We honoured International Women’s day during this week’s weekly Tuesday Zoom by focusing on an increasingly growing demographic – single women. Statistics have shown that in Canada the number of single men and women remain steady until their mid-40’s, and then drastically increases again once women reach their mid-50’s.
The world wasn’t made for single people, but especially single woman. The world was designed for families and that includes financial planning. As a single woman, how does planning for your finances differ from who are married. What needs to be prioritized?
If you missed Tuesday’s Zoom you can find the video recap here. Below were the additional questions asked during our Q&A period after the presentation.
What are some tools or apps to help keep track of your finances?
Mint is no longer available but YNAB (You Know A Budget) is one of the most popular budget/financial tracking apps in Canada. Another popular tool is KOHO. KOHO isn’t quite a budgeting app but it offers a platform (and a prepaid credit card) to help manage your cash flow better. If apps aren’t your thing, you can always go old school with a simple Excel sheet or use a traditional notebook or ledger. NerdWallet has a simple budget Excel sheet on their website (scroll down to NerdWallet’s Budget Planner and click on free budget planner). Whatever you choose, make sure it’s easy for you to incorporate into your day so it doesn’t feel like a chore.
I wonder if I make enough money to keep up with my kids’ lifestyles.
Well, it’s not your kids’ lifestyle – it’s your lifestyle. Your children will never learn about money and the value of money if you don’t talk about it with them. I remember when my kids were growing up the circulars would pass by once a week, and we would sit at the dining room table looking over all the specials. At first when they’re little they don’t get it, but eventually they understand what’s expensive and what’s reasonably priced. When your children become teens, allow them to work part time. There is no better money life lesson than working for your own money at a young age. Teach them to live off of half of their take-home pay (because you as a parent probably pay for everything!). Help your teens develop good money habits from young and don’t be shy to share any of your financial mistakes with them.
What is a good rate of return to aim for when it comes to your investments?
Depends on your time horizon and risk level, but as a blanket statement for any monies allocated for retirement (if you’re not planning to retire tomorrow) you should be shooting for an average annual return of 10%+. If this sounds impossible, it really isn’t. Most US equity funds have averaged annual returns of at least 10% in the last 20+ years. If this isn’t how your retirement funds are performing, it’s probably time to review your investments asap.
What insurance companies do you recommend for disability insurance?
It depends. Disability insurance coverage takes into consideration your job title, tasks, revenue, and your overall medical history. Canada Life, RBC Insurance, and Sun Life are the main disability insurers in Canada (Manulife no longer offers disability insurance) but the one to offer the best solution for you depends on a series of questions and are available through advisor-only. You can always reach out to me to discuss your situation and for a quote.
I’m scared to spend money even though I think I’m financially okay. How do I overcome that?
It all boils down to your numbers, reviewing the “what ifs” in life, and what you have in place to sustain those “what if” moments. Financial planning is about doing what you can to prepare for the things in life that are both predictable and unpredictable. As someone who holds onto your money – completely understandable especially when you’re single – sit down with someone and go over those situations. As much as we need to plan our finances we also need to live, within reason. This is a common mindset, it starts with one baby step of reviewing your overall financial picture. The hump you are trying to overcome is that reassurance that you will be okay if X happens.
How do we go from being a beginner investor to an advanced investor?
Start investing and see how comfortable you are with fluctuations. Bitcoin is at all-time high right now and unfortunately, there will be many inexperienced investors jumping on the bandwagon now who have very little investment experience. It’s like going from zero to 100 in three seconds. There are many, many other investment fund options in between that, upon reading their fund facts, are tangible, have historical performance available, and with more predictable returns. Also, it is possible to have more than one investment strategy within the same account. For example, if you have $10 000 in a TFSA account you have invest $2000 of it in money market funds because you are keeping it for vacation (money market funds are very conservative investments) and the rest can be invested in something more aggressive.
What is the minimum amount you need to start investing?
The investing world has changed so much since I started in the early 2000’s. Nowadays you can start investing with only $50/month. Will you have access to all funds that are out there? No, but there are enough investment options that you can actually see growth and see your money working for you.
How do you break down a 10 year plan? What are the factors you use to plan for the future?
First, without using any financial data, where do you want to be in 10 years? Do you want to be a homeowner? Do you want to retire? Do you want to move from Montreal? Start planning “loosely” for whatever 10-year goals you have. Make sure your income increases by 4% annually (something we have not prioritized over the last 15 years). Using 4% as a target means you’re beating inflation, with a little cushion. Yes inflation has hit an all-time high over the last two years but what were we doing for the 10-15 years before that? We weren’t getting our 4% annual raises. Why didn’t we feel it? Because interest rates were fairly low and inflation was low and steady. Also, make sure your target average annual return for your investments is at least between 7-10% (factoring in age and risk tolerance). Based on these factors and your actual situation, determine if your goals are possible and what needs to change in order to achieve them. And yes, this may mean switching careers or making some tough life decisions.
If you are self-employed and looking for health, dental, disability, and critical illness coverage is it possible to group them together under one insurance company or it needs to be with separate companies? I want to avoid multiple smaller payments.
It’s possible but not necessarily recommended. No insurance company offers the best coverage and best rate for every insurance product available.
Lin Sok is an Independent Financial Security Advisor and Mortgage Broker. To discuss your situation and to find out more about insurance, investments or mortgages, you can reach out here.