Starting Out as a Couple – Planning Your Shared Financial Future

This is an exciting life milestone, when you start making long term plans as a couple – shared goals, shared dreams.  It’s the perfect time to reach out to a financial planner.

These are some of the decisions a planner can help you with:

 

  • Deciding on shared financial goals:
    It’s important that you and your partner agree on what your current and future goals are. Once you’ve identified your goals, a financial plan can help you achieve them.

 

  • Reaching your shared goals:
    Consider what kind of investments you each want to make—aggressive growth or conservative funds? It’s okay if you’re both different – and it can be beneficial to invest accordingly. Investing your individual assets with different time horizons and risk tolerances can provide stability in times of market downturn, and better growth potential in times of high growth.

 

  • Paying off debt:
    It’s common for one spouse to enter a marriage with more debt than the other. It’s important to tackle these decisions together and develop a strategy to best pay down debt. The longer you wait, the more you’ll pay in interest.

 

  • Buying your first home:
    The purchase of your first home is a large financial commitment. Under the Home Buyer’s Plan, the government allows you and your partner to each withdraw up to $35,000 tax-free from your RRSP to make a down payment on your first home.

 

  • Buying a dental practice:
    Do your homework before buying a prospective practice and get an independent appraisal. Make sure you’re incorporated so you can use corporate dollars to pay back the bank for the loan. These dollars are taxed at a lower rate than personally taxed dollars. Being incorporated will also allow you to take advantage of the lifetime capital gains exemption when you eventually sell the practice.

 

  • Starting a family:
    If you’re expecting a child, you may want to open a Registered Education Savings Plan (RESP). With a RESP, you are eligible for the Canada Education Savings Grant (CESG) – meaning the government matches 20% of the first $2,500 contributed annually to a RESP (totaling up to $500 per beneficiary per year). The lifetime CESG maximum per beneficiary is $7,200, up to the age of 18.

 

  • Planning for retirement:
    For a young couple, retirement may seem far off, but it’s important to start planning early. Consider individual RRSPs, as well as a spousal RRSP. In a spousal RRSP, the plan is registered in your spouse’s name and controlled by them, but you claim the deduction for any contributions. It allows for income balancing if one spouse makes more than the other. The 2019 limit for RRSP contributions is 18% of your previous year’s income or $26,500 (whichever amount is lesser). You can also take advantage of any unused contribution room from previous years.

 

  • Protecting what matters most:
    Life insurance is important at all stages of your life and career to protect yourself and your family. You should increase coverage if you want your spouse and/or children to maintain their lifestyle(s) in the event of your unexpected passing. Disability insurance is also required to maintain your lifestyle if you’re unable to practise due to an injury or illness.

 

  • Creating a will:
    A will becomes especially important when you have a family and once you have accumulated assets (such as a practice). You’ll want to make sure that you’ve appointed guardians for young children in the tragic event that you and your spouse pass at the same time. We suggest working with a lawyer on your will. Remember – you can always change your will and you should expect that there will be circumstances down the road where it will be necessary to do so.

 

As you begin your life together, your goals will change over time, and that’s to be expected. Getting the right advice now and throughout your career will change your life. Your financial plan starts with a simple conversation – and there’s no cost to set up or maintain. Call one of our financial planners* today at 1.800.561.9401 to start out right.

 

*Financial planning services are provided by licensed advisors at CDSPI Advisory Services Inc.  Restrictions to advisory services may apply in certain jurisdictions.

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