So you just got married and are starting to build a life together with your partner. Here are 6 Essential Financial Tips that will set you up for success for years to come.
- Change the Beneficiaries on your Insurance Policies, RRSPs, TFSAs, Company Pension and Benefits Plan
At the end of the day if you were to pass away, you would likely want your assets to transition smoothly to your surviving spouse. Before you were married you likely put your parents or a sibling as beneficiaries to your assets. Now that you are married change them to your spouse. The Income Tax Act allows for spousal rollovers for registered plans, which means your surviving spouse can assume your assets, avoiding tax and probate – which you would be subject to if you had anyone other than your spouse as a beneficiary.
- Create your Will and Power of Attorneys
Let’s say you get seriously injured or ill. The Power of Attorney will give your spouse or another person you elect, the power to sign documents and make decisions on your behalf, if you become incapacitated to do so.
Your Will on the hand will indicate how you would like your assets to be distributed on your death. It also provides for you to indicate how you would like your assets to be distributed in various scenarios, for example if you and your spouse happen to pass away together. Without a Will, a court appointed Trustee will step in to administer your Estate and will determine how your assets are distributed. Your surviving beneficiaries could step in to execute your estate but they would first have to apply to the courts get appointed to executor of the estate. Save them the hassle and get one done.
- Buy Life Insurance
Your company life insurance isn’t nearly close enough to be adequate coverage. Life Insurance will be paid to your beneficiary on your passing. It will help your surviving beneficiaries with paying for taxes, debts, funeral expenses and cover on-going living expenses. Life Insurance is cheap when you are young, buy it before you need it and can’t get it.
- Goal set and keep track of your expenditures
Managing money with your partner can be a challenge, especially if you both have different spending habits. Sit down and set short and long term goals. i.e. Buying a house. Create a budget and track your expenditures. Identify areas where you can cut costs and increase your savings.
- Invest when you are young
By investing when you are young, your money will have more time to compound and grow, helping you reach your goals faster. Be sure to take advantage of government registered plans such RRSP’s and TFSA’s to help you meet your goals
- Work with a Financial Advisor
Financial Advisors will assist you on the early stage planning of your new life together. Not only will they provide you more in depth advice for each of the earlier points, but will also be able structure your financial situation, to ensure you are taking advantage of all opportunities available to you. They will also guide you to making smart decisions which will yield results for years to come.