by Divora Mehari | Dec 6, 2023 | Saving
SAVING SMART FOR ALL STAGES OF LIFE
Wednesday, December 6, 2023
There are plenty of major milestones in life that we can look forward to. Whether it’s graduating from post-secondary education, buying a house, getting married or retiring after years of a fulfilling career, we all need to plan accordingly. All of these major steps in life often require some financial planning to ensure you can effectively fund your dreams and maintain your financial health.
If you’re ever wondering when or how you should start saving, YNCU is here to lend a helping hand and give you a tailored strategy to achieve your goals.
We sat down with YNCU’s Sherri Atkinson — a Member Service Representative at the Trunk Road, Sault Ste. Marie branch, to learn how we can master saving smart for all stages of life.
1. Saving for post-secondary education
Going to post-secondary school, whether it’s a 6-month or 6-year program, can be a significant financial commitment. If you’re saving for yourself to go to school, some savings programs are smarter than others and can help take some of the burden off your shoulders when it comes time to pay your tuition or buy books.
Saving over a longer period of time is always beneficial and Sherri recommends setting up an automatic transfer into a savings account as soon as possible. You can set transfers to take place weekly, bi-weekly, monthly or quarterly — whatever fits your budget and lifestyle. Automatic transfers also take the brainpower out of saving and ensure you never forget to set some money aside.
Working with our advisors, we can take the pressure off of students when it comes to paying for school, leaving you time and energy to focus on your studies instead.
2. Saving after graduation
Once you’ve graduated and landed your first job, the newfound freedom and income can feel a little overwhelming. You likely have some student debt, but are looking to the future and are ready to start saving again. So, where do you start?
Sherri recommends you start to pay your loans down as soon as possible and set up a realistic payback plan that fits within your budget.
If you have extra money to set aside once each bill and loan payment has been made, then it’s time to focus on jump starting your emergency savings. By opening up a Tax Free Savings Account (TFSA), you can set money aside and earn interest tax free.
Finally, if you feel you have additional funds to set aside for future savings, it’s never too early to set up a Registered Retirement Savings Plan (RRSP) — a tax sheltered savings account specifically for retirement. It can feel overwhelming to save for so many things right out of school, so only begin to contribute to savings if you have the means and room in your budget to do so.
For additional support or information, you can always reach out to your YNCU advisor to see if you’re ready to jumpstart your savings as a new grad.
3. Saving up before you have kids
Having children is not only a massive time commitment (think 18 years … and then some!) but it is also a significant financial commitment.
When it’s time to bring a new member of the family into the world, Sherri suggests you start saving up for a few different expenses:
- Daycare
- Day-to-day supplies
- Clothing and toys
- Post-secondary education
Even before your baby is born, you can apply to open a Registered Education Savings Plan (RESP) — a tax sheltered savings account specifically for the expenses associated with post-secondary education. Setting up small contributions to start can make a world of a difference. By the time your child is ready to go to school, their RESP can help partially or fully cover their major expenses.
Finally, if you qualify for the monthly Ontario Child Benefit and have room in your budget, you can use this money to invest or save for your child’s future, meaning you are taking less money out of your income to save each month.
4. Saving for retirement
The first step to saving effectively for retirement is knowing how much money you will need to save by the time you plan to retire. Using YNCU’s Retirement Planner calculator, you can start to add your retirement savings into your monthly budget, which will set you up for success years down the line.
The earlier you start and the more you can save each year, the better. However, every little bit counts and will make a big difference in your retirement plan in the future.
Sherri recommends setting up automatic transfers into an RRSP and/or TFSA, so you won’t even notice the money has left your chequing account. Being mindful of your spending and cutting down on extravagant purchases can also make a difference in the future. For example, frequently purchasing a new vehicle, gambling your money or giving money away too often to charities, families, or friends are all major reasons why individuals report they are unable to save for retirement.
Saving smart doesn’t have to be complicated and at YNCU, our goal is to make it as simple and straightforward as possible. To get a head start on your retirement savings, reach out to a YNCU advisor to build a comprehensive financial plan and prepare yourself for retirement as soon as you can.
To get help on saving smart — no matter what stage of life you are in or are planning ahead for — find your local YNCU branch and reach out to an advisor to take control of your financial future, today.
by Divora Mehari | Oct 27, 2023 | Borrowing
How To Improve Your Credit Score
Friday, October 27, 2023
Are you an adult living in Canada who wants to improve your credit score? You’re not alone! A good credit score is essential for financial stability and can open doors to opportunities like getting approved for loans or securing housing. Improving your credit score is a gradual process that requires consistency and responsible credit management. While quick fixes may not be possible, diligent efforts over time will yield positive results. In this blog post, we’ll provide you with valuable tips and insights on how to improve your credit in Canada. So, let’s dive in!
1. Understand Your Current Credit Situation
The first step towards improving your credit score is understanding where you stand. Obtain a copy of your credit report from one of the two major credit bureaus in Canada – Equifax or TransUnion. Review the report thoroughly to identify any errors or discrepancies. If you spot any mistakes, contact the bureau to have them rectified. Knowing your current credit situation will help you create a roadmap for improvement. Hiring a credit repair company is not necessary to improve your credit score. You can take charge of the process yourself by following the steps mentioned in this blog post. However, if you’re overwhelmed or need expert guidance, consulting a reputable credit counselor may be beneficial.
2. Pay Your Bills on Time
One of the most critical factors that affect your credit score is your payment history. Late payments can have a significant negative impact on your creditworthiness. Set up reminders or automatic payments to ensure you never miss a due date. Paying your bills on time establishes a positive payment history and demonstrates your ability to manage credit responsibly.
3. Reduce Your Debt
Another key aspect of improving your credit score is reducing your overall debt. Start by paying off high-interest debt, such as credit card balances, as quickly as possible. Make a budget, cut unnecessary expenses, and allocate more funds towards reducing your debt. By lowering your debt-to-income ratio, you can positively impact your credit score and demonstrate financial responsibility.
4. Avoid Opening Multiple Credit Accounts
While it may be tempting to open multiple credit accounts, doing so can harm your credit score. Each time you apply for new credit, it creates a hard inquiry (when a lender or company requests to review your credit report as part of the loan application process) that stays on your credit report for up to two years. Multiple hard inquiries within a short period can raise red flags to lenders. Instead, focus on managing your existing credit accounts wisely and avoid unnecessary new applications.
5. Keep Your Credit Card Balances Low
Different types of debts are weighted differently when calculating your credit score. High-interest debts, such as credit card balances, generally have a more significant impact on your creditworthiness. Maintaining low credit card balances is crucial for improving your credit score. Aim to keep your credit utilization ratio below 30%. For example, if your total credit limit is $10,000, try to consistently use less than $3,000. Paying off your balances in full each month shows responsible credit management and can help boost your creditworthiness. If you use a lot of your available credit, lenders see you as a greater risk. This is true even if you pay your balance in full by the due date.
6. Diversifying your credit
Your score may be lower if you only have one type of credit product, such as a credit card. It’s better to have a mix of different types of credit, such as:
- a credit card
- a car loan
- a line of credit
A mix of credit products may improve your credit score. Make sure you’re able to pay back any money you borrow. Otherwise, you might end up hurting your score by taking on too much debt.
Improving your credit score in Canada may take time and effort, but it’s well worth it. By following these tips, you can take control of your financial future and set yourself up for success. Remember to stay consistent with your efforts, make timely payments, reduce your debt, and manage your credit wisely. With patience and dedication, you can achieve your goal of an improved credit score.
by Divora Mehari | Sep 25, 2023 | Financial Literacy
Understanding the Financial Literacy Gap with Indigenous Communities
Monday September 25, 2023
Financial literacy (understanding concepts such as budgeting, saving, investing, and understanding credit) is an essential skill that empowers individuals to make informed and responsible financial decisions. Unfortunately, not every Canadian has equal access to financial literacy resources and support, particularly among minority and BIPOC (Black, Indigenous, and People of Color) communities. This gap in knowledge can have long-term implications on their financial well-being and overall quality of life. Let’s discuss the financial literacy gap and its impact on these communities, as well as ways to address this issue.
Minority and BIPOC communities in Canada often face unique challenges when it comes to financial literacy. For many individuals in these groups, access to quality financial education is hard to come by, which hinders their ability to navigate financial systems effectively, limiting their opportunities for economic advancement and financial well-being. Moreover, cultural and language barriers can further contribute to the disparity in financial literacy levels.
To bridge this gap, it is crucial to develop tailored financial literacy programs that cater to the specific needs and challenges faced by minority and BIPOC communities. These programs should be culturally sensitive and designed with input from community members themselves. By providing accessible resources and educational initiatives, we can empower individuals within these communities to build a solid foundation of financial knowledge.
Lack of Financial Literacy for Indigenous Communities Throughout Canada
There is an estimated rate of 15% of individuals without bank accounts in First Nations communities, which was derived from 4.2% of low net-worth Aboriginal respondents to the 2009 Canadian Financial Capability Survey. This percentage was double that of non-Indigenous respondents (Prosper, Canada, 2015).
Historically, systemic inequalities, marginalization, and limited access to resources have hindered the economic advancement of Indigenous communities. As a result, many individuals lack the necessary financial skills and knowledge to manage their finances effectively.
Indigenous people have barriers, unique to them, that impede financial wellness which is influenced by: societal and institutional structures, policies and practices; personal financial literacy and behaviour; and cultural beliefs and values. Historically, trading, bartering, and communal distributions of wealth were central to the allocation of food, shelter, clothing, and tools. These systems were disrupted by colonization and assimilation policies and practices, including Canada’s residential school system. Depending on their geographic location, some communities may also have limited or no local access at all to safe and affordable financial services.
How We Can Make Financial Literacy More Accessible?
To bridge this gap and ensure that financial literacy becomes more accessible to all Canadians, we need to take proactive measures. By promoting education and awareness, we can empower individuals to make sound financial choices. Tailored financial literacy programs ensure that individuals from these communities receive relevant and culturally sensitive education, giving them the confidence to make informed and responsible financial decisions.
One approach is to integrate financial literacy into school curriculums from an early age. By teaching children the importance of money management, budgeting, and saving, we can equip them with essential skills for their future. Providing financial literacy workshops and resources in schools and community centers can also contribute to raising awareness.
Additionally, utilizing digital platforms and technology can play a crucial role in making financial literacy more accessible. Creating user-friendly apps and online tools that simplify complex financial concepts can help individuals better understand and manage their finances. Offering online courses or webinars can also enable people to learn at their own pace, regardless of their geographical location.
Collaboration with Indigenous communities, financial institutions and other organizations is vital in developing targeted financial literacy. These initiatives should incorporate traditional teachings and values while equipping individuals with the tools they need to succeed in modern financial systems.
Understanding retirement planning is also critical to individuals’ financial wellness later in their lives, particularly if they only have limited financial resources. The financial and legal implications of living on- or off-reserve can be very complicated for First Nations peoples, while many people in general are challenged by the increasing complexity of financial products and services, as well as pension and retirement-related government tax and benefit programs. Financial education can help individuals understand how government benefits, employer-sponsored pensions, employment income, investments, and personal savings all fit into one’s overall retirement income.
Building community capacity to deliver tailored financial information, education, and one-on-one support systems is critical to promoting financial wellness within Indigenous communities. This is the only way to ensure that key aspects of cultures and worldviews (such as non-monetary economies, values, customs, and languages) are incorporated to make financial literacy relevant and engaging for these diverse communities. Indigenous Elders and role models can also help to support efforts to enhance community financial information and decision-making, including for Indigenous youth. Developing contextualized curricula that place Indigenous experiences, cultures and values at the core of financial education is essential to any effort aimed at addressing financial wellness barriers faced by these communities.
We encourage you to share some of these financial literacy tools and resources currently available to support financial literacy education for First Nations, Inuit, and Métis peoples:
- AFOA Canada’s Aboriginal Financial Literacy Needs Assessment and Framework – a comprehensive in-depth overview of Aboriginal financial literacy needs and a guide for addressing these. Visit https://afoa.ca/education/financial-wellness/
- The British Columbia Association of Aboriginal Friendship Centres’ Aboriginal Financial Literacy: Journey to Empowerment is a 250-page facilitator’s guide and curriculum exploring financial literacy topics through an Aboriginal lens. Visit https://bcaafc.com/
- The Healthy Aboriginal Network’s Game Plan – comic book for Aboriginal youth featuring a teenager named Jake who struggled with financial wellbeing until he was taught a lesson or two in financial literacy. Visit https://istorystudio.com/wp-content/uploads/2014/04/Game-Plan.pdf
By addressing the financial literacy gap and making financial education more understandable, engaging, and accessible, we can empower individuals and contribute to a financially literate society. Let’s strive towards equipping all Canadians with the knowledge and tools they need to make informed financial decisions, ensuring a brighter and more secure future for everyone. We can help break the cycle of economic disadvantage and promote financial well-being by empowering minority and BIPOC communities through access to quality financial literacy that relates to their individual situations.
Additional financial literacy tools, resources, and events can be found on the Canadian Financial Literacy Database.
Our goal is to ensure every one of our members is equipped with the knowledge and confidence to make responsible financial decisions. Our financial advisors at YNCU are always available to provide educational advice and are happy to assist wherever they can. For all your general financial inquiries and how you can plan out your financial goals, come in and talk with an advisor at your nearest YNCU branch.
by Divora Mehari | Jul 27, 2023 | Investing
ON THE WAY TO WEALTH WITH ASSETS
How to Build Your Financial Portfolio
Thursday, July 27, 2023
Interested in building wealth? Curious about investments and assets? You’ve come to the right place. If you’re looking to secure your financial future, building a solid portfolio is a crucial step in achieving your goals. An investment asset is a financial instrument that individuals obtain with the intention of generating income, capital appreciation, or both over time. In this blog post, we will provide you with valuable insights and actionable steps to help you create a successful financial portfolio.
Step 1: Start with Clear Goals
Examples of fixed assets are your home, your cottage, or any vehicles, while examples of liquid assets are cash, or investments. Before diving into the world of investing, it’s essential to define your objectives. Ask yourself questions like, “What do I want to achieve financially?” and “What is my timeframe for reaching these goals?” Setting clear and achievable targets will guide your investment decisions.
Step 2: Assess Your Risk Tolerance
Investing comes with risks, and understanding your risk tolerance is essential for long-term success. Take the time to evaluate how comfortable you are with potential fluctuations in your portfolio’s value. This assessment will influence the asset allocation that best suits your risk appetite.
Step 3: Explore Tax-Advantaged Accounts
In Canada, there are tax-advantaged accounts such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs). These accounts offer unique benefits and can be powerful tools for building your financial portfolio. Understand the contribution limits, withdrawal rules, and tax implications associated with each account to maximize their potential.
Step 4: Research Potential Investments
Stay informed and keep learning about not only the Canadian market but investing outside of Canada as well – the biggest market in the world is American. A well-informed investor is better equipped to make sound investment choices. Research different companies, sectors, and investment opportunities that align with your goals and risk tolerance. Stay updated on economic indicators, government policies, and industry trends to make informed decisions.
Step 5: Consider Professional Advice
Seeking the guidance of an advisor can provide you with expert advice tailored to your specific circumstances. An experienced professional can help you navigate the intricacies of the markets, help you understand your risk tolerance, identify suitable opportunities, and suggest appropriate portfolio adjustments as needed. They can also guide you on how to take advantage of Canadian tax strategies and investment vehicles.
No need to memorize all this information. YNCU is here to help. YNCU offers registered products such as TFSA, RRSP, RESPs, and non-registered accounts as well. Within these products you can be invested in an array of different types of investments such as savings accounts, term products, and mutual funds through Credential Securities or Credential Asset Management Inc. Click HERE for more information.
Regardless of what you decide to do with your money, assets are important to long term financial stability. Assets build your net worth whether that means for future goals or current lifestyle. Building a financial portfolio as an investor requires careful planning and continuous effort. By setting clear goals, diversifying and staying informed about the investment markets, you can lay a solid foundation for your financial future.
For all your general financial inquiries and how you can plan out your financial goals, come talk with an advisor at your YNCU branch!
by Divora Mehari | May 15, 2023 | Investing
INVESTING IN A GIC
Monday, May 15, 2023
Invest with no risk! A Guaranteed Investment Certificate (GIC) is a great option for every type of investor. Available in short and long terms, your original investment is 100% protected from the fluctuations of the market – so you have nothing to lose and everything to gain.
HOW DOES A GIC WORK?
Think of it like a savings account – the money you hold in your account earns interest over time. The difference between a savings account and a GIC is that you need to leave your money in a GIC account for a specified period of time. When you purchase a GIC, you are agreeing to lend the financial institution your money for a specified term, ranging anywhere from 30 days up to 5 years, in exchange for earned interest. Typically with GICs, the longer the term, the better your rate of return, and the more interest you earn. At the end of the term, you can choose to either cashout your investment with the interest earned, or reinvest into a new GIC.
WHEN IS A GIC A GOOD FIT?
Since GICs have a fixed rate and are not influenced by the stock market, they are considered one of the safest investment options for Canadians. Here’s when investing in a GIC may be beneficial for you:
- You’re new to investing or feel uneasy about investing in a volatile market.
- You’re saving for a specific short-term goal and want to earn a bit of interest until you’re ready to use your savings.
- You’re retired or nearing retirement and will need access to your money soon.
- You struggle with meeting your financial goals and want to remove the temptation to dip into your savings.
- Your child will be pursuing post-secondary education soon and you’re looking for a low-risk investment option.
- You’re beginning to teach your children about investing and looking to show them savings growth over time without the risk.
HERE’S WHAT YOU NEED TO KNOW
- Most GICs pay a fixed rate of interest for a set term (6 months, 1 year, 2 years or up to 5 years).
- Interest on your GIC can be paid monthly, once a year or on the maturity date, depending on the product.
- You can hold your GICs in registered investment accounts (RRSPs, RRIFs and TFSAs).
- Unlike other investment products, GICs have no direct fees associated with them. Times where you may face a fee would be if you withdraw your investment from a non-redeemable GIC prior to the maturity date or if you transfer a GIC from a registered account (TFSA, RSP, RIF) to another financial institution.
- Redeemable GICs give you the option to withdraw your money prior to the maturity date, but typically pay a lower interest rate than originally offered if you choose to do so.
- Cashable GICs are similar to redeemable GICs in that you can withdraw your money prior to the maturity date, but only once a predetermined “locked-in” period (30 days to 90 days) has passed.
- Your deposits are insured through the Financial Services Regulatory Authority (FSRA).
Ready to be proactive about your financial future?
Grow your investments, without the risk. Whether you’re saving for your dream vacation, planning for retirement, or just looking to diversify your portfolio, YNCU is ready to help you grow your money with a variety of terms and products to suit your unique investment goals.
Choose a GIC with YNCU to benefit from our:
- Competitive Rates – Higher rates than redeemable investments and savings account options.
- Tax Benefits – Take advantage of tax benefits when you invest a GIC into your TSFA, RSP, or RIF account.
For all your general financial inquiries and how you can plan out your financial goals, come talk with someone at your YNCU branch!
