Money How to be a grown-up about money
Spoiler alert: it gets easier once you tune in to what you want.
Can’t decide whether to splurge on a holiday or save for retirement? According to Society of Grownups (SOG), a financial education centre that provides advice and classes, there’s no single best answer. Their philosophy? Use your personal values to decide when to spend and save. Karen Carr, financial planner at SOG, helps with your financial issues, here. “I’m worried about my retirement. I’ve taken full advantage of my employer’s pension plan and I want to save for a house. What’s the next best step?”
– Claire, 24, editorial assistant
“Congratulations on taking your company plan funds,” says Karen. “So many people leave that free money on the table.” Now you should open a retirement savings plan that can help you with both your goals. “This plan isn’t tied to your employer, so you’ll have a full choice of investment options,” she says. “If you choose an untaxed retirement plan, any contributions can be taken out tax-free and without penalties, like cash for a deposit on a house.”
“I’m debt-free and I’m saving for my wedding, but my friends are investing. Should I be, too?”
– Patricia, 30, medical resident
Are you ready to commit to the stock market? “Money in an investment account needs three to five years to grow,” says Karen. If you’ll need that money earlier ( like for a wedding dress), it doesn’t make sense to choose stocks. Rather keep your cash in a savings account. But if you can put more money aside than you’ll need for the wedding, then stocks are fine.
“I’m going back to work full-time after having a baby, and my fiancé just got a big raise. If we get married, will we take a hit financially?”
– Amy, 39, teacher
“Many clients worry about the ‘marriage penalty’ (a change in a couple’s tax bill as a result of getting married),” says Karen. This can leave couples paying more in taxes if they file jointly than if they file as individuals. Use a tax penalty calculator to find out exactly how marriage will affect your return – often, the impact is negligible, Karen says.