require a lot of time or investing knowledge to use. Of course, some funds will do better than others, but the real secret is to get started early! Unfortunately, only around 5% of TFSA are held by Canadians under 25.

How do I withdraw money from my TFSA?

If you don’t want to wait until your 65 to start spending those TFSA investment gains, you don’t have to. In fact, you can take as much money as you want out of your TFSA anytime you want. You won’t have to pay any tax and the only downside is that you may have to wait until the following year if you want to put that money back into your TFSA — you cannot re-contribute the amount of the withdrawal until the following calendar year, unless you have available contribution room. If you do overcontribute to your TFSA you need to correct the mistake as soon as possible as you are subject to a penalty tax of 1% per month on the excess amount until it is withdrawn. It's important to keep track of your contribution room to avoid over-contributing.

What are the disadvantages of a TFSA?

You may be thinking a TFSA is the greatest thing since sliced bread and for most Canadians, it is! However, there are situations where another registered account may be a more optimal choice. For example, if your income is high and you are in a high tax bracket, contributing to an RRSP may be a better choice if you don’t have the money to max out both. Another case may be if you are saving for a home, the new First Home Savings Account (FHSA) offers the advantages of a tax reduction like the RRSP and the tax-free investment growth of a TFSA and is a great choice if you are saving up for your first home.

One additional caveat to be aware of with a TFSA is that there are limits on how actively you can trade the investments held in the account. For example, day trading is not allowed, and it could cause the CRA to determine that the income in your TFSA is from carrying on a business and is taxable. Rules and tax interpretations for day trading with regard to TFSAs are different than for RRSPs and the CRA uses a number of factors to make a determination.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're on the right track. Make sure the money is invested and confirm your annual return (net of fees) to ensure your investments are performing up to expectations.

If you haven't yet opened a TFSA, get out there and open one today! A few years from now you will be happy you did. If you're still somewhat confused, scared, excited, nervous, and looking for some support, we have a one-on-one coaching program that clients say is a financial game-changer. You can schedule a free financial assessment call HERE to get some feedback on how to improve your finances and the programs we have available, including one-on-one coaching.

May 01, 2023

Enriched Academy Staff

Saving up the down payment for your first home in Canada can be a daunting task. At the very minimum, you are going to need 5% and even in a comparatively inexpensive city like Edmonton with an average price of $400K, you are looking at $20,000. There are lots of tips and tricks on how to save for your first house, but this article isn’t about personal budgeting, it’s about where to park your savings along the way to purchasing your new home.

The good news is there are several home buyer incentives and a few savings options when saving for your first house! You could put your money under the mattress, in a savings account at your local bank, or take advantage of one of the government’s “registered” savings accounts. These include the Registered Retirement Savings Plan (RRSP), the Tax-Free Savings Account (TFSA), and the new kid on the block, the First Home Savings Account (FHSA). The main advantage of these three accounts is the option to invest and grow your savings while cashing in on some serious tax advantages, allowing you to reach your home ownership goal even faster. It is also possible to use a combination of these accounts, but that may require a lot more income than you have at your disposal.


My retirement plan has a home buying option?

RRSPs are quite well known for punishing early withdrawals — ideally you would keep your money in your RRSP account until you retire and can then draw out the money you need at a nice, low tax rate during your retirement years. However, the Home Buyers’ Plan (HBP) is an exception to the rule. Under this plan, you can withdraw up to $35,000 from your RRSP to buy a home. Although you won’t be taxed on that withdrawal and have avoided one caveat, the catch is that you have to begin paying that money back to your RRSP starting a couple of years down the road. If you don’t pay it back on schedule over the next 15 years, the tax man will come calling as that withdrawal becomes fully taxable! It’s a good benefit, but you need to follow the rules and make sure the repayment schedule fits your budget.

To be eligible for the HBP, you must be a first-time home buyer, which means you or your spouse/common-law partner cannot have owned a home in the four years before the withdrawal. You must also have a written agreement to buy or build a qualifying home. If you're buying a home with your spouse or common-law partner, you can both withdraw up to $35,000 for a total of $70,000.

The home you purchase, or build must be a qualifying home, which includes most types of housing, including single-family homes, semi-detached homes, townhouses, condos, and mobile homes. It must also be located in Canada and must be used as your principal place of residence within one year of buying or building it.

In many cases, using your RRSP for a down payment under the Home Buyers' Plan is a good option. However, it's important to understand the rules and requirements of the program before making a withdrawal from your RRSP.


How can I use a TFSA to buy a home?

In case you missed the memo, Canadians 18 and over can deposit up to $6500 annually into a TFSA. You contribution limit also caries over from year-to-year, so you already have a sizeable contribution limit if you are in you are in your mid-twenties and have never had a TFSA before! The advantage here is that you could invest your down payment savings and would not be taxed on those returns. As the name says, after growing your portfolio for a few years, you could take those tax-free savings and head right down to the bank and put it down on a new home. The only real consideration is that you will have to wait until next year if you want to put that money back into your TFSA account. However, if you just bought a house, you are likely to be tapped for a couple of years anyways, so it may be a non-issue. A TFSA can also be used by anyone who fails to meet the criteria for a first-time homebuyer as required by the HBP and the FHSA.

Although this all sounds straightforward so far, the issue gets complicated when you start to think about using both an RRSP and TFSA. The most you could take out of your RRSP to buy a home is $35K, so once you hit that mark should you start putting your money into a TFSA? If you are looking to get into a home sooner rather than later, the immediate tax savings from an RRSP will help you reach your down payment goal faster than a TFSA providing they were invested the same way (and you reinvest those RRSP tax savings instead of spending a week in Cancun!). Beyond that, you might want to consult a financial coach for some expert advice and do an in-depth analysis of your TFSA/RRSP contribution strategy.

FHSA: The new kid on the block!

As of April 1, 2023, there is a new contender for your down payment savings dollars — the tax-free First Home Savings Account (FHSA or sometimes TFHSA). This is yet another tax-advantaged account from the federal government that takes a stab at combining the best of both the TFSA and RRSP. Although it is not 100% confirmed and the rules could still be tweaked, it basically allows you to do this:

  • Make a tax-deductible contribution of up to $8000 annually (maximum $40,000 lifetime).
  • Invest the contributions in stocks, various funds, fixed income securities, etc.
  • Withdraw the money anytime within 15 years of opening your FHSA to buy a qualifying home with no need to pay back the funds.
  • Carry forward unused contribution room, and also carry forward tax deductions and apply them in future years (if suspect your income is on the way up).
  • Transfer funds to an RRSP or withdraw the funds anytime and pay the tax if you don’t buy a home with in 15 years.

Just like the HBP, the home must be your principal residence within one year of purchase and be located in Canada.

If you have been piling up your money in an RRSP or TFSA and think the FHSA suits you better, it looks like you will also be able to transfer RRSP and TFSA funds into an FHSA. In the case of a TFSA, you would also get a tax deduction on the amount transferred (subject to the rule of course!). Moreover, at this time it is also possible to take advantage of both the FHSA and the HBP allowing a couple to withdraw up to $150,000 of combined RRSP/FHSA funds for a down payment. There are still a few other details to be worked out, but at this point, the FHSA looks like a great down payment option for first-time home buyers.


Which down payment savings account is right for me?

At Enriched Academy we are all about financial education and helping you make the best decision. We equip you with the knowledge and facts you need, but at the end of the day you are in charge of your financial life. Our goal is to always encourage our clients to make an informed decision. There is no clear winner in the RRSP vs TFSA vs FHSA debate as it depends on a myriad of other factors which only you are privy to.

One thing we do know is that when it comes to investing, procrastination is your biggest enemy and saving for a home is no exception. Buying your first home is increasingly difficult right across Canada as prices and interest rates are at record levels and there appears to be no relief in sight. There are programs in place to make it easier to save for a home, and the sooner you start taking advantage of one, two or all three of these plans the better!

The other factor that comes into play is risk and investment planning. Some people see their down payment savings as untouchable and may limit their holdings to low-risk investments or fixed income securities. On the other hand, some folks may have a shorter buying timeline or be naturally less risk-averse and try to fast track saving for a down payment with a more aggressive investment strategy.

Homebuying in Canada has become increasingly difficult in many regions. Sound financial planning and a good credit score will help you save money and obtain financing, but don’t neglect the tax advantages and investing options of the RRSP, TFSA and FHSA.

Apr 15, 2023

Enriched Academy Staff

If you are looking for ways to better your financial situation, one of the first tasks you should be focusing on is how to build your credit score. Your credit score is a measure of your demonstrated ability to meet your loan commitments and other bills in a timely manner. It is one of the key metrics to measure your financial progress. The higher your score, the more likely a lender is to loan you money and the lower the interest rate you will receive.

What is a good credit score?

In Canada, your credit score is derived from a credit report issued by either TransUnion or Equifax and the credit score range is between 300 and 900. The Canadian average is around 650. Good credit scores over 750 offer a higher chance of loan approval, greater borrowing limits, and lower interest rates and insurance premiums. If you want to get the lowest advertised mortgage rates you are going to need a top-notch credit score. At the other end of the scale, a low credit score of under 600 may make it very difficult to get a mortgage from a Canadian bank.

Potential interest savings from an excellent credit score are huge on big-ticket items. Qualifying for a preferential rate on your mortgage could easily save you tens of thousands of dollars. For example, an excellent credit score could qualify you for a $500,000, 5-year fixed mortgage at 4.5%, while a low credit rating could see you paying near 6%. You would save $20K+ during that 5-year period! Vehicle loans offer even greater variation depending on your credit rating and are another area where a bad credit score will take a lot more money out of your pocket every month.


Understanding how to boost your credit score and building the highest score possible will open doors to many opportunities and save you money. If you are looking for a quick hit to improve your financial literacy around credit scores, take 3 minutes of your time and watch, “How Does Your Credit Score Work” on the Enriched Academy YouTube channel.

How to check your credit score?

The first thing to note is that a credit report and a credit score are not the same. Your credit report is available free online from either credit bureau in Canada (TransUnion or Equifax) and contains a summary of your credit history. Your credit report does not contain your credit score. The credit bureau determines your score using a formula based on a number of credit factors, but they don’t share that formula. Although we can guesstimate, It is impossible to know exactly how much your credit score will change based on the actions you take.

You can check and monitor your actual credit score from a number of different sources — banks, finance companies, credit unions and specialty “credit score providers” can all provide your score. They often include it free if you are an existing customer or if you are willing to register and provide an email address.

Who looks at your credit score?

Credit scores are used for a lot more these days than just whether you qualify for a loan. Insurance companies, potential employers, and landlords are just a few of the people that will often check your credit score and use it for decision making.

Employers may request a background check and a credit check before they will formally offer employment. It is legal in Canada to make this request and it is often a requirement for jobs in government, finance, and many other industries.

Landlords will often ask for a credit check before offering you a lease; even utility providers may review your credit history to decide whether or not you need to pay a security deposit to connect to their services.

If you have your eye on the perks that go with obtaining one of those premium credit cards or are looking to increase the limit on your credit card, obtain a business loan, or secure a personal line of credit, your credit score is going to be a big factor in whether or not you are successful.


What affects your credit score?

There are 5 credit score factors:

1. Payment history (35%)

This is the largest determinant of your score and the most critical factor to manage. You need to always make the minimum payments and avoid anything ever getting to the “collections” stage – this includes parking tickets, mobile phone or other utility bills, student loans, and credit cards.

2. Credit utilization (30%)

If all your credit cards are maxed out, your credit utilization rate is 100% and it indicates to potential creditors that you are overextended. Carrying some credit card debt won’t lower your score (as long as you make the payments each month) but try to keep your balance under 30% of your credit limit at all times.

3. Length of credit history (15%)

It takes time to build your credit score, so get a credit card when you turn 18, use it, and pay it off in full each month. A car loan or student loan will also help greatly with your credit history check — but only if you stay current with the payments!

4. Credit mix (10%)

Using a mix of different types of credit will increase your score. When you are young the only credit available may be a credit card, but as you grow older adding a car loan, student loan, or line of credit to the mix will help improve your score.

5. Credit application frequency (10%)

Applying for a lot of new credit in a short timeframe will negatively affect your score. Potential lenders do what is called a “hard pull” on your credit history when you apply. You want to avoid having a number of hard credit pulls in succession as it may look like you are desperately seeking more credit.

How do I fix my credit score?

Credit scores are continuously evaluated and adjusted. If you have "errored" in the past, rest assured that the damage is not permanent! There are ways to improve your credit score over time if you use credit responsibly, but it is much easier to avoid mistakes that lower your score in the first place.

The time required for your credit “indiscretions” to disappear varies. Unpaid debts may not be legally collectible after a couple of years (depends on the province) but can stay on your credit report for five or more years. If you have filed for bankruptcy, that will stay on your credit report for seven years.

If you have mended your financial ways and have reached out to your creditors and are now paying your bills on time/making the minimum payments, perhaps using a secured (pre-paid) credit card — how long does it take to improve a credit score? The answer varies widely from case to case, but you should see your credit score start to rise between four and eight months down the road — don’t expect to boost your credit score fast!

Check your credit score regularly!

If you are looking for some simple financial advice that pays huge dividends — check your credit score on a regular basis! It will allow you to track fluctuations and overall improvement, detect errors, and prevent identity fraud. Checking your own score does not form part of your credit application history and does not affect your credit score!

Errors and omissions are not uncommon in credit reports, and it is a good idea to confirm the details of your report. Both TransUnion and Equifax have a process to report mistakes and get them corrected. It can take up to six months to resolve disputes with a credit bureau as there may be some time-consuming back and forth with you, the creditor, and the bureau.

Helping you increase your credit score often falls outside the scope of services for financial advisors, even though it is one of the most critical aspects of building wealth. Although it is something you are going to have to manage yourself (or tackle it together with your financial coach), the reality is that it isn’t all that difficult.

There is a lot of confusion and plenty of urban myths when it comes to credit scores, so make sure to do your research and more importantly, pay attention to your credit score. If you see it has gone up or down significantly, you may be able to pinpoint a cause or specific action that caused the change. The worst mistake you can make is to ignore your credit score. Sooner or later you are going to need it and the better it is, the more favourable the outcome is going to be.

Mar 31, 2023

Enriched Academy Staff

Financial wellness is fast becoming the latest buzzword as soaring inflation and interest rates pile the financial pressure on Canadians. There is also a strong connection between mental health and finances and financial stress is taking a heavy toll.... so, what exactly does it mean to be “financially well”?

Financial wellness is described as a state of well-being where an individual or a household has achieved financial stability and is able to meet their current and future financial obligations without undue stress.

Financial wellness is not about being rich, having a certain amount of net worth, or achieving a specific financial goal. Rather, it is about having a sense of security and confidence in your financial capability and being able to manage financial issues, challenges and opportunities as they arise over time.

Financial wellbeing is a function of many different factors. Income is obviously a critical element, but it also depends heavily on how well we are able to manage our money. These tasks include budgeting, managing debt, and investing and planning our retirement. The degree to which we are able to handle these tasks successfully depends on our level of personal financial literacy and our ability to make informed decisions, solve financial problems, and manage financial risk.


What is making Canadians so financially unwell?

Lack of financial literacy: Many Canadians lack the financial knowledge and skills to manage expenses and cashflow, save money, and invest and grow their savings for a secure financial future. This makes it difficult to effectively manage their financial life and can lead to financial instability and plenty of financial stress.

Better financial understanding by itself will not solve your money issues, but the importance of financial literacy cannot be overstated. We have seen over and over again at Enriched Academy how just a little pre-emptive knowledge can make a huge difference. For example, understanding the benefits of a TFSA and starting from a younger age.... or investing in an index fund instead of letting cash pile up for years in an RRSP.

High levels of debt: Canadians struggle with credit literacy and have some of the highest levels of household debt in the world. This debt is primarily driven by mortgage debt, but Canadians also carry significant amounts of credit card debt, car loans, lines of credit (often secured by home equity) and student loan debt. The average non-mortgage debt in 2020 was around $23,000. Rising interest rates have seriously exacerbated this problem and there is spiking demand for credit counseling and debt consolidation services.

Income inequality: Income inequality is a significant issue in Canada, with a widening gap between the richest and poorest Canadians. This can make it more difficult for lower-income Canadians to achieve financial stability and security.

Housing affordability: Housing affordability is a major concern in many Canadian cities, with rising housing costs making it difficult for many Canadians to purchase homes or afford rental housing.

What are the costs of poor financial wellness?
Poor financial wellness can have significant costs, both for individuals and for society as a whole.

  • Stress and anxiety: Financial health and mental health go hand-in hand and financial stress can lead to depression, insomnia, and other health problems.
  • Poor performance in the workplace: Financial stress can also affect an individual's job performance and productivity. It can lead to absenteeism, reduced work quality, and lower job satisfaction.
  • Relationship problems: Financial problems can cause tension and conflict in personal relationships. It can lead to arguments, breakups, and divorce.
  • Increased debt: Poor financial wellness can lead to increased debt, which can be difficult to repay and can lead to financial instability.
  • Higher interest rates: Individuals with poor credit scores may face higher interest rates on loans and credit cards, which can make it more difficult to manage debt and improve their financial situation.
  • Limited opportunities: Poor financial wellness can limit an individual's opportunities for education, career advancement, and other life goals.
  • Economic costs: Poor financial wellness can have broader economic costs, such as reduced economic growth, increased demand for social services, and higher rates of poverty.

Overall, poor financial wellness can have far-reaching consequences for individuals and society, underscoring the importance of promoting education and financial literacy to support individuals in achieving financial stability and well-being.

Workplace financial stress in Canada
Financial stress in the workplace is a significant issue in Canada and according to one survey, Canadians worrying about their finances while on the job could have cost as much as $40 Billion dollars in 2022! Employee productivity, employee performance, and employee mental health are all being negatively impacted by financial stress at home and are common reasons for poor performance at work.

Some employers are starting to recognize the effects of poor financial health in the workplace and are implementing programs to support employee financial wellness. Financial wellness benefits may include free financial literacy courses, counseling, employee benefits such as retirement savings plans, and flexible work arrangements to help employees balance work and personal financial responsibilities.

Overall, workplace financial stress is a growing concern in Canada, and employers and policymakers are increasingly looking for financial stress help to support employees in achieving financial wellness.


How do you measure financial wellness?
Financial wellness can be measured in a number of ways, but it is often a feeling rather than some sort of tangible number. While we can easily take some steps to improve our credit score, improving financial wellness is much more complex.

A financial health assessment is a comprehensive evaluation of an individual's or household's financial situation. It typically involves reviewing income, expenses, debt, savings, investments, insurance coverage, and other financial assets and liabilities. A financial health assessment can help identify areas of strength and weakness and provide insights into how to improve overall financial well-being. Enriched Academy offers a complimentary financial assessment call for anyone looking for advice on how to better their financial situation.

A financial stress tests involve evaluating an individual's or household's ability to withstand financial shocks or unexpected events, such as a job loss or medical emergency. Financial stress tests can help identify potential vulnerabilities in one's financial situation and provide insights into how to build financial resilience.

Financial behavior analysis involves examining an individual's or household's financial behavior and decision-making processes. It can help identify patterns of behavior that may be contributing to financial stress or instability, such as overspending or not saving enough.

Surveys and self-assessments can be used to measure an individual's or household's financial wellness. These tools often include questions about financial knowledge, attitudes, and behaviors, and can provide insights into areas where individuals may need additional education or support.

Overall, measuring financial wellness is a complex process that requires taking into account multiple factors and indicators. Different methods may be appropriate for different individuals or households, depending on their specific financial circumstances and goals.

How can I improve my financial wellness?
There are plenty of options for improving your financial wellness and most of them revolve around bettering your financial literacy skills.

Budgeting: Creating a household or personal budget is an important first step towards achieving financial wellness. A budget can help individuals track their income and expenses, prioritize their spending, and identify areas where they can cut back. Most of us are already have the financial knowledge and skills to create a simple budget — the real issue is having the commitment and making the hard choices that are often required to stick to a budget.

Debt management: Developing a plan to manage debt, such as creating a debt repayment plan or debt consolidation and interest rate reduction can help individuals reduce their debt load and improve their financial stability.

Savings: Building an emergency fund and setting savings goals can help individuals prepare for unexpected expenses and achieve long-term financial goals, such as saving for retirement or a down payment on a home.

Financial literacy education: Improving financial literacy can help individuals make informed financial decisions and better understand the impact of their financial choices. Enriched Academy offers free financial literacy in our weekly webinar series, and we also provide learning resources to support financial literacy for young adults to educational institutions across the country.


Seeking professional help: Working with a financial coach, financial planner or financial advisor can provide individuals with personalized guidance and support in achieving their financial goals.

In addition to individual action, there are also broader solutions that can support financial wellness at the societal level. These may include policies that promote income equality, affordable housing, and access to financial services, as well as employee financial wellness programs and education initiatives.

2023 is shaping up to be another tough year financially for Canadians and financial wellness will continue to be elusive, especially if your financial literacy is lacking. The good news is there are a lot of resources available and many of them are free or low-cost. The largest hurdle for most of us is willpower and maintaining our motivation — achieving financial wellness is not a sprint. It can be a time-consuming, slow process and you may not see the results from your efforts until many months or many years down the road!

Mar 15, 2023

Hal Kenty
(Enriched Academy Financial Coach / CFP)

I was very fortunate that my career eventually evolved into a role that provides a sense of personal satisfaction while allowing me to help others in a very direct way. First, as a financial planner of 21 years with Investors Group and now as a financial coach with Enriched Academy.

I would like to offer my insights on financial advice based on my various career and life experiences over the past seven decades. By the end of this post, I hope you will be better educated and motivated to take the necessary steps to create your own lasting wealth.

If you want help to grow your wealth in Canada, you have a few options when it comes to getting financial advice.

Large Wealth Management Firms

The large wealth management firms and banks dominate the financial advice industry in Canada. They mostly deal in mutual funds but also have capability to help you invest in individual stocks and other types of funds as well. As a CFP with a large investment firm for over twenty years, I became quite familiar with the various services and products these types of wealth advisors can provide.

At the firm I worked at, the expectations were that every client should have a financial plan and retirement plan and that they should be updated on an annual basis. Financial consultants are required to pass the Mutual Fund License Course in order to join the company and are expected to study to become a Certified Financial Planner within three years.

The following list is what you can expect to receive in terms of service from the financial professionals at large wealth management firms:

  • Initial discovery meeting.
  • Annual financial plan and retirement plan updated on an annual basis.
  • Risk tolerance assessment and corresponding investment strategy to achieve your financial goals.
  • Rebalancing of portfolio on a regular basis.
  • Goal setting for debt reduction and growing net worth.
  • Estate needs analysis and planning.
  • Insurance needs analysis.
  • Encouragement to move ALL your investments to their firm.

What are the drawbacks of a financial advisor?

The main drawback of large wealth management firms is their advisors usually get paid on the sale of financial products under their management. This limits the investment advisor’s income options and lowers their motivation to work with lower net worth individuals, particularly those new to investing with smaller portfolios or those who may be struggling with debt. Don’t be surprised if one of their first questions is, how much money do you have to invest? This type of advisor is more suited for higher net worth clients who want a hands-off approach and do not mind paying higher financial advisor fees.


For individuals who want to become financially literate and get more involved with decision making or pursue alternative investing strategies (real estate, private lending etc.) they will find very little emphasis on education and training with the large wealth management firms. In fact, promoting alternate investing is not usually allowed.

Should you get a personal financial advisor?

The main advantage of a personal financial advisor is they provide comprehensive service with very little work required on your behalf.  Although they often rely heavily on mutual funds and you need to be wary of MER and other fees, they are financial experts with whom you can build a long-term, trusting relationship. Clients get a comfortable feeling that they are dealing with a professional and reliable advisor.

How about the financial advisors at my Bank?

The big Canadian Banks can offer a range of wealth management services that is similar to those offered by the large investment firms. They have the added advantage of offering a comprehensive range of banking products and services and conveniently integrating them with their investing services.

What are the drawbacks? Banks are in the business of taking in money and lending it back out for a profit, hence the same issue arises as with wealth management firms.  If you don’t have a lot of money, you may not get a lot of attention and nothing in the way of personalized service. Their financial advisor services are mostly provided for high-net-worth clients and their insurance offerings focus on critical insurance products that are primarily intended to pay off mortgages.


What is a fee-only financial advisor?

Fee-only financial advisors are just as their name implies, they charge a fee for handling the services you request, rather than trying to generate commissions by selling you financial products. Their list of services can be comprehensive — they may act as an investment planner or retirement advisor, or they may provide financial planning, debt consolidation, insurance analysis or many of the other services you can get from a full-service wealth management firm.

How much do fee-only financial advisors charge?

Paying only for the services and financial guidance you need and ask for sounds attractive. You will not have any ongoing management fee or bias toward a specific financial product. However, the quality and price of their financial planning advice may vary greatly. If you google “fee-for-service advisor”, you will see hourly rates from as low as $10/hour to over $200/hour. A typical service will advertise a generic review and recommendation for around $800 and a customized plan for around $1800.

The other issue is how to choose a good financial advisor? If you choose an advisor who isn’t very competent or doesn’t take the time to properly understand your situation or explain things, you may not fully understand the risk or lack confidence in their plan. In addition, every time you have a question or need a follow up, it may end up costing you more.  


Financial advisor vs financial Coach

There are several key reasons that I am passionate about the Enriched Academy financial coaching program. The first is that I am able to offer the same level of professional service to every individual who signs up, regardless of their financial situation. The program costs the same and offers the same high-quality financial advice for high net-worth individuals as it does for those who are in debt or living paycheque to paycheque.

The fees for our one-on-one coaching program are relatively low compared to the annual management fees of a wealth management firm or fee-only financial advisor. The Enriched Academy program also provides lifetime access to a continuously updated training portal with all sorts of analytical tools at no additional cost.

Financial coaching also covers the entire spectrum of your financial situation: cash flow and expense management, budgeting, saving strategies, all types of investing (RRSP, TFSA, income properties, other passive income investments), debt management, building credit, wills, insurance, and retirement planning. If we see a particular need, we can go into more detail on any particular area.


While cost and the scope of services are important differentiators, the biggest benefit of a having a financial coach is that you become financially literate. You will learn to understand and analyze your financial situation and the available options, so you can make highly informed decisions regarding your financial future. This knowledge is very valuable for your confidence and peace of mind, even if you do come to rely on a professional for at least some of your financial advice. Issues like estate planning can be very complex and seeking quality professional advice is never a bad idea.

A financial coach is both educator and advisor. A coach teaches you the facts and provides a structured plan, an impartial opinion, and plenty of motivation and inspiration – but the decisions are ultimately up to you. The focus is on equipping you with the confidence and knowledge to make solid financial decisions.  If you want to be 100% hands-off money management and leave the decision making up to someone else, coaching is not a good fit for you.

Aside from the education and financial guidance, there are also intangible benefits to a money coach. Many people have trouble shifting from the learning phase (like reading this blog) to the action phase (purchasing an index fund online for example). A coach provides the motivation, structure and accountability to boost confidence and helps  turn complacency into actions that build a robust financial plan.

In Summary

Becoming successful financially starts with the knowledge that to earn more, you must learn more. The journey to financial freedom is not a get-rich-quick scheme. As evidence, a high percentage of people who win the lottery end up having less money three years later than what they had before they hit the jackpot. Professional athletes make millions of dollars but are disproportionately likely to end up bankrupt compared to your average citizen.

The missing factor in both cases is poor knowledge and a lack of learned financial responsibility that would have equipped them to protect and grow their wealth. It is precisely this financial knowledge and literacy that Enriched Academy is focused on providing to their clients.

Feb 27, 2023

Matt Dewey 
(Enriched Academy Financial Coach / AFCC)

Investing is something most of us should be a lot more focused on to ensure our money outbattles inflation, grows over time, and provides us plenty of options on how we spend our retirement years. Compound interest and investment returns work wonders — but only if you invest the funds in your Tax-Free Savings Account (TFSA) or your Registered Retirement Savings Plan (RRSP). However, there are many options and considerations when it comes to deciding how to invest your money. Even if you have done your homework and decided to make the switch and graduate from a financial advisor to a self-directed account, the process can still be intimidating.

Considerations for self-managed investments
The first thing that you need to establish before setting up a self-directed investment account are your parameters for risk tolerance, then you can move on to determining your asset allocation. Risk tolerance varies widely from person to person and also depends on your current financial position, your time horizon for needing the money, and how comfortable you are with market volatility.

RRSP and TFSA eligible investments include equities (individual stocks, mutual funds, ETFs) and fixed income assets such as bonds, GICs, cash — even gold and silver. For the purpose of this article, we will focus on equities and fixed-income assets for your asset allocation.

Let’s pretend you have 20 years until retirement, and you are comfortable with market volatility, so you decide on 80% equities and 20% fixed income for your asset allocation.  Great, first big step completed!

Where to invest your money?
You’ve decided on DIY investing and determined your asset allocation, so now it’s time to move on to deciding what you want to invest in. If we stick with the example allocation above — the 80% portion for equities could be split among individual stocks, broad-based exchange-traded funds (ETFs) which tracking a particular country or even the whole world, or focused ETFs which may track a particular aspect of the economy like technology, energy or infrastructure. The 20% portion dedicated to fixed income could be in GICs, cash, corporate bonds, short-term bonds, long-term bonds, or even a blended bond fund.

Before you decide to invest by yourself and make all the decisions, you must be comfortable doing so. If you want to be in control of how your money gets divided up that’s great, but you are likely in the minority of the population. The majority of us do not feel confident in knowing which country, region or industry to invest, or the optimum ratio of short-term bonds to long-term bonds. If you fall into this camp, there are a few simpler alternatives to consider.

All-in-One ETFs
The pressure to decide on which investments will meet your asset allocation may be too much for some and can cause analysis paralysis and a lot of stress. It may even force them to stick with their high-fee mutual funds out of comfort and ease.

Fund providers have noted that this is a very common problem and have started offering all-in-one ETFs that as the name implies, are designed to offer one-stop shopping for maintaining a given asset allocation and risk profile. Percentages differ, but most providers offer five choices ranging from 100% equity on the high end of risk – down to 20% equity and 80% fixed income at the low end of the risk scale.

All you need to do as an investor is decide on the all-in-one ETF that matches your asset allocation and risk tolerance!

How an all-in-one ETF works
The ETF provider’s investment management team monitors the economy and many other factors and makes all the investment decisions to rebalance your portfolio, so you don’t need to! For example, if you decided to invest 80% in equities and 20% fixed income and bought an all-in-one ETF, that 80% would likely be split between the US, Canada and international markets. The 20% fixed income would also be split between corporate bonds, government bonds, treasury bonds — all with varying maturity dates.

The beauty of this is that you are making the decision to buy a product that rebalances to your risk tolerance, but also has the benefit of relying on the ETF provider to move your money to different countries and/or sectors to adapt to changing risks. This is an excellent option for those looking to take control over their investing, but do not have strong enough skills/interest to reallocate their portfolio between regions or industries or adjust the type of bonds you are holding as interest rates change.

For example, an all-in-one ETF could have the equity portion allocated 35% US, 25% Canada, and 20% international one month, but after analyzing the latest data could flip to 25% US, 40% Canada, and 15% international the following month. This doesn’t affect your asset allocation in terms of equity versus fixed income, but you can take comfort knowing that actions are being taken on your behalf to keep everything aligned to your asset allocation and risk profile.

Invest with a Robo-Advisor
Similar to all-in-one ETFs, robo-advisors manage your portfolio based on the risk tolerance you set when you open an account. They adjust the actual investments you hold, but robo investing will always automatically rebalance to your equity versus fixed income percentage.

The main difference here is that you don’t need to make any decisions on an ETF investment strategy – that is done 100% for you by the robo-advisor account. The robo-advisor will also immediately reinvest any new funds you add, so you do not need to devote any ongoing maintenance to this plan — aside from adding more money on a regular basis!

Self-directed vs all-in-on vs robo advisor fees
We’ve outlined 3 investing options:  1) A 100% DIY approach where you pick all your own stocks and ETFs. 2) An all-in-one ETF where you choose one ETF based on your asset allocation. 3) A robo-advisor that manages a portfolio of ETFs continually rebalanced to match your asset allocation.

The DIY option should come with the lowest fees (MER or management expense ratio) as you can buy a balanced portfolio of ETFs for under 0.2% annually. Please note that every online brokerage platform has different fees for buying and selling ETFs and stocks.

The all-in-one option should come with slightly higher fees than 100% DIY since there is a slightly higher charge to rebalance your portfolio – but most seem to fall between 0.2% to 0.3%.

The robo advisor option would be the most expensive as most of their MERs are around 0.15% to 0.25% and they charge an additional management fee of 0.2% to 0.75% to automate the process for you.

Basically, the more you do yourself, the more money you can save. However, it is important that you take an honest assessment of yourself and whether saving a small percentage is worth it for you.

Other Considerations
Time – how many hours per week, day, month are you realistically able to devote to your investing plan? If you are going to go with 100% DIY, this should be established before you begin.

Knowledge and confidence – if you are leaning towards a 100% DIY approach, what factors would you be monitoring for changes to your asset allocation or where your money is invested.

Have a plan – if you are going DIY, come up with an investment plan and write it down before you begin. Set rules for yourself to follow, so you don’t start buying stocks based simply on emotion or other factors. For example “Invest in no more than five individual stocks at any one time totalling less than 15% of my portfolio. There has to be at least 75% in broad-based ETFs and I can only  hold up to 10% in focused ETFs that target particular industries. I will review my plan once a year and adjust as my circumstances change.”

Summary
Self-directed investing is great to help you save money on mutual funds MER fees and keep more of your money in your investments, but you need to make sure you set yourself up for success before you begin. Be honest with yourself about your ability and discipline to set and follow your rules because there will be no one holding your hand. A financial coach can discuss your goals, but your asset allocation will come down to you and your comfort level with the ups and downs of the financial markets.

Feb 07, 2023

Maegen Kramer  
(Enriched Academy Financial Coach / CFP)

It’s RRSP (Registered Retirement Savings Plan) season again as the March 1 contribution deadline is looming. All over your news feed you can see articles popping up about what is an RRSP? how does an RRSP work? and how much to contribute to your RRSP? There is a ton of information floating around and we have outlined a few of the basics below, but you may also want to seek professional financial advice on how to take advantage of the specifics of your situation. Either way, we'd like to provide you with some important factors to consider when deciding if, and how much to contribute to your RRSP this year.   

RRSP Basics

RRSPs are a type of registered account that allow you to invest the funds you deposit into the account. Your contributions are tax deductible and investment earnings in the account can grow tax-sheltered until withdrawal, at which point they are taxed as income. The idea is that you can grow your money through investing and then withdraw the funds during retirement when your income tax rate is lower, thus putting more money into your pocket.

RRSP contributions are limited by a yearly maximum amount depending on your income, although you can carry forward unused amounts to reduce taxable income in future years. There are also limitations and possible penalties on withdrawals and overcontributions to an RRSP. Withdrawals from an RRSP prior to age 71 are subject to income tax and an additional withholding tax. A further caveat is that when you withdraw money from an RRSP, the contribution room you used to deposit that money is gone forever. One exception is the Home Buyers’ Plan, which allows you to borrow up to $35,000 tax-free from your RRSP to buy a house with no penalty — although it is a loan and must be paid back within 15 years to avoid taxes.

Unlike a Tax-Free Savings Account (TFSA) which has a minimum age of 18, there is no minimum age limit to open an RRSP, as long as you have earned income. RRSP accounts must be closed and the funds withdrawn or converted to a Registered Retirement Income Fund (RRIF) at age 71. A RRIF provides a steady stream of income since you must withdraw some of the funds on a regular basis, but you still receive tax-sheltered growth of the remaining funds. The minimum amount that must be withdrawn each year is determined by the holder's age and the value of their RRIF account, and the withdrawals are taxed as income in the year they are received.

Plan for retirement by contributing during peak earning years

Peak earnings are the years in which you earn the largest amount of income. Keep in mind that your income doesn’t just come from your employer’s paycheque or your earnings as a contractor. It’s also made up of things like rental income, some government benefits, and growth on any non-registered investments you may hold. These are the years where you can likely take the largest advantage of all the benefits of an RRSP. Typically, individuals earn less in retirement than in their peak earning years. This allows you to not only benefit from deferring tax, but also from withdrawing retirement savings in a lower tax bracket. 


How do I know my income is peaking?  

No one knows exactly what the future holds. You may get promoted, get a big raise, change careers, go down to part-time work, retire early, purchase an investment property, or a combination of the above. This means, like most things financial planning related, we need to make a best guess based on what we know today. Base your assumptions on what you have planned and what you hope and/or are working towards in the future.

If you are just starting out in the work force, or in a new career it’s likely that these aren’t your peak earning years. If you have a significant amount of experience in your industry, are in the position you expect to remain in until retirement or are focused more on work/life balance than doing anything it takes for that next promotion, you may be at or near your peak earning years. 

What happens if I contribute to my RRSP in lower earning years? 

You will still receive your RRSP contribution tax deduction and defer taxes on both the contribution and growth. However, you could be deferring tax now only to pay a higher tax rate on withdrawals from your retirement fund in the future. You’ll also be using up contribution room that would be more beneficial to use in your peak income earning years due to being in a higher tax bracket at that time.  

My income is low – What retirement savings account is best for me?  

A Tax-Free Savings Account (TFSA) is another retirement fund option. It differs from an RRSP account by offering tax-free growth, meaning you won’t pay taxes when you pull money out of this account at any time. Money withdrawn from a TFSA doesn’t count as income.

The money you contribute to this account has already been taxed and the value of the tax benefits is derived from the growth — making it really important to invest the money according to your risk tolerance and maximize the tax benefits from this account. If you’ve already utilized all your TFSA contribution room and still have additional retirement savings, you may want to consider contributing to your RRSP account and deferring the RRSP tax deduction.  


Why would I defer an RRSP deduction?  

At tax time you can select what to do with the RRSP contributions you’ve made that year – take the deduction in the current tax year or defer the deduction to a future tax year by completing schedule 7. By making the contribution now, you are still benefiting from the tax deferral on both the contribution and growth, but by deferring the deduction you can now wait and use it in year peak income earning years when you are in a higher tax bracket.  

How much can I contribute to my RRSP?

Your contribution room (deduction limit) for this year can be found by logging in to your CRA “My Account” and scrolling to the bottom of the page. Your RRSP contribution room is also indicated on your previous year’s notice of assessment. Each year’s unused contribution room is carried forward indefinitely. It increases by an additional 18% of your prior year's earnings up to an annual maximum ($29,210 for 2022). Your notice of assessment provides a detailed breakdown of the calculations used in your specific situation to arrive at your contribution room each year.  

How to open a RRSP account?  

You can open an RRSP account with a financial services institution or through a self-directed investing platform – they'll provide the option to make a lump sum deposit and/or regular contributions. If you already have an RRSP you can make additional contributions to that account. If you’re not satisfied with your current institution/planner, you can open an RRSP account with a different institution. Keep in mind that the more accounts you have open the harder it is to track/manage.

If you’re opening a new account, it’s typically easiest to transfer any other accounts you have to the new RRSP. You just need to submit a transfer form and they can take care of the transfer for you. Transferring will not impact your contribution room, but it's very important to use the transfer form and not withdraw from your RRSP and then contribute (this will have tax consequences). You’ll also want to consider your RRSP investment options and ensure the institution you select offers those options.  

What are my RRSP investment options?

An RRSP can hold “qualified” investments. Common types of qualified investments include: cash, individual stocks (if they trade on a major domestic or foreign stock exchange), government bonds, corporate bonds, savings bonds, mutual funds, index funds, exchange-traded funds (ETFs), segregated funds, mortgages & mortgage-backed securities, shares in Canadian small businesses, gold & silver.

If you’re currently holding cash in your RRSP you are losing out on the biggest advantage — tax deferred growth. You’re also losing to annual inflation! This can have a devastating impact on your retirement savings over the long term. It’s also important to note that just because an investment qualifies under the RRSP rules doesn’t mean it’s the right investment for your situation. It’s important to assess your risk tolerance and invest accordingly in a well-diversified portfolio that aligns with your goals.  

Pay back debt or add to retirement savings?  

This depends on the type of debt and your interest rate. It typically makes sense to pay down debt before investing because of the high cost of carrying that debt. It’s hard to get ahead by saving when your return on your investments is less than the interest you are paying. For example, if you invest according to your risk tolerance and your average rate of return ranges from 3% to 7%, it doesn’t make sense to pay 19% interest on a credit card balance or 8% on a line of credit.  You would get much further ahead by paying down the debt and ensuring you have a plan, so you don’t just rack it back up again!

Emotion and human behaviour can play a large role in financial decisions. It's important to research the facts, seek professional advice if your situation warrants it (preferably from someone who doesn’t benefit from selling investments), and carefully consider all the factors of your situation to make a decision that works best for you.

Jan 17, 2023

Enriched Academy Staff

Do you feel like you need to be part money coach, banker, accountant and economist just to manage your money?

Should it really be so hard to cover the household bills, make the payments on the car and mortgage, put away a little for the kid’s education, and make some solid investments that will hopefully leave you with enough left over for a reasonably comfortable retirement?

Money management might have seemed a lot easier a couple of years ago – before inflation and interest rates went into overdrive and the stock markets and real estate values nosedived 15%. Most of us were just trying to get by financially in 2022 and being buried by an avalanche of ideas and alternatives on how to survive the financial tsunami got very overwhelming and made it hard to decide on anything!

Why is financial planning so hard?
If you are retirement planning and looking for options on where to invest those hard-earned RRSP contributions, there are around 5000 mutual funds and 1000 ETFs in Canada to choose from! But that's only if you are already up to speed on the differences between mutual funds and ETFs, all-in-one ETFs, MERs and other investment fees, asset allocation, portfolio diversification, how RRSPs (and TFSAs) actually work and their many rules and regs, DIY online investment platforms, robo advisors... and the list goes on!

Unfortunately, personal finance management is likely to get more difficult and more complicated in the future. If you are lucky, some employers are now offering financial wellness programs as part of their benefits. Enriched Academy is also working with schools, colleges and universities in several provinces to ensure that students learn the basics of personal finance before they start their career path. This is great news for your kids and their financial future, but it isn’t going to help you…. unless you want to put your kids in charge of the household budget?


The key to a good financial plan
The biggest issue we see over and over at Enriched Academy is focusing way too much time and effort on making money. What really moves the needle is spending more time looking at where your money goes, and how to manage it better and make it work for you. Earning more money won't solve your financial problems if you continue to spend too much, make poor spending decisions, fail to invest, and have no goals to help guide you and measure your financial progress.

The reality is that most of us are on our own when it comes managing our money. The good news is that mastering the basics is a lot simpler than most of us realize. You can still use a pencil and paper to track your expenses and one of our free weekly webinars can teach you a lot in 60 minutes – from how to improve your credit score to how to pay off student loans. There are plenty of excellent learning resources, tools and apps out there that can save you a ton of time.

8 Easy ideas to start your financial plan
If you are ready to dive into your finances and looking for some basic fixes that don’t require a ton of research or knowhow to get rolling, we have eight suggestions for you.

1. TFSAs & RSSPs.
If you don’t have a TFSA or RRSP, take it off your wish list and get one (or both). There is no excuse for not having these accounts; they are free, can easily be opened online, and there is no minimum deposit amount required with many institutions. RRSPs allow you to defer paying tax until you withdraw the funds — ideally when you are retired, and your tax rate is low. The deadline to contribute to your RRSP and take the deduction on your 2022 income taxes is March 1, 2023.

A TFSA contribution doesn’t offer any immediate tax reduction, but you don't pay any tax when you withdraw that money. Furthermore, any income generated by investing your contributions can be withdrawn without any tax. You can open a TFSA and add money to it at any time throughout the year. The maximum you can contribute does not depend on your income like an RRSP, everyone over the age of 18 can contribute up to $6500 to their TFSA in 2023. If you have never had an RRSP or TFSA, you may find that you have a lot of unused contribution space because the annual limits carry over from year to year.


2. Reduce your expenses.
As proven by a never-ending stream of bankrupt celebrities and athletes who “lost it all”, regardless of how much money you have coming in, not tracking where and how much is going out the door is a recipe for disaster.

Countless articles are churned out every day on how to spend less, and they may yield some good tips that are practical for your situation. Look for easy hacks to supercharge your personal budgeting, like taking advantage of grocery store bargains, re-evaluating your mobile phone or cable services, collecting points or discounts on a credit card (but paying the balance in full every month!), or even clipping coupons!

There is no end to money-saving ideas and hacks, but the first step of your financial plan is to know your costs. You can’t kill what you can’t see, and household expenses are no exception. You need to track all your expenses for at least a month and analyze where your money is going. Don’t forget interest charges, memberships, and any other miscellaneous expenses — you need to include everything!

3. Automate your savings.
Making it invisible is the fastest and easiest way ever when it comes to how to start saving money.  Setting up automatic transfers every payday to a savings account (and then investing it!) will remove the guesswork and excuses from how best to stash your cash. It probably doesn’t need to be said, but money left in your daily chequing account has a way of disappearing!

4. Learn to manage debt.
If you are carrying a balance on your credit card, it's time to map out a realistic payment plan for an all-out attack on credit card debt. The average credit card balance in Canada as of September 2022 was $2121. Paying the minimum on that amount will require 187 months to eliminate the balance and cost you almost $2400 in interest. Paying the minimum plus $50/month will cut it down to 27 months and $518 in interest charges! If you have options to borrow more cheaply through a home equity loan and pay off your card, what are you waiting for? Balance transfer cards are another option as long as you investigate your obligations, create a strict repayment plan, and are disciplined.

5. Do I need a financial advisor?
A "high-interest" savings account is a huge misnomer, even with the recent increase in interest rates. You might get over 3% in a new account for a limited period, but chances are you are currently earning under 2%. The same goes for any cash sitting in your RRSP, TFSA, or your child's RESP. Financial markets were way down in 2022 and have been volatile, but stock have always recovered over the long term.  

You may not need a financial advisor if you have the time and motivation to handle your own financial education. Self-directed investing in financial markets is very do-able and will help keep fees to a minimum. Make sure you understand the risk and how it is mitigated, regardless of who is making your investment decisions and financial plan.

6. Understand your mortgage.
Investigate you mortgage options and how recent interest rates hikes will affect your payment when you renew. The average for a 5-year fixed mortgage in 2018 was around 4.5%, so you are likely looking at 1% to 2% more if you are renewing in 2023. That will add between $200 to $400 monthly to a $400K mortgage.

If you have a variable rate mortgage you are already feeling the pain unless you have a fixed-payment variable rate mortgage? If you do, you could be in for a shock, so make sure to confirm the situation and allow for the higher payment in your financial plan. Some of these mortgages have already reached their trigger rate while others have payments that are barely covering the interest and not making any dent in the principal.

7. How much should I spend on a car?
Cars can easily be bought and sold and there is almost always a cheaper option. Attachment to a car is usually much more emotional than rational, so it's less about giving up a real need and more about feeling good behind the wheel. If you are comparing car alternatives, make sure you factor in gas, insurance, parking, snow tires, oil changes, and any repairs not under warranty in addition to the monthly payment. You should be aiming for around 15% of your take home pay for all your car expenses combined.

8. What is a RESP?
You don’t need a financial advisor to understand that a Registered Education Savings Plan (RESP) is hands down the easiest money you will ever make on an investment. Deposits up to the $2500 annual limit receive a 20% grant from the federal government. If you miss a year, you are allowed to overcontribute to some extent in future years but playing catch-up is hard — just dump in whatever you can every year.

If you are short of cash, try taking a $100/month from your child’s CCB payment. Just like your RRSP and TFSA, you should be looking to invest the funds in your RESP rather than let it sit in cash. You can get a CDIC-guaranteed GIC at around 5% these days if you need a risk-free alternative until you get up to speed and feel comfortable investing in the financial markets.

Choosing a financial planning solution
Although it may seem daunting at times, learning how to manage your money and save and invest for the future will pay huge dividends over the course of your lifetime. Even if you come to rely on a professional for advice (some financial issues are very complex and consulting an expert is a wise move), a little financial education will help you evaluate their recommendations and make sound decisions, as well as provide an extra layer of reassurance and confidence.

2022 has been a financial disaster for many Canadians with high inflation, high interest rates, falling home prices in many markets, and stagnant wages. There is no easy financial fix for 2023 and it could be another tough year, especially if your financial knowhow is lacking.

We hope taking some concrete actions to improve your financial literacy and putting that knowledge to practical use to develop a sound financial plan is top of your resolution’s list. The choice of how you improve your financial literacy is up to you. Our advice is simple — make it a priority in 2023 and just dive-in!

Nov 29, 2022

Enriched Academy Staff

It’s a fact; retirement planning is an overwhelming task that is all too easy to kick down the road! There are so many “ifs” in the planning process it’s hard to know where to start, and just getting by for the near term may be taking up all of your time… and most of your money! However, the result of procrastination when it comes to retirement planning is also a fact —getting started too late will severely restrict your retirement lifestyle and is the number one regret for retirees.

To that end, we have assembled a list of quick tips and busted a few myths to help get you going on the essentials and highlight some additional factors you should be considering.

There is no magic amount for a savings target or a simple rule of thumb to base your retirement plan. There is no shortage of variables to consider when trying to figure out how you are going to fund your retirement dreams: How long will I live? Will my health or my spouse’s health fail? How much will my current assets and investments grow in value? How will inflation impact the next 5,10 or 20 years? There is also no magic number — often quoted numbers like $1,000,000 or formulas like six times your annual salary at age 50 have no basis in fact, especially not your facts.

The truth is there is only YOUR number, which results from making a plan based on the kind of retirement life you envision, carefully calculating how much it might cost, and creating a saving and investing roadmap to fund it. If you must have some kind of number for reference, 2019 Federal Government data showed the average annual spend for a household over 65 (including taxes) was $64,461.

CPP, OAS and other government programs will get me through. The maximum amount of CPP you can currently receive is $1254, but the average CPP payment at age 65 is only around $750. OAS will add another $685. You need to pay the maximum yearly CPP contribution for 39 years in order to max out your benefit! Both CPP and OAS are indexed for inflation but that is a pretty tight budget by any standard and you will definitely need to supplement these benefits with some retirement savings of your own. You can get an estimate of your CPP and OAS payments HERE.

If you don’t yet have a TFSA and/or a RRSP, waiting is costing you a lot more than you think! Maxing out your TFSA every year from age 25 to 65 with an index fund returning 5% (TSX 15-year average) would yield $725,000. Starting at age 40 would leave you with only $287,000. You could try and compensate by taking on riskier investments with higher returns, but your downside risk would also be higher.

Saving as much as possible is the only retirement plan I need. This might work if you are super disciplined, but it does leave a lot to fatalism! Having a written plan will help you track progress and let you know when it’s time to make adjustments. Putting the savings away is only half the battle, you also need a plan to invest and track the growth of your nest egg as well as one for how much money you will need post-retirement.

A financial advisor is the golden ticket. A financial advisor can offer information and advice, but they don’t do miracles. They may also play a limited role (e.g. investing) and their market returns may not be any better than what you could get with a lower cost DIY solution like a robo-advisor or all-in-one ETF. A financial coach or financial planner offers more comprehensive planning and are good choice if you don’t have time or motivation to dig into retirement planning on your own.

The value in my home is going to make up for my lack of saving. It might if house prices remain elevated, but how will you get cash for day-to-day out of your home? You could sell it and rent or downsize, rent a part of it (or do short-term rentals like Airbnb), or get a reverse mortgage. There are options but each one has limitations, so do your homework before you retire and see which one might work for you. For example, there may be no market for Airbnb in your area. A reverse mortgage may make financial sense if you absolutely need to stay in your home, but they are currently running over 8% interest and you can only borrow to 55% of value.

I will spend a lot less after I retire. Another maybe! Some of your big-ticket expenses should be gone (mortgage, kid’s college) but your day-to-day will depend a lot on where you live and how you plan on keeping yourself busy. Your home may be paid for, but it could need major repairs down the road and property taxes go up continuously.

As for entertainment, are you content with the length of the Canadian golf season in your area, or do you hope to spend a couple of the winter months polishing your game down in Arizona? If you have retirement dreams, the first step is to sit down and make a best guess budget at how much they are going to cost and where that money is going to come from every month.

If you are planning to rely on a side hustle, spouse and/or inheritance for some extra cash to get you through retirement, just be aware that those options can be easily derailed. If your spouse dies, your survivor’s pension could be considerably lower. Side hustles are great, but your health may fail or maybe you can’t find something – only 10 to 20% of retirees report doing some sort of work. As for inheritance, your parents may live to be a 100, they may make some bad investments, or they may even get remarried.

I will be free as a bird and can move somewhere cheap. If you currently live in Vancouver or Toronto, you have options. If you currently live in rural Saskatchewan, your choices are definitely more limited! Moving from one place to another within Canada may yield savings, but it may also put you far away from familiar people and places that will keep you happy and content during retirement.

Moving to a “cheaper” country overseas sounds exotic, but it’s a huge commitment if you are thinking permanently, and you have to consider health and safety issues, cultural differences, and the fact you may simply get tired of it! You may need to (medical reasons?) or want to (homesick?) come back at some point. Despite the cold, we think Canada is a great place to be!

High interest rates will let me live safe and secure on the interest and keep my capital intact… I’m set! If you are nearing retirement age and looking for safe and secure investments, being able to buy a GIC at over 5% is a nice option that we haven’t had for a long time. However, there is no guarantee that we are entering a long-term high interest rate period. A quick look at this graph shows the BOC overnight rates was under 2% for 13 years from 2009 until earlier this year! With the average retirement now stretching 20 to 25 years, economic conditions are likely to change, and you need to plan accordingly.

The factors affecting your retirement planning are constantly changing — savings rate, inflation, investment performance, interest rates, real estate values, retirement age, job loss or illness, etc. Some degree of uncertainty will always be there but knowing your options and laying down a roadmap to get you started and stay on track will help alleviate a lot of that uncertainty.

Nov 02, 2022

Enriched Academy Staff

You don’t have to look at the news for very long before you see a headline about the debt problems of the average Canadian – and the numbers can be quite shocking!

• Average consumer (non-mortgage) debt: $21,000

• Average household debt to disposable income: $1.82

• Most indebted age group: 46 to 55 years ($36,241 non-mortgage)

• Average credit card debt: $5679

The only positive has been that over the past couple of years, carrying debt (credit cards aside) in Canada has been pretty cheap. Anyone with access to home equity could have easily cashed in on rising house valuations and gone on a major spending spree at a pretty manageable cost somewhere between 2% and 3%.

Unfortunately, the consensus now is that those rates were once-in-a-lifetime bargains and aren’t likely to be repeated anytime soon. Interest rates have already risen sharply in 2022 and we are not through yet. The Bank of Canada overnight rate which is used as the benchmark for most loan agreements has risen from 0.25 % at the start of 2022 to 3.75% in October and is likely to rise again in December.

Despite the daily headlines about rates rising at a record clip, many people remain in the dark about just how much they are paying (or will soon be paying) to service their debts. Part of the reason for our nonchalance might be that we have all forgotten how interest (both simple and compound) can add up!

Car loans are a good example. The days of ultra-cheap financing have all but disappeared and according to Stats Canada the average car loan is now at 6.62%. While a lot of us can borrow at a lower rate depending on our credit score and the dealership, a 7-year loan on a $35,000 car at 5% is going to cost you $6554 in interest charges. Shortening the term to 5 years (what used to be the norm for car loans!) will reduce that down to $4630 and save you almost $2000 in interest charges.

Before you convince yourself a shiny new ride is well within reach by simply adding a couple of years to the financing term, make sure to calculate and then rationalize the added interest cost, not just whether the bi-weekly payment is do-able. Don’t forget to factor in depreciation (currently very low thanks to the shortage of cars) as well as the total operating costs including gas, insurance, parking, tires, oil changes, car washes, etc. — which are getting more expensive by the day!

If you do the math on your house, the pain is much worse, and you need to start budgeting for when your current mortgage agreement expires. If you are renewing a fixed rate mortgage from 5 years ago, you are likely looking at somewhere around 2% more. On a 25-year, $400,000 mortgage, moving from 4% to 6% will cost you about $500/month more. If you have a variable rate mortgage, you have probably seen it increase by the full 3.75% increase this year and that works out to a bump of almost $900! If you have a variable rate mortgage with a fixed payment, you are in for a huge increase and you may have to adjust your amortization schedule when you renew as your current payment may barely be covering the interest.

Home equity backed lines of credit are another area where borrowing costs have increased dramatically and will very likely continue to rise. A quick Google search shows these rates are now hovering in the mid 5% range, about double what they were 2 years ago. We agree that not all debt is bad, and home equity is often a great option to draw funds and pay down higher interest debts. However, it is no longer a source of super cheap cash for vacations, home renos, cars, furniture, etc.

If you are eyeing home equity to fund a $100,000 kitchen and bath renovation for example, make sure the accompanying $5500 in annual interest expense (assuming you pay interest only) is within your means. Also ensure you fully understand the terms and conditions for repayment and have a solid plan in place for paying it back and/or refinancing. Don’t forget that interest rates are most likely going higher and home prices may continue to fall — a double whammy that would easily slam the value of that $100K kitchen investment and put it way underwater very quickly!

The perils of credit card debt are well documented, but it bears repeating as the average Canadian owes their card company around $6000. Not all credit cards have high rates, but most are pushing 20% and even “low-rate credit cards” are seldom below 10%. The good news is that credit card rates don’t usually move with other interest rates and are bound by your cardholder agreement, so you may not see much change. The bad news is that credit cards are quite unique in that the interest charges are compounded daily, and the minimum monthly payments are shockingly low.

Paying the 3% minimum on a $1000 balance at the usual rate of around 20% will take around 11 years to pay off and cost you another $1000 in interest charges. Even the so-called “low-rate” card at 10% interest will require almost 8 years before you eliminate the balance. Paying the minimum balance on a credit card is an almost a never-ending debt cycle. Adding even a small amount ($50) to the minimum can make a big difference — learn just how much here.

Student loans are another type of debt that could see a dramatic increase when the interest-free period imposed during the pandemic on Canada Student Loans (federal) comes to an end in March 2023. If you elected to pay back your student loan at a fixed rate (prime +2%) you were likely paying around 4.5% in April of 2021. Based on current interest rates (which are expected to go higher] the interest rate on your Canada Student Loan will rise to almost 8% when the interest resumes in April of 2023. There has been some talk of loan forgiveness programs, but the current Repayment Assistance Plan is quite limited, and nothing has been announced so far on any other assistance programs.

A lot of people struggle with debt because they don’t really understand the details. Do yourself a favour and take the time to learn why paying the minimum on your credit card balance is futile and costing you a fortune, or how those fixed payments on your variable rate mortgage are fast becoming a huge liability as interest rates rise.

Not all debt is bad and it is a fact of life if you are eyeing a new car or buying a home. However, that’s no excuse to sign on the dotted line without fully understanding your obligation to repay that money an under what terms and conditions. There is no way to reliably forecast which way interest rates may go but they were historically low through the first quarter of 2022, and it isn’t likely they will be returning to those levels anytime soon — understanding the details of your debt will help you cope with future changes and find solutions.

Sep 30, 2022

Enriched Academy Staff

Research by the Financial Consumer Agency of Canada has revealed that financial worries are the leading cause of stress for Canadians, surpassing the amount of stress stemming from either relationships or their jobs. The tables have turned and rather than focus on how our job is affecting our personal life, the focus is shifting to how our personal life (especially finances) are affecting our job performance.

Some research has been done and the new isn’t good for employers. Employees dealing with financial stress are twice as likely to report poor health issues including sleep problems, headaches and other illnesses. They are also more likely to be absent, use sick leave or quit altogether; have lower morale and engagement; poor working relationships; and show lack of focus and poor decision making. For businesses, this can result in administrative and financial errors, workplace accidents, production errors and poor customer service.

The consequences of financial stress have a very real cost to your organization. A 2019 study by the Canadian Payroll Association (CPA) revealed that 46% of all Canadian employees admit to being distracted by financial stress at work causing an average 8.1% loss in productivity. Extrapolating that data to an organization of 300 people making and average of $64,000 results in almost $700,000 in lost productivity over the course of a year!

Keep in mind that the CPA study was done prior to the pandemic and does not reflect the financial stress the average Canadian is now facing due to rapidly increasing interest rates driving up mortgage and loan payments, skyrocketing prices due to inflation and supply chain constraints, and most recently, volatile financial markets.

If you need more proof of mounting financial stress, the National Payroll Institute just released survey results that show a 26% increase in the number of Canadians living paycheque-to-paycheque in just the last year. The average non-mortgage debt is now over $21,000 with the latest household debt-to-income ratio (the amount of debt to disposable income) at an all-time high of 181.7% according to the latest figure from Statistics Canada.

Many Canadians are struggling financially and the question all employers should be asking themselves is, “how much is poor financial wellness impacting the success of our business?”

While organizations across the country are bolstering employee assistance programs to improve the overall well-being of their staff, one area that has been widely ignored is the effect of financial stress in the workplace. It is very ironic that despite the intensifying focus on employee wellness, the #1 concern of employees themselves is receiving scant attention.

Many employers already provide pensions, matching RRSP contribution schemes, and various other financial benefits as part of their EAP. A financial literacy education program greatly complements these benefits by raising awareness and helping employees understand how to take full advantage of the available benefits and leverage their impact. For example, teaching employees how to invest and grow their RRSP rather than just helping out with matching contributions. A lot of Canadians are unfamiliar with even basic investing knowledge such as the effects of compound interest, investment fees, index funds and ETFs, risk management, or how to use RRSPS and TFSAs to defer/reduce taxes and grow their retirement nest egg… or help purchase their first home.

Retirement planning is another complex issue for employees. A company pension plan is a great asset to have but adding an education program to help employees make good decisions now and lay down a roadmap for retirement will give them a lot more assets down the road. Gaining the financial knowhow to manage your retirement plan and feel comfortable about your financial future will also allow employees to focus much better on the job at hand.

When you invest in the financial well-being of your employees, your business will benefit from higher productivity, better morale, lower absenteeism and turnover, and better talent attraction. A 2017 study by Sun Life Financial showed that 70% of employees feel their employer should support their employees financially and 84% would be interested in financial education programs in the workplace.

By implementing a comprehensive financial education program and not just paying lip service to the issue with a “lunch & learn” (they are just one of many tools) you demonstrate a lasting commitment to your employees and their families. Effective financial education programs for employees offer a number of training resources and options including live or virtual sessions, self-guided online programs, and options to consult and seek advice from financial professionals.

The timing of when employees need financial advice may range from imminent (i.e. they are fending off calls from bill collectors while at work) to long-term (i.e. they are unsure of how best to start planning their retirement) and companies need to be prepared to support with either of these timelines. Even your best/irreplaceable employees can get into financial difficulties (they may be creative geniuses or masters of other tasks… but miserable with money) and it is in the company’s best interest to do what you can to help them get through their financial issues.

Financial pressures have seriously mounted in 2022 and a lot of employees are turning to their employers to help out, and the first place they look is to bolster their household income with higher wages and salaries. While more income is certainly going to help, it isn’t always feasible based on the company’s financial situation. More money will also never become a long-term solution if employees continue to make poor spending decisions or overspend, fail to adequately save and invest, and put off their long-term financial/retirement planning until later in life.

There are lots of bankrupt athletes and entertainers who have clearly demonstrated that you can always spend more than you make, regardless of your income! Focusing only on the top line (income) when it comes to your finances is a common mistake. Anyone who has followed Enriched Academy knows that we teach the skill of saving and investing is much more important than the skill of earning.

Millionaire Teacher author Andrew Hallam has been a regular guest over the years in our live webinars. His book is proof that a steady income and some knowledge of basic investing principles combined with a high school English teacher’s salary can lead to early retirement and a very comfortable life post retirement.

Companies are increasingly caught in the trap of having to offer more money to keep their employees happy and stop them from bolting to the competition for slightly more salary (especially as inflation bites).  However, they should also be looking at adding proactive education measures to help improve their employees’ financial life and stop them from job shopping in the first place.

The reality is that personal finance is likely to get even more difficult and more complicated in the future and helping your employees master their financial life will pay increasingly valuable benefits to both employees and employers. If you would like to learn more about how programs from Enriched Academy can help your organization get ahead of the curve, please reach out to [email protected]

Aug 29, 2022

Enriched Academy Staff

We often hear the mantra, “pay yourself first” when it comes to financial advice. This concept of automatically routing some of your salary every payday (before you can spend it!) into an investment account like a TFSA or RRSP isn’t hard to understand, but it’s hard to implement if you need every nickel just to survive until your next paycheque.

Discipline and dedication to the cause will help, but they are only part of the savings solution. The fact is that to succeed at saving in today's world, most of us will need to earn more and spend less.

It’s obvious that a higher income will help you mow down expenses and leave you with more money in your jeans at the end of the month. However, any size paycheque will go a lot farther when supplemented with restraint and monitoring to control expenses at their source... before they vacuum up your potential savings.

Making more money is often the preferred approach as cutting back on spending can be painful, but there are definitely some drawbacks. More income means more taxes and it may also lower benefits like your GST rebate or CCB benefits. If your tax rate is around 20%, an extra hour at $15 hour will have the same effect as cutting about $12 from the household budget.

Working more will also rob you of precious free time, so there are significant social costs as well. If you have to incur additional expenses such as a babysitter or dining out more because you have less time or energy to cook, those costs need to be factored in as well.

Perhaps the biggest problem with working more is the very strong tendency to spend more! This is where discipline and determination come into play — make sure you earmark that extra income for saving and keep your expenses at the current level. Making more money won’t solve your problems if you don’t monitor your expenses, make poor spending decisions, delay investment planning, and have no goals to help motivate you and measure your financial progress.

You should also look at your debt cost to see if you should be saving in the first place! If you carry a credit card debt for example, you should definitely be throwing everything you have at it instead of saving. Even with the recent rise in interest rates, you would be lucky to get 4% on cash savings — most credit cards have rates four or five times that figure. You could also invest any extra money, but you have to add in the risk factor, and you would be hard-pressed to get returns that exceed the interest rate on most credit cards.

Turning to defensive savings strategies, there are countless articles churned out every day on how to trim the household budget. They may yield some good tips that are practical for your situation. Look for easy to implement ideas like comparing grocery store prices and stocking up on bargains, collecting points or discounts on a credit card (but paying the balance in full every month!), or clipping coupons.

There is no end to the money-saving ideas and hacks, but the first step is to know your costs. You can’t kill what you can’t see, and household expenses are no exception. You need to track all your expenses for at least a month and analyze where your money is going.

You may find some low-hanging fruits like a lightly used membership you could cancel, or maybe you didn't realize how much those nights out on the town are adding up to every month. On the other hand, you may find the low-hanging fruit is long gone and that making more money is your only way forward! Make sure to track your expenses first and give yourself a realistic starting number before you dive into a more austere budget.

For life’s necessities and things we need to survive, there is no need to ward-off the temptation to spend. We can focus on straightforward techniques that work for our situation and allow us to get the items we need at the best price, whether that’s clipping coupons or visiting a few different supermarkets to get the best deals for your weekly food shopping.

However, even the tightest of budgets include some discretionary spending and that is where some alternative strategies for spending less come into play that are quite different from the simple tips and tricks we see every day.

For example, maybe your “go-to” coffee shop has a stamp-card type offer where you buy ten and get one free. Rather than focus on that future free one, maybe some other thoughts would help you skip that coffee altogether? You could try mentally calculating the cost of your take-out coffee habit into time spent working, or simply pause to ask yourself, “do I really need it, or just want it?” You could also remove the temptation altogether by making coffee at home, taking a route that doesn’t pass by the shop, or throwing away their stamp card altogether.

For discretionary spending in particular, psychology is an important aspect when it comes to controlling urges. Spending can be triggered by a number of factors that affect are psyche — advertising and social media; comparing to our friends, neighbors or colleagues; habitual behaviour; lifestyle creep; the pursuit of happiness.

While it may be possible to limit your exposure and/or do your best to ignore these types of influences, there are financial self-control strategies that can really help put the bite on spending. A lot of personal finance research has focused on these tactics and the summary below has some practical ideas you could start using today.

  • Avoid tempting people, places, and activities (restaurants, malls, online browsing)
  • Eliminate spending temptations (e.g. make your own coffee/meals at home)
  • Use a shopping list and stick to it
  • Make regular savings automatic (set up payday bank transfers)
  • Set financial goals, track savings, and use a budget or conscious spending plan
  • Make funds difficult to access (lock or limit credit/debit cards)
  • Always consider your long-term financial goals (retirement, kid’s education, buying a home)
  • Reconsider your needs versus wants — we all did without many “needs” during the pandemic!
  • Use a “cooling-off” period before making a major purchase
  • Rely-on others for support and self-control (spouse, partner, friend, relative)
  • Convert the cost of an item into time spent working to earn that money
  • Choose to pay now rather than pay later or installment options
  • Use a retirement savings projections plan to understand how your current spend affects that plan.
  • “Lock” your savings away using term-deposits or registered accounts like an RRSP
  • Save before spending and not vice-versa
  • Always consider the reasons for your financials goals (family, retirement, etc.)
  • Use rewards for self-motivation (e.g. reward yourself with a take-out lunch after 20 days of brown-bagging)

At the and of the day, it doesn’t matter whether you save money through self-analysis and careful justification of spending decisions, or by picking up a sale-priced, jumbo size can of coffee and firing up the kitchen coffee maker every morning... whatever works for you!

Rising inflation and higher prices don’t appear to be a short-term trend, so now is the time to dig into your financial habits and maybe add a little anti-spending psychology to your mental money game.

Finding the cash to move from a paycheque-to-paycheque existence to a situation where you are saving and investing is becoming increasingly difficult these days. More income will certainly help, but you will also need to continuously manage your expenses and make smart buying decisions to really pile up the savings.

Jul 15, 2022

Enriched Academy Staff

Household budgets are under siege across Canada as inflation spikes prices on gas, food, and almost everything else we need to record levels. In addition, rising interest rates have added hundreds of dollars to the mortgage if you have a variable rate or are looking at renewing a fixed mortgage. Many Canadians have been forced to cut back on their monthly spend to try and make ends meet but don’t have the financial education they need to get started.

Budgets have a reputation for being difficult to sustain and it isn’t unjust, almost everyone has tried and failed at budgeting at least once. There are a lot of reasons for this, your budget may have been too strict and not realistic or maybe it was simply because it took too much of your time.

A lot of people start the budgeting process with trying to figure out how much they think they spend or might need and then try to live within those amounts. The fact is, most people don’t really know (or vastly underestimate) how much they spend. So, the first step to creating a realistic, sustainable-over-the-long-term budget is to track your current spending. You can do this in a number of ways; a mobile app or a piece of paper both work fine. It doesn’t matter which method you choose, just make sure it is easy and convenient to do so you don't forget.

Once you start tracking expenses you will soon see some that a whole pile of them are quite stable and don’t vary much (if at all) from month-to-month. This list includes the mortgage or rent, car or student loan payments, most utilities (some like gas or electric do vary seasonally), car or life insurance, and childcare. A second class of expenses are necessary items that fluctuate a little from month-to-month, like food, gasoline, and (essential) clothing.

The final class of expenses fluctuate wildly and are items that are discretionary or nice-to-haves.... but you could survive without. These include eating out, vacations, concerts or sports events, recreation, and non-essential clothing.

You can determine a basic monthly spend by adding up all the items in the first two expense categories. Put that amount of money into a chequing account every month and pay all those bills from that account. You don’t have to bucket each purchase to a category if you don't want to, but if you are running short from month-to-month and you are not cheating and using that money for non-essentials, you may have to up the amount. If you use a credit card instead of cash, make sure to pay those charges by the payment deadline with money from this account — no cheating!

Any money leftover after filling your basic expense bucket is not what you can spend, because you haven't saved anything yet! You need to fill two more buckets — your savings bucket and your discretionary or fun-money bucket. This is where it all goes sideways for most people. Taking from one bucket obviously robs from the other, so you need to find a balance between short-term gratification and long-term financial security. You also need to stick to the plan and lock away these amounts every month to succeed.

It isn't reasonable to follow some guideline that says put away "xx" percentage of your discretionary income because saving 30% of $500 is a lot harder than saving 30% of $5000. You are going to have to come to a conclusion yourself on what is livable when choosing between what you save and what you spend and aligning that to other financial goals like funding your retirement. Our only advice is that even if what you can save at the moment seems negligible, make that commitment! Did you know that just $100 month invested at 5% for a period of 30 years will give you an extra $100K for your retirement?

If your expense tracking shows that you are running out of money just trying to cover the basics, you need to go back and dig into your spending on necessities. There are some low hanging fruits here…. cable packages and cell phone plans are much easier to eliminate or lower than the water bill, and food is a huge expense that offers a ton of savings opportunities.

Food prices fluctuate wildly from week-to-week and from store-to-store. There are also cheaper substitutes on everything from what you BBQ (rib steak vs. pork steak... or marinade a cheap cut!) to your morning coffee (a large tub of Folgers vs those pricey Starbucks beans). Make sure you know your food prices so you can recognize a bargain when you see one (big-ticket items like laundry soap can be up to $8 cheaper from week-to-week) and constantly assess alternatives – there are lots of options at the grocery store.

What you consider essential clothing is also a grey area, your kids grow out of winter boots and need new ones — mom and dad can likely get another season out of their still functional but not so stylish boots.

If you are seriously in the red each month before even getting to your discretionary spend, then you need to dig into your fixed expenses. Number one on the hit list and a primary source of overspending is the car. Ideally, you want to keep the car payment and the related expenses (gas, insurance, oil changes, tires parking, etc.) to around 15% of your take home. Most people can afford much less car than they currently drive and turn to the never-ending lease or monthly payment to make it happen.

The other option for some families is to go from two cars to one. Before you say impossible; at least look at how you might make it work and how much money you could save. Car prices are extremely high at the moment and there has never been a better time to unload a used car.

Finding a cheaper place to live is an option and you can easily look around at what’s available if you are renting. If you own a home, there may not be many alternatives unless you really went overboard on your current home and there are viable options that make sense given the costs and effort involved. An easier option than selling would be to try and rent some portion of your home (a basement suite?) or maybe offer a spare room through Airbnb or as a homestay to an international student.

If you are already struggling with the mortgage payment, keep in mind that it could get much worse depending on your current rate, whether it is fixed or variable, and when you have to renew. The Bank of Canada interest rate hike on July 13 is expected to add about $55 a month for every $100,000 held on a variable rate mortgage and more interest rates increases are expected.

Credit card debt is another expense that is often overlooked because most people don’t fully realize how much of their money goes out the window each month on potentially unnecessary interest payments. If you are tapped out and need to use your card just to get by then you need to dig into your fixed expenses. However, if a review of your credit card statement reveals a number of discretionary purchases over the past few months (or years!) that you are financing at 19.99% then you need to do two things.

The first is to get a budget in place and a system to keep your card purchases under control. Whether you give up on the card and switch to a monthly cash envelope is up to you, but you need to know exactly how much fun money you have at any given time and a system to keep that spending in check.

The second step is to reduce that card balance as soon as possible. Cutting spending is the first place to look for generating funds, but you may also be able to draw on the equity in your home or have some investments that you could liquidate. For reference, paying the minimum on a $1000 credit card bill will require more than 10 years and another $1000 in interest before you finally get it paid off.

Lines of credit are another area where discretionary spending may also go unchecked. Many LOCs are backed by home equity and have carried a very low variable interest rate over the past two years (especially compared to credit cards). The problem is that as interest rates spike higher, the interest on these loans will also start to bite more and more. At best, these loans will add years to your mortgage free date and at worst, you could lose your home entirely. A decline in home prices like we are seeing now may also cause lenders to look a lot more closely at equity-backed loans in the future.

If you are having trouble making ends meet and up until now have been getting by with fairly lose monitoring of your spending, it is time to dig in and put some controls in place. Tracking your monthly expenses and getting a handle on your monthly spend is a good idea even if you don’t have financial issues.

You don’t need to bucket every purchase into a complicated spreadsheet (unless that works for you!) but you do need to get a good idea of the total amount you absolutely have to spend each month. After that, you can figure out how to start saving money and how much you have left over to enjoy.

Jun 27, 2022

Enriched Academy Staff

There are volumes of information out there explaining every aspect of Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs). Articles on how to optimize your contributions to each based on your tax bracket and expected future earnings, details of the TFSA over contribution rules and penalties, why the age of 71 is a big deal for your RRSP…. and plenty more.

We like getting the facts, but this information overload isn’t much help if you are simply wondering, “what is an RRSP account?” or “what does tax-free saving really mean?”. The mountain of details available is not only confusing, it may also discourage you from investigating more — and that would be a huge mistake!

Everyone should be aware of three things about RRSPs and TFSAs:

1. They are free to open and it’s not difficult to get one.

2. The TFSA age limit is 18, but there is no minimum age for an RRSP.

3. The younger you start, the more money you are going to make.

The biggest RRSP/TFSA mistake is procrastination; it has nothing to do with the minutiae of the TFSA rules or which investment fund is best for your RRSP. Do not put off getting your TFSA and/or RRSP until you are “older” and/or “have more money” — and don’t think these accounts are just for your retirement fund. You will definitely get older, but having “more” money is a pretty vague goal and that situation many never materialize. Keep reading this article to learn the essential facts, but make sure you put your newfound knowledge into action.

While TFSA and RRSP both have "savings" in their name, they are actually designed for investing your money, not saving cash.

After you put money into a TFSA or RRSP, you should be investing it, not just letting the cash sit there. Inflation will eat away at your cash pile over the years, so you need to invest to fight back against inflation and grow your retirement investments. Fortunately, you have a lot of options for investing your money.

Most Canadians invest the money in their TFSA and RRSP in some type of funds (mutual funds or exchange-traded funds) as part of their retirement savings plan. These funds are basically a basket of different stocks, bonds, and other financial instruments — there are thousands of funds available. Some are broad-based and include many companies across multiple industries, while others focus on a particular industry or region. The risk varies greatly from one fund to the next and you will need to factor your risk tolerance into the funds you choose.

Funds are professionally managed and you need to be wary of the built-in management fee (called an MER), but they make it easy for anyone to get invested. You don’t have to pick individual stocks and you don’t need anyone to help you if you want to do it yourself. Many Canadians handle their own investments and there are number of online options to self-manage the funds you hold in your TFSA or RRSP. There are also "all-in-one funds" with varying degrees of risk that are very convenient for beginning investors. There is even a fully automated online option called a robo-advisor that continuously adjusts the funds you hold to match your financial situation and goals — all you have to do is deposit the money!

While you don’t need a financial advisor to choose investments that are right for you, you are responsible for learning the basics of investing and making sure you understand the risks involved, regardless of whether you do it yourself or seek professional advice.

No one should be discouraged from opening a TFSA and/or RRSP because they only have a "little bit" to spare, and it wouldn’t seem to make much difference.

The first argument against this belief is that building a savings habit requires the right mindset and is a skill you need to practice. No one is born with a genetic predisposition to savings. You may be influenced as a child by the savings habits (or lack of) from those around you, but getting into the habit early will get you started down a very long, profitable road due to the wonders of something called ‘compound returns’.

Investing $200/month from age 18 to 65 at a 7% return (compounded for 47 years) in your TFSA would give you $790,139 tax-free at retirement. The same $200 invested with the same 7% return from age 28 to 65 (compounded for 37 years) would yield just $384,810. Sure, you would be contributing $24,000 more over those extra 10 years, but your nest egg when you retired would be almost double.

A lot of young people get discouraged by the sheer amount you are allowed to contribute — and for good reason! If you make $60,000/year, your annual contribution maximums are $6000 for your TFSA and around $10,800 for your RSSP. That’s $16,800; a pretty big chunk of your take home pay! The good news is that your yearly contribution limits can be carried over and as you grow older (and theoretically have more disposable income) you can catch up.

There is no need to choose between and RRSP or TFSA.

As your financial situation grows and changes you can definitely benefit from having both. The main reason is that the timing and impact of the income tax benefits is very different.

In short, you delay paying tax by putting money into your RRSP. When you fill out your tax return, you get to deduct the money you put into your RRSP from income — and that will result in a very noticeable reduction of your income taxes for that year. The higher your tax rate, the more you will save! However, before you go out and spend these tax savings, make a mental note that you are only delaying or deferring that tax to later in life.

Your RRSP should grow substantially over time if you are invested. However, you need to make sure your retirement budget reflects the fact that any money you plan to take out of your RRSP down the road is fully taxable in the year it is withdrawn. The primary advantage is that if you are retired, your income and associated tax rate could be substantially lower than when you were working. This will reduce the impact of taxes, but only to some degree! A lot of retirement advice focuses on maxing out your RRSP, but this could create a hefty tax bill if your retirement income is high.

If you had put the cash into a TFSA instead of an RRSP and invested it the same way, you would have the same amount of money, but you would be able to take it out and spend it tax free. You would have received no reduction in your taxes when you put the money into your TFSA, but you don’t have to pay tax on that money when you take it out of your TFSA.

An RRSP will put more money in your jeans today than a TFSA because of those immediate tax savings, but the opportunity to invest and grow tax-free money for the future in your TFSA is also very attractive. There are lots of other considerations (flexibility of withdrawals & your tax rate for example), but we will leave that debate for another article, just get one, or both accounts, and get started!

It is relatively easy to get started. The TFSA age limit is 18 but there is no minimum age to open an RRSP.

Both accounts require a social insurance number to open. You can open them in-person or online at most banks, credit unions and investment brokers. There are no fees to open one, although some institutions require a minimum balance. Both the TFSA and RRSP are a type of "registered account" and are not used for daily banking. They differ from your savings or chequing account because the cash flowing in and out is tracked to make sure you follow the rules and the tax implications can be managed.

You can put funds into an RRSP and TFSA anytime throughout the year, but there are annual limits.

For a TFSA, the amount is the same for every Canadian regardless of their income. For 2022, the maximum contribution limit is $6000. For an RRSP, you can put away up to 18% of your income up to a maximum of around $28,000.

If that sounds like way more than you can spare, the good news is that you can carryover unused contributions and catch up later. In fact, if you are over 18 and are just now eyeing your first RRSP or TFSA, you already have unused TFSA contribution room available. You may also have some RRSP contribution room as well depending on your income. You can confirm these amounts on your most recent income tax assessment. Just remember that catching up on contributions will be harder than you think and as we already mentioned, your nest egg will have less time to grow.

Although you can contribute funds anytime during the year, there are some deadlines for tax purposes. For an RRSP, you need to get the money deposited (not invested!) by the end of February in order to claim a RRSP deduction on your taxes for the preceding year. If you miss the deadline (even by a day) you will have to wait until next year to reduce your taxes. For a TFSA, the official deadline is December 31, but since the contribution limit can be used in any subsequent year and there is no tax deduction, there really is no deadline. There are also penalties for overcontributing to either your TFSA or RRSP, so make sure you understand the rules.

Even if you are not forgetful, it is a great idea to set up your bank account to automatically transfer a fixed sum every payday into your TFSA and RRSP. You can’t spend what you can’t see, and it will force you to save. You also won’t have to run around like a lunatic every year trying to find the cash and meet the contribution deadline.

The last thing to know is that TFSAs and RRSPs are not just for saving for retirement.

You can use your RRSP to save up cash for a down payment on a home and then "borrow" up to $35,000 ($70,000 for a couple) from your RRSP to purchase the home under the Home Buyers’ Plan. You do have to repay the borrowed funds over a period of years, but you do not have to pay tax when you withdraw the funds.

TFSAs offer even more flexibility with no tax due on withdrawals and you get to keep your contribution room. If you don’t know how much to save for retirement, maxing out your TFSA every year is a good place to start. If your plans change and you need that money before retirement, it is available. You do have to wait one year before you can replace any of the funds you took out so be careful, there are penalties if you run afoul of the rules!

There is a lot more that can be said about TFSAs and RRSPs but the short story is, if you don’t have one, you are seriously missing out. It’s time to get moving!

May 23, 2022

Enriched Academy Staff

It’s difficult to find timeless advice in the ever-changing world of personal finance but these five are about as close as you can get.

1. Start small and start early with investing

Starting small could be as little as $100 month and starting early means now! Invest what you can and don’t think a $100 monthly will never amount to anything. Only around 5% of Canadians under 25 have a TFSA, which means 95% have already missed out on 7 years of compounded returns! Investing that "measly" $100 month at 5% for 47 years (18-65) will give you $68,754 more than someone who did the same for 40 years starting from age 25. Time really is money when it comes to compounded returns, so get started as soon as possible.

2. Make more or spend less?

Our advice would be to do both, but there are limits on how much income you can generate and cutting back on expenses has a larger impact on your bottom line. You may even be able to cut back without a huge pain factor by first auditing your expenses and keeping track for a couple of months. You may find some expenses you could do without, like that "lightly used" gym membership or seldom watched 300-channel cable package. A part-time job or side hustle isn’t a bad idea, but it comes with its own pain factors. You will spend more time working and less time enjoying life, and any extra income is fully taxable — you might need to earn around $10 in order to get the same result as a $7 spending cut.

3. Re-evaluate your wants and needs

A 1200 square foot, 3-bedroom bungalow used to be the standard for many young Canadian families back in the early 1970’s. A lot of us grew up in a house like that with our parents, brothers, sisters, even the family cat managed to squeeze in! Houses are much bigger now (over 2000 square feet on average) and often come with a lot of high-end finishes. They call this trend lifestyle creep, and it is not limited to housing, it has inundated every part of our life. From what we drive to how often we eat out to where we go for vacation, we are constantly presented with a new norm as our wants slowly transition to needs. Being able to satisfy your wants later in life will only come from making smart spending decisions on your “needs” earlier in life and freeing up the cash to start saving and investing.

4. Understand credit and debt

131 months — that’s how long it takes to pay off a $1000 credit balance paying only the minimum amount — and it will cost you another $1000 in interest charges! Many people carry a credit card balance and are blissfully unaware of just how much it is costing them each month. Car loans are another area where the financing costs are often a lot more than most people realize. It is also important to realize that not all debt is bad, and mortgages are a great example. Even with recent increases in interest rates, 5-year variable mortgages are still a bargain at under 3%.

The key is to be knowledgeable about your debt. Track what you owe and what it is costing you as well as any alternatives that may lower that cost. For example, refinancing your mortgage or drawing on home equity to pay off higher interest loans or credit cards. If you struggle with debt, then it's time to bear down on expenses and draw up a strict repayment plan.  

5. Get financially literate

Managing your money has become more difficult as we have a lot more spending, saving, and investing options, but we also have access to a lot more information and tools to help us. Some things like a Registered Education Savings Plan (guaranteed 20% annual return for your child’s education) are a no brainer and can easily be understood with an hour or two spent online. Understanding the fees on your investments and how much they will cost you over the life of those investments is another need-to-know piece of information that can be easily confirmed.

Managing your retirement savings is more complicated because there are a lot of variables (lifespan, health, income, taxes, lifestyle) as well as options (TFSA, RRSP, investment properties, pensions) to consider. You may want some professional advice at some point but arming yourself with as much financial knowledge as you have the time and motivation to learn will help you better evaluate any advice you do get.

Enriched Academy offers complimentary, informative webinars every week on a wide variety of personal finance issues to help you become more financially literate. We don't sell or recommend financial products and we do our best to provide reliable advice and information that is easy to understand, practical and unbiased. Check out our events page to see the webinars coming your way over the next few weeks.

Apr 19, 2022

Enriched Academy Staff

Financial literacy has many different aspects and most of what we teach focuses on methods and strategies to either generate more income, or better manage and control our expenses. A third area which doesn’t always get the attention it requires is protecting our financial assets and income streams against unforeseen circumstances.

Insurance is the primary tool to help us in this regard, but the details are often overlooked and many of us take it for granted that we are sufficiently protected in the case of an emergency. Reading an insurance policy is not for the uninitiated and most of us would struggle to understand one even if we made the effort.

Insurance can be complicated due to the many types and variations available as well as plenty of confusing jargon to go along with it. The appropriate amount of coverage required can also be difficult to determine. Most of us are familiar with car insurance and understand the coverage we have, but that certainly isn’t always the case, especially when it comes to life or disability insurance.

A survey from online insurance specialists Policy Me found that only 33% of parents with children under 18 had term life insurance. This was quite a surprising result given term life insurance is the most cost-effective means of protecting your family. The survey also showed that many parents rely solely on employer-provided insurance benefits that can be expensive and may not provide sufficient coverage in the case of an emergency.

In addition to holding permanent (universal/whole life) insurance instead of term life insurance, other common misbeliefs are centered around mortgage life insurance and holding life insurance on your children. Mortgage life insurance actually pays off directly your creditors and not to your family, so term-life insurance would allow more flexibility for your family and may also be cheaper for the equivalent coverage.

Insuring your children with some sort or permanent life plan is often pitched as a way to save for their future, but the reality is that these plans are expensive and there are more cost effective alternatives for anyone looking to create a nest egg for their child’s future.

Your home is your biggest asset and there are also a few insurance caveats there to be aware of. Most homes insurance policies now use Guaranteed Replacement Cost. This is the amount required to rebuild your home as it was, on the same site — not the market value of your home. Make sure you have replacement cost insurance and let your provider know if you have done anything that would significantly increase you rebuild cost.

Fire is the primary threat for most homes, but we are seeing more and more flooding these days as weather patterns change and covering your home against water damage — whether it is overland (surface flooding) or from a backed-up sewer — has become an issue. Cost, availability, and pricing will vary but you should inquire if flooding is a possibility in your area.

One final caveat with home insurance is making sure you are covered if you rent your home (or part of it) regardless of whether it is long-term or short-term (like Airbnb). Talk to you agent and let them know the details of your rental situation so they can adjust your coverage accordingly.

You most likely have a lot more types of insurance than we could cover in this article, but the key takeaway is simply to be knowledgeable about your insurance products — they play a key role in wealth management. Make sure you confirm the details of your employer benefits like life and disability insurance and call your agent with any questions about the details of your home or car insurance. You will get peace of mind knowing there won’t be any surprises when you least need a surprise, and you might even save yourself some money.

Mar 21, 2022

Enriched Academy Staff

Rising inflation combined with a strengthening post-pandemic economy gives both reason and opportunity for the Bank of Canada (BOC) to raise interest rates aggressively in 2022. The 0.25% increase to its benchmark overnight rate in early March likely went unnoticed by most of us. However, it could be that interest rates are 1% or even 2% higher by this time next year, and that would definitely not go unnoticed! Don’t forget that the BOC dropped rates by a whopping 1% in just a few weeks at the height of the pandemic in March of 2020.
 
One common point of misunderstanding about variable rate loans is their basis on the prime rate. The prime rate is currently 2.2% higher than the BOC overnight rate and is determined by the major banks. Although the rates are much different, the key takeaway is the prime rate moves in lockstep with any changes to the BOC rate, usually within a few days. 
 
Now that we have the background knowledge out of the way, just how will future BOC rate hikes affect your debt? 
 
1. Variable rate mortgages 
The percentage of Canadians holding a variable rate mortgage surged in 2021 and now stands at about 50%. Any rise in the BOC rate is met by an equal rise in variable rate mortgages, so the impact is almost immediate. If rates rise 1% over the next year, a $500K mortgage payment will increase by over $200 month. 
 
2. Home Equity Line of Credit (HELOC) 
HELOCs usually have a variable interest rate that will rise in conjunction with any BOC rate hikes. A $100,000 balance carried on your HELOC will cost you about $20 more each month for every 0.25% increase by the BOC, so you could easily be looking at an extra $100 monthly a year from now. 
 
3. Credit card debt 
Credit cards have fixed interest rates, and you would have to dig into your card-holder agreement to see the details of how the rate can be changed. However, credit card rates are already so astronomically high that it is unlikely you would even notice a 1% increase! Our advice is to attack any outstanding credit card balance ASAP. Paying the minimum each month is futile and only keeps your creditors at bay. It requires over 10 years of minimum payments to eliminate a $1000 balance (at 20%) and will cost you another $1000 in interest charges! 
 
4. Personal lines of credit 
There are fixed and variable rate options out there. If you selected the lower variable rate when you signed the agreement, expect to pay more going forward on any outstanding balance. 
 
5. Car loans 
Car loans can be either fixed, variable, or sometimes have a combination where they change to a variable rate after a few years. You will need to check your loan agreement for any variable interest portion to see if your payment is going up…. in addition to those skyrocketing gas prices! 
 
6. Student loans 
The default choice for Government of Canada student loans is variable interest "at prime" with a fixed rate option at "prime + 2%". The point is mute right now as interest charges are currently suspended, but variable rate student loan holders will see a significantly higher payment when interest charges resume in April of 2023.


The bad news is that you will likely be paying more interest as we move through 2022, but the silver lining is that you will become more aware of just how much your debt is costing you. Not all debt is bad, but the cost of your debt can vary greatly, so make sure you understand your interest expense and adjust your repayment priorities accordingly.

Feb 08, 2022

Enriched Academy Staff

The worst financial mistake you can make is believing that Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA) are something to look into when you are a little older and more able to set some money aside. The fact is, you don't use these accounts for saving at all, you use them for investing. Your retirement fund could grow to seven figures, even if you only contribute a fraction of the allowable yearly maximums. They also come with huge tax-saving benefits.

A lot of people get discouraged by the sheer amount that you are allowed to contribute to these registered accounts and the mere pittance they may be able to come up with — don’t fall into that mindset!

If you make 60,000/year from your job, you could contribute over $10,000 to your RRSP and another $6000 to your TFSA every year. Considering you are only going to have about $45K in your jeans after taxes, finding a spare $16K would require almost 40% of your pay-packet!

The good news is that your yearly contribution limits can be carried over and as you grow older (and theoretically have more disposable income) you can catch up. The bad news is that playing catch up isn’t going to happen unless you are very disciplined with your spending. Sure, you may earn more, but you will spend more... kids, cars, a house, vacation — even the family cat is going to cost you $800 year and he may hang around for 20 years!

That extra disposable income you were envisioning may not materialize until you are in your mid 50’s — if ever! You need to scrape together whatever investment savings you can now; even saving just 5% ($200/month) of a $60K salary would make a huge impact.

Putting off getting started is going to cost you way more than you ever imagined in lost investment returns. Ignore the pitiful interest rates you see on bank savings accounts, holding cash will actually cost you money at current interest and inflation rates. However, the average annual return on many stock indexes (S&P, TSX, DSJ) over the past 40 years is around 9%. If you do a little math, you are soon going to realize that even on a relatively small investment of $200 month, the difference between starting when you are 18 versus starting at age 28 is jaw dropping.

Investing $200/month from age 18 to 65 at 9% would give you $1,504,471. The same $200 at the same rate from age 28 to 65 would yield just $620,102. Sure, you would be contributing $24,000 more over that extra 10 years, but your nest egg at 65 would be almost $1,000,000 higher — more than enough to keep you poolside at a nice resort in the tropics a few months every winter while those “late starters” are stuck in the snow.

There are plenty of rules, regulations and strategies to consider and as the March 1 RRSP contribution deadline looms, the media will examine and re-examine every TFSA vs RRSP angle and option known to man. You need to understand the basics of how they work, but the goal for the vast majority of us is simply to put something, anything into one (or both) of these accounts on a regular basis and start investing — you can’t go wrong!

Dec 13, 2021

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

If you are trying to get your financial life in shipshape, one of the first tasks you should be focusing on is how to improve your credit score. Your credit score is a measure of your demonstrated ability to pay your loan commitments and other bills in a timely manner. It is derived from a credit report issued by either TransUnion or Equifax and ranges between 300 and 900. The Canadian average is 650.

Credit scores of 700+ are considered "good" and offer a higher chance of loan approval, greater borrowing limits, and lower interest rates and insurance premiums. If you want to get one of those super-low advertised mortgage rates you are going to need a top-notch credit score. Potential interest savings are huge on big-ticket items; qualifying for a preferential rate on your mortgage could easily save you tens of thousands of dollars. Vehicle loans are another area where a good credit score can let you keep a lot more money in your jeans every month.

However, credit scores are used for a lot more these days than just whether you qualify for a loan. Insurance companies, potential employers, and landlords are just a few of the people that will often request your credit score and use it for decision making. Understanding how to improve your credit score and ensuring you have the highest score possible is going to open doors to many opportunities and save you money. For a great overview of your credit score “must know” information, take 3 minutes of your time and watch ”How Does Your Credit Score Work” on our YouTube channel.

Five factors that affect your credit score:

  • Length of credit history (15%) It takes time to build your credit score, so get a credit card when you turn 18, use it, and pay it off in full each month. A car loan or student loan will also help greatly — but only if you stay current with the payments!

  • Credit utilization (30%) If all your credit cards are maxed out, your credit utilization rate is 100% and it indicates to potential creditors that you are overextended. Try to keep your balance under 30% of your credit limit at all times.

  • Credit mix (10%) Using a mix of different types of credit will increase your score. When you are young the only credit available may be a credit card, but as you grow older adding a car loan, student loan, or line of credit to the mix will help improve your score.

  • Credit application frequency (10%) Applying for a lot of new credit in a short timeframe will negatively affect your score. Potential lenders do what is called a “hard pull” on your credit history when you apply. You want to avoid having a number of hard credit pulls in succession as it may look like you are desperately seeking more credit. Please be mindful of this if you want to get more credit cards or are rate shopping for a mortgage.

  • Payment history (35%) This is the largest determinant of your score and the most critical factor to manage. You need to always make the minimum payments and avoid anything ever getting to the “collections” stage – this includes parking tickets, mobile phone or other utility bills, student loans, and credit cards.

Credit scores are continuously evaluated and adjusted. If you have "errored" in the past, rest assured that the damage is not permanent! Your score can be raised/rebuilt over time by using credit responsibly, but it is much easier to avoid mistakes that lower your score in the first place.

Errors and omissions are not uncommon in credit reports and it is a good idea to confirm the details of your report. Both TransUnion and Equifax have a process to report mistakes and getting them corrected.

Monitoring your credit score regularly is a great financial habit that will allow you to track improvements, detect errors, and prevent identifying fraud. Please note that checking your own credit score is a "soft" inquiry and will not affect your score.

If you want to learn all the details about managing your credit score, make sure to check out How to Increase your Credit Score on the Enriched Academy YouTube Channel. Alanna Abramsky, our head of financial coaching and resident credit score expert, has packed everything you need to know into an easy-to-understand, informative session.

Nov 24, 2021

Enriched Academy Staff

You don’t need a money coach or financial advisor to learn the basics of how to start saving money, Financial Literacy Month is all about educating yourself. This 3-minute DIY workout will help build your financial fitness and steer you around eight of the most common pitfalls we see every day.

  1. Spending too much on a car.
    You should be aiming for 15% of your take-home pay for the car payment, insurance and gas. The monthly operating costs of a brand-new Hyundai Santa Fe (base-model $33,284 at 3.19%) would be minimum $800 month for 84 months. You would need to take home over $5K/month after tax ($90 to $100K in salary) to “afford” one. Slightly used cars are still very reliable and offer a lot more value.
     
  2. Investing before paying off debt.
    Make sure you pay off the right debts first! If your only debt is a mortgage at 3%, relax and go ahead and invest. Any loans or lines of credit up around 7% or higher (credit cards are around 20%) should be on your hit list before you even think about investing.
     
  3. Spending more than you have.
    It hurts to write something so obvious, but how can something so simple in theory be so difficult in practice? Too many “wants” is the root cause, but easy credit (not cheap, just easy!) and failure to track your spending and see just how big a hole you are digging every month with that credit card debt facilitates this downward spiral.
     
  4. Putting off saving, investing and retirement planning.
    Maxing out your TFSA ($6000 year deposited to an index ETF) from the time you are in your early twenties to when you retire at 65 could easily make you a millionaire. Never underestimate the power of compound interest when it is working for you! And don’t forget, the TFSA and RRSP also offer huge tax sheltering benefits on top of the compound interest!
     
  5. Not understanding your student loan agreement.
    Many students are not fully aware of their loan details and mistakenly assume their interest rate will be low. They also underestimate the future monthly payment and how long it will take to completely pay off student loans. Repayment of student loans will put a bigger dent in post-graduation lifestyle than most students ever imagine! Education has great value, just make sure you do the math, confirm that value, and know what to expect down the road.
     
  6. Not creating and using a workable, realistic household budget.
    Have you ever failed at budgeting? Of course you have, everyone does! The problem is not budgeting itself, it’s your process for creating a budget and your system for tracking household expenses. Relying on guesswork and not your actual spending, ignoring an emergency fund, not leaving any "wiggle room", too time-consuming – these are all fatal flaws for a budget.
     
  7. Getting caught up in "lifestyle creep".
    “The more you make, the more you spend”. It’s an old saying that rings true for most of us, but why not enjoy the fruits of your hard work? How much of your cash you can afford to use for enjoyment depends on your situation and you need to constantly re-assess your lifestyle. If you were just getting by before (and not saving for retirement) and get a $500 a month raise – do you get a shiny new car or a TFSA?
     
  8. Failure to build credit and ignoring your credit score.
    Completely eschewing credit will keep you debt-free, but do nothing for your credit score. And make no mistake, a good credit score will save you a ton of money over the course of your life! You can easily learn how to improve your credit score — simply using your credit card and paying it off in full every month; or financing a car (IF the dealer offers a great rate) are two ways to send your score soaring.

If these tips sound familiar, your financial literacy may be better than you think, or maybe you have been attending our free webinars? We offer great webinars on all sorts of topics and there isn’t a better way to improve your financial literacy with so little time. We do the research, present the facts, answer your questions, and get you motivated to act – all in 60 minutes!

Why not subscribe to our Financial Friday newsletter— you get all the details on our upcoming webinars, and it’s also crammed with practical, need-to-know personal finance facts, tips and advice.

Oct 04, 2021

Enriched Academy Staff

You might have heard Enriched Academy Co-founder Kevin Cochran explaining how YOLO (You Only Live Once) is the most expensive word in the English language. Kevin has a great point – justifying clearly unaffordable purchases with a YOLO attitude usually leads to a pile of very expensive credit card debt and more than a little regret down the road.

However, YOLO has a contender for the expensive word title, and that contender is procrastination. We are huge believers in education, fact finding, and analysis before making any important financial decisions, but at some point, you have to take action. Whether it’s opening an online brokerage account, meeting with a financial coach, or simply inputting your monthly household expenditures into a spreadsheet, you need to get moving.

The cost of procrastination when it comes to getting your finances in order is easy to overlook, so we are making it crystal clear by highlighting six issues where failing to act is definitely going to come back and haunt you!

Attacking your debt problem
Throwing everything you have to pay off a 3% mortgage doesn't make financial sense for most people. However, if you have higher interest credit card debt, car loans, or a line of credit that you are in no hurry to eliminate, you need to look at how much it is costing you. Once you see how much money you are wasting on interest every year and how many years (not months) it will take to pay back, your laissez-fair attitude to eliminating that debt will likely change.

Starting your retirement planning
Too little, too late is the story for many Canadians when it comes to funding their retirement. CPP and OAS aren’t enough to save you. The good news is you don’t need a comprehensive plan to get started. For now, if you have no plan or don’t know what to do first, open a TFSA and focus on maxing out the contributions every year and invest in an index fund. You can even automate the process with a robo-advisor and make it as easy as paying the phone bill.

Analyzing expenses and budgeting
Next month is not the time to start figuring out where your money goes every month and where you could/should/need to cut back on spending. The time to get started is today, and it has never been easier with hundreds of online applications and spreadsheet software, or you can go old school with pen, paper and calculator. Enriched Academy has a number of easy-to-use proprietary tools in our programs to help you crunch the numbers.

Getting started with investing
For many of us, it’s hard to get over the risk-aversion and fear of loss that goes with putting our hard-earned dollars into the markets. You need to be comfortable with your decision to invest and knowledgeable of strategies to mitigate the risk, but you also have to realize that holding cash at the interest rates we have seen over the last several years is not going create much of a retirement fund. The TSX was hovering around 5000 in August of 1996 and is just over 20,000 today. Had you invested $300/month for that 25-year period and achieved average market returns, you would have upwards of $500K today.


 

Creating an emergency cash reserve and a will
Two things you never know when you might need, but if the pandemic taught us anything, it was to prepare for the worst. Your income could unexpectedly and very easily disappear for a number of reasons, so you need to have enough cash on hand to tide you over for a few months. As for a will, they are pretty easy to get these days and there isn't any valid excuse for not having one, especially compared to the mess it leaves behind for your loved ones if you die without one.

Our goal at Enriched Academy is to educate and inspire you to take control of your financial life. We do our best to prepare you and get you moving, but it’s up to you to ensure procrastination and YOLO are not holding you back from reaching your financial goals!

Oct 04, 2021

Enriched Academy Staff

We scrimp and save to fund our RRSP and TFSA contributions and meet the goals of our retirement plan, so why is it that so few of us really understand the fees we are paying on our investments? Despite increased transparency and fee disclosure, many investors remain in the dark about fees and how much of a bite they take out of long-term returns.

It’s only 2%, that’s just a couple of bucks out of a hundred!”

When it comes to investment fees, you are about to see these are very costly words!

Assume you are 25 years old and maximize your 2021 annual TFSA contribution limit of $6000. You are busy and don’t know much about investing, so you stop by your local bank and they recommend one of their “top-performing” mutual funds.

The bank gives you a glossy brochure highlighting the fund managers vast experience and dutifully informs you of the “management expense ratio” (MER) built into the fund. This 2.35% annual fee seems reasonable to you. Everybody has to get paid and you tip a restaurant server 15%, so this is a relative bargain! No one does any math; the whole matter is soon forgotten and becomes routine. In fact, you barely notice this built-in fee on your annual statement.

Fast forward 35 years and you are now 60 years old and ready for retirement. Your $6000 in that “top- performing” mutual fund has returned 5% annually (before fees) and grown into the tidy sum of $14,987.

Unfortunately, your lack of financial knowledge meant that you had no idea of an alternative investment; something called an index ETF. Buying an index ETF is dead easy and you could have done it yourself with an online brokerage account. Your annual fee would have been much lower at around 0.35%.

If we re-do the math with the same parameters ($6K for 35 years at 5%) and use a 0.35% annual fee, you can see that your investment in an index ETF would have grown into the much tidier sum of $29,446!

Doing some much simpler math ($29,446 minus $14,987) reveals that your retirement fund is $14,459 lower than what it could have been – half of your total gain has disappeared with that little 2.35% fee!

But wait…. How can a mostly set-and-forget index fund return the same as a highly managed “top performing” mutual fund? The answer is that index funds often match or outperform “managed funds” with much higher fees regardless of whether the market is stable or volatile. In our example, the mutual fund would have had to beat the index fund by at least 2% every year in order to return the same amount.

You can always find exceptions and some managed funds may have success over a couple of years. However, very few are consistently able to beat the returns of the index over the long term. When you factor in their low cost and ease of maintenance, the decision to rely heavily on index ETFs is a no-brainer for most investors.

Canadian DIY investment guru Larry Bates has created this online calculator to instantly show how fees can cut into your investment returns.

Our passion at Enriched Academy is to inspire everyone to improve their financial literacy and take control of managing their money. In this example, a little financial education would have done wonders for your retirement planning. The same can be said for many aspects of personal finance – saving, budgeting, passive income generation – so make sure to get the financial knowledge you need to make the right choices for today as well as build your plan for a secure financial future.

Oct 04, 2021

Enriched Academy Staff

Financial planner? Money coach? Financial advisor? There are several titles for the people who can help you manage your money, but it isn’t always clear what each one does, and more importantly, which one is right for you?

With the exception of Quebec, anyone in Canada can call themselves a financial advisor or a financial planner —there is no guarantee of expertise. The level of experience, education, professional accreditation and the range of products and services offered varies greatly. Some advisors focus only on investments and will help purchase and manage a portfolio of stocks, bonds, ETFs, mutual funds, etc. Others take a broader financial view and will advise you on investing as well offer advice on issues such as taxes, insurance, or retirement planning.

A financial coach is both educator and advisor. They use a holistic approach and take a deep dive into all aspects of your financial situation. It includes cash flow management, budgeting, savings, investing (RRSP, TFSA, income properties, other passive income investments), debt management, building credit, wills and estate planning, insurance, and retirement planning. The program is customized to each client's needs, and you have the option to go into more detail on any aspects that are particularly relevant to your case.

In addition to the scope of their advisory services, the other primary difference is that a financial coach teaches you as you move through the program. The focus is on equipping you with the confidence and knowledge to make a lifetime of informed financial decisions. A coach teaches you the facts and provides a structured plan, an impartial opinion, and plenty of motivation and inspiration – but the decisions are ultimately up to you.

Aside from the education and guidance, there are also intangible benefits to a coach. Many people have trouble shifting from the learning phase (like reading this blog) to the action phase (purchasing an index fund online for example). As with any sport or activity, the presence of a coach is super motivational, and the structure and accountability built into the coaching sessions really helps to boost confidence. A coach can definitely help turn financial complacency into actions that build a robust financial plan.

The best way to highlight how coaching helps is to look in more detail at one of our Enriched Academy clients. “Stacey” and her husband called themselves “middle-class professionals” and they are in their 30's with three kids. They were looking for solutions on how to pay back debt and build a fund for their future. Stacey felt she did not have a good understanding of their overall financial picture and was unsure where their money was going every month.

After six months of working with a coach, she felt like they had made some “serious progress” and the results supported her feelings. Their net worth climbed by $16,388.62 and they also paid-off or consolidated a lot of high-interest debt. They saved almost $3400 in interest charges over the 6-month coaching period.

Stacey noted their gains easily covered the initial cost of the program and it will continue to provide positive returns for many years into the future. She also noted that the results were "super motivating" and she is looking forward to seeing how their financial situation changes for the better over the next two to three years.


 

Coaching is not for everybody, and Stacey pointed out that she did spend a fair amount of time studying the self-help resources her coach provided as well as drilling down into the details of their finances. Enriched Academy coaches have access to a huge library of proprietary teaching resources and tools to help their clients learn, but you will need to put in a few hours each month to maximize the effectiveness of the program.

For those who would like to have more control of their finances or take over management of them completely, coaching is a great way to transition and get the ball rolling. You get a period of expert support and guidance when you may be lacking the confidence or knowledge you need, and you are steadily preparing yourself for more independent decision-making down the road.

If you would like to read more about Stacey's review of her experience with the Enriched Academy Coaching Program, click here

Learn more about our financial coaching program

Aug 02, 2021

Enriched Academy Staff

Why hello there!

Have you been wondering about our coaching program since we launched in October 2017? Well, wonder no more! 

We took a few readers from Million Dollar Journey and took them through our 6 months of Financial Freedom coaching. They achieved some really amazing results, and THEN they wrote a really amazing review about us. 

If you've ever been looking for a completely unbiased review of our coaching program, you can read about it here

Enjoy:)

Feb 26, 2021

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

And no, the holidays did not come early this year. It’s RRSP season and the most exciting time of the year when you need to start preparing to file your taxes.

If you haven’t made a contribution towards your 2020 year yet, you only have until March 1 to do so. This date hasn’t really ever changed, so it always amazes me to see how many people are always scrambling in the last week to put money away into their RRSP’s. This is something that you can set up, and contribute to, at any time during the year. You don’t just have to wait until February when everyone starts marketing that the RRSP deadline is coming up.

If you don’t know what an RRSP is, let me tell you as simply as I can.

It’s a government-regulated account (registered) where any contribution that you make will give you an immediate tax deduction. Within your RRSP you can invest in things such as ETFs, stocks, bonds, mutual funds, real estate, etc.

Example: if your income at the end of 2020 was $75,000, and you contributed $10,000 into your RRSP throughout the 2020 year, then you are only being taxed as if you made $65,000 in 2020. This would bump you down into a lower tax bracket, and either provide you with a bigger tax refund, or would reduce the amount of taxes owed.

Keep in mind as well, that when you invest in a healthy and diversified portfolio within your RRSP, that your contributions grow tax-free until you start to withdraw them. And most people withdraw their RRSP when they need the income in retirement, so they’re typically in a lower tax bracket. You do eventually pay tax on your withdrawals, but if you’re retired and farting around the golf-course or sipping Pina Coladas on a beach somewhere, chances are you won’t be in a high tax bracket already, because most retirees don’t work. If you start young, build your portfolio up to $1,000,000, and only need $50,000 in retirement, then you’re only paying tax on your $50,000 withdrawals.

How Do I Get Started?

Well, to be honest, you should contribute to your RRSP throughout the year, but if you haven’t been contributing then you should do so before March 1. The contribution room that you have available to you can be found through your CRA My Account, or on your NOA from the previous year. Your accountant should also have that number somewhere. So don’t delay, start today.

Here are the three main ways that you can open an RRSP;

1. Managed: Personalized investment portfolios that are managed by advisors and professional money managers at financial institutions. Portfolios are tailored to the specific needs of the client depending on a number of factors such as your age, risk tolerance, and short and/or long-term goals. There are typically high fees associated with managed accounts since a human is deciding what securities to hold within that account and are actively managing it.

2. Robo-Advisor: A new class of financial advisors. It uses algorithms to provide investment management and advice with little human supervision. Using a certain type of software, a Robo-Advisor is able to automatically buy, sell, and rebalance assets in your portfolio. Don’t know the first thing about investing but want to invest in ETFs? Don’t you worry. Robo-advisors will do it all for you. So, if you’re new to investing, and want to reduce the fees you’re paying, then a Robo-Advisor may be a perfect fit for you.

3. Self-Directed: You have full control over the buying and selling of securities in your account. By managing your own account, you can reduce the amount of fees that you pay, putting more money in your pocket at the end of each year. With a self-directed account, you do all of the dividend re-investing and rebalancing of your portfolio.

We’ve helped 100’s of clients in our Financial Freedom Coaching program set up an RRSP and use it as an investment vehicle throughout the year. And we can help you too. If you’re ready to set up a Free Coaching Assessment call with our team to see if you’d be a good fit for our coaching program, then sign up here.

We can help you build a solid budget, set you up on a plan where you’re making weekly-monthly contributions into your RRSP, and save you from pulling your hair out every February as you scramble to find money to contribute.

Jan 22, 2021

Enriched Academy Staff

Happy New Year to all of you. I LOVE January.

Why, do you ask?

Because it marks the beginning of my personal financial year. This is where I sit down, complete my Net Worth Tracker, organize my budget, and fill out my Financial Freedom calculator so that I can figure out how much to set aside for the year ahead. My current financial goal is to retire by 45, and I seem to be on the right track (right now). Wish me luck.

I thought I would take this opportunity to write a post for parents out there who are wanting to motivate and teach their kids about financial literacy and money management. We get a lot of clients in our  Financial Freedom coaching program who take the education that they’ve learned and pass it on to their little ones. Financial literacy should start as young as possible!

Growing up, my grandparents always gave me Israeli Savings Bonds for birthdays and holidays instead of physical presents. I never understood why, and to be honest, it always pissed me off. Until I hit 18. Around my 18th birthday, all of the bonds had matured, and I was presented with a cheque for $10,000. I couldn’t believe my eyes when I saw all of those zero’s! I kept thinking about all of the things that I could buy with that money, but my mom had another plan in place for me. I’m so glad that I listened to her advice. Looking back now, I don’t think I’d be where I am today without my mom’s guidance and financial education.

She immediately took me into the bank and had me open up a self-directed TFSA where all of the money was invested into Index funds. At this time, I had NO idea what any of these words meant. I just thought that there was a savings account and a chequing account. But my mind was blown after my mom had taught me about the different types of accounts one could have – and this was at the young age of 18.

For the entire year after, I didn’t think about or look at the TFSA. I just let it sit there and allowed the market to take its course. One day, I decided to take a peek and see what was happening. I had made just over $800! And I literally did nothing all year with that money. It just sat in the account, made a 7.5% return, and compounded interest while invested in these Index funds. Seeing the $800 return sparked my interest in investing. I had a conversation with my dad afterward about the money I had made, and about investing in general. He told me to “make your money work for you, and don’t work so hard for it”. That saying has stuck with me to this day.

Three years ago, I hit a milestone. I turned 30 (I’m currently 33). And since I’ve been tracking my Net Worth for the last 3 years, I remember taking a look at my savings and investment portfolio and having just over $100,000, at the age of 30. I’m now 33, and my investment portfolio has doubled in growth over the last 3 years. What’s the secret you ask? I’ll tell you how I did it.

Keep in mind that I am not a homeowner. I choose to rent. But I do have a partner, a car, and a lovely 2-year-old Bernese Mountain dog (named George). We live a great life in Toronto (one of the most expensive cities in Canada. So yes, it is possible to save).

  1. Set goals for yourself and work hard. After that first year of investing, it became a personal goal to max out my RRSP and TFSA every year. And I can happily say that I’ve completed this financial goal since the age of 19. Before working for Enriched Academy as the head of their coaching program, I worked as a freelancer in the entertainment industry, and prior to that, worked in the restaurant industry.
  1. Pay yourself first, and have fun after. I know that I have a different mentality about money than other people my age do. I don’t spend a lot on material things. I go out for dinners and drinks with friends, have a great apartment in Toronto, and bike/walk almost everywhere I can. I spend the majority of my money on experiences, food, and travel. I have the mentality that I need to pay myself first by maxing out my RRSP and TFSA, and then I can have fun afterwards. Knowing that I have that money in an account makes me sleep like a newborn baby every night.
  1. Educate yourself and invest! I know that I wouldn’t be where I am now without investing. Learn the basics, take a course (like our one-on-one coaching program), and put some money into diversified investments so you begin to understand the principles. It doesn’t need to be a lot! Start with $10/week. A majority of my portfolio is invested in Index ETF’s, but I hold a few blue-chip stocks that pay out a dividend.
  1. Budget, budget, budget. This is so important and will be the basis of your financial plan. Once you have a budget in place, you will see where your income is coming from, and what you’re spending money on. And if you have any “leftovers”, you can start putting it into your savings/investment account. This is really where you’ll start to see your Net Worth grow.

I know that I’m not like the majority of Canadians. And that’s ok. I'm incredibly thankful to both of my parents who took the time to educate me about money. It’s never too late. So make sure that you take the 2021 year as a teaching opportunity and start to make the financial changes that you need to yourself. Your kids will thank you later.

Dec 07, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

What a Year.

How did you manage? What did you learn? What are you bringing with you into 2021?

2020 was tough. Emotionally. Mentally. Physically. The pandemic has definitely taken its’ toll on my emotional and mental well-being. Not being able to freely walk around, see friends and family, and be constantly mindful of the people around me has really made this quite the year. It’s definitely been hard, but I think after all of this, there are probably a few things that we’ve learned in regard to our finances.

Here are a few things to bring with you into 2021. 

  1. We don’t need a lot to live. I think for the majority of our coaching clients, the thing we hear the most is that the pandemic really taught them about the most important things in life. It wasn’t about the car they drove, the clothes they had in their closets, any other material object they once had, or even going to get their hair done bi-weekly, we’re surviving without all of it. There are always going to be things that we like to have. But when you really get down to the nitty-gritty of it, we don’t truly need a lot to live. Head into 2021 by taking a good hard look at your finances, cut out those things that may not be bringing you joy, and focus on those things that matter most to you.
  2. You can manage your cash flow, regardless of your financial situation. This one was SO interesting to me. We had a number of coaching clients who had joined us back in February, and then lost their jobs because of the pandemic and had to take a paycut or live off of the CERB. And guess what? They still managed. By working one-on-one with our coaches, our clients were able to re-work their budgets and focus on the priorities of putting food on the table and a roof over their head. It just goes to show that it’s not the money you make, but the way you manage it.
  3. Pay off your high-interest debts – ASAP. Being in debt can be hard. Being in debt during a pandemic can be even harder. But I hope (if you were one of the 1000’s of Canadians who had debt before the pandemic) that you had some ah-ha moments. Our coaching clients certainly did. Always pay off high-interest debts (above 5%) every month, or as fast as you can. Nobody knows what’s going to happen in the future, and I think the pandemic made a lot of us realize that our finances are not finite. Manage your income, dollar by dollar, and get out of the weeds when you have the ability to.
  4. Have money set aside for an emergency fund. Remember how we always talk about having 3-6 months of necessary living expenses in an account that you can dip into for emergency purposes? I’m sure that really came in handy back in March if you were someone who lost your job. Figure out what your absolute necessities are, and keep a 3-6 month emergency fund in an out of sight, out of mind account that pays some kind of high interest.
  5. Invest, Invest, Invest. Once you’ve gotten rid of all of those high-interest debts (above 5%), you can start to invest. Back in March, I was in the airport heading to Belize when the markets were crashing. I kept seeing them drop. Lower and lower and lower. Do you know what I did? I didn’t sell my investments. No, no, no. This was the opportunity that I’ve been waiting for. Everything went on sale! I maxed out my TFSA, RRSP, and had my partner do the same. To this date, our investments are up over 30%. Now, I’m not telling you to time the markets, because nobody can. But if you can keep costs low throughout the year, manage your cash flow, and have cash set aside for these kinds of opportunities, then you’re all set. Buy low, sell high, remember? Don’t panic. If you’re properly invested and diversified, you’ll never lose all of your money. Yes, it may be volatile, but if you can think of the future, you’ll come out on top.

"Be Greedy When Others' are Fearful and Fearful When Others' are Greedy" - Warren Buffet

At the end of all of this, it’s been really interesting to see our clients throughout this pandemic. Regardless of their financial situation, they’re excited about getting their financial house in order for a healthy and successful 2021.

Are you ready to join them? Sign up for your free Coaching assessment call here. Having someone else to give you a completely non-judgmental and non-biased view of your financial situation may just be what you need for your own successful year ahead. After everything is said and done though, make sure to not take any moment for granted. Hugged your loved ones. Take time away from technology, work, and enjoy every minute.

Happy Holidays and New Year from Enriched Academy

Oct 09, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

What Are You Thankful For?

As we approach one of my favourite holidays of the year (aside from Passover, and Christmas, and Hanukkah, and my birthday), I’d like to check in with you to see what you’re thankful for?

I’ll start. I’m thankful for the health of myself and my family and friends, and also the financial education that my parents taught me at a young age, which now has provided me with the financial freedom to not stress about money. And I’m 33 years old. How many 33-year-olds do you know who can say that?

As the head of coaching for our Financial Freedom program, our program sees 1000’s of clients every year who are in really difficult situations because of a lack of financial education. Just remember, this is not your fault. We live in a broken system. But there is a way that you can make a change, and that change starts with altering your behaviours and habits.

How To Make Habits Stick

We all know bad habits are easy to pick up and hard to drop. Good habits on the other hand? Well, if it was easy, we would all be wealthy and fit (and able to wear the same jeans that we did in high school). I’m currently struggling to fit into the same pants that I was wearing before COVID hit. Damn you quarantine.  
 
But I’m going to let you in on a super easy secret that can help you create strong, lasting habits.
 
Make those habits as easy as possible. 

If you sat down and made a list of habits that you go through in a day, you can probably come up with around 10-20 of them. Here are a few of mine that may help you to create your list.

  • Wake up and make coffee.
  • Review budget.
  • Read finance blog.
  • Walk the dog.
  • Brush my teeth.
  • Make breakfast.
  • Clean dishes.
  • Get dressed in workout clothes.
  • Work out.
  • Do yoga.
  • Shower.
  • Make lunch.

Pretty crazy eh? It’s not even 1 pm yet and I’ve already gone through 11 habits that I don’t think about. I’ve gotten into a routine where I just do them.  

Atomic Habits is our favourite book on creating winning habits. The author, James Clear, outlines a few tips you to follow... 

Use this formula: I will (behavior) at (time) in (location). For example, instead of saying, “I will budget each month.” Try, "I will budget on the 1st of each month at 5 PM in my office." 

Every habit is initiated by a cue. The cue triggers your brain to initiate a behavior because it predicts a reward. We are more likely to notice cues that stand out. Setting an alarm on your phone for 5 PM monthly is a cue that you need to budget. 

Forming a new habit is hard so Make it Easy. We really strive for that in our Enriched Academy Programs.

And now I’d like to share with you:

5 Money Habits of Wealthy People 
 

These concepts are honestly so easy, and they truly are the key to building wealth. We see most of our successful Financial Freedom clients live by these means, and you can start to see results today if you follow the list below.

  1. Live below your means. Spend less than what you earn. It’s as easy as that. Sit down and go through all of your sources of income, and everything that you spend money on. If you have money left over every month, and are putting money into an investment account, you’re beyond the majority of Canadians. If you’re overspending though, then you need to make some cutbacks unless you want to end up in debt for the rest of your life. It’s not about making more money. It’s about living with what you have and being smart with it. If Warren Buffett is worth over 70 billion dollar and lives in the same home that he bought 50 years ago for $31,000, and drives a modest Cadillac, then you can live within your means as well.
  2. Learn one new thing a day. No one has ever gone broke buying books. I read a daily personal finance blog that keeps me up to date with what’s going on in the world. If your new thing is a recipe, or a craft, or a new trade, then that’s awesome. But just force yourself to learn something new.
  3. Small steps each day. Have you ever read a book or taken a course but quickly found your motivation evaporated? Wealth is given to those that take small consistent actions daily. Ask yourself, what is one small thing I can do today to help me make progress with my finances? 
  4. Track your net worth and budget monthly. You cannot improve what you don’t measure. These two numbers are the foundation for financial and time freedom. 30 minutes per month, that's all it takes. This is one of the biggest ways that we measure our clients in our Financial Freedom coaching program. We get them to track their Net Worth month and start to track their cashflow as much as possible. This way, they can see the correlation between the two. When you start to track your cash flow, and you spend less than what you earn, then your Net Worth goes up.
  5. Learn to say “no”. Only spend money on things that bring you an immense amount of joy and happiness. Everything else, say no to. 

Once you’ve got the top 5 habits above in place, you’ll start to see dramatic results with your finances. You’ve just laid down the foundation to becoming financially successful. Congratulations. But there’s still more work to do! You need to review your financial goals and plan each month. Step 1 is creating that plan. Step 2 is constantly reviewing and making changes to your plan as things change. If you are not constantly reviewing your plan you could be headed in the wrong direction and not even know it. 

When COVID-19 hit and our economy, we worked with all of our coaching members to revise their financial plans because so many things were changing all at once. Some of our clients had lost their employment, their investment portfolios were going down, their kids were home from school, among many other things.

The one thing that we’ve heard over and over again is how thankful our Financial Freedom clients have been for having us work with them throughout COVID-19. Even though some of our clients have seen a decrease in income, they’ve seen an overall increase in their Net Worth. This education that we provide is something that will be with you forever. And we can help you change your habits.

Just the other day I received a note from one of my past students. It made my heart go all warm and fuzzy inside.

“I am not exaggerating when I say that what you all do is life-changing! You helped us so much and we are forever grateful ????”.

So, if you’re ready to take control of your finances and join the 1000’s of Canadians who have gone through our Financial Freedom Coaching, sign up here for your coaching assessment to see if we can help you.

You’ll be thankful.

Happy Thanks giving!

Aug 31, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Have you ever gone through your bank to take a look at your credit score and haven't been super happy with the results? Or have you ever looked into getting a mortgage or needing to borrow money, and nobody will give you a loan? It's likely because you don't have a credit score that's in tip-top shape. This article will explain what a credit score is, and how to increase it. 

What is a Credit Score?

You credit score is a number (typically between 300-900) that is based on your credit report. Your credit score your financial report card, and it’s used by lenders to predict the likelihood that you will repay any future debt. Your credit score is based off of your credit report, which is a summary of how you pay your financial obligations. Lenders use your credit report to verify information about you and how you have been paid off your financial obligations in the past.

Why is This Important?

Your credit score will determine if you are a risk to lenders and it will affect the interest rates you pay on any loans you applying for. If you have a “poor” or “fair” credit score, and are looking at securing a mortgage, you may not qualify through a bank or credit union. You may have to go with a B-grade lender or even a private lender, where you’re looking at interest rates 3-6% higher than a traditional A-lender.Your Credit Score is one of the metrics that we track in our Coaching program, and if you can believe it, we’ve helped our average coaching client increase their credit score by 21 points over a 6-month period.

How Can I Increase My Credit Score?

There are 5 ways to increase your Credit Score. All of these ways need to be monitored and effectively managed in order to work.

  1. Payment History: This is the most crucial factor in your credit score, and it makes up to 35% of it. Creditors want to know that you’re going to pay back the money you are asking to borrow from them, so they will look at what your payment history has been like from previous consumer debts. ALWAYS make your payments on time and make the full (or at least minimum amount owed) payment each time.
  2. Amounts Owed: This makes up about 30% of your overall score, so it’s an important one. Try to keep your credit utilization rate less than 35% of your available amount, and don’t max out all your available debt options. If you use a lot of your available credit on your debts, lenders see you as a greater risk, EVEN if you pay your balance off in full by the due date. For example, if you have a credit limit of $10,000, you should not carry a balance of more than $3,500.   
  3. Length of Credit History: This makes up about 15% of your score. Creditors and lenders like to see that you’ve been able to handle credit accounts correctly over a period of time. Newer accounts will lower your average account age, which may negatively impact credit scores. Never cancel one of your oldest cards because that marks the beginning of your credit history. 
  4. New Credit Applications or Credit Checks: Every time you apply for more credit, your score will be affected, so try to limit hard inquiries. There is a difference between a soft credit check (checking your credit score) and a hard credit check (looking for more credit). Every time you do a hard credit check, your credit score will be lowered. This takes place when you apply for a mortgage, loan or credit card. 
  5. Use Different Types of Credit: You should have at least two credit vehicles open (credit cards, LOC’s, car loans and mortgages.) Showing you can manage different types of credit will have a positive impact on your score. 

You should check your credit report and score once per year. One small error can have a significant long-term impact on your credit score. Your credit score is like your financial report card and having a bad score can have a negative affect on your long-term financial plan. We’ve helped 1000’s of clients increase their score. If you feel like you need a little one-on-one help, make sure to sign up for our free Financial Assessment Call.

Jul 26, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

It’s been a few years now since the term robo-advisor has surfaced, and we get a lot of questions. So many in fact, we have an entire webinar dedicated to explaining what they are and how they work. No time for a webinar? No worries, we have answered most of the common questions below.

What is a robo-advisor?

A robo-advisor is an automated, online financial advisor. It combines a questionnaire or text chat regarding your investing preferences with a lot of high-tech software and algorithms to figure out an ideal asset allocation. It then builds a portfolio of exchange-traded funds (ETFs) for you and continuously manages this portfolio as necessary based on your investor profile — buying, selling, and re-investing dividends. If you don’t want to do DIY investing but still want the simplicity and convenience of investing in ETFs, a robo-advisor may be perfect for you.

What are the fees?

Robo-advisors don't use a lot of human management and have relatively low fees. They charge an MER fee (management expense ratio) on assets under management of anywhere from 0.30% to 0.60% for their services, and then you have to add on the ETF fees of around 0.10% to 0.30%. At the end of the day, you may be paying around 0.7%. This is probably going to save you a bundle compared to the other options.

Let’s break down how robo-advisors compare to actively managed funds (mutual funds) from the big banks. Canada has some of the highest mutual fund fees in the world and the MER fee can be as high as 2.3%. If you have a portfolio of $100,000 with a financial advisor, you could be paying more than $2000 in MER fees regardless of how your fund performs. But if you're using a Robo-advisor, you're only paying around 0.7%, or approximately $700. That extra $1300+ you're not paying in fees every year will really add up as your investment returns compound.

Which robo-advisor is best for me?

Good question! This depends on your preferences, goals, and the portfolios the robo-advisors use. Each robo-advisor offers something different, so it’s important to take a look at which one works best for you. Here are some of the different things to look into:

  • Fees (although this isn’t the only factor!)
  • ETFs that make up the portfolio.
  • The dashboard.
  • Other benefits. Some robo-advisors provide you with a dedicated financial advisor, estate planning, insurance needs, tax-loss harvesting, etc. This may be something that you require, so it’s good to look into your own personal needs.

What next?

There is no better time than the present! If your returns have been less than stellar over the last few years, it may be time to rethink your current investment strategy and take a hard look at why you are paying the fees you do. Or maybe you’re ready to grab the bull by the horns yourself and start to

secure your financial future, especially if you don’t have any high-interest debts that should be taken care of first! If you feel like you’re still lost, and need some guidance, you can always check out one of our upcoming livestreams or sign up for one of our free financial assessment calls.

Jun 17, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Crush Your Debt – For Good

Have you heard about our brand spankin’ new program that we launched in May? It’s for all of you out there that have a little (or a lot) of debt to pay off. And we’re not just talking mortgage debt. This goes a little bit deeper than that. This program is tailored specifically for those who have credit card debt, line of credit debt, personal loans, and debts to family members. Interested in finding out more? You can take a look at the program here: https://enrichedacademytraining.com/debt-sales-page

Why did we create this program?

Getting out of debt is hard if you’re not educated on a wide range of topics. After launching our coaching program back in 2017, we saw a need for continual education surrounding debt. We kept seeing the same debt patterns time and time again, and we wanted to help our followers get out of debt by being able to use the same tools and worksheets that we use with our one-on-one clients. Introducing…….our Debt Elimination Program.

What’s so great about this program?

I think the question is, what is NOT great about this program? It’s specifically constructed to provide you with the education, tools, and resources that you need to get rid of your debt. These are proven methods that we teach to our one-on-one clients, but now you can have access to the education, the resources, and the worksheets to feel more empowered and confident in the next steps. The principles work, so long as you’re willing to do the work yourself.

The other thing that is really great about this program, is that we wanted to make it affordable because we know that getting out of debt can feel really daunting. We priced this at $197+tax. That’s it. And you get 7 modules, tools, resources, and an exclusive Facebook group to ask questions and get support.

What do you cover in the program?

Here are the 7 modules that we cover:

  1. Creating Your Net Worth Tracker and Analyzing For Quick Fixes
    1. This is probably the most important thing that you can do to help organize your finances. We’re going to teach you how to go through all of your assets and liabilities with a fine-tooth comb and figure out any opportunities you can go through to get rid of your debts faster.
  2. Understanding Your Cash Flow and Creating Your Budget
    1. My personal favourite module is all about creating your budget, and figuring out different way to manage your cash flow moving forward so you can prioritize your spending towards what matters most (getting out of debt).
  3. Creating New Goals and Tracking Your Spending
    1. Chances are that you got yourself into this debt because you didn’t track your money coming in and money going out. We’re going to help you create some realistic goals that you can stick to moving forward so you can get our of debt faster.
  4. Using the Debt Crusher Tool
    1. We have this really amazing tool on our website that calculates how much you need to put onto debts to get rid of them by a certain time. This really looks into goal setting.
  5. Organizing Your Debts and Understanding Different Paydown Methods.
    1. Consolidation? Debt Avalanche? Debt Snowball? If you don’t know what these methods are, it’s difficult to focus on one thing at a time. This module teaches you all about those different method.
  6. Understanding Compound Interest and How Your Credit Score is Calculated.
    1. Do you know your credit score? Do you know how your credit card or line of credit calculates interest? If you don’t, this module is for you.
  7. Financial Freedom
    1. Ahhhh yes. Finally, debt-free. Now what? This module will take you through how to become financially free and what the next steps are.

So, if you’re unsure of any of the module breakdowns mentioned above, it sounds like you’ll get LOTS of value out of this course. Come check it out. You can learn more about it here.

May 15, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

We’ve been in isolation now for what seriously seems like forever. But the time is flying by, isn’t it? Our coaching division has been working diligently with our clients to help them navigate through this time, and I’ve compiled a list of ways to help clients cut back and think outside of the box to stretch their dollars the furthest. Here are some that may help you if you’re finding that funds are tight.

Take This Opportunity to Clean the House and Sell Your Unused Stuff: Have you ever taken a step back and thought about how much stuff you have but never use? Craigslist, LetGo, Kijiji, Bunz, Facebook Marketplace are some of the amazing platforms out there that allow you to sell and buy used (if you need anything). Not only will it feel amazing to get rid of everything, but if you can free up some cash, it will help in the long run. One person’s trash really is another person’s treasure!

Do You Have Any Reward Points That You Can Use?: I don’t know about you, but I’ve been accumulating PC Points for years. I signed onto my PC Points last week and found that I had $500 worth of free groceries. WINNING! So, then I started to look at some of my other rewards points that I’ve been accumulating all of these years and found that I had $100’s of dollars in reward points. This is the PERFECT time to use those points if you find that you’re strapped for cash. Air Miles? Coffee rewards? Points from your bank? Sign onto your platforms and see what you have and start to use them if you need. Also take a look at unused gift cards!

If You Absolutely NEED to Shop: Have you Heard of Rakuten? We all have things that we absolutely need right now. Perhaps those necessities can be purchased through Rakuten. It’s a website that gives you cash back on purchases that you’d be making in-store anyways. And if you use this link, you'll get $5 cash back on your first purchase!

Take a Look at Your Insurance: Do you have insurance on two or more cars that you’re not driving right now? Time to call your provider and cut one of the monthly car insurance premiums. If you’re able to drive one car between a family, you might as well scrap the monthly cost for the time being. Have you read the fine print of your insurance premiums? Maybe you haven’t taken a look at your insurance policies in a while. There are a few really awesome websites out there such as PolicyAdvisor and PolicyMe that will provide you with a quote in minutes. You can compare them to the policies you currently have. Maybe you can save a few bucks every month by making the switch.

Get Rid of Those Pesky Monthly Bank Fees: I've always asked my friends why they're paying a financial institution a monthly bank fee to take out their own hard-earned money? Unless you actually need a service that a No-Fee bank cannot provide you with, this idea has never made sense to me. Bank fees typically range anywhere from $5-$30/month, but it doesn't need to be that way. There are TONS of no-fee banking options out there that also offer high-interest savings accounts. Here are a few of them; Simplii Financial, Tangerine, and EQ Bank.

I know that times are tough right now, but with a little more thinking outside of the box, I’m sure there are a few other ways that you can think of. Feel free to share them with us!

Apr 21, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Looking for a few extra ways to cut back during COVID19? We’ve compiled our top 5 list of proven ways that you can cut back on your spending to allocate your finances to what’s most important to you during these tough times.

  1. Call current utility providers and ask for a better deal. I recently called my car insurance provider and cut back on my annual premiums by $150. It took me 5 minutes on the phone, and I was able to cut back on my car insurance since I’m no longer driving anywhere. You can do the same with all of your recurring bills. You just have to make time to call. And most of us now have the time! This is always something that you should always do on a yearly basis. Negotiate, negotiate, negotiate. 
  2. A lot of the restaurants are no longer open, so your dining out and coffee bills are probably minimal. This is a good thing. Take this as an opportunity to get ahead of your spending and cut back in dining out as much as possible. This should also be a good opportunity to learn about your habits and how much you spend on a monthly basis on areas that may leave your wallet empty.
  3. Sell unwanted stuff on Craigslist, Kijiji, Facebook Marketplace, or other apps like LetGo and Bunz. This is the PERFECT time to organize your house and go through your stuff to figure out what you need, and what you could sell for a little extra cash in your pocket.
  4. Negotiate your Mortgage or look into a refinance. With dropping interest rates in Canada, it would be a good time to take a look at your mortgage and look into refinancing at a lower rate if it makes sense. Talk to your bank representative or connect with a mortgage broker.
  5. Organize your pantry and make a shopping list when grocery shopping. If you already have lots of dry goods in your pantry, this will assist in not repurchasing it. Use up when you need and organize your pantry so that you know exactly what you have. On top of that, when you go grocery shopping, there is often a discount section for produce at the grocery store where products can be anywhere from 30-50% off. If you’re anything like me, I like to do my grocery shopping on Sundays which is also when I prepare my food for the week. I always hit up this discount section first to fulfil whatever I can in my shopping list. That extra 30-50% in money saved goes a long way and you’ll see this reflected in your grocery bill.

Some of these techniques have helped our own coaching clients save $1000's per month by executing on these tasks. It's a good time to start to analyze your credit card bills to make sure that you're not spending money on something you're not using. 

And now is the perfect time to do so, since we all have a little bit more time on our hands. 

Apr 04, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

In light of everything that’s going on in the world right now, I thought there was no better time to write about managing your cash flow. Hundreds of thousands of Canadians have lost their jobs and income over the last few weeks, and they’re scrambling. This is not good. And from what I’m seeing, I think this is going to be a wakeup call for a lot of people. I wish things didn’t have to be this way, but this should be a learning lesson that money is not infinite. It comes and goes. But when it comes, it’s important to manage the crap out of it, and set yourself up for anything that may come.

I find it fascinating (and also scary) that a number of Canadians couldn’t financially support themselves until the end of the month. The amount of calls that the big five banks have received in regard to mortgage deferrals is incredible. Almost 300,000 as of today (April 4, 2020). And the number of people who couldn’t pay their rent on April 1 was through the roof (I’m sure).

However, regardless of where everyone is right now in their financial situation, it’s important to take a step back, look at what you do have, and stretch your dollars as far as you possibly can. Here’s a step by step breakdown on how to approach the next few months. More on managing cash flow in weeks to come, but here’s where to start.  

  1. Sit down and organize your finances. Take a look at your deposit and investment accounts (or look at your Net Worth Tracker if you have one), and understand which accounts are easy to take money from, and which ones aren’t worth touching right now. Write down the total amount of money that you have in all of these accounts.
  1. Figure out how much income you have coming in every month. If you had to apply for EI, or will be applying to any government assistance programs, write down these amounts. If you have other income from other sources, include those as well. I don’t care if it’s a few dollars here and there – every dollar counts.
  1. Print out the last 3-6 months of your credit and debit statements and add up the averages in each category that applies to your spending. Figure out what you spend on a monthly basis. Write it down somewhere.
    1. Fixed Expenses don’t change on a monthly basis (rent/mortgage, insurance premiums, bank fees, etc).
    2. Variable Expenses change every month (grocery bills, dining out, utility bills, etc).
    3. Irregular Expenses are those expenses that happen infrequently (holidays, vacations, car maintenance, annual membership fees, etc).
  1. Analyze. On a monthly average, are you spending more than you currently make? If you are, it means that you have some serious cutting back to do. You have to rework your numbers and completely change your lifestyle around for the time being (and maybe for a little while after that if you didn’t have an emergency account). On top of that, once you have your monthly expenses figured out, does the money in your accounts from Step 1 cover those expenses for the next 3-6 months? Example: if you spend $3000/month on average on everything, do you have $9000-$18,000 sitting somewhere that you can live off of?

Just remember that what we are going through is not permanent. There are going to be sunnier days, and hopefully, we’ve all taken something away from this. There are lessons to be learned, and mindsets to shift. There is no better time than now to actively start learning about personal finance because of how important of a role that it plays in our society.

If you're interested in learning more, please take a look at our website and find some upcoming webinars. www.enrichedacademy.com

Mar 17, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Unless you've been living under a rock within the last week, or have completely shut yourself out from the outside world, you've probably heard that a majority of the services, restaurants, schools, and a majority of Canada, has seen a drastic shift due to COVID19. 

So - what does this mean for your finances? A lot. No need to panic, but it's very important that you grab this bull by the horns and understand how this shut-down will affect the economy.

I'm hoping though, with a little bit more information and education through this blog post, that I'll be able to give you a few tips and exercises that I urge you to do NOW to ensure you can stretch your dollars as far as possible. 

1. Figure out your Net Worth: the best thing to do right now is to sit down and organize all of your finances. What are the values of the assets that you have? Where are they? How easy are they to liquidate? Now, take a look at your liabilities. What do you owe? What are the interest rates?

2. Once you've gotten pretty organized with what you own (assets), and what you owe (liabilities), it's time to look at your cash flow. I suggest (now that we all have some extra time at home), that you print out the last 3-6 months of your credit card and debit transactions, and get real with your spending in as much detail as possible. I want you to figure out what you spend on housing, services, interest rates on outstanding debts, transportation, etc. When you add it all up, what do you spend on a monthly basis? 

3. Time to cut back. There are always ways to cut back in your spending, and there's no better time to do it than now. Restaurants are closed, your favourite coffee shop is cutting back on tables and chairs to socialize at, and we're being told to stay at home. Listen to this advice. It will not only keep you healthy, but it will keep your wallet healthy as well. Take this opportunity to only spend money on the absolute essentials; your mortgage/rent, groceries, monthly services such as internet and cell phone, insurance premiums etc. Nobody knows what the future holds, but it's important that we understand our cash flow as best as we can now so that we can understand how long our savings and assets can sustain us. 

I really wish I had a crystal ball and could tell you when this will all be over. Unfortunately, I can't. But what I can do is urge you to take action with your finances now. Nobody knows what will happen next week, next month, or next year, but let this be a wake-up call for all of us. Make sure that you're always saving for a rainy day, putting money into your emergency fund, and spending less than what you make. Your finances are always evolving and will continue to do so throughout your lifetime. What you do with those finances, at the end of the day, is really what matters. 

Be smart. And stay healthy. 

Feb 09, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

A what?

A Tax-Free Savings Account (TFSA) is a Registered Investment Account that has a whack-load of financial benefits. Want to know why I bolded and underlined the word investment? Because this account will benefit you the most when you hold investments in it, and not use it as a day-to-day savings account. 

Here are some of the main benefits of the TFSA and why you should open one (and use it) right now.  

The Benefits of the TFSA:

  • Any income that you make from investments within this account is tax-free (hence the name). This means that you don't have to claim any income you've made from your investments on your tax return at the end of the year. I'm talking about free investment income here people.

    • Let's take an example - shall we?: Mary Lou Cannary contributed $10,000 into her TFSA on January 1, 2019, and invested it into the S&P500 ETF (VFV). In all of 2019, VFV made a whopping 25.13% return. WEO. What does this mean for Mary Lou Cannary at the end of the year? Well, her investment of $10,000 now has a current market value of $12,513 as of December 31, 2019. Now, because she invested this money within her TFSA, she could withdraw her investment income of $2,513 without paying a gosh-darn penny of income tax. Pretty neat huh? 

  • You can contribute to your TFSA from the age of 18 and do not need a job to open one (unlike the RRSP). The contribution limits change every year, based on inflation (mostly). As of January 1, 2020, you can contribute up to $69,500. If you're unsure of what your contribution room is, you can sign onto your CRA My Account for Individuals and find out. 

    • If you don't have a CRA My Account for Individuals, you should get one. Sign up here

  • The money that you contribute to your TFSA is used with after-tax dollars so there are no taxes to be paid when you withdraw the funds, making the TFSA a relatively liquid investment account (depending on the investment holdings within the account itself). This is a great account to use if you need money on a short or long-term basis; travelling, getting married, downpayment on a house, sending the little ones off to school, beefing up retirement income, etc.

What the TFSA is not:

  • It is NOT a type of investment (contrary to some peoples' belief). You cannot purchase a TFSA. It is an account that is registered with the CRA which has tax benefits to it. Don't just put money into your account and have it sitting there. The whole point is to have your money working for you by investing it in stocks, bonds, mutual funds, ETFs, Reits, etc. 

  • It should not be used as an everyday bank account. Although you can deposit and withdraw into your account when you want, there are some rules surrounding this so make sure you understand them. The CRA really breaks that down here.

    • When I first started investing in my TFSA, I made the mistake of not understanding the rules (because I was an 18-year-old and nobody was there to teach me). Unfortunately, I was taxed by the CRA and had to pay a big chunk of money ($300 buckaroos!). I don't want this happening to you so make sure you know your limits, and play within it. (See what I did there?)

Where Can My TFSA Be Held?

  • At a financial institution of your choice. Your financial advisor will be able to open up a TFSA for you where they actively manage it (just be aware of the fees that you may be incurring as these can sometimes be hidden). 

  • With a Robo-Advisor. This is a great option for those who are trying to get away from the bigger financial institutions, want lower fees, and are big believers in ETFs. 

  • You can Self-Direct it. I do this. And I love it. Low fees, freedom to choose the investments I want, and the money that I make within my TFSA are completely made due to my efforts.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're doing good things (so long as your investments are making money). If you have a TFSA, have money sitting in one of those "high-interest savings accounts",  and you do not need that money any time soon, you may want to rethink your strategy.  

If you haven't opened one yet, get out there and open one up today. You'll be happy you did. If you're still somewhat confused, scared, excited, nervous, and potentially need some one-on-one coaching, contact us for information on our coaching program

Jan 19, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Happy New Year to you. And you. And you and you and you. 

I don't know about you, but I LOVE January 1. 

Why do you ask?

It's the first day of the year when there is not much else to do except set myself up for financial success for the year ahead. 

Our finances are always changing. Every. Single. Day. And it's important to evolve and change along with our finances and ensure that we're adapting as our circumstances change. 

Here are the top 3 things that I accomplished on January 1.

1. I updated my Net Worth Tracker. I love a good Net Worth tracker. It allows me to analyze and understand where all of my finances are, and how they've improved over the last year. 

2. I filled out the Financial Freedom calculator. Every year, I fill out a calculator that determines how much I need to save for the year ahead in order to reach financial freedom. I also use the CRA retirement calculator, which helps me determine what kind of CPP and OAS I'll be receiving when I hit a certain age. You can find that calculator here. https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html. Once I've figured out my CPP and OAS income, then I can go back and fill in the rest. Easy peasy lemon squeezy. Once I have my Financial Freedom number, it's time for me to set up my financial plan. 

3. Go through my budget and understand my cash flow for the year ahead. We all have financial goals. We also all have expenses. It doesn't matter if we work or not, at the end of the day, it costs money to live, and it's important that we understand our expenses on a monthly basis. Personally, this is a big year for me. I just bought a car, I'm going on a trip to Belize in March, and I'm getting married in August. There are a lot of expenses coming up, but I'm not worried. I have a solid understanding of my expenses for the year ahead, and I will have to change my lifestyle for a few months so I can accommodate all of those upcoming expenses. I track every single dollar that I have coming in, and every dollar coming out. I know that most people brush this idea of a budget aside, but what better way to manage your finances than to track it? 

So before you spend another day heading into work, I suggest sitting down and doing some of the above. It will not only help relieve some of the financial stress that you may be facing, but it will help put your finances into perspective and will allow you to focus on what's a priority. 

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

People. Let me bring you up to speed here. Are you still paying the big banks to take out your hard-earned money? How often do you really use a bank teller anymore? You're probably using the ATM and doing most of your banking online, right? And you're still paying monthly bank fees for a Chequing account?

The thought of all of this craziness makes me feel like this...YOU'RE NOT ALONESince launching The Budget Babes back in January; I've had just over 45 consultations and see the same pattern over and over again. People are spending a lot of money on their daily banking fees! Almost 95% of my clients have some kind of monthly fee that they pay without thinking twice about it. And if you do the math, you'll find that you're spending a lot every year. Are your bank fees worth it? If they are, then keep on banking. But if you find that your bank isn't doing that much for you, maybe it's worth making the switch to a no-fee bank account like PC Financial, Tangerine, EQ Bank, or a Credit Union of your choice.

2017 COMPARISON OF BANK FEES
TD CANADA TRUST : 
The TD Minimum Chequing account will cost $3.95/month but can be waived if you keep $2000 or more in your account at the end of each day in the month. You'll get 12 transactions per month ($1.25/each for additional transactions), and access to their online/telephone banking. TD also offers an Every Day Chequing account for $10.95/month. This gives you 25 transactions (anything over $1.25/transaction), free Interac e-transfers and access to their online/telephone banking. TD will waive this $10.95 fee if you keep $3000 or more in your account at the end of each day of the month.  CIBC: Their Everyday Chequing account is $3.90/month. This gives you 12 free transactions (anything over that limit is $1.25/transaction), access to their online/telephone banking, and, well.... that's pretty much it. They also have a Smart Account that is more flexible and charges you based on the number of transactions you make. You could pay as low as $4.95/month up to $14.95/month. This account gives you unlimited transactions, unlimited Interac e-transfers and access to their online service. CIBC will waive this fee if you keep $3000 or more in your account, and you make a recurring transaction or 2 pre-authorized payments each month.

 RBC:
Charges for RBC's day-to-day bank account are $4.00/month. This gives you 12 free transactions (anything over $1.00/transaction), access to their online/telephone banking, and unlimited Interac e-transfers. They also have a No Limit Banking account for $10.95/month which gives you unlimited transactions, unlimited Interac e-transfers, and access to their online/mobile service.  SCOTIABANK: With fees starting at $3.95/month, Scotiabank's Basic Bank account gives you 12 free transactions (anything over $1.25/transaction), 2 free Interac e-transfers, access to their online/telephone banking, and you'll earn SCENE rewards. Their Basic Plan is $10.95/month which includes 25 transactions ($1.25/transaction after you've used the 25), 2 free Interac e-transfers, you'll earn SCENE rewards, and they waive the $10.95 fee if you keep a $3000 minimum as a closing balance after each day. And of course, you receive access to their mobile and online banking.

BMO: 
BMO's Practical Plan will give you 12 free transactions (anything over $1.25/transaction) at a cost of $4.00/month which they waive if you keep a minimum of $2000 in your account at the end of each day. You'll receive unlimited Interac e-transfers, and of course, access to their telephone/online banking. Their Plus Plan will run you $10.95/month which will be waived with a minimum balance of $3000 in your account. This plan allows you 30 transactions, unlimited Interac e-transfers, and telephone/online banking.

Conclusion:
 Do the math! How much are you spending on bank fees? $50/year? $180/year? It really adds up quick and this is for most basic banking plans! There are still premium/small business plans that are offered. Keep in mind that the above information doesn't even include overdraft protection, the cost of paper statements, cheques, and the charges that apply when using a different branded bank machine. The big banks are making billions of dollars every year. Although it's not all from bank fees, it's definitely helping with some profits. Do you need some help getting your personal finances under control? Contact me for a budgeting consultation! Bank fees are one of many tips that I often give to my clients to save money over the long term, but there are so many more tips that I'd love to share with you.

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

People. Let me get real with you for a second. Tax season is upon us, and there is this magical unicorn of an account in Canada called an RRSP (Registered Retirement Savings Plan). It will help you reduce the amount of tax that you owe the government, and/or increase your tax return. Interested? I thought you'd be! I just maxed out my RRSP before the March 1, 2018, deadline. So get on it, open your account, and start contributing!

"BUT ALANNA, I DON'T KNOW WHAT AN RRSP IS?"
Funny you should say that out loud! I had an infographic created last year about the RRSP. Note that the date on the infographic is for 2017 and this year's deadline is March 1, 2018!) And if you're like, "Alanna, I don't want to look at this cool and helpful infographic you made for your readers", then read on Donkey Kong.

What is an RRSP and why should I have one?
A registered retirement savings plan is an account that will help you save for a happy and financially stress-free retirement. Want to live on a boat in the middle of the ocean, scuba diving all day, surrounded by Great White Sharks? Yes. Please. Mountain climb in the middle of Vancouver Island feeding freshly caught salmon to Grizzly bears every day? Fuck, yes - who wouldn't? The RRSP will help you achieve your dream retirement, but you need to start right NOW. There are two main reasons why:
1. The money that you contribute to your RRSP is deductible from your taxable income.
Um.... what?
Example time! Say you made $40,000 in 2017, and contributed $3000 to your RRSP. When it comes time to file your taxes, you can claim that $3,000 contribution as a deduction and can calculate your income as if you’ve made $37,000. This will likely put you in a lower tax bracket, saving you money and/or increasing your tax return. Cool, huh?
Yes. Yes, it is cool.
2. The savings in your RRSP are able to grow tax-free. Within your RRSP you can invest in stocks, mutual funds, ETFs, bonds, and other investments. If you make profits from these investments, they are not taxable until you withdraw the funds, which ideally occurs when you retire. And when you retire and have very little income, you will be in a lower tax bracket than you are now (hopefully) and will have to pay less tax on your withdrawals. Kapeesh?
YAS QUEEN.
sweet BOULDER HOLDERS. how do I start?
You can set up a managed RRSP through a Robo-Advisor like Wealthsimple (which helps to reduce your MER fees, rebalance your portfolio, and is just all around awesome), or you can open one up through your bank, credit union, trust, or insurance company. You can also have your RRSP self-directed, and manage it all on your own (that's what I do!) However, if you'd like to go that route, I'd suggest contacting me for more information on how to do this.
I'm sold! But I need some more facts.

• If you work and file an income tax return, are under 71 years old, and have a social insurance number, you should definitely consider opening up an RRSP. • Your RRSP contribution room changes every year, and is calculated based on the following: ◦ 18% of your earned income from the previous year, with a maximum of $26,230 for the 2017 tax year;
◦ Whatever remaining amount is available after any company contributes to your RRSP. If your company contributes 10% of your earned income from the previous year, you can only contribute the remaining 8%.
• You can withdraw up to $25,000 for a down payment on your first home, and not pay any tax under the Home Buyer’s Plan. However, you have up to 15 years to repay the full amount back into your RRSP. • Wanna go back and hit the books? You can withdraw up to $10,000/year, or up to $20,000 in total to help pay for your education using the Lifelong Learning Plan. All you have to do is repay at least 10%/year for up to ten years.
• It isn’t mandatory that you deduct your RRSP contribution on your tax return in the same year that you made the contribution. You can hold off and deduct it in a future year if you think you will be making more money down the road. So, if you have room in your RRSP and just want to generate some kind of income through an investment, you can just leave it in your RRSP and let that shit grow. Yay compound interest!
• You can set up a spousal/common-law RRSP, which you can contribute to, but your common-law partner/spouse owns. This reduces their taxable income with your help.

RRSP vs TFSA - CONCLUSION
The RRSP and TFSA are great accounts for all Canadians and you should definitely consider opening up one or both of them and start contributing ASAP. Depending on your financial situation and short/long-term goals, one account may be more beneficial than the other. If you are only making $25,000/year and are in a low tax bracket, you'd probably be better off with a TFSA. But let’s say you get a raise and go from making $25,000/year to $60,000/year, it would probably be worth contributing to your RRSP to put yourself into a lower tax bracket, saving you some money at the end of the year.

So there you have it! Everything you need to know about the RRSP. If you're still hella confused and need some more guidance, please contact me! I've helped over 100 millennials and Gen-Y'ers figure out what's best for them and how to get started - and I can help you too!

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Greetings from Wiesbaden, Germany! I've been here for the past week and a half for my Oma's 80th birthday. This is me stuffing my face with the Thanksgiving dinner that we prepared for our German family. Do you know how hard it is to find a Turkey in this country? It's not easy - let me tell you!

Travelling is an important part of my life, and it’s something that I try to do at least once a year. However, it can get expensive, and it’s something that definitely needs to be budgeted for. I’ve met lots of travellers who end up stressing during or after a trip because they’ve dug themselves so deep into debt.One of my personal goals is to help others create and manage their personal finances and budget for short or long-term goals. So, this post is a list of some handy tips to ensure that you have financially stress free travels.

1. Plan and research: 
It’s always smart to have some kind of idea as to where you want to travel to so you can start looking into flights and accommodation. This will be the most expensive part of your travels. Sites like Google Flights, Kayak, Momondo, and Cheapoair will scrounge the Internet for the cheapest flights possible. And with so many great accommodation websites like Airbnb, Couchsurfing, Booking.com, Agoda, Priceline, and Hostelworld, it’s always great to give yourself enough time to find the cheapest nights available in parts of the city you want to explore. It’ll also be helpful to read some travel bloggers who have recently travelled to your destination as they often discuss how much money they spent. On top of your flight and accommodation, you’ll also want to budget enough money for your food and drink, daily excursions, transportation, and a small emergency fund in case anything goes wrong.

2. Budget:  Just like your food, clothes, rent/mortgage, car etc., travel should be a line item in your budget. If it’s something that you foresee doing in the near future, add it into your yearly budget and account for it from the get-go. That way you won’t be scrambling a few weeks/months before you leave, and you’ll have already had some money set aside.

3. Save, Save, Save: When I saved $20,000 for my trip to South America and Southeast Asia in 2015, I took 15% of my paycheques and put it into a high-interest savings account that I didn’t touch. If I had any money left over after all of my bills were paid and my fun was had, it went into a TFSA where I invested in Index Funds. These funds paid out a dividend and gave me between a 5-10% return for that particular year. It’s one thing to save, but investing your savings will help you make money even faster, getting you one step closer to take off.

4. Open a Separate Account: Once you have a rough idea as to how much money you’ll need, open up a separate bank account that’s out of sight, out of mind. A TFSA and/or high-interest savings account is great because it will accumulate interest faster than an everyday savings account. For those who don’t know the first thing about investing, Wealthsimple is a really great platform that makes saving and investing easy and effortless.

5. Be Flexible and Open: When I was in Brazil, I was complaining to this Irish girl that the flight from Chile to Thailand was $2300. She suggested that I try to be a little more flexible with my timing and not look for a direct flight, but rather create my own trip around the world and book different lags of the flight myself. At first, I was a little skeptical but she helped me research some different itineraries and I booked 3 separate flights. Although it took me 48 hours to reach my final destination, I ended up saving over $900. It’s definitely worth being flexible and having an open mind because you can find some really great deals if you just think outside of the box.

  Conclusion? be smart with your money
For those of you who are as gung-ho about seeing the world as I am, be sure to work hard so you can play hard when on the road. The worst thing that could happen is that you start to travel and realize that you don’t have enough money to do the things that you want to do. This is a once in a lifetime opportunity for most. Make sure you’re smart with your money before you takeoff so you can leave your financial stresses on the runway. And as always, if you're planning a trip and need some personal finance guidance, please contact me!

Nov 06, 2019

This is the day that Canadians fell in love with Enriched Academy!

Jul 26, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

It’s been a few years now since the term robo-advisor has surfaced, and we get a lot of questions. So many in fact, we have an entire webinar dedicated to explaining what they are and how they work. No time for a webinar? No worries, we have answered most of the common questions below.

What is a robo-advisor?

A robo-advisor is an automated, online financial advisor. It combines a questionnaire or text chat regarding your investing preferences with a lot of high-tech software and algorithms to figure out an ideal asset allocation. It then builds a portfolio of exchange-traded funds (ETFs) for you and continuously manages this portfolio as necessary based on your investor profile — buying, selling, and re-investing dividends. If you don’t want to do DIY investing but still want the simplicity and convenience of investing in ETFs, a robo-advisor may be perfect for you.

What are the fees?

Robo-advisors don't use a lot of human management and have relatively low fees. They charge an MER fee (management expense ratio) on assets under management of anywhere from 0.30% to 0.60% for their services, and then you have to add on the ETF fees of around 0.10% to 0.30%. At the end of the day, you may be paying around 0.7%. This is probably going to save you a bundle compared to the other options.

Let’s break down how robo-advisors compare to actively managed funds (mutual funds) from the big banks. Canada has some of the highest mutual fund fees in the world and the MER fee can be as high as 2.3%. If you have a portfolio of $100,000 with a financial advisor, you could be paying more than $2000 in MER fees regardless of how your fund performs. But if you're using a Robo-advisor, you're only paying around 0.7%, or approximately $700. That extra $1300+ you're not paying in fees every year will really add up as your investment returns compound.

Which robo-advisor is best for me?

Good question! This depends on your preferences, goals, and the portfolios the robo-advisors use. Each robo-advisor offers something different, so it’s important to take a look at which one works best for you. Here are some of the different things to look into:

  • Fees (although this isn’t the only factor!)
  • ETFs that make up the portfolio.
  • The dashboard.
  • Other benefits. Some robo-advisors provide you with a dedicated financial advisor, estate planning, insurance needs, tax-loss harvesting, etc. This may be something that you require, so it’s good to look into your own personal needs.

What next?

There is no better time than the present! If your returns have been less than stellar over the last few years, it may be time to rethink your current investment strategy and take a hard look at why you are paying the fees you do. Or maybe you’re ready to grab the bull by the horns yourself and start to

secure your financial future, especially if you don’t have any high-interest debts that should be taken care of first! If you feel like you’re still lost, and need some guidance, you can always check out one of our upcoming livestreams or sign up for one of our free financial assessment calls.

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

People. Let me bring you up to speed here. Are you still paying the big banks to take out your hard-earned money? How often do you really use a bank teller anymore? You're probably using the ATM and doing most of your banking online, right? And you're still paying monthly bank fees for a Chequing account?

The thought of all of this craziness makes me feel like this...YOU'RE NOT ALONESince launching The Budget Babes back in January; I've had just over 45 consultations and see the same pattern over and over again. People are spending a lot of money on their daily banking fees! Almost 95% of my clients have some kind of monthly fee that they pay without thinking twice about it. And if you do the math, you'll find that you're spending a lot every year. Are your bank fees worth it? If they are, then keep on banking. But if you find that your bank isn't doing that much for you, maybe it's worth making the switch to a no-fee bank account like PC Financial, Tangerine, EQ Bank, or a Credit Union of your choice.

2017 COMPARISON OF BANK FEES
TD CANADA TRUST : 
The TD Minimum Chequing account will cost $3.95/month but can be waived if you keep $2000 or more in your account at the end of each day in the month. You'll get 12 transactions per month ($1.25/each for additional transactions), and access to their online/telephone banking. TD also offers an Every Day Chequing account for $10.95/month. This gives you 25 transactions (anything over $1.25/transaction), free Interac e-transfers and access to their online/telephone banking. TD will waive this $10.95 fee if you keep $3000 or more in your account at the end of each day of the month.  CIBC: Their Everyday Chequing account is $3.90/month. This gives you 12 free transactions (anything over that limit is $1.25/transaction), access to their online/telephone banking, and, well.... that's pretty much it. They also have a Smart Account that is more flexible and charges you based on the number of transactions you make. You could pay as low as $4.95/month up to $14.95/month. This account gives you unlimited transactions, unlimited Interac e-transfers and access to their online service. CIBC will waive this fee if you keep $3000 or more in your account, and you make a recurring transaction or 2 pre-authorized payments each month.

 RBC:
Charges for RBC's day-to-day bank account are $4.00/month. This gives you 12 free transactions (anything over $1.00/transaction), access to their online/telephone banking, and unlimited Interac e-transfers. They also have a No Limit Banking account for $10.95/month which gives you unlimited transactions, unlimited Interac e-transfers, and access to their online/mobile service.  SCOTIABANK: With fees starting at $3.95/month, Scotiabank's Basic Bank account gives you 12 free transactions (anything over $1.25/transaction), 2 free Interac e-transfers, access to their online/telephone banking, and you'll earn SCENE rewards. Their Basic Plan is $10.95/month which includes 25 transactions ($1.25/transaction after you've used the 25), 2 free Interac e-transfers, you'll earn SCENE rewards, and they waive the $10.95 fee if you keep a $3000 minimum as a closing balance after each day. And of course, you receive access to their mobile and online banking.

BMO: 
BMO's Practical Plan will give you 12 free transactions (anything over $1.25/transaction) at a cost of $4.00/month which they waive if you keep a minimum of $2000 in your account at the end of each day. You'll receive unlimited Interac e-transfers, and of course, access to their telephone/online banking. Their Plus Plan will run you $10.95/month which will be waived with a minimum balance of $3000 in your account. This plan allows you 30 transactions, unlimited Interac e-transfers, and telephone/online banking.

Conclusion:
 Do the math! How much are you spending on bank fees? $50/year? $180/year? It really adds up quick and this is for most basic banking plans! There are still premium/small business plans that are offered. Keep in mind that the above information doesn't even include overdraft protection, the cost of paper statements, cheques, and the charges that apply when using a different branded bank machine. The big banks are making billions of dollars every year. Although it's not all from bank fees, it's definitely helping with some profits. Do you need some help getting your personal finances under control? Contact me for a budgeting consultation! Bank fees are one of many tips that I often give to my clients to save money over the long term, but there are so many more tips that I'd love to share with you.

Nov 06, 2019

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

People. Let me get real with you for a second. Tax season is upon us, and there is this magical unicorn of an account in Canada called an RRSP (Registered Retirement Savings Plan). It will help you reduce the amount of tax that you owe the government, and/or increase your tax return. Interested? I thought you'd be! I just maxed out my RRSP before the March 1, 2018, deadline. So get on it, open your account, and start contributing!

"BUT ALANNA, I DON'T KNOW WHAT AN RRSP IS?"
Funny you should say that out loud! I had an infographic created last year about the RRSP. Note that the date on the infographic is for 2017 and this year's deadline is March 1, 2018!) And if you're like, "Alanna, I don't want to look at this cool and helpful infographic you made for your readers", then read on Donkey Kong.

What is an RRSP and why should I have one?
A registered retirement savings plan is an account that will help you save for a happy and financially stress-free retirement. Want to live on a boat in the middle of the ocean, scuba diving all day, surrounded by Great White Sharks? Yes. Please. Mountain climb in the middle of Vancouver Island feeding freshly caught salmon to Grizzly bears every day? Fuck, yes - who wouldn't? The RRSP will help you achieve your dream retirement, but you need to start right NOW. There are two main reasons why:
1. The money that you contribute to your RRSP is deductible from your taxable income.
Um.... what?
Example time! Say you made $40,000 in 2017, and contributed $3000 to your RRSP. When it comes time to file your taxes, you can claim that $3,000 contribution as a deduction and can calculate your income as if you’ve made $37,000. This will likely put you in a lower tax bracket, saving you money and/or increasing your tax return. Cool, huh?
Yes. Yes, it is cool.
2. The savings in your RRSP are able to grow tax-free. Within your RRSP you can invest in stocks, mutual funds, ETFs, bonds, and other investments. If you make profits from these investments, they are not taxable until you withdraw the funds, which ideally occurs when you retire. And when you retire and have very little income, you will be in a lower tax bracket than you are now (hopefully) and will have to pay less tax on your withdrawals. Kapeesh?
YAS QUEEN.
sweet BOULDER HOLDERS. how do I start?
You can set up a managed RRSP through a Robo-Advisor like Wealthsimple (which helps to reduce your MER fees, rebalance your portfolio, and is just all around awesome), or you can open one up through your bank, credit union, trust, or insurance company. You can also have your RRSP self-directed, and manage it all on your own (that's what I do!) However, if you'd like to go that route, I'd suggest contacting me for more information on how to do this.
I'm sold! But I need some more facts.

• If you work and file an income tax return, are under 71 years old, and have a social insurance number, you should definitely consider opening up an RRSP. • Your RRSP contribution room changes every year, and is calculated based on the following: ◦ 18% of your earned income from the previous year, with a maximum of $26,230 for the 2017 tax year;
◦ Whatever remaining amount is available after any company contributes to your RRSP. If your company contributes 10% of your earned income from the previous year, you can only contribute the remaining 8%.
• You can withdraw up to $25,000 for a down payment on your first home, and not pay any tax under the Home Buyer’s Plan. However, you have up to 15 years to repay the full amount back into your RRSP. • Wanna go back and hit the books? You can withdraw up to $10,000/year, or up to $20,000 in total to help pay for your education using the Lifelong Learning Plan. All you have to do is repay at least 10%/year for up to ten years.
• It isn’t mandatory that you deduct your RRSP contribution on your tax return in the same year that you made the contribution. You can hold off and deduct it in a future year if you think you will be making more money down the road. So, if you have room in your RRSP and just want to generate some kind of income through an investment, you can just leave it in your RRSP and let that shit grow. Yay compound interest!
• You can set up a spousal/common-law RRSP, which you can contribute to, but your common-law partner/spouse owns. This reduces their taxable income with your help.

RRSP vs TFSA - CONCLUSION
The RRSP and TFSA are great accounts for all Canadians and you should definitely consider opening up one or both of them and start contributing ASAP. Depending on your financial situation and short/long-term goals, one account may be more beneficial than the other. If you are only making $25,000/year and are in a low tax bracket, you'd probably be better off with a TFSA. But let’s say you get a raise and go from making $25,000/year to $60,000/year, it would probably be worth contributing to your RRSP to put yourself into a lower tax bracket, saving you some money at the end of the year.

So there you have it! Everything you need to know about the RRSP. If you're still hella confused and need some more guidance, please contact me! I've helped over 100 millennials and Gen-Y'ers figure out what's best for them and how to get started - and I can help you too!

Feb 09, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

A what?

A Tax-Free Savings Account (TFSA) is a Registered Investment Account that has a whack-load of financial benefits. Want to know why I bolded and underlined the word investment? Because this account will benefit you the most when you hold investments in it, and not use it as a day-to-day savings account. 

Here are some of the main benefits of the TFSA and why you should open one (and use it) right now.  

The Benefits of the TFSA:

  • Any income that you make from investments within this account is tax-free (hence the name). This means that you don't have to claim any income you've made from your investments on your tax return at the end of the year. I'm talking about free investment income here people.

    • Let's take an example - shall we?: Mary Lou Cannary contributed $10,000 into her TFSA on January 1, 2019, and invested it into the S&P500 ETF (VFV). In all of 2019, VFV made a whopping 25.13% return. WEO. What does this mean for Mary Lou Cannary at the end of the year? Well, her investment of $10,000 now has a current market value of $12,513 as of December 31, 2019. Now, because she invested this money within her TFSA, she could withdraw her investment income of $2,513 without paying a gosh-darn penny of income tax. Pretty neat huh? 

  • You can contribute to your TFSA from the age of 18 and do not need a job to open one (unlike the RRSP). The contribution limits change every year, based on inflation (mostly). As of January 1, 2020, you can contribute up to $69,500. If you're unsure of what your contribution room is, you can sign onto your CRA My Account for Individuals and find out. 

    • If you don't have a CRA My Account for Individuals, you should get one. Sign up here

  • The money that you contribute to your TFSA is used with after-tax dollars so there are no taxes to be paid when you withdraw the funds, making the TFSA a relatively liquid investment account (depending on the investment holdings within the account itself). This is a great account to use if you need money on a short or long-term basis; travelling, getting married, downpayment on a house, sending the little ones off to school, beefing up retirement income, etc.

What the TFSA is not:

  • It is NOT a type of investment (contrary to some peoples' belief). You cannot purchase a TFSA. It is an account that is registered with the CRA which has tax benefits to it. Don't just put money into your account and have it sitting there. The whole point is to have your money working for you by investing it in stocks, bonds, mutual funds, ETFs, Reits, etc. 

  • It should not be used as an everyday bank account. Although you can deposit and withdraw into your account when you want, there are some rules surrounding this so make sure you understand them. The CRA really breaks that down here.

    • When I first started investing in my TFSA, I made the mistake of not understanding the rules (because I was an 18-year-old and nobody was there to teach me). Unfortunately, I was taxed by the CRA and had to pay a big chunk of money ($300 buckaroos!). I don't want this happening to you so make sure you know your limits, and play within it. (See what I did there?)

Where Can My TFSA Be Held?

  • At a financial institution of your choice. Your financial advisor will be able to open up a TFSA for you where they actively manage it (just be aware of the fees that you may be incurring as these can sometimes be hidden). 

  • With a Robo-Advisor. This is a great option for those who are trying to get away from the bigger financial institutions, want lower fees, and are big believers in ETFs. 

  • You can Self-Direct it. I do this. And I love it. Low fees, freedom to choose the investments I want, and the money that I make within my TFSA are completely made due to my efforts.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're doing good things (so long as your investments are making money). If you have a TFSA, have money sitting in one of those "high-interest savings accounts",  and you do not need that money any time soon, you may want to rethink your strategy.  

If you haven't opened one yet, get out there and open one up today. You'll be happy you did. If you're still somewhat confused, scared, excited, nervous, and potentially need some one-on-one coaching, contact us for information on our coaching program

Financial Coaching

A little accountability goes a long way in turning financial education into action!

Financial Coaching

A little accountability goes a long way in turning financial education into action!

May 16, 2023

Enriched Academy Staff

Almost everyone in Canada has heard of the Tax-Free Savings Account (TFSA), but if you already have a savings account or maybe you are younger and don’t have a lot of money, is there any reason to get one?

The short answer is yes — and the sooner the better!

You may believe a TFSA is something to start when you get older or mistakenly think that it is something for locking away long-term retirement savings. The fact is that TFSAs are actually quite flexible when it comes to deposits and withdrawals, they can save you a lot on your taxes, and you can use one to save for a house or a car, or yes, even your retirement.

What is a TFSA and how does it work?

A TFSA isn’t anything like your regular bank account. The main differences are that it is registered with the government and the money in the account doesn’t have to be held in cash. Registered accounts like the TFSA (and the RRSP) track the funds going in and out for tax purposes and although you can hold cash in them, you can also hold investments like stocks, mutual funds, ETFs and many others.

Although a TFSA is unlike your regular account and isn’t for daily banking, you can open a TFSA at most banks and credit unions as well as online brokerages. You have to be at least 18 years old to get one, but there is no fee and no minimum amount required to get started.

What are the benefits of a TFSA?

The main reason to get a TFSA as the name implies, is to save on your taxes. The catch is that if you don’t invest the money in your TFSA, you won’t be saving much. Simply putting money in your TFSA and then letting it sit there in cash won’t do anything for you. This is very different from an RRSP which delivers an immediate reduction in your income tax. However, down the road when you take money out of your RRSP you have to pay the tax, but you can take all the money you want out of your TFSA at anytime and pay absolutely no tax.

So, the secret is to make as much money as possible by investing with your TFSA because all that money will be tax free. If you buy a share of Google for $100 and sell it 5 years down the road for $500, you have $400 tax free profit in your jeans. If you bought those Google shares outside of your TFSA in a cash trading account, you would be on the hook for a pretty big chunk of tax — 50% of that $400 gain would be fully taxable!

How much should I contribute to my TFSA?

The best part of a TFSA is that everyone gets to put in the same amount regardless of how much money you earn and unlike an RRSP, you don’t need to be working and making an income to contribute. In 2023, you can put up to $6500 into your RRSP. But if you missed a couple of years and now suddenly find yourself flush with cash, you can use the carried over amounts from each year since you turned 18. In fact, if you are now 25 and have never had a TFSA, you can drop in over $45,000 since you have 7 years of contributions carried over.

What is the minimum I can put in my TFSA?

Chances are you won’t be able to max out your TFSA contributions, especially when you are young. Only 10% of Canadians of all ages actually max out their TFSA. However, this doesn’t mean that a TFSA is just for rich people. If you could only come up with $100 monthly for your TFSA from the time you were 18 until you retired at 65 and received historical average stock market returns of 7%, you would have $438,643. If you upped the monthly amount to $225 you would retire a millionaire!

Of course, 47 years is a long time and things will cost a lot more, but don’t underestimate the power of compounded investment returns. There are a number of self-directed investing options (like broad-based index funds or all-in-one ETFs) you can use to invest your TFSAs that don’t require a lot of time or investing knowledge to use. Of course, some funds will do better than others, but the real secret is to get started early! Unfortunately, only around 5% of TFSA are held by Canadians under 25.

How do I withdraw money from my TFSA?

If you don’t want to wait until your 65 to start spending those TFSA investment gains, you don’t have to. In fact, you can take as much money as you want out of your TFSA anytime you want. You won’t have to pay any tax and the only downside is that you may have to wait until the following year if you want to put that money back into your TFSA — you cannot re-contribute the amount of the withdrawal until the following calendar year, unless you have available contribution room. If you do overcontribute to your TFSA you need to correct the mistake as soon as possible as you are subject to a penalty tax of 1% per month on the excess amount until it is withdrawn. It's important to keep track of your contribution room to avoid over-contributing.

What are the disadvantages of a TFSA?

You may be thinking a TFSA is the greatest thing since sliced bread and for most Canadians, it is! However, there are situations where another registered account may be a more optimal choice. For example, if your income is high and you are in a high tax bracket, contributing to an RRSP may be a better choice if you don’t have the money to max out both. Another case may be if you are saving for a home, the new First Home Savings Account (FHSA) offers the advantages of a tax reduction like the RRSP and the tax-free investment growth of a TFSA and is a great choice if you are saving up for your first home.

One additional caveat to be aware of with a TFSA is that there are limits on how actively you can trade the investments held in the account. For example, day trading is not allowed, and it could cause the CRA to determine that the income in your TFSA is from carrying on a business and is taxable. Rules and tax interpretations for day trading with regard to TFSAs are different than for RRSPs and the CRA uses a number of factors to make a determination.

Conclusion?

If you've already opened a TFSA and have investments sitting within your account, you're on the right track. Make sure the money is invested and confirm your annual return (net of fees) to ensure your investments are performing up to expectations.

If you haven't yet opened a TFSA, get out there and open one today! A few years from now you will be happy you did. If you're still somewhat confused, scared, excited, nervous, and looking for some support, we have a one-on-one coaching program that clients say is a financial game-changer. You can schedule a free financial assessment call HERE to get some feedback on how to improve your finances and the programs we have available, including one-on-one coaching.

Feb 27, 2023

Matt Dewey 
(Enriched Academy Financial Coach / AFCC)

Investing is something most of us should be a lot more focused on to ensure our money outbattles inflation, grows over time, and provides us plenty of options on how we spend our retirement years. Compound interest and investment returns work wonders — but only if you invest the funds in your Tax-Free Savings Account (TFSA) or your Registered Retirement Savings Plan (RRSP). However, there are many options and considerations when it comes to deciding how to invest your money. Even if you have done your homework and decided to make the switch and graduate from a financial advisor to a self-directed account, the process can still be intimidating.

Considerations for self-managed investments
The first thing that you need to establish before setting up a self-directed investment account are your parameters for risk tolerance, then you can move on to determining your asset allocation. Risk tolerance varies widely from person to person and also depends on your current financial position, your time horizon for needing the money, and how comfortable you are with market volatility.

RRSP and TFSA eligible investments include equities (individual stocks, mutual funds, ETFs) and fixed income assets such as bonds, GICs, cash — even gold and silver. For the purpose of this article, we will focus on equities and fixed-income assets for your asset allocation.

Let’s pretend you have 20 years until retirement, and you are comfortable with market volatility, so you decide on 80% equities and 20% fixed income for your asset allocation.  Great, first big step completed!

Where to invest your money?
You’ve decided on DIY investing and determined your asset allocation, so now it’s time to move on to deciding what you want to invest in. If we stick with the example allocation above — the 80% portion for equities could be split among individual stocks, broad-based exchange-traded funds (ETFs) which tracking a particular country or even the whole world, or focused ETFs which may track a particular aspect of the economy like technology, energy or infrastructure. The 20% portion dedicated to fixed income could be in GICs, cash, corporate bonds, short-term bonds, long-term bonds, or even a blended bond fund.

Before you decide to invest by yourself and make all the decisions, you must be comfortable doing so. If you want to be in control of how your money gets divided up that’s great, but you are likely in the minority of the population. The majority of us do not feel confident in knowing which country, region or industry to invest, or the optimum ratio of short-term bonds to long-term bonds. If you fall into this camp, there are a few simpler alternatives to consider.

All-in-One ETFs
The pressure to decide on which investments will meet your asset allocation may be too much for some and can cause analysis paralysis and a lot of stress. It may even force them to stick with their high-fee mutual funds out of comfort and ease.

Fund providers have noted that this is a very common problem and have started offering all-in-one ETFs that as the name implies, are designed to offer one-stop shopping for maintaining a given asset allocation and risk profile. Percentages differ, but most providers offer five choices ranging from 100% equity on the high end of risk – down to 20% equity and 80% fixed income at the low end of the risk scale.

All you need to do as an investor is decide on the all-in-one ETF that matches your asset allocation and risk tolerance!

How an all-in-one ETF works
The ETF provider’s investment management team monitors the economy and many other factors and makes all the investment decisions to rebalance your portfolio, so you don’t need to! For example, if you decided to invest 80% in equities and 20% fixed income and bought an all-in-one ETF, that 80% would likely be split between the US, Canada and international markets. The 20% fixed income would also be split between corporate bonds, government bonds, treasury bonds — all with varying maturity dates.

The beauty of this is that you are making the decision to buy a product that rebalances to your risk tolerance, but also has the benefit of relying on the ETF provider to move your money to different countries and/or sectors to adapt to changing risks. This is an excellent option for those looking to take control over their investing, but do not have strong enough skills/interest to reallocate their portfolio between regions or industries or adjust the type of bonds you are holding as interest rates change.

For example, an all-in-one ETF could have the equity portion allocated 35% US, 25% Canada, and 20% international one month, but after analyzing the latest data could flip to 25% US, 40% Canada, and 15% international the following month. This doesn’t affect your asset allocation in terms of equity versus fixed income, but you can take comfort knowing that actions are being taken on your behalf to keep everything aligned to your asset allocation and risk profile.

Invest with a Robo-Advisor
Similar to all-in-one ETFs, robo-advisors manage your portfolio based on the risk tolerance you set when you open an account. They adjust the actual investments you hold, but robo investing will always automatically rebalance to your equity versus fixed income percentage.

The main difference here is that you don’t need to make any decisions on an ETF investment strategy – that is done 100% for you by the robo-advisor account. The robo-advisor will also immediately reinvest any new funds you add, so you do not need to devote any ongoing maintenance to this plan — aside from adding more money on a regular basis!

Self-directed vs all-in-on vs robo advisor fees
We’ve outlined 3 investing options:  1) A 100% DIY approach where you pick all your own stocks and ETFs. 2) An all-in-one ETF where you choose one ETF based on your asset allocation. 3) A robo-advisor that manages a portfolio of ETFs continually rebalanced to match your asset allocation.

The DIY option should come with the lowest fees (MER or management expense ratio) as you can buy a balanced portfolio of ETFs for under 0.2% annually. Please note that every online brokerage platform has different fees for buying and selling ETFs and stocks.

The all-in-one option should come with slightly higher fees than 100% DIY since there is a slightly higher charge to rebalance your portfolio – but most seem to fall between 0.2% to 0.3%.

The robo advisor option would be the most expensive as most of their MERs are around 0.15% to 0.25% and they charge an additional management fee of 0.2% to 0.75% to automate the process for you.

Basically, the more you do yourself, the more money you can save. However, it is important that you take an honest assessment of yourself and whether saving a small percentage is worth it for you.

Other Considerations
Time – how many hours per week, day, month are you realistically able to devote to your investing plan? If you are going to go with 100% DIY, this should be established before you begin.

Knowledge and confidence – if you are leaning towards a 100% DIY approach, what factors would you be monitoring for changes to your asset allocation or where your money is invested.

Have a plan – if you are going DIY, come up with an investment plan and write it down before you begin. Set rules for yourself to follow, so you don’t start buying stocks based simply on emotion or other factors. For example “Invest in no more than five individual stocks at any one time totalling less than 15% of my portfolio. There has to be at least 75% in broad-based ETFs and I can only  hold up to 10% in focused ETFs that target particular industries. I will review my plan once a year and adjust as my circumstances change.”

Summary
Self-directed investing is great to help you save money on mutual funds MER fees and keep more of your money in your investments, but you need to make sure you set yourself up for success before you begin. Be honest with yourself about your ability and discipline to set and follow your rules because there will be no one holding your hand. A financial coach can discuss your goals, but your asset allocation will come down to you and your comfort level with the ups and downs of the financial markets.

Jan 17, 2023

Enriched Academy Staff

Do you feel like you need to be part money coach, banker, accountant and economist just to manage your money?

Should it really be so hard to cover the household bills, make the payments on the car and mortgage, put away a little for the kid’s education, and make some solid investments that will hopefully leave you with enough left over for a reasonably comfortable retirement?

Money management might have seemed a lot easier a couple of years ago – before inflation and interest rates went into overdrive and the stock markets and real estate values nosedived 15%. Most of us were just trying to get by financially in 2022 and being buried by an avalanche of ideas and alternatives on how to survive the financial tsunami got very overwhelming and made it hard to decide on anything!

Why is financial planning so hard?
If you are retirement planning and looking for options on where to invest those hard-earned RRSP contributions, there are around 5000 mutual funds and 1000 ETFs in Canada to choose from! But that's only if you are already up to speed on the differences between mutual funds and ETFs, all-in-one ETFs, MERs and other investment fees, asset allocation, portfolio diversification, how RRSPs (and TFSAs) actually work and their many rules and regs, DIY online investment platforms, robo advisors... and the list goes on!

Unfortunately, personal finance management is likely to get more difficult and more complicated in the future. If you are lucky, some employers are now offering financial wellness programs as part of their benefits. Enriched Academy is also working with schools, colleges and universities in several provinces to ensure that students learn the basics of personal finance before they start their career path. This is great news for your kids and their financial future, but it isn’t going to help you…. unless you want to put your kids in charge of the household budget?


The key to a good financial plan
The biggest issue we see over and over at Enriched Academy is focusing way too much time and effort on making money. What really moves the needle is spending more time looking at where your money goes, and how to manage it better and make it work for you. Earning more money won't solve your financial problems if you continue to spend too much, make poor spending decisions, fail to invest, and have no goals to help guide you and measure your financial progress.

The reality is that most of us are on our own when it comes managing our money. The good news is that mastering the basics is a lot simpler than most of us realize. You can still use a pencil and paper to track your expenses and one of our free weekly webinars can teach you a lot in 60 minutes – from how to improve your credit score to how to pay off student loans. There are plenty of excellent learning resources, tools and apps out there that can save you a ton of time.

8 Easy ideas to start your financial plan
If you are ready to dive into your finances and looking for some basic fixes that don’t require a ton of research or knowhow to get rolling, we have eight suggestions for you.

1. TFSAs & RSSPs.
If you don’t have a TFSA or RRSP, take it off your wish list and get one (or both). There is no excuse for not having these accounts; they are free, can easily be opened online, and there is no minimum deposit amount required with many institutions. RRSPs allow you to defer paying tax until you withdraw the funds — ideally when you are retired, and your tax rate is low. The deadline to contribute to your RRSP and take the deduction on your 2022 income taxes is March 1, 2023.

A TFSA contribution doesn’t offer any immediate tax reduction, but you don't pay any tax when you withdraw that money. Furthermore, any income generated by investing your contributions can be withdrawn without any tax. You can open a TFSA and add money to it at any time throughout the year. The maximum you can contribute does not depend on your income like an RRSP, everyone over the age of 18 can contribute up to $6500 to their TFSA in 2023. If you have never had an RRSP or TFSA, you may find that you have a lot of unused contribution space because the annual limits carry over from year to year.


2. Reduce your expenses.
As proven by a never-ending stream of bankrupt celebrities and athletes who “lost it all”, regardless of how much money you have coming in, not tracking where and how much is going out the door is a recipe for disaster.

Countless articles are churned out every day on how to spend less, and they may yield some good tips that are practical for your situation. Look for easy hacks to supercharge your personal budgeting, like taking advantage of grocery store bargains, re-evaluating your mobile phone or cable services, collecting points or discounts on a credit card (but paying the balance in full every month!), or even clipping coupons!

There is no end to money-saving ideas and hacks, but the first step of your financial plan is to know your costs. You can’t kill what you can’t see, and household expenses are no exception. You need to track all your expenses for at least a month and analyze where your money is going. Don’t forget interest charges, memberships, and any other miscellaneous expenses — you need to include everything!

3. Automate your savings.
Making it invisible is the fastest and easiest way ever when it comes to how to start saving money.  Setting up automatic transfers every payday to a savings account (and then investing it!) will remove the guesswork and excuses from how best to stash your cash. It probably doesn’t need to be said, but money left in your daily chequing account has a way of disappearing!

4. Learn to manage debt.
If you are carrying a balance on your credit card, it's time to map out a realistic payment plan for an all-out attack on credit card debt. The average credit card balance in Canada as of September 2022 was $2121. Paying the minimum on that amount will require 187 months to eliminate the balance and cost you almost $2400 in interest. Paying the minimum plus $50/month will cut it down to 27 months and $518 in interest charges! If you have options to borrow more cheaply through a home equity loan and pay off your card, what are you waiting for? Balance transfer cards are another option as long as you investigate your obligations, create a strict repayment plan, and are disciplined.

5. Do I need a financial advisor?
A "high-interest" savings account is a huge misnomer, even with the recent increase in interest rates. You might get over 3% in a new account for a limited period, but chances are you are currently earning under 2%. The same goes for any cash sitting in your RRSP, TFSA, or your child's RESP. Financial markets were way down in 2022 and have been volatile, but stock have always recovered over the long term.  

You may not need a financial advisor if you have the time and motivation to handle your own financial education. Self-directed investing in financial markets is very do-able and will help keep fees to a minimum. Make sure you understand the risk and how it is mitigated, regardless of who is making your investment decisions and financial plan.

6. Understand your mortgage.
Investigate you mortgage options and how recent interest rates hikes will affect your payment when you renew. The average for a 5-year fixed mortgage in 2018 was around 4.5%, so you are likely looking at 1% to 2% more if you are renewing in 2023. That will add between $200 to $400 monthly to a $400K mortgage.

If you have a variable rate mortgage you are already feeling the pain unless you have a fixed-payment variable rate mortgage? If you do, you could be in for a shock, so make sure to confirm the situation and allow for the higher payment in your financial plan. Some of these mortgages have already reached their trigger rate while others have payments that are barely covering the interest and not making any dent in the principal.

7. How much should I spend on a car?
Cars can easily be bought and sold and there is almost always a cheaper option. Attachment to a car is usually much more emotional than rational, so it's less about giving up a real need and more about feeling good behind the wheel. If you are comparing car alternatives, make sure you factor in gas, insurance, parking, snow tires, oil changes, and any repairs not under warranty in addition to the monthly payment. You should be aiming for around 15% of your take home pay for all your car expenses combined.

8. What is a RESP?
You don’t need a financial advisor to understand that a Registered Education Savings Plan (RESP) is hands down the easiest money you will ever make on an investment. Deposits up to the $2500 annual limit receive a 20% grant from the federal government. If you miss a year, you are allowed to overcontribute to some extent in future years but playing catch-up is hard — just dump in whatever you can every year.

If you are short of cash, try taking a $100/month from your child’s CCB payment. Just like your RRSP and TFSA, you should be looking to invest the funds in your RESP rather than let it sit in cash. You can get a CDIC-guaranteed GIC at around 5% these days if you need a risk-free alternative until you get up to speed and feel comfortable investing in the financial markets.

Choosing a financial planning solution
Although it may seem daunting at times, learning how to manage your money and save and invest for the future will pay huge dividends over the course of your lifetime. Even if you come to rely on a professional for advice (some financial issues are very complex and consulting an expert is a wise move), a little financial education will help you evaluate their recommendations and make sound decisions, as well as provide an extra layer of reassurance and confidence.

2022 has been a financial disaster for many Canadians with high inflation, high interest rates, falling home prices in many markets, and stagnant wages. There is no easy financial fix for 2023 and it could be another tough year, especially if your financial knowhow is lacking.

We hope taking some concrete actions to improve your financial literacy and putting that knowledge to practical use to develop a sound financial plan is top of your resolution’s list. The choice of how you improve your financial literacy is up to you. Our advice is simple — make it a priority in 2023 and just dive-in!

Oct 04, 2021

Enriched Academy Staff

You might have heard Enriched Academy Co-founder Kevin Cochran explaining how YOLO (You Only Live Once) is the most expensive word in the English language. Kevin has a great point – justifying clearly unaffordable purchases with a YOLO attitude usually leads to a pile of very expensive credit card debt and more than a little regret down the road.

However, YOLO has a contender for the expensive word title, and that contender is procrastination. We are huge believers in education, fact finding, and analysis before making any important financial decisions, but at some point, you have to take action. Whether it’s opening an online brokerage account, meeting with a financial coach, or simply inputting your monthly household expenditures into a spreadsheet, you need to get moving.

The cost of procrastination when it comes to getting your finances in order is easy to overlook, so we are making it crystal clear by highlighting six issues where failing to act is definitely going to come back and haunt you!

Attacking your debt problem
Throwing everything you have to pay off a 3% mortgage doesn't make financial sense for most people. However, if you have higher interest credit card debt, car loans, or a line of credit that you are in no hurry to eliminate, you need to look at how much it is costing you. Once you see how much money you are wasting on interest every year and how many years (not months) it will take to pay back, your laissez-fair attitude to eliminating that debt will likely change.

Starting your retirement planning
Too little, too late is the story for many Canadians when it comes to funding their retirement. CPP and OAS aren’t enough to save you. The good news is you don’t need a comprehensive plan to get started. For now, if you have no plan or don’t know what to do first, open a TFSA and focus on maxing out the contributions every year and invest in an index fund. You can even automate the process with a robo-advisor and make it as easy as paying the phone bill.

Analyzing expenses and budgeting
Next month is not the time to start figuring out where your money goes every month and where you could/should/need to cut back on spending. The time to get started is today, and it has never been easier with hundreds of online applications and spreadsheet software, or you can go old school with pen, paper and calculator. Enriched Academy has a number of easy-to-use proprietary tools in our programs to help you crunch the numbers.

Getting started with investing
For many of us, it’s hard to get over the risk-aversion and fear of loss that goes with putting our hard-earned dollars into the markets. You need to be comfortable with your decision to invest and knowledgeable of strategies to mitigate the risk, but you also have to realize that holding cash at the interest rates we have seen over the last several years is not going create much of a retirement fund. The TSX was hovering around 5000 in August of 1996 and is just over 20,000 today. Had you invested $300/month for that 25-year period and achieved average market returns, you would have upwards of $500K today.


 

Creating an emergency cash reserve and a will
Two things you never know when you might need, but if the pandemic taught us anything, it was to prepare for the worst. Your income could unexpectedly and very easily disappear for a number of reasons, so you need to have enough cash on hand to tide you over for a few months. As for a will, they are pretty easy to get these days and there isn't any valid excuse for not having one, especially compared to the mess it leaves behind for your loved ones if you die without one.

Our goal at Enriched Academy is to educate and inspire you to take control of your financial life. We do our best to prepare you and get you moving, but it’s up to you to ensure procrastination and YOLO are not holding you back from reaching your financial goals!

Oct 04, 2021

Enriched Academy Staff

Financial planner? Money coach? Financial advisor? There are several titles for the people who can help you manage your money, but it isn’t always clear what each one does, and more importantly, which one is right for you?

With the exception of Quebec, anyone in Canada can call themselves a financial advisor or a financial planner —there is no guarantee of expertise. The level of experience, education, professional accreditation and the range of products and services offered varies greatly. Some advisors focus only on investments and will help purchase and manage a portfolio of stocks, bonds, ETFs, mutual funds, etc. Others take a broader financial view and will advise you on investing as well offer advice on issues such as taxes, insurance, or retirement planning.

A financial coach is both educator and advisor. They use a holistic approach and take a deep dive into all aspects of your financial situation. It includes cash flow management, budgeting, savings, investing (RRSP, TFSA, income properties, other passive income investments), debt management, building credit, wills and estate planning, insurance, and retirement planning. The program is customized to each client's needs, and you have the option to go into more detail on any aspects that are particularly relevant to your case.

In addition to the scope of their advisory services, the other primary difference is that a financial coach teaches you as you move through the program. The focus is on equipping you with the confidence and knowledge to make a lifetime of informed financial decisions. A coach teaches you the facts and provides a structured plan, an impartial opinion, and plenty of motivation and inspiration – but the decisions are ultimately up to you.

Aside from the education and guidance, there are also intangible benefits to a coach. Many people have trouble shifting from the learning phase (like reading this blog) to the action phase (purchasing an index fund online for example). As with any sport or activity, the presence of a coach is super motivational, and the structure and accountability built into the coaching sessions really helps to boost confidence. A coach can definitely help turn financial complacency into actions that build a robust financial plan.

The best way to highlight how coaching helps is to look in more detail at one of our Enriched Academy clients. “Stacey” and her husband called themselves “middle-class professionals” and they are in their 30's with three kids. They were looking for solutions on how to pay back debt and build a fund for their future. Stacey felt she did not have a good understanding of their overall financial picture and was unsure where their money was going every month.

After six months of working with a coach, she felt like they had made some “serious progress” and the results supported her feelings. Their net worth climbed by $16,388.62 and they also paid-off or consolidated a lot of high-interest debt. They saved almost $3400 in interest charges over the 6-month coaching period.

Stacey noted their gains easily covered the initial cost of the program and it will continue to provide positive returns for many years into the future. She also noted that the results were "super motivating" and she is looking forward to seeing how their financial situation changes for the better over the next two to three years.


 

Coaching is not for everybody, and Stacey pointed out that she did spend a fair amount of time studying the self-help resources her coach provided as well as drilling down into the details of their finances. Enriched Academy coaches have access to a huge library of proprietary teaching resources and tools to help their clients learn, but you will need to put in a few hours each month to maximize the effectiveness of the program.

For those who would like to have more control of their finances or take over management of them completely, coaching is a great way to transition and get the ball rolling. You get a period of expert support and guidance when you may be lacking the confidence or knowledge you need, and you are steadily preparing yourself for more independent decision-making down the road.

If you would like to read more about Stacey's review of her experience with the Enriched Academy Coaching Program, click here

Learn more about our financial coaching program

Aug 02, 2021

Enriched Academy Staff

Why hello there!

Have you been wondering about our coaching program since we launched in October 2017? Well, wonder no more! 

We took a few readers from Million Dollar Journey and took them through our 6 months of Financial Freedom coaching. They achieved some really amazing results, and THEN they wrote a really amazing review about us. 

If you've ever been looking for a completely unbiased review of our coaching program, you can read about it here

Enjoy:)

Feb 26, 2021

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

And no, the holidays did not come early this year. It’s RRSP season and the most exciting time of the year when you need to start preparing to file your taxes.

If you haven’t made a contribution towards your 2020 year yet, you only have until March 1 to do so. This date hasn’t really ever changed, so it always amazes me to see how many people are always scrambling in the last week to put money away into their RRSP’s. This is something that you can set up, and contribute to, at any time during the year. You don’t just have to wait until February when everyone starts marketing that the RRSP deadline is coming up.

If you don’t know what an RRSP is, let me tell you as simply as I can.

It’s a government-regulated account (registered) where any contribution that you make will give you an immediate tax deduction. Within your RRSP you can invest in things such as ETFs, stocks, bonds, mutual funds, real estate, etc.

Example: if your income at the end of 2020 was $75,000, and you contributed $10,000 into your RRSP throughout the 2020 year, then you are only being taxed as if you made $65,000 in 2020. This would bump you down into a lower tax bracket, and either provide you with a bigger tax refund, or would reduce the amount of taxes owed.

Keep in mind as well, that when you invest in a healthy and diversified portfolio within your RRSP, that your contributions grow tax-free until you start to withdraw them. And most people withdraw their RRSP when they need the income in retirement, so they’re typically in a lower tax bracket. You do eventually pay tax on your withdrawals, but if you’re retired and farting around the golf-course or sipping Pina Coladas on a beach somewhere, chances are you won’t be in a high tax bracket already, because most retirees don’t work. If you start young, build your portfolio up to $1,000,000, and only need $50,000 in retirement, then you’re only paying tax on your $50,000 withdrawals.

How Do I Get Started?

Well, to be honest, you should contribute to your RRSP throughout the year, but if you haven’t been contributing then you should do so before March 1. The contribution room that you have available to you can be found through your CRA My Account, or on your NOA from the previous year. Your accountant should also have that number somewhere. So don’t delay, start today.

Here are the three main ways that you can open an RRSP;

1. Managed: Personalized investment portfolios that are managed by advisors and professional money managers at financial institutions. Portfolios are tailored to the specific needs of the client depending on a number of factors such as your age, risk tolerance, and short and/or long-term goals. There are typically high fees associated with managed accounts since a human is deciding what securities to hold within that account and are actively managing it.

2. Robo-Advisor: A new class of financial advisors. It uses algorithms to provide investment management and advice with little human supervision. Using a certain type of software, a Robo-Advisor is able to automatically buy, sell, and rebalance assets in your portfolio. Don’t know the first thing about investing but want to invest in ETFs? Don’t you worry. Robo-advisors will do it all for you. So, if you’re new to investing, and want to reduce the fees you’re paying, then a Robo-Advisor may be a perfect fit for you.

3. Self-Directed: You have full control over the buying and selling of securities in your account. By managing your own account, you can reduce the amount of fees that you pay, putting more money in your pocket at the end of each year. With a self-directed account, you do all of the dividend re-investing and rebalancing of your portfolio.

We’ve helped 100’s of clients in our Financial Freedom Coaching program set up an RRSP and use it as an investment vehicle throughout the year. And we can help you too. If you’re ready to set up a Free Coaching Assessment call with our team to see if you’d be a good fit for our coaching program, then sign up here.

We can help you build a solid budget, set you up on a plan where you’re making weekly-monthly contributions into your RRSP, and save you from pulling your hair out every February as you scramble to find money to contribute.

Jan 22, 2021

Enriched Academy Staff

Happy New Year to all of you. I LOVE January.

Why, do you ask?

Because it marks the beginning of my personal financial year. This is where I sit down, complete my Net Worth Tracker, organize my budget, and fill out my Financial Freedom calculator so that I can figure out how much to set aside for the year ahead. My current financial goal is to retire by 45, and I seem to be on the right track (right now). Wish me luck.

I thought I would take this opportunity to write a post for parents out there who are wanting to motivate and teach their kids about financial literacy and money management. We get a lot of clients in our  Financial Freedom coaching program who take the education that they’ve learned and pass it on to their little ones. Financial literacy should start as young as possible!

Growing up, my grandparents always gave me Israeli Savings Bonds for birthdays and holidays instead of physical presents. I never understood why, and to be honest, it always pissed me off. Until I hit 18. Around my 18th birthday, all of the bonds had matured, and I was presented with a cheque for $10,000. I couldn’t believe my eyes when I saw all of those zero’s! I kept thinking about all of the things that I could buy with that money, but my mom had another plan in place for me. I’m so glad that I listened to her advice. Looking back now, I don’t think I’d be where I am today without my mom’s guidance and financial education.

She immediately took me into the bank and had me open up a self-directed TFSA where all of the money was invested into Index funds. At this time, I had NO idea what any of these words meant. I just thought that there was a savings account and a chequing account. But my mind was blown after my mom had taught me about the different types of accounts one could have – and this was at the young age of 18.

For the entire year after, I didn’t think about or look at the TFSA. I just let it sit there and allowed the market to take its course. One day, I decided to take a peek and see what was happening. I had made just over $800! And I literally did nothing all year with that money. It just sat in the account, made a 7.5% return, and compounded interest while invested in these Index funds. Seeing the $800 return sparked my interest in investing. I had a conversation with my dad afterward about the money I had made, and about investing in general. He told me to “make your money work for you, and don’t work so hard for it”. That saying has stuck with me to this day.

Three years ago, I hit a milestone. I turned 30 (I’m currently 33). And since I’ve been tracking my Net Worth for the last 3 years, I remember taking a look at my savings and investment portfolio and having just over $100,000, at the age of 30. I’m now 33, and my investment portfolio has doubled in growth over the last 3 years. What’s the secret you ask? I’ll tell you how I did it.

Keep in mind that I am not a homeowner. I choose to rent. But I do have a partner, a car, and a lovely 2-year-old Bernese Mountain dog (named George). We live a great life in Toronto (one of the most expensive cities in Canada. So yes, it is possible to save).

  1. Set goals for yourself and work hard. After that first year of investing, it became a personal goal to max out my RRSP and TFSA every year. And I can happily say that I’ve completed this financial goal since the age of 19. Before working for Enriched Academy as the head of their coaching program, I worked as a freelancer in the entertainment industry, and prior to that, worked in the restaurant industry.
  1. Pay yourself first, and have fun after. I know that I have a different mentality about money than other people my age do. I don’t spend a lot on material things. I go out for dinners and drinks with friends, have a great apartment in Toronto, and bike/walk almost everywhere I can. I spend the majority of my money on experiences, food, and travel. I have the mentality that I need to pay myself first by maxing out my RRSP and TFSA, and then I can have fun afterwards. Knowing that I have that money in an account makes me sleep like a newborn baby every night.
  1. Educate yourself and invest! I know that I wouldn’t be where I am now without investing. Learn the basics, take a course (like our one-on-one coaching program), and put some money into diversified investments so you begin to understand the principles. It doesn’t need to be a lot! Start with $10/week. A majority of my portfolio is invested in Index ETF’s, but I hold a few blue-chip stocks that pay out a dividend.
  1. Budget, budget, budget. This is so important and will be the basis of your financial plan. Once you have a budget in place, you will see where your income is coming from, and what you’re spending money on. And if you have any “leftovers”, you can start putting it into your savings/investment account. This is really where you’ll start to see your Net Worth grow.

I know that I’m not like the majority of Canadians. And that’s ok. I'm incredibly thankful to both of my parents who took the time to educate me about money. It’s never too late. So make sure that you take the 2021 year as a teaching opportunity and start to make the financial changes that you need to yourself. Your kids will thank you later.

Dec 07, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

What a Year.

How did you manage? What did you learn? What are you bringing with you into 2021?

2020 was tough. Emotionally. Mentally. Physically. The pandemic has definitely taken its’ toll on my emotional and mental well-being. Not being able to freely walk around, see friends and family, and be constantly mindful of the people around me has really made this quite the year. It’s definitely been hard, but I think after all of this, there are probably a few things that we’ve learned in regard to our finances.

Here are a few things to bring with you into 2021. 

  1. We don’t need a lot to live. I think for the majority of our coaching clients, the thing we hear the most is that the pandemic really taught them about the most important things in life. It wasn’t about the car they drove, the clothes they had in their closets, any other material object they once had, or even going to get their hair done bi-weekly, we’re surviving without all of it. There are always going to be things that we like to have. But when you really get down to the nitty-gritty of it, we don’t truly need a lot to live. Head into 2021 by taking a good hard look at your finances, cut out those things that may not be bringing you joy, and focus on those things that matter most to you.
  2. You can manage your cash flow, regardless of your financial situation. This one was SO interesting to me. We had a number of coaching clients who had joined us back in February, and then lost their jobs because of the pandemic and had to take a paycut or live off of the CERB. And guess what? They still managed. By working one-on-one with our coaches, our clients were able to re-work their budgets and focus on the priorities of putting food on the table and a roof over their head. It just goes to show that it’s not the money you make, but the way you manage it.
  3. Pay off your high-interest debts – ASAP. Being in debt can be hard. Being in debt during a pandemic can be even harder. But I hope (if you were one of the 1000’s of Canadians who had debt before the pandemic) that you had some ah-ha moments. Our coaching clients certainly did. Always pay off high-interest debts (above 5%) every month, or as fast as you can. Nobody knows what’s going to happen in the future, and I think the pandemic made a lot of us realize that our finances are not finite. Manage your income, dollar by dollar, and get out of the weeds when you have the ability to.
  4. Have money set aside for an emergency fund. Remember how we always talk about having 3-6 months of necessary living expenses in an account that you can dip into for emergency purposes? I’m sure that really came in handy back in March if you were someone who lost your job. Figure out what your absolute necessities are, and keep a 3-6 month emergency fund in an out of sight, out of mind account that pays some kind of high interest.
  5. Invest, Invest, Invest. Once you’ve gotten rid of all of those high-interest debts (above 5%), you can start to invest. Back in March, I was in the airport heading to Belize when the markets were crashing. I kept seeing them drop. Lower and lower and lower. Do you know what I did? I didn’t sell my investments. No, no, no. This was the opportunity that I’ve been waiting for. Everything went on sale! I maxed out my TFSA, RRSP, and had my partner do the same. To this date, our investments are up over 30%. Now, I’m not telling you to time the markets, because nobody can. But if you can keep costs low throughout the year, manage your cash flow, and have cash set aside for these kinds of opportunities, then you’re all set. Buy low, sell high, remember? Don’t panic. If you’re properly invested and diversified, you’ll never lose all of your money. Yes, it may be volatile, but if you can think of the future, you’ll come out on top.

"Be Greedy When Others' are Fearful and Fearful When Others' are Greedy" - Warren Buffet

At the end of all of this, it’s been really interesting to see our clients throughout this pandemic. Regardless of their financial situation, they’re excited about getting their financial house in order for a healthy and successful 2021.

Are you ready to join them? Sign up for your free Coaching assessment call here. Having someone else to give you a completely non-judgmental and non-biased view of your financial situation may just be what you need for your own successful year ahead. After everything is said and done though, make sure to not take any moment for granted. Hugged your loved ones. Take time away from technology, work, and enjoy every minute.

Happy Holidays and New Year from Enriched Academy

Oct 09, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

What Are You Thankful For?

As we approach one of my favourite holidays of the year (aside from Passover, and Christmas, and Hanukkah, and my birthday), I’d like to check in with you to see what you’re thankful for?

I’ll start. I’m thankful for the health of myself and my family and friends, and also the financial education that my parents taught me at a young age, which now has provided me with the financial freedom to not stress about money. And I’m 33 years old. How many 33-year-olds do you know who can say that?

As the head of coaching for our Financial Freedom program, our program sees 1000’s of clients every year who are in really difficult situations because of a lack of financial education. Just remember, this is not your fault. We live in a broken system. But there is a way that you can make a change, and that change starts with altering your behaviours and habits.

How To Make Habits Stick

We all know bad habits are easy to pick up and hard to drop. Good habits on the other hand? Well, if it was easy, we would all be wealthy and fit (and able to wear the same jeans that we did in high school). I’m currently struggling to fit into the same pants that I was wearing before COVID hit. Damn you quarantine.  
 
But I’m going to let you in on a super easy secret that can help you create strong, lasting habits.
 
Make those habits as easy as possible. 

If you sat down and made a list of habits that you go through in a day, you can probably come up with around 10-20 of them. Here are a few of mine that may help you to create your list.

  • Wake up and make coffee.
  • Review budget.
  • Read finance blog.
  • Walk the dog.
  • Brush my teeth.
  • Make breakfast.
  • Clean dishes.
  • Get dressed in workout clothes.
  • Work out.
  • Do yoga.
  • Shower.
  • Make lunch.

Pretty crazy eh? It’s not even 1 pm yet and I’ve already gone through 11 habits that I don’t think about. I’ve gotten into a routine where I just do them.  

Atomic Habits is our favourite book on creating winning habits. The author, James Clear, outlines a few tips you to follow... 

Use this formula: I will (behavior) at (time) in (location). For example, instead of saying, “I will budget each month.” Try, "I will budget on the 1st of each month at 5 PM in my office." 

Every habit is initiated by a cue. The cue triggers your brain to initiate a behavior because it predicts a reward. We are more likely to notice cues that stand out. Setting an alarm on your phone for 5 PM monthly is a cue that you need to budget. 

Forming a new habit is hard so Make it Easy. We really strive for that in our Enriched Academy Programs.

And now I’d like to share with you:

5 Money Habits of Wealthy People 
 

These concepts are honestly so easy, and they truly are the key to building wealth. We see most of our successful Financial Freedom clients live by these means, and you can start to see results today if you follow the list below.

  1. Live below your means. Spend less than what you earn. It’s as easy as that. Sit down and go through all of your sources of income, and everything that you spend money on. If you have money left over every month, and are putting money into an investment account, you’re beyond the majority of Canadians. If you’re overspending though, then you need to make some cutbacks unless you want to end up in debt for the rest of your life. It’s not about making more money. It’s about living with what you have and being smart with it. If Warren Buffett is worth over 70 billion dollar and lives in the same home that he bought 50 years ago for $31,000, and drives a modest Cadillac, then you can live within your means as well.
  2. Learn one new thing a day. No one has ever gone broke buying books. I read a daily personal finance blog that keeps me up to date with what’s going on in the world. If your new thing is a recipe, or a craft, or a new trade, then that’s awesome. But just force yourself to learn something new.
  3. Small steps each day. Have you ever read a book or taken a course but quickly found your motivation evaporated? Wealth is given to those that take small consistent actions daily. Ask yourself, what is one small thing I can do today to help me make progress with my finances? 
  4. Track your net worth and budget monthly. You cannot improve what you don’t measure. These two numbers are the foundation for financial and time freedom. 30 minutes per month, that's all it takes. This is one of the biggest ways that we measure our clients in our Financial Freedom coaching program. We get them to track their Net Worth month and start to track their cashflow as much as possible. This way, they can see the correlation between the two. When you start to track your cash flow, and you spend less than what you earn, then your Net Worth goes up.
  5. Learn to say “no”. Only spend money on things that bring you an immense amount of joy and happiness. Everything else, say no to. 

Once you’ve got the top 5 habits above in place, you’ll start to see dramatic results with your finances. You’ve just laid down the foundation to becoming financially successful. Congratulations. But there’s still more work to do! You need to review your financial goals and plan each month. Step 1 is creating that plan. Step 2 is constantly reviewing and making changes to your plan as things change. If you are not constantly reviewing your plan you could be headed in the wrong direction and not even know it. 

When COVID-19 hit and our economy, we worked with all of our coaching members to revise their financial plans because so many things were changing all at once. Some of our clients had lost their employment, their investment portfolios were going down, their kids were home from school, among many other things.

The one thing that we’ve heard over and over again is how thankful our Financial Freedom clients have been for having us work with them throughout COVID-19. Even though some of our clients have seen a decrease in income, they’ve seen an overall increase in their Net Worth. This education that we provide is something that will be with you forever. And we can help you change your habits.

Just the other day I received a note from one of my past students. It made my heart go all warm and fuzzy inside.

“I am not exaggerating when I say that what you all do is life-changing! You helped us so much and we are forever grateful ????”.

So, if you’re ready to take control of your finances and join the 1000’s of Canadians who have gone through our Financial Freedom Coaching, sign up here for your coaching assessment to see if we can help you.

You’ll be thankful.

Happy Thanks giving!

Aug 31, 2020

Alanna Abramsky
(Enriched Academy Financial Coach / AFCC)

Have you ever gone through your bank to take a look at your credit score and haven't been super happy with the results? Or have you ever looked into getting a mortgage or needing to borrow money, and nobody will give you a loan? It's likely because you don't have a credit score that's in tip-top shape. This article will explain what a credit score is, and how to increase it. 

What is a Credit Score?

You credit score is a number (typically between 300-900) that is based on your credit report. Your credit score your financial report card, and it’s used by lenders to predict the likelihood that you will repay any future debt. Your credit score is based off of your credit report, which is a summary of how you pay your financial obligations. Lenders use your credit report to verify information about you and how you have been paid off your financial obligations in the past.

Why is This Important?

Your credit score will determine if you are a risk to lenders and it will affect the interest rates you pay on any loans you applying for. If you have a “poor” or “fair” credit score, and are looking at securing a mortgage, you may not qualify through a bank or credit union. You may have to go with a B-grade lender or even a private lender, where you’re looking at interest rates 3-6% higher than a traditional A-lender.Your Credit Score is one of the metrics that we track in our Coaching program, and if you can believe it, we’ve helped our average coaching client increase their credit score by 21 points over a 6-month period.

How Can I Increase My Credit Score?

There are 5 ways to