Having children does not mean that investing is out of the question. It is possible to provide for your family now and still make smart investments.
But families are expensive, so how do you do both?
The average annual cost to raise a child in Canada is estimated to be $13,365 and by the time they are 18, it’s $253,946, based on a 2015 article by Moneysense.ca. It sounds like a lot of money, because it is a lot of money.
But, your future and retirement is not going away. So the earlier you start with a good financial plan, the better you’ll be off.
“Even though it can be a challenge to save for the future, giving your savings those extra years to grow could make the struggle worth it, every little bit you can save helps,” says Fidelity senior vice president, Jeanne Thompson.
And while saving is good, some argue that it’s not always enough.
“With the current pandemic, interest rates at banks are very low, saving isn’t really doing much for your personal wealth. Depending on your financial situation, especially for a family, you have to really find that sweet spot as far as how much you can save and take advantage of current rates,” adds financial entrepreneur Gary Ng.
Consider finding an investment advisor or financial planner that can help you start a savings plan, investment strategy, and to look at your current financial situation. They can help guide you to make the best choices.
Learn the difference between investing, stocks and trading to see what works for you.
“Investing is different from saving or trading. Generally investing is associated with putting money away for a long period of time rather than trading stocks on a more regular basis. Investing is riskier than saving money,” notes personal finance writer Andrew Goldman.
If you do want to invest, do your research and let your planners help you. This is especially important when you’re just starting out, but it doesn’t hurt to have their expertise for the long-haul.
“And invest in familiar territory or where you have expertise. Perhaps it’s related to your career or something you have a profound interest in,” adds Gary Ng. This is especially true for beginners in the stock market. Don’t make it complicated for yourself.
And if you are putting money away at the bank, many financial advisors say it’s a good rule of thumb to save about 15 percent of your pre-tax income annually for retirement.
This may seem like a lofty goal, so make it easy on yourself and have regular automatic deductions from your paycheck to your bank. Ten percent of your weekly earnings is a good starting point. Increase it in time when, or if, you feel you’re ready to put away more.
Make a list of expenses for the next decade and definitely have an emergency fund. Create a realistic budget and, with a savings plan and investment success, you can plan for a profitable future.