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    Canadian Financial Planning 101 15 Facts You Need To Know

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    The document discusses 15 key facts about basic financial planning in Canada. It covers topics like different types of insurance, taxes, registered savings plans like TFSA and RRSP, and how deductions work. It provides explanations of insurance, taxes, savings accounts and credits that are important for financial literacy in Canada.

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    Canadian Financial Planning 101 15 Facts You Need To Know

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    The document discusses 15 key facts about basic financial planning in Canada. It covers topics like different types of insurance, taxes, registered savings plans like TFSA and RRSP, and how deductions work. It provides explanations of insurance, taxes, savings accounts and credits that are important for financial literacy in Canada.

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    The document discusses 15 key facts about basic financial planning in Canada. It covers topics like different types of insurance, taxes, registered savings plans like TFSA and RRSP, and how deductions work. It provides explanations of insurance, taxes, savings accounts and credits that are important for financial literacy in Canada.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views3 pages

    Canadian Financial Planning 101 15 Facts You Need To Know

    Uploaded by

    porkedjuson
    The document discusses 15 key facts about basic financial planning in Canada. It covers topics like different types of insurance, taxes, registered savings plans like TFSA and RRSP, and how deductions work. It provides explanations of insurance, taxes, savings accounts and credits that are important for financial literacy in Canada.

    Copyright:

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    ‭Basic Financial Planning In Canada: 15 Facts You Need To Know‬

    I‭ ntro:‬
    ‭As a practicing RCIC and an Insurance advisor, I make sure that I take a little bit of time to‬
    ‭discuss basic financial literacy tools with my clients.‬
    ‭Personal finance in Canada is very individual and independent - unlike in the Philippines where‬
    ‭we can sometimes count on family and friends with our finances, we often lack that resource‬
    ‭here in Canada and must rely on our own available resources.‬

    ‭1.‬ I‭ nsurance is important (Travel, Life, CI, Extended, Disability)‬


    ‭It is necessary; for you and your family’s protection‬

    ‭2.‬ D
    ‭ ifference of temporary and permanent types of life insurance‬
    ‭Buying a renting vs. buying a home comparison; temporary starts cheap but gets‬
    ‭expensive when you get old; permanent demands a higher premium but it is constant and‬
    ‭may have a definite paying period (like a mortgage).‬
    ‭You will need it when you buy a house.‬

    ‭3.‬ W
    ‭ hat is CI (Critical Illness)‬
    ‭“Living Benefit” - you get sick and you survive. What now? Lumpsum amount; smart‬
    ‭tip: you may use it as a savings account (return of premium)‬

    ‭4.‬ P
    ‭ rovincial Medical Service Plan, Extended Health Benefits, and Disability‬
    ‭Insurance‬
    ‭Prov Med Serv Plans available in all provinces, you need to wait for 3-months, but not‬
    ‭available to visitors; Extended health available from shcool or work, coverage may differ;‬
    ‭Disability - personal or through work - provides portion of your income if you are‬
    ‭temporarily disabled.‬

    ‭5.‬ H
    ‭ ow do taxes in Canada work?‬
    ‭Marginal tax rates - amount of tax you will pay on the dollars earned in the highest range‬
    ‭of income or tax bracket you reach.‬
    ‭You pay federal and provincial tax rates‬

    ‭6.‬ Y
    ‭ our net pay: Tax witheld, EI, and CPP contributions‬
    ‭You recieve a lesser amount for your take home because of these deductions.‬
    ‭“Unemployment Insurance” is for when you get laid off (not terminated), if you claim‬
    ‭you can receive a portion (max for 2024 is $668 per week) of your monthly income;‬
    ‭Canada Pension Plan - you will get it when you retire, earliest is at 60 years old. Tax‬
    ‭witheld is remitted to the gov’t every paycheck & if you give too much Canada, you can‬
    ‭get a tax refund after you file your taxes‬

    ‭7.‬ W
    ‭ hat are tax credits?‬
    ‭Reduces your tax burden. You cannot turn them into Cash, but you can carry them‬
    ‭forward each year.‬

    ‭8.‬ C
    ‭ an I deduct personal expenses to reduce my tax burden?‬
    ‭Short answer: No. You can use your credits;‬
    ‭You can also contribute to RRSP and/or FHSA to reduce your taxes - talk about later‬
    ‭if you are self-employed, you can claim some expenses like meals and entertainment that‬
    ‭you spend for your business‬

    ‭9.‬ I‭ ’m a full-time student, do I still need to file taxes?‬


    ‭Yes! Even though you have no income, you can file taxes so you can claim the credits.‬
    ‭If you are a worker and it’s tax season, you are only required to file taxes if you have‬
    ‭been in Canada for at least 183 days. If you want to file, you may and it is encouraged for‬
    ‭your records.‬

    ‭10.‬‭Use of credit cards (points and rebates)‬


    ‭Credit cards are handy with the discounts and the perks that they have. Major grocer‬
    ‭credit cards earn you points for groceries, other types earn you cash back.‬
    ‭Tip: limit your credit cards - although they offer some benefits - it may get hard to‬
    ‭manage, bad debt may pile up and affect your credit score.‬

    ‭11.‬‭What are registered saving plans?‬


    ‭Or RSP - savings plans that have the government’s oversight: TFSA, RRSP, RESP/RDSP,‬
    ‭FHSA. They have special features compared to your regular savings account in the bank‬

    ‭12.‬‭TFSA - Explained‬
    ‭Tax Free Savings Account - Just like a regular savings account. After-tax contribution,‬
    ‭but if the money grows, the withdrawn amount is tax free.‬
    ‭YEARLY room you can carry forward if you don’t use it all.‬
    ‭If you open today and never have contributed before, your maximum room is $95,000‬

    ‭13.‬‭RRSP - Explained‬
    ‭Registered Retirement Savings Plan - Contributions will reduce taxes, but when‬
    ‭withdrawn it is taxable. Used for retirement - when your tax bracket is lower.‬
    ‭Your contribution room is usually, 18% of your yearly income.‬
    ‭You can contribute until Dec 31 the year you turn 71, after that you need to transfer the‬
    ‭funds out off the RRSP‬
    I‭ f you withdraw before your retirement, you need to pay taxes on the withdrawn amount:‬
    ‭10% for first $5k, 15% between $5k and $15k, 30% over $15k‬

    ‭14.‬‭RESP/RDSP - Explained‬
    ‭Registered Education Savings Plan and Registered Disability Savings Plan.‬
    ‭RESP - After tax contributions, your contributions are matched by the governments‬
    ‭through grants. For your child’s education. If the child doesn’t pursue a higher education,‬
    ‭the grants will be returned to the government. Withdrawal for education purposes is‬
    ‭non-taxable.‬
    ‭RDSP - for people who have disability (qualify for the disability tax credit), similar to‬
    ‭RESP, Canada will issue grants, varying from your contributions and adjusted family net‬
    ‭income‬

    ‭15.‬‭FHSA - Explained‬
    ‭First Home Savings Account - towards your first home. Lifetime max of $40k, annual‬
    ‭contribution limit is $8k. Contribution going in is tax deductible, withdrawals are tax free‬
    ‭(mix of RRSP and TFSA), withdrawals don’t need to be returned, unlike HBP‬

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