Youtube Channel

Here are links to the latest YouTube videos:

1. Financial Literacy https://youtu.be/c653PWEVR00

2. Active versus Passive management https://youtu.be/yI-Pg_uVdMg

3. RRSP versus TFSA https://youtu.be/b7uMwue6nsA

When it comes to finances, boring works

Why Smart Financial Planning Isn’t Boring (And How It Can Save You From Eating Instant Noodles Forever)

Let’s face it: financial planning often feels like eating your vegetables. You know it’s good for you, but you’d rather binge-watch Squid Games while pretending money grows on trees. The good news? Getting your financial house in order doesn’t have to be as dull as counting calories. In fact, once you see the benefits, you might even enjoy it. Here’s why you need to set up or track these key financial tools, with a sprinkle of humor to sweeten the deal.

1. Have Liquidity for 3-6 Months of Expenses

Imagine this: your car breaks down, your dog swallows a sock (again), and your boss announces company-wide layoffs. That’s three disasters in one week! Having 3-6 months of expenses stashed in a savings account means you’re prepared for life’s little or big(COVID) curveballs.

Think of this fund as your financial "get out of jail free" card. Without it, you’re one unexpected expense away from Googling “how to sell a kidney on eBay.” Trust me, having that cushion is cheaper and way less dramatic.

2. Know Your Net Worth

If you don’t know your net worth, you’re flying blind. Your net worth is like a report card for your financial life, except you don’t have to show it to your parents. It’s simply the difference between what you own (assets) and what you owe (liabilities).

Tracking your net worth helps you spot trends, like “Wow, my student loans are shrinking faster than my pants after holiday dinners” or “Hey, my investments are growing like weeds… the good kind!” It’s motivating, illuminating, and, dare I say, kind of fun.

3. Set Up Auto Contributions for RRSP, TFSA, FHSA, and RESP (If Applicable)

Automation is the lazy person’s secret to success. Setting up automatic contributions to your RRSP, TFSA,FHSA, or RESP ensures your money is working harder than you are on a Monday morning.

Picture it: every payday, a chunk of your income goes straight to your future self without you lifting a finger. It eliminates the temptation to blow that money on a 75-inch TV you definitely don’t need.

4. Set Up Annual Increases in Contributions

Do you give your savings a raise every year? You should! Setting up annual increases in your contributions is like putting your financial growth on autopilot. Even a small bump (say, 1% more per year) can add up to a retirement fund big enough to fund your dream of slipping down South everytime it’s -30. The best part is, you won’t notice.

And let’s be real, when was the last time your property tax didn’t increase? If they can sneak in an extra charge, so can you—except this time, it’s for your benefit.

5. Track Your Expenses, Including Subscription Services

Remember that free trial you signed up for two years ago? Yep, still charging you $12.99 a month. Tracking your expenses reveals what shows what you value and what’s just draining your wallet.

From the “everyday” (groceries) to the “extras” (streaming subscriptions, delivery apps), a good tracking system gives you clarity and control. Bonus: You’ll finally have an answer to the question, “Where does all my money go?” Spoiler: It’s probably lattes and Amazon.

At the end of the day

Financial planning doesn’t have to be scary. By setting up and tracking these key financial metics, you’ll save yourself from future headaches (and possibly a lifetime supply of instant noodles). Plus, you’ll sleep better knowing you’ve got a solid plan in place.

*ChatGPT may have been used in developing this article

Longer, More Acvtive Retirees need different planning

The concept of retirement has undergone a shift. Gone are the days when retirement meant an endless stretch of leisure and relaxation. Today’s retirees are living longer, staying active, and redefining their golden years with purpose. For Canadians aged 45 and up, this new retirement reality demands a fresh perspective—and highlights the critical importance of working with a financial planner. Specifically, starting with an advice-only financial plan can be a game-changing decision.

Why Retirement Planning Is More Complex Than Ever

The numbers tell the story. By 2046, Canada’s population aged 85 and older is projected to triple to nearly 2.5 million. Many in this group won’t just be living longer—they’ll be living better. Improved health and vitality presents both an opportunity and a challenge.

Retirement today is no longer one-size-fits-all. Some retirees may choose to continue working, pursue passion projects, or travel extensively. Others might need to supplement their savings to maintain their lifestyle. This evolving landscape raises critical questions:

• How can you ensure your money lasts as long as you do?

• What’s the best strategy to maximize your pension or government benefits?

• How do you fund a lifestyle that aligns with your dreams while mitigating risks like inflation or unexpected expenses?

These are not just financial questions—they’re lifestyle questions. They demand a personalized approach that integrates financial expertise with an understanding of your values, needs, and goals.

The Power of an Advice-Only Financial Plan

If you’re over 45, the stakes are higher, and your financial decisions carry more weight than ever before. An advice-only financial planner can be your best ally for several reasons:

1. Objective Guidance Without Sales Pressure
   Advice-only planners are compensated for their expertise, not for selling products. This means you’ll receive unbiased recommendations tailored solely to your needs, not a commission-driven agenda.

2. Comprehensive, Personalized Planning
   With no cookie-cutter solutions, advice-only planners take the time to understand your dreams for retirement, whether that’s pursuing a second career, volunteering, or traveling the world. They’ll craft a strategy that ensures your finances align with your vision.

3. Mastering the Nuances of Retirement Income
   Retirement income planning is far from straightforward. Should you draw from your RRSP first or delay withdrawals? What’s the optimal age to start Canada Pension Plan (CPP) or Old Age Security (OAS) benefits? Advice-only planners specialize in answering these questions, helping you make informed decisions that maximize your income over time.

4. Flexibility for a Changing Landscape
   Life doesn’t always go as planned. An advice-only planner can help you adapt to changing circumstances, whether that’s unexpected health issues, market volatility, or new opportunities that require financial pivoting.

Why Now Is the Time to Act

For Canadians aged 45 and up, the decisions you make today will define your retirement tomorrow. The sooner you engage financial planner for an advice-only plan, the more options you’ll have to build the life you want. By taking control of your financial future now, you can navigate the complexities of modern retirement with confidence and clarity.

The Bottom Line

Canadians over 45 face unique challenges and opportunities as they transition into this exciting stage of life. An advice-only financial plan can provide the unbiased, expert guidance you need to thrive in retirement—not just financially, but holistically.

Your retirement is yours to define. Start the conversation with a planner today and set the stage for a future that’s as vibrant and fulfilling as you are.

Article based on the article, The New Retirement requires a new approach in the Investment Executive Oct 16. 2024 written by Susan Silma.

*ChatGPT may have been used in developing this article

Optimize Tax on Retirement Income

Retirement is a time to enjoy the fruits of your labour, not to stress over unnecessary taxes. Yet, for many Canadians, improper withdrawal strategies can result in leaving more money on the table than necessary. A well-thought-out withdrawal strategy can make the difference between a financially secure retirement and one that feels constrained. In this blog, we’ll explore how to optimize your retirement income withdrawals, with a focus on minimizing taxes. I encourage you to focus on concepts, not the specifics, because it is different for everyone.

Why a Withdrawal Strategy Matters

When entering retirement, your focus shifts from accumulating wealth to managing it effectively. However, spending money from your retirement funds without a plan can lead to unintended tax consequences.

Taxes can eat away at your savings faster than expected, particularly if you inadvertently trigger higher tax brackets or lose access to income-tested benefits such as Old Age Security (OAS). A strategic withdrawal plan helps:

• Minimize taxes over your lifetime.

• Preserve your savings for as long as possible.

• Maximize government benefits.

• Provide peace of mind knowing your income needs are sustainably met.

Sequencing Withdrawals for Tax Efficiency

One of the most effective ways to minimize taxes is through proper sequencing of withdrawals. This involves deciding which accounts to draw from first and when. Let’s explore some common strategies:

1. Tapping into RRSPs First

Registered Retirement Savings Plans (RRSPs) are an excellent tool for tax-deferred growth during your working years. However, all withdrawals from an RRSP or its successor, a Registered Retirement Income Fund (RRIF), are fully taxable as income. If you wait too long to start withdrawals, you may face higher tax brackets as mandatory RRIF withdrawals increase with age.

Strategy:

• Consider starting RRSP withdrawals in your early retirement years, particularly if you’re in a lower tax bracket compared to your working years.

• Draw down RRSP funds before claiming Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) benefits to avoid stacking income sources and triggering higher taxes.

2. Delaying CPP/QPP for Larger Payments

CPP/QPP benefits can be claimed as early as age 60 or delayed until age 70. For every month you delay, your payments increase. Delaying CPP/QPP not only boosts your guaranteed income but may also reduce your taxable income in the earlier years of retirement when withdrawals from other sources can fill the gap.

Strategy:

• Use RRSP withdrawals or taxable savings to fund early retirement years while delaying CPP/QPP for higher payouts.

• This approach ensures you maximize lifetime benefits while keeping taxable income low during the deferral period.

3. Leveraging Tax-Free Savings Accounts (TFSAs)

TFSAs are a tax-efficient tool for retirement. Withdrawals from a TFSA are completely tax-free and do not affect eligibility for income-tested benefits like OAS.

Strategy:

• Use TFSAs strategically to top up income in high-tax years or to cover unexpected expenses.

• Maximize TFSA contributions while working and consider re-contributing after withdrawals when possible.

Planning Around OAS Clawbacks

The OAS pension is subject to a recovery tax (or "clawback") if your income exceeds a certain threshold.

Strategy:

• Monitor your income levels to stay below the clawback threshold.

• Use income-splitting opportunities, to balance income between spouses.

• Incorporate TFSA withdrawals or non-registered investments to manage taxable income.

• Be careful to not obesses with avoiding the clawback. In some cases, it can and should not be avoided.

When Not to Withdraw RRSPs First

There are scenarios where starting RRSP withdrawals early may not be the optimal choice:

• High Income in Early Retirement: If you have significant income from other sources, such as rental properties or a pension plan, withdrawing from your RRSPs could push you into a higher tax bracket. In this case, it may be better to delay RRSP withdrawals until your income decreases.

• Large TFSA Contributions: If you’ve built a substantial TFSA, its tax-free withdrawals might be a better source of early retirement income while your RRSPs continue to grow tax-deferred.

• Planned Deferral of Government Benefits: If you’re delaying CPP/QPP to age 70, and your income needs are already met by other sources, it may make sense to leave RRSPs untouched to avoid unnecessary taxes.

• Legacy Planning: If you’re focused on passing wealth to heirs, you might prioritize using taxable accounts or TFSAs first to preserve RRSPs or RRIFs for later distribution.

Strategy:

• Consult a financial planner to model scenarios and determine when RRSP withdrawals align with your broader financial goals.

• Consider using other tax-efficient income sources before drawing from RRSPs to manage your tax brackets and preserve long-term wealth.

Building Your Personalized Withdrawal Plan

An effective withdrawal strategy is not one-size-fits-all. Your plan should reflect:

• Your unique financial situation: Consider your income sources, savings, and anticipated and unanticpated expenses.

• Life expectancy: Factor in longevity to ensure your funds last.

• Tax brackets and thresholds: Plan withdrawals to stay in lower tax brackets where possible.

• Legacy goals: If you intend to leave an inheritance, managing taxes on remaining RRIF balances or estate assets becomes crucial.

Work with a Financial Planner

Navigating the complexities of retirement withdrawals can feel overwhelming. An experienced financial planner can help you:

• Project future income and tax scenarios.

• Identify opportunities to optimize withdrawals.

• Adjust your plan as tax laws and personal circumstances evolve.

Take Action Today

The earlier you develop a withdrawal strategy, the more options you’ll have to minimize taxes and optimize your income. Here’s how to get started:

1. Assess your income sources: List your RRSPs, CPP/QPP, TFSAs, non-registered accounts, and any pensions.

2. Estimate your expenses: Include essentials, discretionary spending, and contingency funds.

3. Consult an expert: Reach out to a certified financial planner to build a custom withdrawal strategy.

Retirement should be a time to enjoy life without financial worry. With the right strategy in place, you can feel confident knowing your money is not going to pay taxes when it didn’t have to.

*ChatGPT may have been used in developing this article

5 Key Actions to Boost Your Net Worth and Minimize Taxes in 2025

As the calendar flips to a new year, it’s the perfect time to assess your financial goals and create a strategy that aligns with your aspirations. Increasing your net worth while minimizing your tax burden doesn’t happen by chance; it requires intentional actions. Here are five steps you can take in 2025 to make this your most financially productive year yet.

1. Maximize Tax-Advantaged Accounts

One of the simplest ways to grow your net worth while reducing your taxable income is to take full advantage of tax-advantaged accounts such as RRSPs (Registered Retirement Savings Plans), TFSAs (Tax-Free Savings Accounts), and FSHA(First Home Savings) in Canada.

• RRSPs: Contributions lower your taxable income today, and investments grow tax-deferred until withdrawal in retirement. Aim to contribute as much as possible within your contribution limit.

• TFSAs: Contributions aren’t tax-deductible, but any growth or withdrawals are completely tax-free. Use this account for investments that are likely to generate significant gains over time.

• FHSAs: If you are a first time home buyer, take advantage of the tax deferral even if you aren’t sure you will be buying a home.

Automate your contributions to these accounts to make saving effortless.

2. Diversify and Rebalance Your Investments

Net worth growth hinges on making your money work for you. Diversify your portfolio across various asset classes such as equities, fixed income, and real estate. Regular rebalancing ensures that your portfolio stays aligned with your risk tolerance and financial goals.

• Assess your asset allocation at least annually.

• Consider tax-efficient investment outcomes like capital gains.

• Utilize tax-loss harvesting by selling underperforming investments to offset capital gains elsewhere.

If managing a portfolio feels overwhelming, consider working with a certified financial planner for personalized guidance.

3. Create and Stick to a Budget

A budget is your roadmap to financial success. By tracking your income and expenses, you can identify opportunities to save more and avoid unnecessary spending. It isn’t how much you make, it’s how much you spend.

• Review your current spending habits and categorize expenses. Don’t forget about those subscriptions!

• Set savings goals for both short-term and long-term priorities.

• Use budgeting tools or apps to make tracking easier and more accurate.

Revisit your budget monthly to adjust for any changes in income or expenses.

4. Pay Down High-Interest Debt

Debt with high interest rates can significantly hinder your ability to grow your net worth. Make paying off high-interest debt a priority this year.

• Focus on credit cards, payday loans, and other high-interest obligations first.

• Consider using the debt snowball or avalanche method to accelerate repayment.

• Avoid taking on new debt unless it’s for an essential purpose.

Once high-interest debts are paid off, redirect those payments to savings or investments.

5. Develop a Comprehensive Tax Plan

Tax efficiency is a cornerstone of wealth-building. A comprehensive tax plan not only saves money but also provides clarity and confidence in your financial decisions.

• Work with a tax professional to forecast your 2025 income and strategize ways to reduce taxable income.

• Time income and expenses strategically; for example, defer income to a lower-earning year if possible.

• Incorporate income-splitting strategies with a spouse or family members if applicable.

• Understand tax brackets and where you are.

Stay informed about changes to tax laws that could impact your planning or work with someone who does.

Final Thoughts

Building wealth and minimizing taxes require a proactive approach. Start 2025 strong by implementing these strategies and reviewing your progress regularly. Whether you’re just starting your financial journey or you’re past the halfway point, these steps can help you achieve greater financial success.

Need guidance on creating a tailored plan? As a financial planner, I specialize in helping individuals and families make smart, tax-efficient decisions that align with their goals. Reach out today to set up a consultation and make 2025 your best year yet!

*ChatGPT may have been used in developing this article

Understanding Tax-Deferred and Tax-Free Accounts: A Guide for Soon-to-Be Retirees

As you approach retirement, one of the most critical decisions you face is how to structure your savings for maximum tax efficiency. Two of the most powerful tools in your retirement planning toolkit are the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA). While both accounts are invaluable for retirement savings, they work in different ways. Understanding these differences can help you make informed decisions that minimize your lifetime tax burden and maximize your retirement income.

RRSPs: Save Now, Pay Later

How They Work:
The RRSP is a tax-deferred account designed to encourage long-term savings. Contributions to an RRSP reduce your taxable income for the year, providing an immediate tax benefit. However, this is not tax-free money; instead, it is tax-deferred. When you withdraw funds from your RRSP in retirement, the withdrawals are fully taxed as income at your marginal tax rate.

Key Benefits:

• Immediate tax deduction for contributions.

• Tax-deferred growth on investments, allows your savings to compound more quickly.

The Catch: The tax deferral means you are essentially borrowing from future you. The withdrawals, could place you in a higher tax bracket if your retirement income is substantial. While this is not most people’s experience, this can happen because eventually there is a minimum you have to withdraw after age 71. The tax advantage is most significant if your tax rate in retirement is lower than it was during your working years.

TFSAs: Save Now, Benefit Later

How They Work:
The TFSA allows your investments to grow and be withdrawn completely tax-free. Contributions are made with after-tax dollars, meaning there is no immediate tax deduction. However, all growth and withdrawals from the account are not subject to tax.

Key Benefits:

• Tax-free withdrawals provide flexibility in retirement.

• No required minimum withdrawals, unlike the RRSP (which converts to a RRIF at age 71).

• Investment growth is sheltered from taxes, just like in an RRSP.

The Catch: Because contributions are made with after-tax dollars, there is no immediate tax break. The TFSA’s benefits are maximized over the long term through tax-free compounding and strategic withdrawal planning.

Balancing Contributions: A Lifetime Tax Perspective

When deciding between RRSP and TFSA contributions, it’s crucial to think beyond the current tax year and focus on your lifetime tax strategy. Here are some tips:

1. Assess Your Current and Future Tax Brackets:

   • If you are in a high tax bracket now and expect to be in a lower bracket during retirement, prioritize RRSP contributions.

   • If you are in a low or moderate tax bracket and there is a probability your income is going to increase, consider focusing on your TFSA to avoid paying higher taxes on RRSP withdrawals in retirement.

2. Think About Withdrawal Flexibility:

   • TFSAs provide a tax-free source of income in retirement, which can be useful for managing your marginal tax rate.

   • Use TFSAs for large, one-time expenses to avoid pushing yourself into a higher tax bracket by withdrawing the funds from your RRSP/RRIF.

3. Diversify Your Tax Exposure:

   • A mix of RRSPs and TFSAs can provide flexibility and control over your taxable income in retirement. This allows you to withdraw strategically and optimize your tax situation.

4. Plan for Retirement Income Splitting:

   • If you have a spouse, consider spousal RRSPs to equalize income in retirement and reduce overall taxes.

5. Avoid Over-Contributing:

   • Both accounts have strict contribution limits, and there are penalties for over-contributions. Pay attention to your notice of assessment and login to MY CRA to track your limits.

The Lifetime Tax Advantage

When deciding how much to contribute to each account, consider the total taxes you’ll pay over your lifetime, not just the taxes you’ll save today. For example, a heavy reliance on RRSPs could result in large mandatory withdrawals during retirement, pushing you into a higher tax bracket and affecting government benefits like Old Age Security (OAS).

By balancing contributions between RRSPs and TFSAs, you can:

• Reduce the risk of high taxes on RRSP withdrawals.

• Protect your eligibility for income-tested government benefits.

• Create a tax-efficient withdrawal strategy that smooths out your taxable income over time.

Start Planning Today

Understanding the differences between RRSPs and TFSAs is only the first step. The real magic happens when these accounts are used together in a strategic way. Everyone’s financial situation is unique, and there is no one-size-fits-all solution. That’s where professional guidance comes in.

As a certified financial planner, I specialize in helping Canadians navigate the complexities of retirement planning. We create a strategy that minimizes your lifetime tax burden and maximizes your retirement income.

*ChatGPT may have been used in developing this article

Hidden Cost of Inaction

How a Certified Financial Planner Can Keep More Money in Your Pocket

The Tax Leak You Never See

Imagine you’re sipping your morning coffee, scrolling through your banking app, and feeling good. You’ve been diligent, you’ve saved, and you’ve even managed to invest. But somewhere, quietly and persistently, a leak has sprung. It’s not coming from your roof, car, or wallet. It’s your taxes.

Most people see taxes as a necessary evil. But what if I told you that your approach to taxes could be just as important as your approach to investing, homeownership, or debt repayment? What if, with the right guidance, you could plug that leak not just for today but for decades?

This is where a Certified Financial Planner comes in. Unlike a traditional advisor focused solely on investments, a CFP takes a holistic view of your finances, connecting the dots between your income, expenses, savings, goals, and—you guessed it—your taxes. And the impact? It’s not just for "tax season." It’s for life.

Let’s look at how a CFP can help throughout your lifetime.

1. Reducing Your Tax Bill Now: The Power of the Immediate Win

There’s a particular kind of pain that comes from overpaying your taxes in the present. It’s like finding out you’ve been tipping 50% at a restaurant for years. The money’s gone, and you’re not getting it back.

A Planner can help you avoid this kind of mistake. One of the most common ways they do this is by optimizing your RRSP contributions. Many Canadians know they should contribute, but they don’t know how much or when.

Example: Sarah, 42, is a self-employed consultant earning $120,000 a year. She’s contributing $5,000 to her RRSP annually because that’s "what she’s always done." A CFP reviews her situation and shows her that by increasing her contribution to $ XX this year, she’ll drop her taxable income into a lower tax bracket(brackets change annually). The result? She’s saving an additional $XX in taxes this year alone. That’s $xx she’d never have seen without help.

Another immediate action is optimizing deductions and credits. Many Canadians miss out on valuable credits like the Canada Caregiver Credit or the Disability Tax Credit simply because they’re unaware they’re eligible. A CFP’s job is to make sure you’re not leaving money on the table.

2. Reducing Your Tax Bill in the Future: Tomorrow’s Wealth Starts Today

If today’s pain is annoying, tomorrow’s pain is insidious. It’s the kind of pain you don’t feel until it’s too late. But with proper planning, you can set up "future you" for success.

A major focus for a planner is retirement income planning. Without guidance, many retirees withdraw from their RRSPs or RRIFs in ways that may trigger unnecessary taxes. The secret? Strategic withdrawal sequencing.

Example: John and Lisa, both 65, have a combined $800,000 in RRSPs. Without advice, they’d start drawing from their RRSPs/RRRIF at the required age of 71. But their CFP points out that if they start withdrawals at 65 instead—even small, gradual ones—they can "smooth out" their taxable income. By spreading the withdrawals over more years, they avoid being bumped into higher tax brackets in their 70s and 80s when they’re forced to withdraw larger amounts. Over 20 years, this strategy can save them thousands in taxes.

Future tax planning also includes navigating capital gains. If you’ve ever sold a rental property or stocks, you’ve felt this pain. A CFP can advise on "tax-loss harvesting," which is a fancy way of saying, "sell your losers to offset your winners."  

3. Reducing Your Tax Bill Over Your Lifetime: The Long Game

The third and perhaps most powerful impact of a Planner is seen throughout your lifetime. When you take a long-term view, the small, steady drips of tax leakage become a river.

Lifetime tax planning often revolves around estate planning and succession planning for business owners. Without a plan, a large chunk of your wealth can be eaten up by taxes at death. The solution? May include charitable giving, life insurance, giving while alive, and thoughtful beneficiary planning.

Example: Marie is a 70-year-old widow with $2 million in assets. If she does nothing, her estate will face a significant tax bill when she passes away. Using Professional planning software, a CFP can run alternatives using various tools to reduce or pay the tax bill. The end goal is to leave her children with the full value of her estate.  

CFPs also look at intergenerational wealth transfers. Instead of waiting for your estate to be settled after your death, they’ll help you plan "living gifts" that transfer wealth to your kids or grandkids during your lifetime—at a far lower tax cost.

Finally, for entrepreneurs and business owners, a CFP will work side by side with your accountant and lawyer to structure corporate investment accounts or holding companies to create tax-efficient strategies for retained earnings. This is where big tax savings can be found, but only with the right expertise.

The Cost of Not Acting

If you’ve ever tried to "do your own taxes" with DIY software, you’ve probably felt that twinge of doubt: Did I get it all? Did I miss something? The truth is, without help, you probably did.

Overpaying taxes isn’t like overpaying for a coffee. It’s not a $5 mistake; it can be a five-figure mistake. And it’s not a one-time mistake; it’s a mistake you’ll repeat every year until something changes.

What Can You Do Now?

The first step is the simplest: Book a conversation with a Certified Financial Planner. It’s not a commitment; it’s an education. Many planners offer a free initial 30-minute consultation. Ask them to review your situation—past, present, and future. Ask about your RRSP contributions, your withdrawal strategy, and your estate plan. See if they can find the leaks.

The only thing worse than paying too much tax is knowing you are paying more tax than you had to.

#taxes #certifiedfinancialplanner #planning #retirement #retirementincome #retirementplanning #rrsp #rrif #tfsa

*ChatGPT may have been used in developing this article

Why Do We Ignore the Painful Truth About Our Health and Money Issues?

Ever notice how humans can be absolute masterminds at avoiding reality? We’ll convince ourselves that the suspicious clunking noise from our car will "just go away," or that the mystery pain in our back is "probably nothing" (even though it’s been there since 2019). When it comes to health and money issues, our powers of denial are unparalleled. But why do we do this? And more importantly, how do we stop?

Let’s look into the psychology of avoidance, laugh at our collective human weirdness, and maybe even walk away with a plan to face our issues head-on.

The "If I Don’t See It, It’s Not There" Phenomenon

You’re familiar with this one. That financial plan? Yep, if we wait long enough the overspending and paying too much tax will fix itself, it’s basically will fix itself. The weird mole on your arm? If you don’t look at it too closely, it’s probably just "sun damage."

Why We Do It: Our brains are wired to avoid discomfort. Thanks to evolution, we’re programmed to seek pleasure, avoid pain, and conserve energy. Confronting health issues, debt, or financial uncertainty triggers our "threat detection system." Instead of fighting or fleeing, we freeze. Our brains think, "Nope, this looks dangerous. Let’s just pretend it’s not there." This is called "Avoidance Coping," and it’s surprisingly common.

The Downside: Spoiler alert: Avoidance doesn’t make the mole disappear. It also doesn’t pay down debt or make back pain go away. Avoidance makes the problem worse. That mole grows (literally), that back pain worsens, and the interest on that credit card? It’s doing backflips while you’re "not looking."

How to Snap Out of It:

• Start with a micro-action. Instead of "fixing everything," just open the letter. Book one doctor’s appointment. You’re not committing to a life overhaul—you’re just opening a door.

"I Have No Control, So What’s the Point?" (aka Learned Helplessness)

When people feel like they’ve "tried everything" and nothing worked, they’re prone to throwing in the towel. "I’ll never get out of debt." "I’ll always be unhealthy." Sound familiar? It’s called "learned helplessness," a psychological trap that’s more stubborn than a toddler at bedtime.

Why We Do It: Back in the 1960s, a psychologist named Martin Seligman did a (slightly cruel) experiment with dogs. He found that when dogs were repeatedly exposed to unavoidable pain, they stopped trying to escape even when an escape route was made available. Humans are no different. When you’ve tried budgeting before and it didn’t work or tried to lose weight only to regain it, your brain says, "Why bother? It’s hopeless."

The Downside: Believing you have no control guarantees that you’ll stay stuck. It’s like sitting in a car that’s out of gas and thinking, "Well, I guess I’ll just live here now." You’re not helpless—you’re stuck in a thinking trap.

How to Snap Out of It:

• Look for "controllables." You can’t pay off all your debt in one day, but you can call the credit card company and ask for a lower interest rate. You can’t "get healthy" instantly, but you can go for a 10-minute walk.

• Remind yourself of past wins. You’ve overcome hard stuff before. Bet on yourself.

The "Busy Work Band-Aid" Approach (A.K.A. Fake Progress)

"I’m working on it! Look, I’m organizing my workout clothes!" Humans are champions of "productive procrastination." When the real problem feels too big or scary, we’ll do something tangentially related and call it "progress."

Why We Do It: This is our brain’s sneaky way of feeling accomplished without addressing the root issue. Why face the anxiety of starting a workout routine when you can "prepare" by buying a new water bottle and downloading five fitness apps? Why budget when you can "research" financial planners (but never call them)?

The Downside: It’s the equivalent of rearranging deck chairs on the Titanic. You’re "busy," but you’re not making meaningful progress. Worse, you’re burning energy that could’ve been used for actual problem-solving.

How to Snap Out of It:

• Ask: Is this action directly attacking the root issue, or is it just making me feel productive?

• Set a "Next Action" that’s embarrassingly small. For health, it might be "do 5 push-ups or 10-minute walk." For money, it might be "move $20 to savings." Small actions build momentum.

What’s the Solution? (No, It’s Not "Be More Disciplined")

1. Reframe the Stakes: Ask, "What’s the cost of doing nothing?" This ties into Kahneman’s insight on availability bias. Visualize the "shark" of credit card interest or health risks looming below the surface.

2. Build Systems, Not Willpower: Use Daniel Crosby’s concept of commitment devices. Automate savings, schedule health check-ups, or set reminders that "lock in" good behavior.

3. Identity-Based Habits: Borrow James Clear’s insight and shift your identity. Say, "I am the type of person who faces problems head-on." This makes your actions feel more authentic and less forced.

Look for the Tipping Point: Gladwell’s insight on tipping points suggests that small wins add up. Break down big tasks into small, momentum-building actions—like paying down $100 of debt or working out for 10 minutes.

You’re Not Broken

If you’re ignoring health or money issues, welcome to the human experience. Avoidance is normal—but it’s not helpful. You’re not "lazy" or "undisciplined"—you’re human. The trick is to outsmart your brain’s alarm system.

Start small. Open the letter. Move the $20. Book the appointment. Momentum isn’t magic—it’s physics. An object in motion stays in motion, and it’s time to get moving.

*ChatGPT may have been used in developing this article

Why middle-income Canadians in their 40’s needs an advice only financial plan

Your 40s are a glorious time. You’re old enough to know better, young enough to still do something about it, and smack dab in the middle of a financial balancing act that makes Cirque du Soleil look like a kid on a teeter-totter. Mortgage, kids, saving for retirement, aging parents — the list is endless. But don’t worry; you’re not alone. This is where an advice-only financial plan comes in to help you pull off your greatest act yet: securing your financial future.

What Is an Advice-Only Financial Planner?

Unlike other financial advisors who might try to sell you products like mutual funds, insurance policies, or a magical “get-rich-quick” scheme (spoiler: there’s no such thing), an advice-only financial plan offers exactly what the name suggests: unbiased, professional advice.

Why Now? Why Your 40s?

Your 40s are a financial sweet spot — or, let’s face it, a sour patch. Your kids might be in braces, you’re trying to figure out how to pay for their education, and your knees are starting to groan every time you climb the stairs (welcome to midlife!).

This is the perfect time to:

• Avoid expensive mistakes like borrowing from your RRSPs to renovate the kitchen. (Your 2035 self will NOT thank you.)

• Plan for retirement so that Future You doesn’t end up in your kids’ basement, arguing about whose turn it is to load the dishwasher.

• Organize your cash flow so your money is working as hard as you are.

Benefits of an Advice-Only Financial Plan

• Tax Smarts Now, Retirement, and Beyond

  • Now: An advisor can help you figure out whether contributing to an RRSP or a TFSA or FHSA(or all three) makes the most sense for your situation. Spoiler alert: It depends on your tax bracket.

  • Retirement: They’ll guide you in creating a withdrawal strategy that minimizes taxes and keeps the CRA from crashing your retirement party.

  • At Death: Yes, even here taxes are a thing. A planner can help you organize your estate to ensure the government gets less and your heirs get more.

• Clarity on Cash Flow

  • Knowing how much money is coming in and where it’s going is critical. A planner can help you prioritize: mortgage payments, RESP contributions, and that annual vacation to escape winter.

  • They'll also make sure you’re setting aside enough for emergencies. Life happens — the furnace dies, the car breaks down, or your kid suddenly needs $500 for a “mandatory” school trip.

• Purpose for Your Money

  • A planner will help you align your financial goals with your values. Do you want to retire early? Pay for your kids’ education? Travel the world? Buy a lifetime supply of golf balls? Whatever your dreams, they can show you how to make your money work towards them.

• Peace of Mind

  • You’ll sleep better knowing you have a roadmap for your finances. It’s like having GPS for your wallet and purse, minus the annoying “recalculating” notifications.

Costs

An advice-only plan charges a flat or hourly fee, usually ranging from $1,500 to $5,000 for a comprehensive plan. Yes, it’s an investment. But consider the cost of NOT having a plan:

• Ppotentially paying thousands in unnecessary taxes.

• Living in financial chaos, which could lead to stress, arguments, and possibly a regrettable midlife crisis purchase (a boat? really?).

A Legacy

Working with a planner doesn’t just benefit you; it’s a gift to your entire family. You’ll teach your kids the importance of financial literacy, ensure your spouse is on the same page, and reduce financial stress at all stages of life.

Conclusion

Having an advice-only plan in your 40s isn’t just a good idea; it’s the best decision you can make for your financial future. You’ll gain clarity, confidence, and control over your money, ensuring it works for you now and well into the future. Plus, you’ll avoid waking up at 65 wondering where it all went.

*ChatGPT may have been used in developing this article

Advice Only Financial Planning versus Investment Managment

Not all financial professionals are created equal. Understanding the difference between advice-only planners and investment management is critical to choosing the right fit for your needs. Here’s a breakdown:

• Focus

  -Advice-Only Financial Planner: Offers comprehensive, unbiased advice on all areas of personal finance, including budgeting, retirement planning, tax strategies, debt management, and estate planning. They provide a plan based on the whole picture.

  -Investment Manager: Primarily focuses on managing investment portfolios, aiming to grow your assets through equties, bonds, and fund selection.

• Sales vs. Advice

  -Advice-Only Financial Plans: There is no selling of financial products or earning commissions. The advice is independent and aligned solely with your best interests.You pay for the plan

  -Investment Manager: May sell financial products like mutual funds, potentially earning commissions or management fees from these products.

• Cost Structure

  -Advice-Only Financial Planner: Charges flat or hourly fees, or fees for a comprehensive plan. Costs are transparent and tied to the time and expertise provided.

  -Investment Manager: Typically charges a percentage of assets under management (AUM).

• Comprehensive Planning

  -Advice-Only Financial Planner: Looks at your entire financial picture, including non-investment-related goals like paying off debt, buying a home, or saving for a child’s education.

  -Investment Management: Primarily focuses on investments and might not offer advice on broader financial topics.

• Tax Efficiency

  -Advice-Only Financial Planner: Provides guidance on tax-efficient savings, withdrawals, and estate planning, potentially helping you reduce your lifetime tax burden.

  -Investment Management: May optimize your portfolio for tax efficiency but typically focuses on tax consequences of investments rather than broader tax strategies.

• Product Recommendations

  -Advice-Only Financial Planner: Recommends strategies that are not tied to specific products or providers.

  -Investment Manager: Often recommends products they manage or sell, which can create bias especially if there are differences in compensation or paperwork. IE.Seg fund vs Mutual fund

• Flexibility and Accessibility

  -Advice-Only Financial Planner: Commonly works with clients of all income levels, not requiring a minimum level of investable assets.

  -Investment Managent: Often has minimum asset thresholds (e.g., $500,000 or more) and can cater primarily to wealthier clients.

• Behavioral Coaching

  -Advice-Only Financial Planner: Acts as a coach, helping you navigate emotions around money and build better financial habits across all areas of your life.

  -Investment Management: Focuses on managing investment behavior, such as staying invested during market volatility, but may not provide broader financial behavioral guidance.

• Alignment with Goals

  -Advice-Only Financial Planner: Helps align your financial strategies with your goals, whether it’s early retirement, supporting parents and children, buying a vacation property, or leaving money to the next generation.

  -Investment Management: Aligns your investment strategy with your risk tolerance and growth objectives but may not address non-investment-related goals.

Investment management and financial planning are related but not the same. It is best to have someone in your corner who is looking at the whole picture. Most middle-income Canadians in their 40’s would gain clarity and confidence from having an Advice only financial plan.

*ChatGPT may have been used in developing this article

Dividends: Taxation, Integration, and Mental Accounting

Here is a great article explaining dividend stocks and why they are not necessarily as great as you are sometimes lead to believe. Read the article here

Did you know you can build your own pension?

Here is a great article discussing Individual Pension Plans. This is something to explore if you are a business owner and are thinking about retirement strategies.Read here

The Family Cottage

A group of Financial Planners shares their wealth of knowledge with other planners regularly. The articles are well thought out and educational and I want to share them with you. Here is one discussing passing the family cottage down to future generations.

Read here

Jumping into the world of adulting

You have decided you want to buy your first home and are wondering what help is available. There are two primary savings tools for first-time home buyers to buy a new home in Canada. You can consider these your welcome to home ownership hug from the government. You can use the First Home Savings Account(FHSA) or/and you can use your RRSP with the First time Home Buyers Plan(HBP). And, yes you can use both and so can your spouse or partner. The FHSA allows you to contribute $8,000 per year to a maximum contribution of $40,000. The savings can be invested and you will not be taxed on the growth of the investments when you withdraw it for the purchase, similar to your TFSA. The contributions are tax-deductible like your RRSP.

The HBP allows you to use $35,000 from your RRSP to purchase your first home without tax consequences. This amount will be increasing to $60,000 based on the recent budget. A big difference with the HBP is that it needs to be repaid within 15 years. Each year you must pay back 1/15 ($4000 annually on $60,000) of the amount or you will be taxed on that amount and lose that RRSP room.

Assuming the budget passes, this means you have access to $100,000($200,000 as a couple) to buy your new home. There are some key considerations for you to make when considering where to withdraw the money from. The primary considerations are when are you buying and how much do you have saved outside your RRSP. If it is in the near future, and you have no savings outside of your RRSP, you will likely consider the HBP. There needs to be consideration for future cash flow and budgeting because you have to repay 1/15 annually. It also affects retirement because you lose the growth on that money until you pay it back. When you have a longer time horizon to purchase the home, you can fund the FHSA, receive the tax deduction, and not worry about repayment or affecting your retirement.

Like most financial decisions, it depends on your situation.

Important links: FHSA Home Buyer’s Plan Federal Budget Announcement