Financial health is serious, But we can still have fun

Young people under 30 generally tend to have problems with saving. The excuse made by most is that they don't earn enough to set aside part of it for saving purposes. This is a wrong mindset. No one is too young to save. In fact, saving at that early stage helps you attain your financial goal on time. There are other numerous advantages in having enough savings before you clock 30. It's all about cultivating a habit of saving and there are numerous ways to develop this habit. Nothing is stopping you from having a financial safety net savings account before you clock 30. This article will give you reasons why you should have savings as early as possible. We will also discuss what is appropriate for you to have saved before you clock the age of 30.

How Much Should I Have Saved By The Age Of 30

There is no exact figure as to how much you should have in savings by the time you're 30 years old. It all depends on a number of variables like your income, your financial obligations, financial goals, debts and so many other things. The most important thing is to have a saving culture before the age of 30. While we are all different and have different financial obligations and goals, it is important to have a general idea of what is considered reasonable savings at the age of 30.

While not putting yourself under any pressure, it is said that you should have an average savings of $47,000 if you're earning a relatively average salary. This estimation is based on the rule of thumb which says you should have a 1-year salary in savings by the time you start your fourth decade. The average weekly salary of persons between 25 and 34 in Canada is $979, and the average monthly salary within the same age bracket is $3,917, which makes an annual salary of $47,000.

If you have saved this amount or you're approaching this amount and you are not even 30,congratulations, you have met a financial goal. If not, do not put yourself under pressure, take this as a wake-up call and start your savings plan to save as much as you can before you clock 30. There is still time.

How Much Do I Need To Retire

This is a very common question among young people who want to start saving to secure their future and even those approaching retirement age. The truth is no amount is too small or big to have as your retirement fund, it all depends on the retirement lifestyle you have envisaged for yourself. Your retirement lifestyle will determine how much you need and how much will be enough to meet your lifestyle post-retirement. Knowing more about your income potential will secure your post-retirement lifestyle, although, emergencies occur which may affect your financial goals it is good to have some measure of control over your finances could give you the post-retirement lifestyle of your dream.

There is no benchmark of the amount you must have for retirement, it depends on your financial plan and your retirement lifestyle. However, to give you an idea, look at your lifestyle now and assess your expenses, then consider how these expenses will change when you retire, then you add some of the retirement benefits you will get from the Canadian Retirees Incomes: The Canada Pension Plan (CPP) or Quebec Pension Plan(QPP); The Old Age Security (OAS); Employer-sponsored pension plans and personal savings and investments. All these analyses combined should give you a fair idea of how much will be enough for your post-retirement lifestyle.

A survey showed that an average Canadian who retires at 65 will spend $60,359 including taxes until the age of 82. If you have a spouse and you both retire at 65, you will need $1,026,103 till you are both 82. These are average numbers which does not mean it has to be your numbers. Depending on the peculiarity of your situation, the money needed during your retirement may be lower or higher. This figure is only to give you an idea of the amount you should have in savings and investments before you retire.

Average Retirement Age

Globally, the age of 65 is regarded as the ripe age for retirement. Some retire before that while some retire way after that. Other than health reasons or years of service, it is the age most of the government retirement benefits are accessible to you. In Canada, you are eligible for the Old Age Security Pension, and Canada Pension Plan. The mandatory retirement age in Canada was 65 years until 2009 when mandatory retirement was abolished except for Judges, Justices of Peace and Magistrates.

Unless you are expecting an inheritance that will cater for you for the rest of your life, you are expected to work until the age of 50. That is usually referred to as the earliest retirement age. According to Statistics Canada, the average retirement age in Canada is 63 and a half years. The average retirement age for self-employed people is 68 years and 61 and a half years for federal workers. Private sector workers retire mostly at 65 years.

10 Ways To Save For 30

Developing a saving culture before the age of 30 is something that is now being encouraged. Covid 19 showed that anything can happen at any time and no one is too young to save. Even if you do not have a financial plan, endeavour to save as much money as you can, it is the key to securing your future. Here are some ways to save for the age of 30:  ‍

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Treat Paying Off Debt With High-Interest Rates As Investment

Debt is an undesirable situation that most people find themselves in. You may have some debt situations in your 30s such as student loans, and credit card debts. One hindrance to paying off loans on time is the high-interest rate. However, if you focus on paying off the debt with the highest interest rate, you save more by taking it off the list. To have a better understanding of this strategy, you can read more about the avalanche strategy of debt management.

Have An Emergency Fund

Building an emergency fund is an effective way of developing a saving culture. Emergency funds are used to settle unexpected financial obligations without having to touch your other savings or investment funds. To build an emergency fund, you will have to set aside a portion of your income which means you are indirectly saving some amount somewhere for when you may need it. This emergency fund also protects your other savings should the need arise for you to fulfil a financial obligation.

Automate Your Savings

Automated savings allows you to set up a direct deposit into your savings account at specific periods. The amount to be saved will be determined by you, it only means you do not have the power to decide when you remit once you activate it. It is a very effective way of developing a saving culture early on in your life. You will not have to keep racking your brain for when you have to save or are tempted to miss this current month’s savings commitment.

Have a Budget

This is a tested and trusted method of instilling a saving culture. Having a budget will give you the necessary discipline to meet your financial goals. With a budget, you can track your income and expenses and stop impulse spending. To have a realistic budget, you can have weekly and monthly expenses to watch what you spend. It is important to stick to your budget. You must be intentional about your saving culture and having a budget is one way to go about it.

Cut Down On Your Expenses

To have an effective savings plan, you must separate your needs from your want and stick to them. Reduce unnecessary travelling, impulse buying, eating out and other things that take your extra cash. Channel this cash into building an emergency fund and other investment goals. Things you can cut down on include utilities, energy, taxes, food and groceries, auto expenses and credit card charges. The extra cash you make off the cutting down can be channeled into your savings plan.

Insurance Policies

This is another way you can save enough before you clock 30. You can subscribe to policies such as disability insurance and auto insurance. This ensures that you are catered for if events under this policy occur. It is a way of saving for the eventuality and protecting your investment fund.

Save More As You Earn More

At your current age, you are full of energy and take on multiple jobs for multiple incomes. Do not see this as an opportunity to spend lavishly, rather it is an opportunity to have more money saved before you are even 30 years old. Take advantage of your youth to secure your future. It is not a time to live extravagantly and forget there is a future you need to secure starting from now. At this stage of your life, your expenses should increase at a slower rate than your income.

Open High-Interest Savings Account

This complements your automated savings plan. You can have an automated savings plan with a high-interest rate. This will ensure your money grows at a higher rate as against the regular savings accounts. At this rate, you're not only saving, but you are also earning. It is a smart move that every young person should think of.

Understand The Concept Of Cash Flow

At this stage, your financial knowledge may not be that deep which is common with everyone in their 20s. However, you can be smart and start improving your financial knowledge. One thing you can start with is the concept of cash flow. This will help you in your budgeting plan. It teaches you how money comes in and how it goes out. It allows you to streamline your expenses and make wise financial decisions. Knowledge is power.

Start Now

Do not think you are still young and you have decades to prepare. Time flies and you may end up regretting it. Things happen and you may not make as much later or you may make a lot more but because you have not cultivated the habit of saving, you lavish your income without thinking of the future. Be intentional about your finances and start saving now.   

Review Your Progress

This is important for your motivation. Once your savings plan is in place, you can set up a monthly review of how far you have gone into meeting your savings goal. It also helps you change your strategy if it doesn't align with your financial goals.

Conclusion

These tips will help you develop a saving culture and still allow you to have enough fun in your youth. Do not mistake these tips as a gag on your youth, it is an opportunity to be smart and have fun at the same time. With an effective savings plan before you are 30, you are sure to continue living the lifestyle of your dreams till you're 80 and more.

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This month, we'd like to introduce you to Vivian Man, who is the founder of the Chinese herbal wellness company, Kyth + Kyn. Kyth + Kyn has brought a modern take on teas and soups that have been used for millennia. From her own deep rooted traditions in Chinese culture, Vivian brings a refreshing (literally) and delicious way for us to enjoy the same health benefits!

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Tell us a bit about yourself

Vivian Man, Founder of kyth + kyn, a Chinese herbal wellness company. We strive to preserve Chinese culture and provide careful crafted and curated products that are culturally rooted in Traditional Chinese Medicine. We focus on educating and normalizing this practice so that we can introduce these great health benefits to both old and new customers.

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Tell us a few personal interests and hobbies

I love staying active both in and outdoors! I also am busy with 2 dogs whom I love (Huckleberry and Willow) and I enjoy watching the NBA. I play basketball myself and am an lover of sunny places like California!

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When and why did you choose this industry over others?

The concept of kyth + kyn started in Nov 2017 over a phone conversation with my mom. She had recently moved back to Hong Kong with my dad and we stay in touch by FaceTiming or speaking on the phone. On this particular day I was craving the homemade Chinese soups that she would make my sister and I weekly. I thought about how much I had took for granted these delicious healing broths. She would always tell us about what she puts in these soups and what they're good for but I had very little interest in what she would say because, well, she was going to make the soup for us regardless. But since she's left for Hong Kong, for the first time, I wish I had listened to everything she had tried to teach us.

I told her I was craving the soups and asked her what I should put into them.

"Just add these herbs, put it in water and add some veg and meat"

...uhhh...ok mom that's really not too clear. That's when I decided I really wanted to learn about Chinese herbs, Chinese herbal soups and all the amazing properties she had always told me about. I discovered that a lot of Chinese millennials also felt the same way I do. Sooo...lightbulb moment happened and I realized I could take my learnings and share it with the world. That's when kyth + kyn was born.

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As a business owner, how do you keep your team motivated?

It's important to find the right people who believe in and are interested in my brand and the vision behind it. I am a hands off leader who encourages my team to take ownership and see the company as their own.

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What's the most fulfilling part of the job? 

When a customer connects with us about how helpful or great our products are, or when they resonate with the brand, that's when I know all the struggles of having a small business are worth it.

Who should be reaching out to you?

If you're interested in how to include Chinese herbs in your life, or you're a business owner looking for new products to include on your shelves, I encourage you to check out my website (kythandkyn.com)

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We encourage you to connect with Viv to find out more about Kyth+kyn, and take a look at some of the tea and soup blends she has created. Simple, healthy, and nutritious, so take a look!

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Financial planning, as important as it is, must not be rushed into because of its sensitive nature. It is a way of protecting your future by structuring your finance. It is advisable not to rush into a financial plan because things could go south faster than you imagine and you might end up wasting your time and money. The importance of financial planning cannot be overstated. The major importance of financial planning is that it puts you in control of your income, expenses, savings, and investments. It is advisable to break everything about financial planning into stages in order to have a solid financial plan. This will enable you to track each step of your financial plan to ensure you dot every ‘i’ and cross every ‘t’. If you want to do your homework before involving a professional financial advisor, you can research the different steps (you can read our blog on the steps to take on financial planning) you can take and the things to include while preparing a financial plan. Once you are done, you can then give your financial advisor to review. From analyzing your current financial situation to developing an effective strategy to implement your financial plan, financial planning involves a systematic way of making provisions for your future.

The importance of a financial plan requires you to be thorough. Therefore, asides from outlining the steps you need to take to have a good financial plan, you can also go the route of outlining a checklist of things you want to take care of and included in your financial plan. Having a checklist is a more comprehensive way of ensuring you tick all the necessary boxes of having a workable financial plan. A good financial plan must include some important elements in order to make it work, these elements can be recreated as your checklist which will guide you when you finally start developing your financial plan. You may be wondering how you will determine what should be on the checklist and what you should leave out. This article will discuss some of the major elements that must be on your checklist so you won’t miss out on anything while preparing your financial plan. Some of what will be discussed include your assets and strategies. At the end of it all, it is important to run everything by your financial advisor for a professional view.

What Should Be Included In A Financial Plan?

A financial plan is composed of different components that work together to guarantee you a financially secured future. While some of these components are a must, you may do away with others. It all depends on your financial status, needs, and financial goals. Some of the things that must be included in your financial plan include.

Estate Plan

Estate planning is a way of taking care of your finances when you are no longer around. It is usually in form of a Will or Trust. It will state your wishes on how to handle your assets, dependents, and the administration of your estate. Your estate plan should also include a section that will appoint the person that will make medical and financial decisions when you are incapacitated. Your estate plan should also include an up-to-date list of beneficiaries of your insurance policies and registered accounts such as RRSP and TFSAs.

Financial Goals

Financial goals are an important aspect of a financial plan that you must include. These goals can be divided into short-term, mid-term, and long-term goals. This will be a road map to how you will spend, save and invest your income to meet your various financial goals. Short-term goals which could be in a time frame of 1 or 2 years include paying off high interests debts, tax preparations, and short-term investments. Mid-term goals take a few years and it includes life insurance policies, real estate purchases, and starting a family. Long term goals, like the name implies, is usually for a long period and it includes your estate planning and retirement planning. Financial goals should also include your family goals which will take care of them in your lifetime and when you are no longer around.

Emergency Funds

An emergency fund is a fund you set aside to use for any unforeseen circumstances. Things you don’t plan for may happen anytime and this is one of the major reasons for having a financial plan. Having an emergency fund in your financial plan ensures your savings and investments continue to increase in value without touching it, even in the event of emergencies. Unforeseen circumstances could be in the form of unexpected job loss or unexpected medical bills. Financial advisors recommend that you have at least 3 to 6 months of savings that can cover your living expenses for the same period as your emergency fund. It is also advisable to put your emergency fund into a liquid checking or savings account in order to be able to access the funds in a time of emergency.

Retirement Plan

The essence of a retirement plan is to make you financially independent post-retirement. It is never too late to include a retirement plan in your financial plan to give you a much-desired independence post-retirement. For a sufficient retirement plan, it is advisable to save between 20% to 30% of your pre-retirement income. You should also create financial goals and a budget for life after retirement. This will ensure you judiciously spend your retirement funds to achieve your set out financial goals.

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Financial Checklist To Include In Your Financial Plan

For you to have a comprehensive financial plan, having the following checklist will go a long way in helping build a solid financial plan.

Current Financial Analyses

Number one on the checklist is the analysis of your current financial situation. You cannot possibly plan for your future if you do not understand your current situation. In analyzing your financial situation, you must consider the following.

Financial assets

Your assets will tell you where you stand financially. You need to make a comprehensive list of all your assets which may include your saving and checking accounts, retirement accounts, brokerage accounts, investment accounts, emergency funds, cars, real estate, jewelry, artworks, and artifacts. Your assets include all your valuables and they must all be assessed to determine your worth before you start your financial plan.

Financial liabilities

You will also need to analyze your liabilities which may include loans, mortgage, credit card debts, business debts, and other expenses.

Credit Utilization Ratio

To calculate your credit utilization ratio, you divide your total debt by your total credit limit. This is also something you should include when preparing your financial plan.

Financial Insurance Portfolio

It is important to assess all your insurance coverage as well. Life, auto, health, and other insurance policies should be considered.

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Paying Your Debts

Debt is not a pleasant thing to have on your neck, especially with the interest rates. While it is advisable to avoid any form of debt, there are some debts that you may not be able to avoid at a particular stage of your life. Some of these debts include mortgage, student loans, and credit card debts. While preparing your final plan, you should come up with a strategy to pay of your debts. You can start with the ones with high interest rates. This is important for the health of your financial plan. It will ensure that you are not buried in debt while trying to build your financial plan.

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Financial Goals

This is another element of a financial plan you should have on your checklist. Your financial goals are what will drive your savings and investments and they will also give you a sense of direction on your finances. You can divide your financial goals into the following:

•  Short term goals

•  Mid-term goals

•  Long term goals

•  Family goals

•  Retirement goals

•  Career goals

Tax Issues

There will always be questions of tax when it comes to your assets. Your short and long-term profits on your investments are subject to capital gains tax. You can engage a tax professional to help you maximize every tax benefit available to you. Have a tax strategy before making any financial move that concerns your financial plan. You need to optimize your approach for tax benefits when you want to sell your assets, set up a charitable trust or donation, or shift your investments. It goes a long way in your financial plan.

Budget

This is also another important element to include in your checklist. You can break down your budget into weekly and monthly budgets. This will enable track your expenses and ensure that you are within your expected spending limit. It also separates your needs from your wants. It will also help you reach your financial goals on time.

Emergency Funds

Having an emergency fund in your financial plan enables you to grow your savings and investments even in times of emergency. You can put your emergency fund in a liquid investment to also grow it for your time of need.

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Insurance

Another important component of financial planning that you must include in your checklist is insurance policies. It goes side by side with your emergency fund as it ensures that certain aspects of your life are covered without you needing to dip into your savings and investments. Health insurance will cover your health needs, auto insurance takes care of your automobiles, life insurance provides for your dependents for when you are gone. Others include umbrella insurance policies and disability insurance policies.

Investment

This is arguably the backbone of your financial plan. It is a must on your checklist because it is what will ensure the growth of your savings. It is advisable to diversify your investments so as to vary your income and ensure a healthy financial plan. You should also align your fund allocation on each investment to suit your risk tolerance.

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Retirement Plan

This is an important aspect of your financial plan because of its importance when you are no longer active to work. You should decide on the percentage of your income you want to save for your retirement plan.

Estate Planning

Estate planning will allow you to include your loved ones in your financial plan. It will be your legacy when you are no longer around to take care of them. Some of your wishes that you can include in your Will are the beneficiaries of your retirement accounts and life insurance policies. You can also include a durable power of attorney on who will handle your finances when you are incapacitated. You can also take care of your post mortem financial goals in your estate plan.

Consulting A Professional

The role of a professional financial expert in reviewing and putting together your financial plan should not be overlooked. You may choose to prepare your financial plan using this checklist, but it is advisable to engage the services of a financial expert to put everything in order and ensure you do not miss any component. A professional will also help you consult other requisite professionals such as a tax lawyer and an insurance agent to help you review sections of your financial plan that requires their input. Engaging a professional to guide you when preparing your financial plan should therefore be on your checklist.

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Financial Planning Checklist Conclusion

The above checklist is not all-inclusive. Different strokes for different folks. Depending on your financial situation and financial goals, you may need to include some other components to have a comprehensive financial plan. That is why it is advisable to engage the services of a professional.

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