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Financial Planning for Women at the Different Stages of Life
Laura Chanin • Jun 15, 2023
Financial planning for women is important no matter of where you are in life and your financial situation. Whether you are single, married, changing careers, starting a family, getting divorced, or caring for elderly parents, there are key financial steps you should be taking to ensure you meet your financial goals.
When it comes to financial planning for women, it can get overwhelming. However, with these financial steps, you can create a plan to ensure you are financially prepared for whatever life stage you are at!
Financial planning for women if you are employed
Whether you are the female breadwinner or working part-time, these are key steps to include in your plan.
- Take advantage of your employer’s RRSP matching plan
- If your employer offers a retirement savings plan with a match, you should be taking advantage of it.
- You can do this by contributing enough to at least get the full match your employer is offering. It's essentially free money.
- If your employer's plan does not have a match, contribute anyway with a goal to eventually max out your contributions.
- No employer-sponsored retirement plan or self-employed?
- Set up your own RRSP or TFSA through a brokerage and make your retirement contributions that way. The limits are lower, but it's a great start to your long-term retirement savings.
- Also, you can start looking into non-retirement investing and repurpose them as investments towards your retirement. One of the most important steps of financial planning for women is saving for retirement.
- Bulk up your emergency fund.
- It's important to set up your emergency fund. This is one of the most important things to do when it comes to financial planning for women. Your first goal should be getting one month’s rent or mortgage payment saved. Then work towards saving 3 - 6 months of your basic living expenses.
- This would be to cover things like food, transportation, and housing. This way, you can ensure you don't have to use debt in the event of an unexpected situation. Major expenses such as fixing your car, home repairs, or losing your job can wreak havoc on your finances if you don't prepare for them!
- Pay yourself first.
- Another important part of financial planning for women is to learn to pay yourself first! It is a great way to save and it's so easy to let money slip through our fingers. Set up automatic transfers to your savings accounts to ensure you are paying yourself before spending money. Even setting up a transfer of $25 a week adds up to $1,300 in just a year! You can also contact your employer or bank to see if you can have your paycheck automatically split into different accounts.
- Pay off high-interest debt.
- Start paying off any debt you might have especially high-interest credit card debt. If you have high-interest debt, get your emergency fund to $1,000 and then focus on getting rid of that debt asap. High-interest debt is costly, and the longer you keep it, the more you pay.
- Get properly insured.
- Review your insurance options to make sure you have the right ones in place. Different types of insurance policies will include disability, life, health, auto, home, tenant, etc.
- Also, keep your beneficiaries up to date on all your accounts.
- Plan for your children.
- If you have children, you can start saving for their university education needs with a RESP and take advantage of government grants. Start building their shorter-term needs into your budgeting and savings plans as well.
Financial planning for women to take if you are in a serious relationship or marriage
Getting married and joining your finances together means working as a team. Here are some steps you can take to plan your finances as a couple.
- Talk about finances as a couple
- It's important that you are communicating your life and financial goals with your partner.
- Learning to tackle your finances as a team is an essential part of financial planning for women. Talk about what you'd like to accomplish together.
- Set time aside once a month to go over your progress.
- Review your budget as a couple, including your debt repayment, savings, and investment plans.
- Update your beneficiaries on your accounts and insurance.
- Remember to include your significant others, i.e., your spouse and children.
Financial planning for women to take when switching jobs
Have you recently changed jobs? Be sure to follow these steps to be sure your plan is on track!
- Transfer your retirement accounts.
- If you've found a new job, don't forget to move your retirement savings plan away from your old employer. This is because many employers charge maintenance fees for retirement accounts that belong to former employees. Consider rolling your retirement savings into your new employer's plan, put it into a LIRA through a brokerage firm. This will give you more investment options.
- Start investing in your new employer's retirement savings plan if they offer one.
- You don't want to take any unnecessary breaks away from your long-term savings plans.
- Update your insurance policies.
- Review your insurance needs and options and adjust accordingly, i.e., disability, life, health, auto, home, tenant, etc. For instance, if you are recently married add your spouse to your new policy.
Financial planning for women that are expecting a baby
Congratulations on starting a family! So, how do you plan your finances for a baby? Use these key steps to properly prepare your plan for your new addition.
- Update your budget to include your baby's expenses
- While having children is a blessing, they also come with their own expenses. You want to be sure that you include your child's expenses in your monthly budget. So, be sure to review and update your budget for when the baby arrives.
- Know the costs of having a baby.
- Consider what your costs of having a new baby will be initially. For instance, the cost of formula, diapers, clothes, childcare, etc., and plan accordingly by saving for the baby's needs before their arrival. Of course, you can learn ways to cut costs and save on items by being a thrifty shopper! But knowing the costs of having children is a vital part of financial planning for women.
- Update your health and life insurance to include your child so they are adequately covered.
- Having the proper insurance can cut costs on health care and take care of your children if something happens to you. Adjust your savings plans to include your baby
- Bulk up your emergency fund to include your child's basic needs for 3 to 6 months as well.
- Also, start putting money aside for your child's future expenses and university education.
- Create an estate plan—it's an important part of financial planning for women
- Having an estate plan is important, but even more when you have children. You want to ensure that everything is in place by choosing a guardian for your child and ensuring your assets are distributed as you wish.
Financial planning for women after a divorce or loss of a spouse
Unfortunately, divorces happen, but it's important to get back on your feet as quickly as possible when it comes to your finances.
- Update your financial accounts.
- Be sure to close all joint accounts and open new accounts in your own name. Update your beneficiaries on all your accounts, including your insurance and retirement savings accounts.
- Make a new financial plan for your personal finances.
- Learn how to budget on your own and review your finances every month at the very minimum. You also want to focus on rebuilding and take ownership of your finances in their entirety. For instance, budgeting, bulking up your emergency fund, tax planning, retirement savings, etc.
- It's also a good idea to be aware of and review your CPP and OAS benefits.
- Finally, it's important to understand the tax implications of inheriting any investment or retirement accounts due to the loss of a spouse.
Financial planning for women to take when caring for elderly
Your parents are important, so of course, you should include them in your plan.
- Determine the cost of caring for your aging parents and include it in your financial picture to prepare for the expenses you must pay.
- For instance, out-of-pocket costs to cover prescriptions, gas to doctors’ appointments, food, homecare, long term care and more.
- Review their plan and determine how to fill in the gaps.
- Determine what financial and health care options they have in place for themselves. This includes any government benefits, and then you can determine what gaps need to be filled.
- Update your tax filing status to include your parents as dependents
- Update your dependents on your insurance documentation and when you file your taxes.
- This can help you get tax credits to aid in caring for your elderly parents.
Financial planning for women is key to your financial success.
Financial planning for women is essential for success, no matter what stage of life you are at.
Creating a plan and determining financial goals will help you take the steps needed to prepare you for emergencies and save for a comfortable retirement.
This commentary is compliments of Manulife Investments - 2024 starts with a bang! Global markets stormed out of the gate in the first three months of 2024. The combination of a resilient consumer base and lower inflation levels created a positive backdrop for investors. The S&P 500 Index, the S&P/TSX Composite Index, and the MSCI World Index were up 10.2%, 5.8% and 8.4%, respectively, in Q1. The euphoria, however, didn't extend to the fixed-income space—Canadian and U.S. bonds (measured by the FTSE Canada Universe Bond Index and Bloomberg U.S. Aggregate Bond Index) were down 1.2% and 0.8%. In our view, equities are priced for the best case scenario, with markets expecting to avoid a recession, on the belief that we’ll see a gradual decline in inflation, and that central banks will soon start cutting interest rates. In such an environment, any headline surprises that state otherwise may create potentially choppy markets in the near term. How do stocks and bonds perform when the government begins to cut rates? Investors have been waiting in anticipation for the U.S. Federal Reserve (Fed) to start cutting interest rates. They believe that lower interest rates will help drive the markets even higher. That said, history suggests things may not be quite as simple. We looked at the previous nine easing cycles, dating back to 1970. In the first chart, we’ve indicated (in red) periods that we believe to mark the beginning of an easing cycle. These are easily identifiable in recent easing cycles; however, those in the early 1980s aren’t and require subjective interpretation.
Calling all high achievers! Maybe fun isn’t the first place your head goes to when thinking of high performance. We’re talking to you- the hard worker, the busy parent, the dedicated athlete, the responsible sibling. We’ve got compelling, scientific evidence proving how important it is for you to incorporate fun and play into your life! You’ll also find some practical suggestions for incorporating more fun into your daily routine. Research indicates that happy individuals tend to be healthier physically, have lower inflammatory markers, and may even have improved productivity at work. Happiness has also been linked to better mitochondrial health and is a key factor in sustainable high performance. A recent study on twins suggests that 35% to 50% of your happiness is genetically predetermined. That means there's still a significant portion of happiness that's within our control. Interestingly, humans typically aren’t the best at knowing exactly what makes them happy. Dr. Gillian Mandich, who studies the science of happiness, says that it’s not the big shiny moments that matter, but rather the small moments over time that determine how happy we are. It is recommended to dedicate at least two hours per day to fun. Engaging in playful activities, such as games or sports not only increases happiness, but it’s also important for your brain. A study found that juvenile rats that engaged in “rough and tumble” play had higher activation in certain areas of the brain compared with control rats. They also had greater brain-derived neurotrophic factor (BDNF) gene expression, suggesting that play is important for neurodevelopment. Humor is another way to sprinkle small bursts of joy throughout the day. Laugh therapy is currently being used to treat depression and anxiety, as well as stress-related disease. Research shows that laughter actually supresses cortisol, and boosts dopamine and serotonin hormone levels. Playfulness isn't just beneficial for personal wellbeing; it can also have positive effects in professional and practical settings. Play has been shown to reduce stress, increase productivity and job satisfaction, and improve overall work quality and team cohesion. Play can also serve as an effective coping mechanism for stress, allowing you to mobilize cognitive resources and build resilience in the face of challenges. Contrary to the belief that play is only for children, research demonstrates its importance for health and wellbeing across all age groups, adults being the most prone to high stress levels. Remember that striving for constant happiness can be counterproductive. Happiness is a result, not a pursuit. Accepting the ups and downs of life and focusing on creating joyful moments, when possible, can lead to a more sustainable sense of wellbeing. In summary, incorporating more fun, play, and happiness into our lives can lead to numerous benefits, including improved physical health, enhanced productivity, and greater overall wellbeing. It's essential to prioritize these elements and recognize their significance for both personal and professional fulfillment. If you’ve been all work, no play lately- this is your sign to get out there and have some FUN! Source: https://drgregwells.com/blog/your-brain-on-play-the-science-of-how-fun-can-fuel-wellbeing References: Dfarhud, D., M. Malmir, and M. Khanahmadi. “Happiness & health: The biological factors—systematic review article.” Iranian Journal of Public Health 43, no. 11 (November 2014): 1468–1477. Panagi, L., L. Poole, R.A. Hackett, and A. Steptoe. “Happiness and inflammatory responses to acute stress in people with type 2 diabetes.” Annals of Behavioral Medicine 53, no. 4 (March 20, 2019): 309–320. Salas-Vallina, A., M. Pozo-Hidalgo, and P.R. Gil-Monte. “Are happy workers more productive? The mediating role of service-skill use.” Frontiers in Psychology 11 (March 27, 2020): 456. Picard, M., A.A. Prather, E. Puterman, A. Cuillerier, M. Coccia, K. Aschbacher, Y. Burelle, and E.S. Epel. “A mitochondrial health index sensitive to mood and caregiving stress.” Biological Psychiatry 84, no. 1 (July 1, 2018): 9–17. Chick, G., C. Yarnal, and A. Purrington. “Play and mate preference: Testing the signal theory of adult playfulness.” American Journal of Play 4, no. 4 (2012): 407–440. Wallace, J. “Why it’s good for grown-ups to go play.” Health and Sci- ence. Washington Post (May 20, 2017). https://www.washingtonpost . com/national/health-science/why-its-good-for-grown-ups-to-go- play/2017/05/19/99810292-fd1f-11e6-8ebe-6e0dbe4f2bca_story.html. Magnuson, C.D., and L.A. Barnett. “The playful advantage: How playfulness enhances coping with stress.” Leisure Sciences 35, no. 2 (2013): 129–144. Neale, D. “A golden age of play for adults.” British Psychological Society (March 25, 2020). https://www.bps.org.uk/psychologist/gold- en-age-play-adults. Edwards, D. “Play and the feel good hormones.” Primal Play (June 23, 2022 ). https://www.primalplay.com/blog/play-and-the-feel-good- hormones. Guitard, P., F. Ferland, and É. Dutil. “Toward a better understand- ing of playfulness in adults.” OTJR: Occupation, Participation and Health 25, no. 1 (January 1, 2005): 9–22.
The Canadian dollar's recent decline to its lowest level in almost two years against the US dollar is primarily attributed to several factors, including worsening economic outlook, rising inflation concerns, and diverging monetary policies between the US Federal Reserve and the Bank of Canada. Inflation Concerns: The persistently high inflation in the United States has raised expectations of aggressive interest rate hikes by the Federal Reserve. This anticipation of higher interest rates in the US has led to a flight to safety, with investors favoring the US dollar over other currencies, including the Canadian dollar. Diverging Monetary Policies: The Federal Reserve is expected to raise its benchmark interest rate significantly, possibly reaching as high as 4 or 5 percent, whereas the Bank of Canada may not be able to match such aggressive rate hikes due to concerns about the impact on the housing market and consumer spending. This disparity in monetary policy paths between the two central banks is widening the gap between the US dollar and the Canadian dollar. Commodity Prices: The Canadian dollar is also influenced by commodity prices, particularly oil, as Canada is a major oil exporter. The recent decline in oil prices, coupled with softness in other commodity prices, has further weighed on the Canadian dollar's performance. Market Sentiment: Market sentiment plays a crucial role in currency movements. The prevailing perception among investors is that the US dollar is a safer haven during times of uncertainty, leading to increased demand for the US dollar and consequent weakness in the Canadian dollar. Expectations for Future Performance: Some analysts predict further depreciation of the Canadian dollar against the US dollar in the near term, with projections of the loonie falling below 73 cents by the end of the year. This outlook reflects concerns about the Canadian economy's relative weakness compared to the US economy. Overall, the combination of inflation worries, diverging monetary policies, commodity price movements, and market sentiment has contributed to the recent depreciation of the Canadian dollar against the US dollar, with implications for Canada's economic outlook and trade competitiveness. Source: https://www.cbc.ca/news/business/canadian-dollar-1.6585291
If you’re delving into the intricacies of managing retirement savings, particularly the transition from RRSPs to RRIFs, read on. This transition is crucial to understand, especially considering the tax implications and mandatory withdrawal requirements associated with RRIFs. Missing the deadline to convert your RRSP to a RRIF can have significant tax consequences, as the entire value of your RRSP becomes taxable income, potentially pushing you into a higher tax bracket. This underscores the importance of staying vigilant about conversion deadlines. You can convert anytime but the last year to convert is the year you turn 71. While RRSPs and RRIFs share similarities, such as holding the same investments and being fully taxable upon withdrawal, there are key differences to note, such as the lack of contribution capability in RRIFs and the mandated minimum withdrawals. Managing RRIF withdrawals is a strategic endeavor, involving considerations like tax implications, OAS claw backs, and income splitting with a spouse. Additionally, converting a RRIF back to an RRSP is possible under certain circumstances, offering flexibility in retirement planning. Understanding the mechanics of RRIF conversion, the timing of withdrawals, and the options for structuring payments is essential for optimizing retirement income and minimizing tax liabilities. Navigating the transition from RRSPs to RRIFs requires careful planning and consideration of various factors to ensure financial stability and tax efficiency in retirement. Reach out to us anytime for more information or clarity! Source: How to cope with the RRSP-to-RRIF deadline in your early 70s - MoneySense How to cope with the RRSP-to-RRIF deadline in your early 70s - MoneySense
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