Friday, 26 May 2017

Weekly Column: Does Your Child Need an RESP?

Will your child need an RESP?

Look around the community and you’ll find plenty of self-made men and women who set out on their own at a young age, without much formal education, and worked hard to build a successful farm or business. With determination and perseverance, and by the sweat of their brow, these entrepreneurs strengthened the local economy and contributed to their communities at the same time. 

While that generation had very little handed to them, it’s hard to know if today’s young people will have the same shot at life without their grade 12 plus some manner of formal education.

No one can predict what their children will want to be when they grow up, but we can acknowledge that times have changed. As farmers learn to navigate world markets and business owners face competition on a global scale, it’s hard to imagine what the career of a child born today will look like.

Just another thing to save for

With payments coming out your ears and a long list of contingencies to save for, your child’s post-secondary education might seem a long way off and the least of your worries. While this may be true, ask any grandparent how quickly a child grows up and leaves the nest. Committing even a small amount, monthly, to an RESP will reap rewards for your child in the future.

A Registered Education Savings Plan (RESP) is a means to save for your child’s education, whether it be an apprenticeship program, trade school, college or university. The plan is most beneficial because the Federal Government provides 20 cents for every dollar that you contribute (up to $500 annually). Anyone can contribute to a child’s plan. Also, there are extra options available for low income families.

Learn about RESPs

This is by no means the definitive explanation of how RESPs work. For more information, visit cra-arc.gc.ca and speak to professionals. Understanding RESPs is imperative to getting the most for your money.

Basically, your monthly contribution is supplemented by the government and invested. The money grows tax-free until your child is ready to use it at an approved institution. When the money is paid out, it’s taxed at the child’s rate, not yours. Assuming the child has little to no income, the money can be received at little cost. The RESP needn’t be used immediately upon graduation from high school can remain open for over 30 years.

Consider what’s right for your family. For instance, will you want the RESP to be transferable between siblings? Would you like to have a say in how the money gets invested or would you prefer to have a professional handle the details? These are questions to ask, whether you invest through a financial institution or credit union, a certified financial planner, or through a group plan dealer.

Know that there is a difference between group RESPs and individual or family ones. Each group, or pooled, plan works differently and has its own rules. There are often more fees associated with group plans and you must commit to buying a set number of plan units. Should you miss a regularly scheduled payment you may be subject to fees and penalties or your plan may go into default and be terminated. In such a case, you may lose some or all of your investment. Do your research and speak to a number of parents and professionals before committing to a group RESP.

Sacrifice for an investment

The list of things to save for can get downright disheartening. Retirement, emergencies, vehicle and home repairs…it seems there is no money left in a budget for fun and incidental spending. But if you find yourself sacrificing in the here and now to give your children the toys and gadgets they want, consider, instead, investing some of that money into an RESP so that they can earn a good living and buy their own gadgets in the future.

We could debate whether giving kids too much for free is a help or a harm to their character. Perhaps raising trust fund babies and providing them with brand new vehicles and designer clothes doesn’t prepare them for the real world at all.

On the other hand, having no future plans or resources is equally as debilitating. Discuss your children’s aspirations with them as they grow. Can they compete and succeed without further education? What are the projected costs of what they need?

Balancing your support with their own hard work and contributions will not only teach them responsibility but will get them started in life without the burden of significant student debt. RESP contributions, no matter how small, add up over time and are a sensible way to encourage a child to invest in their skills. The sooner you start, the better.


Thursday, 11 May 2017

Weekly Column: And Baby Makes Three

And baby makes three

For most parents, preparing for your first child is a time of nervous wonder and excitement. All the “firsts,” from the first movements in the womb to your first delivery and baby’s first words and steps, make parenthood a fantastic and awe-inspiring experience.

Beyond all the emotional and hormonal changes happening in your life, you may also notice different pressures and judgements being assigned. Baby gear is a competitive industry and you will be marketed to non-stop as the pregnancy progresses.

From maternity clothes to stretchmark creams, there is no frontier left unexplored by advertisers. Prepare to be bombarded by all the “essential” things you must have to ensure that your child develops and thrives to its highest potential.

And that’s before you’ve even given birth.

Part of your responsibility as the adult caring for a newborn and preparing a child for life is to become a discerning consumer. This begins with being rational about what you actually need and what’s clever marketing. It’s easy to get caught up in the excitement and want to buy every new gadget out there. But, while babies can be expensive, remember they don’t have to be.

Newborns don’t require much and it needn’t all be top of the line merchandise. In fact, much of it can come your way in the form of hand-me-downs or garage sale finds.

Everyone has their own level of tolerance for used items. While some people might happily buy used cloth diapers on kijiji, someone else might shudder at the thought. As a parent, you must always do what you are comfortable with, but do give used baby gear a chance.

Remember that many things will be outgrown before they are used. Additionally, if you have a large extended family, you may be given more than you need without having to purchase much at all. Consider the wealth of experience that surrounds you. Ask relatives and friends that have children what the most essential things are—you might be surprised at the range of answers.

Safety first

Obviously, no amount of money saved is worth putting your child at risk. Car seats expire, so check the date on the bottom before accepting a used seat. Also, if you can’t be sure that the car seat has never been in an accident, don’t take it.

Having a top of the line seat won’t matter much if it isn’t installed properly. Before your due date, search for a car seat clinic near you through the SGI website or book an appointment with a car seat technician at https://www.sgi.sk.ca/online_services/locators/carseattech/index.html

Baby needs a safe place to sleep. While many parents now sleep with their children for the first few months and beyond, if you have a used crib or playpen make sure all of the pieces are intact and that there hasn’t been a safety recall on the product. As well, replace the mattress if it has seen a lot of wear. Too soft of a surface can smother baby.

Baby fashion

The days of the Winnie the Pooh diaper bag are long gone. Baby accessories are now a reflection of the parent’s style, and it can be difficult to keep perspective when you see your friends with all the latest trends. If keeping to a budget is important and necessary to you, comfort yourself that having the latest fashions does not reflect on the love you have for your child.

There are strollers out there that can attach to a car seat, collapse to fit into the trunk of a car, and go off-road like an all-terrain vehicle. Before making a purchase, consider what you will really be using the stroller for. If short walks to the park predominate, a $30 umbrella stroller might suffice. If jogging through the woods is more your style, the price will be higher. Knowing that, you may want to start watching used websites, garage sales and mommy Facebook pages to snag some great deals.
There are so many opinions about how to raise a child. From cloth or disposable diapers, to breast or formula feeding, to baby’s development, you will likely feel overwhelmed at times.

Keep your wits about you. Advertisers like to make us feel as though we are incapable of raising a child without their products. Those fancy nursing covers used to be called a blanket. Bottle sterilizers were once a pot of boiling water.

Don’t allow the pressure to spend more money detract from this spectacular, once in a lifetime experience.


Make sure your baby is safe and warm. Consult with other parents and respected elders and make decisions based on reality. What you save now will be spent later, believe me, when the hand-me-downs dry up and your child begins playing sports and attending birthday parties. 

Friday, 5 May 2017

Weekly Column: On Living Long, and Wide, and Deep

Living long, and wide, and deep

It’s a popular trend to think that, since we don’t know that we will live long, we should live wide—taking in every experience possible with the motto “you only live once,” or YOLO. But research reveals that simply experiencing thrills and pleasures doesn’t make us truly happy. Maybe it’s time to also experience living deeply…where our consideration for others and making small meaningful sacrifices enriches our experience and brings lasting contentment and gratification.

Two articles in the Atlantic, both by Olga Khazan, discuss why more and more people feel isolated and depressed in today’s society. In “How Loneliness Begets Loneliness” (April 6, 2017) the author states that Americans are “facing an epidemic of loneliness and isolation.” She cites research showing that a lack of social connection can cause significant health problems including depression and anxiety. The statistics in the US and Canada are roughly the same in stating that a quarter of us are lonely.

It is no wonder, then, that 1 in 10 Canadians will suffer a depressive episode in their lifetime. Once you are lonely and depressed it becomes harder to get out and see people, and the spiral deepens. 
In her second article, “Meaningful Activities Protect the Brain from Depression,” (April 21, 2014) Khazan discusses a study of 100 teenagers which found that kids are less vulnerable to depression if they are predisposed to selfless deeds.

Of course, depression is a real medical condition and it can’t be solved by saying “go do selfless deeds, you’ll feel better.” But it is heartening for parents to know that a little action on our part might insulate our children from depression and mental anxiety down the road.

Kahzan describes two kinds of joy. The first is the selfish kind of pleasure found in receiving a gift or purchasing something new. This happiness quickly fades. The second type of joy is the more gratifying feeling of contentment that comes from helping others, doing meaningful work, or “otherwise living a life well lived.” This sense of well-being lasts longer.

In other words, it’s better to give yourself and your kids experiences where you interact meaningfully with each other and the community, rather than worrying about giving them gadgets and vacations. What a relief.

It makes sense that if doing things for others protects young people from depression, the same should be true for the rest of us.

It also makes sense that many of the people that have been uncertain about their income and future over the past few years might have suffered anxiety, depression or isolation as a result. This is bad for your health and hard on your family. It can trickle down to the kids and affect their behaviour and confidence. We have a vested interest in learning to cope with and prevent isolation and depression wherever possible.

Rather than searching for ways to give yourself and your kids the thrills of a Disney vacation, teach them to appreciate the everyday wonders around them. Allow them to be bored and learn to entertain themselves. Teach them that feeling good doesn’t come with a price tag but rather that it takes effort to create a happy life.

Give them opportunities to volunteer and discuss how it made them feel. Show them how other people live and teach them gratitude. Let them feel the rush of bettering someone else’s situation.
Talk about the things that make them feel grateful and inspired, and do more of those. Have them identify what makes them feel unhappy—like seeing other people’s exciting Facebook statuses—and, periodically, have them unplug from it. Remind them that what they see online is not reality.

You only live once. 

The idea that you can only enjoy the high points, the visits to the mountains, the bungee jumping, the gatherings with friends, is an idea that detracts from the rich, everyday miracles of northern lights, a good book, an inspiring conversation.

When you feel stressed at trying to provide your family with an amazing life experience, take heart in knowing that teaching them to have morals, a positive attitude and a good work ethic doesn’t have to cost a dime. Armed with these attributes and a dedication to helping others, hopefully your children will know how to cope with what life throws at them.

It would be nice to provide your children with a worldly upbringing, full of adventure and spontaneity. Preparing for an adulthood that is often hard and mundane is equally as important, though.


Being a provider in an economic downturn is not for the faint of heart. Relax about giving your kids all the vacations and toys that they dream of. Teach them to appreciate life’s small pleasures so that they can recognize joy when they feel it. 

Monday, 1 May 2017

Weekly Column: The Payday Loan Trap

The payday loan trap

 Payday loans are high interest, short-term loans that can be obtained without a credit check. As the name implies, they are advertised as a way for someone with poor credit to obtain fast cash until they can pay it back on pay day. In order to receive a payday loan, you must be 18, have proof of income and a bank account.

Look on any payday loan company’s website and you’ll see how easy it is to get a loan—apply online! approved in 15 minutes! But, as they say, if something seems to good to be true, it probably is.

While a payday loan might get you out of a short-term situation like a car repair or the unexpected cost of a prescription, it’s not a long-term fix for not having enough money.

For example, if you need $300 to cover your bills until payday (typically a two-week loan), that loan will cost you just over $60. For someone who only uses a payday loan as an emergency measure, and doesn’t see emergencies pop up very often, one might think it is okay to pay that $60. But what if you’re paying that $60 in fees every few months?

Rather than looking at payday loans as a back-up plan, start looking at that $60 fee on a $300 loan as money you could save by finding another source of emergency money. If you are tempted to give payday loans a try, first ask yourself if you have exhausted all other alternatives.

Have you visited your bank to inquire about a personal loan, a line of credit or an overdraft? 

Although not free, these options are much more sensible than the over 400 per cent annual interest of most payday loans. Compare even the average credit card’s annual interest at nine to 30 per cent…if you are trying to avoid incurring debt then you can quickly see the dangers of using payday loans and missing a deadline.

No one should ever recommend using a credit card to get you from pay cheque to pay cheque. But if you are able to use it only for essentials and you can pay it off in full every month, you have “borrowed” for free. The thing is, even the lesser of two evils is still evil. How can you get your finances under control without resorting to the risk of a high interest credit card, if you can even get one, or the slippery slope of payday loans?

If you are thinking of taking out a payday loan to pay off your cable and cell phone bill, it is actually cheaper to pay late charges than take out the payday loan. And, if you are that strapped for cash, it’s time to downsize the cell bill and cut the extras like cable, satellite, even internet.

You are actually better off cashing in on your RRSPs or TFSAs, rather than getting tangled up in a spiral of out of control fees on payday loans that you aren’t paying back on time. But this will not help, either, unless you can save a small nest egg for the next time you need money to get you to pay day.

Obviously, the person that has already missed payments and has no savings or access to conventional means of credit is the one most enticed by the no strings appeal of a payday loan. But, should that person be unable to repay on time, she is also the most at risk of being ruined by the payday loan industry.

For the person already caught up in the spiral of payday loans, there is no alternative but to seek out help. Of course, the best advice is don’t let it come down to a payday loan in the first place.

Consider all of your vices and eliminate them along with any unnecessary spending. Get help if you have addictions. Sell things you no longer need and don’t use. Take in a roommate, couch surf if you must. Access the temporary assistance of a church or foodbank, or contact a shelter. Ask for extra hours, look for extra work, and do your best to set aside a bit of emergency money every payday. 

Although it may seem an inconsequential amount of money, that little bit of savings, accumulated, might be what tides you over until payday in an emergency.


Pay day loans exist because there is a need for small, easily accessible, short-term loans. People might’ve had bad experiences with banks or they might not understand what is available through more conventional methods. Before you take the sizable risk of a payday loan, explore every other alternative possible. If it’s too late, get advice at from professionals like Canada’s Credit Counselling Society at nomoredebts.org.