The term “wellness” — including emotional, physical and mental wellness — is finding its way into more and more conversations these days. However, there’s one aspect of general wellness that is often overlooked despite its significant impact: financial wellness.
Given the current economic environment, Canadians’ financial concerns are among the largest sources of stress. According to a recent study by FP Canada, 49% of Canadian adults have lost sleep because of financial worries, which may impact their overall wellness.
Just like physical and mental wellness, there is no one formula to create financial wellness for everyone.
Luckily, there are strategies we can all adopt to improve our financial wellness. It starts with acting in the present while planning for the future. The path to financial wellness is a personal journey, and a qualified financial advisor can help you take the first step and make important progress.
Prioritizing financial wellness for today
Before working on your financial wellness, it’s important to ask, “What does financial wellness look like for me?”
It can be as simple as creating (and sticking to) a budget or making a realistic and actionable plan to pay off your current debts. Your path to financial wellness can even begin by getting a better understanding of a familiar term: tax.
Whether we like it or not, tax is inevitable and it impacts nearly every financial decision we make. Therefore, gaining an understanding of your tax situation can provide you with confidence and help improve your financial wellness.
Depending on your circumstances and stage of life, contributing to your Registered Retirement Savings Plan (RRSP) or First Home Savings Account (FHSA) are two options that may help you prepare for your future, while also reducing your taxable income, meaning you’ll get taxed less come tax season.
Being knowledgeable about the different types of accounts (including RRSPs, FHSAs and Tax-Free Savings Accounts), as well as tax deductions and tax credits available to lessen your tax liability, can also help build financial knowledge and reduce financial stress.
Planning financial wellness for the future
Part of financial wellness is proactive planning, so you can feel comfortable and confident in your future. Saving is an important part of building a strong financial future, but financial wellness goes beyond that.
If you’re employed, taking advantage of any available employer matching programs is an easy way to grow your retirement savings. If these are offered at your workplace, making voluntary contributions to your RRSP or other pension plans right off your paycheque (and having your employer match them, if available) is an easy way to save. If the money never hits your bank account, you can’t spend it.
The best way to save for a post-secondary education, for your child or another minor dependent, is by investing in their Registered Education Savings Plan (RESP). Through this plan, there are additional government grants to bolster educational savings, including the Canada Education Savings Grant and — depending on your family income — the Canada Learning Bond.
Estate planning is another important part of financial wellness and creating peace of mind for both you and your family. Taking the time now to set up a proper estate plan and updating it periodically can help reduce financial stress when it comes to knowing that your assets will be distributed according to your wishes on your passing.
There is no one-size-fits-all approach to any type of wellness, including financial wellness. Financial worries are one of the biggest causes of stress today, but proper planning can help you secure your own financial future and leave a lasting legacy for your family and any registered charities that you care about.
Blair Evans is a Chartered Professional Accountant and Certified Financial Planner. He is an Assistant Vice-President of Tax and Estate Planning at IG Wealth Management.
Written and published by IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Advisor.
