Lifestyle |  An opportunity to regain control financially

Lifestyle | An opportunity to regain control financially

Even if we actually double down on poor financial choices, we can still control. And sometimes life gives good opportunities to improve a lot. Just enter them.

Posted at 6:00 AM

Martin Littart

Martin Littart
special cooperation


Nadine* did not have the opportunity to learn good habits of managing her personal finances when she was young. “My parents always struggled to make ends meet, and saving wasn’t part of our vocabulary at home,” she says. I started working at a very young age, but didn’t know how to manage my intake. »

From college, I got into debt by doubling down on credit cards, by taking out a “huge” student loan, by taking out high-interest personal loans, etc. At the age of forty, she made a consumer show. “I got out of it, now I am more disciplined in managing my money and I even managed to save.”

Nadine has worked as a healthcare professional for 22 years and contributes to the Government and Public Employees Retirement Plan (RREGOP). I got a raise this year, a retroactive income of more than $34,000 as a result of union negotiations under Equal Pay Actas well as rewards related to COVID-19.

I feel like I have a second chance to finally make good financial choices and would like some advice. I want to avoid paying a lot of taxes this year and continue saving for my retirement, which I plan to do when I turn 60.


Nadine is the mother of a young man who has just moved into an apartment and will turn 16 in the fall. She wants to contribute to his Registered Education Provision Scheme (RESP), but wonders if it’s too late. She also plans to help her daughter pay for her master’s degree, which will begin in September.

In three years, you want to buy a Montreal triplex worth about $1 million you want to live in to have access to a patio. His daughter will own 25% and his son can also buy 25% of the building when he can. “I wonder if this is a realistic project.”


Nadine 48 years

  • Annual salary in 2022: $92,000 (previously $82,500)
  • Bank account: $16,600 (of equity)
  • TFSA: $15,800 ($10,000 of equity)
  • RRSP: $11,300 ($125 bi-weekly automatic payment)
  • Paid car: $2000
  • Current annual cost of living: $48,000
  • Expected annual cost of living in retirement: $44,000
  • Accumulated RRSP Contribution Room: $36,621


Photo by Robert Skinner, press archives

Julie Paquin, Financial Planner and Vice President of Special Management, at Optimum Gestion de Placements

Having lived through more difficult years financially, Nadine has many possibilities. “She has gone to great lengths to straighten out her finances, and with her budget rigorous, she is on the right track,” says Julie Paquin, financial planner and vice president of private management, at Optimum Gestion de Placements.

On the other hand, for RESP, it’s too late for Nadine. “She should have contributed at least $2,000 to her cause last year, because to receive the 30% base government grants, a child must have turned 15 on December 31 of the year of contribution,” Julie Paquin says.

Reduce your taxable income

Since Nadine’s taxable income has jumped this year due to her salary hike and retroactive equity payments of more than $34,000, her marginal tax rate will rise from 37.12% to 47.46%, according to Julie Paquin.

Contributing to your RRSP is a priority to reduce your tax bill this year. Since she has an unused RRSP contribution room, I advise her to take $15,000 from her checking account and $10,000 from her TFSA and deposit it into her RRSP.

Julie Paquin, Financial Planner and Vice President of Special Management, at Optimum Gestion de Placements

The financial planner also suggests that she increase her automatic payments to $185 in her RRSP for the next two years. After that, she explains, she can add that amount to her contributions to the TFSA. This will allow him to take advantage of his unused rights on his RRSP and continue saving for the down payment in order to become a homeowner. »

Maximizing TFSA

To achieve her goals, Nadine also has an interest in setting up an automatic bi-weekly payment in her TFSA account.

“I advise him to transfer $200 every two weeks,” Julie Paquin says. The TFSA is attractive because returns and withdrawals are not taxable. »

Nadine also advises keeping a portion of her TFSA account as an emergency fund, the equivalent of about three months of expenses. “A financial pillow gives you peace of mind,” says the financial planner. However, several factors can affect the required amount, such as the details of his disability insurance. You should also invest this amount in safe and flexible investments so that you can withdraw funds if necessary. »

Feasibility assessment of the three-pronged project

For the trilogy issue, Nadine and her daughter will have to go to their financial institution to assess their ability to borrow and to obtain pre-eligibility for a certain amount. “This would be a good indication of the realism of the project,” Julie Paquin says.

For a $1 million building, a 20% down payment is required if you wish to avoid paying the mortgage loan insurance premium from Mortgage and Housing Canada Corporation (CMHC). “So we’re talking about $200,000 down payment and $4,652 in mortgage payments per month at a simulated interest rate of 5%, Julie Paquin estimates. Nadine could also choose the triple minimum down payment of 10%, but then she would have to pay a premium CMHC, and of course a lower down payment means having to borrow a larger amount, and therefore more installments. Mortgages.”

Under the financial planner’s proposed savings scenario, Nadine will have approximately $33,000 in TFSA in 2026 and will be able to benefit from the Home Buyers Plan (HBP) by withdrawing the maximum allowed in her RRSP, which is $35,000.

While buying a property for income can be attractive, it also has a lot of responsibilities to consider. “According to the retirement analysis that was done, Nadine would be able to retire at 60 without buying a property with a $44,000 cost of living,” Julie Paquin says. Nadine could also decide to delay the purchase of a triplex, or consider other options, such as buying an apartment with a patio. One thing is for sure, it is important that she is accompanied by real estate and personal finance experts to make the best choices and keep her budget strict. »

*Although the case described in this section is real, the first name used is fictitious.

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