Right now, our two boys don’t have a lot of questions about finances. In fact, I have found that many of the children of clients that meet with us don’t know what questions to ask. I believe that this is not because they aren’t interested but rather because the topic can be so overwhelming.
I believe strongly in teaching financial responsibility to our children. I also believe that this often happens organically in our homes. Our children absorb financial values by watching our behaviours and listening to what we say. We also have the opportunity to be intentional in how we speak about money. Here are four things that happen in our family, mostly intentionally, in an effort to raise financially literate kids. I very much welcome comments or ideas that worked well (or are working well) in your family.
We try to include discussions about money in our regular conversations. When we talk about money, we have found it reduces anxiety around the topic. Here are some things we try to intentionally talk about:
Our kids watch us. Yep, they do! If we go out and buy something whenever we want, it doesn’t teach our children to be disciplined with their money. Recently, I wanted to upgrade our sound system. We talked about saving for it. Then we listed our current sound system for sale and sold some of it. We updated them on the status of the savings (whether they wanted to hear about it or not) and celebrated when I installed the system, including forcing them to listen to my 80’s music at a loud volume (whether they wanted to or not).
Our boys had saved some money over time from birthdays or work. We talked to them about investing their money and the benefit that investing could have. I think this is an important point – They needed to give the green light to invest their money. It had to be their decision.
We then opened an investment account and gave them updates on the status. For the first year, I made sure the portfolio was up through small additional investments of Dad. This gave them some initial confidence in investing. I made sure I communicated that the investment will go down at times and when it does…INVEST MORE! Nowadays, I don’t top up the accounts. They get the full experience of the investment market (the good and the bad) so that they learn to be comfortable with various markets.
I am a big believer in our kids having to invest something into what is important to them. That investment can be time, money, materials or thought. Right now, we are considering how to apply this principle in funding post-secondary education as our eldest moves into this new world. We feel that it is important for our boys to have a level of ownership and financial responsibility in their post-secondary choices be that school, work or travel.
Connect Wealth is an independent financial planning firm that offers holistic advice to clients based on their current goals and future aspirations. We use well-established workflows and cutting edge technology to maximize planning efficiencies while simplifying the process for clients. Learn how you can maximize your financial opportunities at www.connectwealth.ca
De-Bunking Your Budgeting Barriers. If you don’t have a million dollars in your account right now, it is likely that you hate budgeting. It’s even more likely that you’re annoyed, even enraged, the moment the topic arises. It’s an interesting phenomenon, we all want to be financially successful, yet this first step is often the […]
The income sprinkling rules outlined in July 2017 held strong and the rules pertaining to passive investment income weren’t as harsh as predicted. Specifically, Budget 2018 has implemented two simple measures as it pertains to passive investment income:
Budget 2018 proposed to provide for an alternative reduction to the small business tax rate where a Canadian Controlled Private Corporation (CCPC) and its associated corporations have investment income in the year exceeding $50,000. The amount of the reduction is $5 for every $1 of investment income exceeding $50,000. In effect, the small business tax rate reduction disappears if passive income in a related business exceeds $150,000 in a fiscal year.
Currently, private corporations are entitled to claim a tax refund equal to $38.33 for every $100 of taxable dividend Where the corporation has a combination of regular business income (taxed at the regular business rate which does not include a refundable tax element) and investment income (taxed at the corporate investment rate which includes a refundable tax component), planning was commonly implemented to have the business income distributed by way of eligible dividend (taxed at a lower rate) while still being able to claim the tax refund.Budget 2018 proposes to modify the refundable tax regime to eliminate this planning and ensure that, in general, the private corporation is entitled to a dividend refund only when non-eligible dividends are paid.
There are ways to reduce the impact the business tax changes outlined within Budget 2018 through other financial strategies. These strategies may include Individual Pension Plans, Cash Value Insurance, as well as the strategic use of prescribed loans. We highly recommend contacting your financial advisor to determine which of these strategies will best suit your financial situation.
____________
If you have any questions on this taxes, or the different kind of impact it could have on you, please, do not hesitate to contact us!
Connect Wealth is an independent financial planning firm that offers holistic advice to clients based on their current goals and future aspirations. We use well-established workflows and cutting edge technology to maximize financial efficiencies while simplifying the process for clients. Learn how you can maximize your financial opportunities at connectwealthp.wpengine.com
Volatility Doesn’t Have to be a Bad Word