A financially secure life

Date: Jan 03, 2007

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This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.

At this time of year, we make all kinds of deals with ourselves. About going on a diet. Getting fit. And all sorts of other resolutions large and small.

The trouble is, even with the best of intentions, many of our resolutions last about as long as an ice cube in the sun.

But here's one resolution you should make and never break: "I resolve to have a financially secure life."

Here's how:

1. Be budget aware. Take a very critical look at your income and expenses and set a realistic monthly budget that includes a specific amount for savings.

2. Be debt aware. Credit cards are very convenient, but usually very expensive. Stay on top of your debt by paying high-interest-rate and non-tax-deductible debt first.

3. Be life aware. Take a good look at your life and goals in relation to your income. Then resolve to set aside enough on a regular basis to reach your goals.

4. Be RRSP aware. An RRSP is the best tax-deferred savings builder for most Canadians. By starting early and making your maximum yearly contributions, you'll save on taxes and your RRSP has the potential to grow faster.

5. Be tax aware. Take advantage of every possible tax deduction and tax credit that may apply to you - including items like moving expenses, child-care expenses, tuition fees, medical expenses and charitable donations.

6. Be investment aware. Certain investments are more tax-efficient than others. For example, interest income is taxed significantly higher than dividends or capital gains - so it's often better to hold investments that earn investment income inside your tax-deferred RRSP and those that earn dividends or attract capital gains outside your RRSP.

7. Be children aware. Your kids are going to grow up one of these days and you want them to have the best start in life. That means a college or university education. Sure it's expensive - but you can manage those costs using the tax-deferred, compound growth advantages of a Registered Education Savings Plan (RESP).

8. Be insurance aware. As your life changes, your need for income protection and estate planning changes. So be sure that your insurance coverage keeps pace.

9. Be asset allocation aware. A good asset allocation plan delivers a portfolio that includes the right balance of assets from the three asset categories - cash, fixed income investments and equities -to deliver steadier long-term growth.

10. Be plan aware. Take everything you've resolved to do so far and wrap it up in a consolidated approach that keeps everything pointing directly at your future and a 'financially secure life.'

A little common sense, discipline, dedication ... and the help of a professional advisor can help you keep on track to achieving your dreams.