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Money Milestones

Most of us choose our financial paths based on life circumstances, stage, and our financial priorities. While there isn’t one perfect path to follow, sometimes the many choices can feel confusing or overwhelming, leaving us to wonder where to begin.

Let’s follow along as Sally Saver and Charlie Chill embark on their own financial adventure as adults—from graduating university, to buying their first home, to supporting their own children, and beyond. We’ll look at the options they considered, the decisions they made at each stage, and how SCU specialists helped them to accomplish their short-term goals while setting them up for a successful financial future.

Jump to section:

Milestone 1: The bank of mom and dad

Milestone 2: The financial merge

Milestone 3: To rent or to buy? Which option is right for you?

Milestone 4: Your kids have left the nest. Now what?


Milestone 1: The bank of mom and dad

Meet Sally and Charlie

Sally has always known she wanted to be a teacher. From the time she was in the sixth grade and her own teacher asked her to tutor a few of the other students, she was certain this was the right career path for her. Sally’s parents started putting money into a Registered Education Savings Plan (RESP) as soon as she was born and continued to contribute to it regularly, adding any monetary gifts from family and friends as Sally grew up. This meant that Sally had enough money to pay for university and could focus fully on her studies.

Charlie, on the other hand, took a more circuitous route in his education and career until eventually becoming an entrepreneur. He spent the first couple of years of university not knowing which of his interests to pursue, changing his major several times before ultimately deciding to complete a degree in business.

While Charlie’s parents weren’t able to save for his education, they helped out as much as they could, often buying his textbooks or bringing groceries and snacks to him in his dorm. This meant that Charlie was largely financially responsible for his own post-secondary education. He managed this through student loans, a student line of credit, and a credit card, which also helped him to maintain his late-night pizza habit. 

Through graduation and beyond

Sally and Charlie met during their final year of university. As they prepared for graduation and their life beyond university, they talked a lot about their financial futures and the importance of creating budgets to help them stay on track without relying on their parents for support. After graduation, they each wanted to buy a car. Sally did a lot of research and purchased a sensible used vehicle with low mileage to help keep her payments down as she worked on a budget with her new teacher’s salary. When Charlie started working for his first company, he was thrilled with his regular paycheque and decided to splurge on a brand-new vehicle.

Investing in the future

Sally’s father advised her to seek assistance from an SCU deposit specialist to discuss her financial dreams and goals. They suggested opening a Registered Retirement Savings Plan (RRSP) to start with and recommended that Sally explore other savings options for her short-term goals. 

With his student loan debt to consider, in addition to his new car payments, after hearing about Sally’s positive experience at SCU, Charlie made an appointment to speak with an SCU lending specialist. He didn’t feel ready to start saving, but the specialist recommended he open a High Interest Savings Account (HISA) to ensure whatever he was saving was earning the most interest, while still providing him with the flexibility to access the money any time he needed it. 

Charlie felt good about this approach and took the lending specialist’s advice about obtaining a consolidation loan to wrap his student loan and car debt into one easy payment. The lending specialist showed him a calculation that determined if he continued to make the same payment each month, he could end up saving around $10,000 in interest, which would give him more room to start putting some of his income into savings.

Ready to discuss your financial future? Book an appointment with an SCU specialist.
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Milestone 2: The financial merge

As Sally and Charlie were both feeling settled in their careers, they decided to take the next step in their relationship. Knowing how different their financial journeys were until then, they knew they needed to discuss how to manage their finances going forward. 

The couple met with an SCU specialist to discuss their options and determine which approach was the best for them. One of the biggest considerations in their decision-making process was that Charlie was a higher-income earner, while Sally was a better saver. 

There’s no one way to manage finances as a couple

During their meeting with the SCU specialist, Sally and Charlie went over their incomes, debt, and their financial priorities and goals. In the end, they decided to maintain their separate accounts but opened a joint chequing and savings account where they agreed to put a percentage of their income to cover shared expenses and savings goals. 

This approach made the most sense to them because it allowed them to make sure their shared expenses were covered while still providing them with the independence they wanted to make their own financial decisions outside of their shared goals.

Explore the possibilities

While there are endless options for managing finances as a couple, here are three common ways couples might approach their finances.

Caution: Merging lanes ahead

With this first option, couples merge all of their bank accounts and credit cards and have a plan to pay down any debt either of them brings into the relationship. Some couples also build in a system that allows each person to have their own portion of spending money, but all the funds reside in shared accounts where transactions are visible to both people.

Merging all your money is one way to simplify things, but it requires compromise and radical transparency. What’s most important to making this approach work is that your financial styles are aligned and to keep in mind that any differences in discipline or spending and saving habits could cause conflicts.

Yours, mine, and ours

In this second option, each person holds onto their own accounts, and they also open one or more accounts that they share. For example, a joint chequing account for shared expenses as well as a savings account for shared short- and long-term goals. How much and how often is contributed to these joint accounts is up to each couple.

This approach is great for combining finances in a way that fits your unique relationship and lifestyle. It works well for those who want to commit to shared goals, but still want some financial autonomy. It can take some trial and error to find the perfect system, so good communication is essential.

Six degrees of separation

With this third option, couples keep their accounts and credit cards fully separate, and divvy up any shared bills to pay them separately. Each person maintains their financial independence, and any shared purchases are either divided or taken in turns.

Separating your money this way might seem simple because it’s what you were doing before you met, but it can get challenging as your lives become enmeshed over time. And, if children enter the picture, having at least one joint account could make things simpler.

Whichever option you choose, keep in mind that you can always make adjustments as your financial needs as a couple change.

Ready to discuss your financial future? Book an appointment with an SCU specialist.
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Milestone 3: To rent or to buy? Which option is right for you?

Sally and Charlie have been renting an apartment for a few years and are ready to start talking about their future housing options. As with any big decision, they have many discussions to help them determine if they want to buy a home or continue renting. 

Sally is now the Vice-Principal at her school and Charlie is working in middle management for a tech company while also building his own business on the side. They are talking about the possibility of having children and they know they need more space than they have in their current apartment. While they could move into a bigger apartment, they ultimately decide they want to own their own home, hopefully in the next few years. They set up a meeting with an SCU specialist to talk about their options for saving for a down payment.

Saving for a down payment

The SCU specialist recommends Sally and Charlie open a First Home Savings Account (FHSA), which allows them to save up to $8,000 a year in a tax-sheltered account, as well as a Tax-Free Savings Account (TFSA) to help them save even more. Sally and Charlie discuss their current financial situation and decide on an amount they are both comfortable putting aside for a down payment. They set up regular pre-authorized debits to automatically transfer money from their chequing accounts into their FHSA and TFSA each month, so they don’t have to think about it. They also agree to set aside any annual bonuses or extra income or money they receive to help them save for their down payment faster.

The mortgage pre-approval

When they’re ready to start looking for a home, Charlie and Sally book a pre-approval appointment with their SCU lending specialist so they know how much house they can afford without needing to change their lifestyle. Together with their SCU specialist they determine the percentage of gross income (income before taxes) Sally and Charlie plan to spend on housing costs. This includes mortgage payments, property taxes, home insurance, and general home maintenance. Ideally, it is recommended to stay below 32 percent—that way, you won’t extend yourself too much.

Then they determine the percentage of gross income Sally and Charlie will be spending on their total debt (total debt ratio). For most homeowners, this shouldn’t exceed more than 40 percent; however, 30 percent will allow you to also put money into savings at the same time. 

Once they have their down payment and have determined the range of price point they are comfortable with purchasing, Sally and Charlie are ready to start searching for their dream home. And, when they’re ready to make an offer, they’ll meet with their SCU specialist, who will help guide them through every step of the way to finalize their mortgage. 

Renting versus buying: The pros and cons to consider

Renting might be the right option if you:

  • Are living on your own for the first time and want to experience the responsibility of paying monthly bills and utilities before deciding if home buying is right for you
  • Don’t have enough money saved for a down payment
  • Are working to improve your credit score and pay down debt
  • Want less responsibility for home maintenance and outdoor upkeep
  • Aren’t able to comfortably afford the additional costs that come with home ownership
  • Don’t mind following your rental’s rules
  • Want the flexibility to move without paying a penalty when your lease ends 

Home ownership might be the right option if you:

  • Have enough money saved for a down payment
  • Are looking for a sense of stability and responsibility that often comes with home ownership
  • Want to build equity that can be used for future purchases or renovations
  • Have a stable income and can cover additional house costs
  • Like to choose the look and feel of your home, and want the flexibility to make improvements to suit your preferences
  • Plan to live in the same area for at least the next few years
  • Prefer not to follow a rental’s rules

Coming up with twenty percent needed for a down payment can seem like a daunting task, but it doesn’t have to be if you have a good game plan. Every small amount you save now will move you closer toward your goal. And while options for a lesser down payment may seem tempting—and may even make sense—the size of down payment you can afford now can have a long-term impact on your finances, determining your monthly mortgage payments and your initial home equity. 

Ready to discuss your financial future? Book an appointment with an SCU specialist.

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Milestone 4: Your kids have left the nest. Now what?

Now that Sally and Charlie’s kids are grown and embarking on their own financial—and life—journeys, heading off to university and beyond, the couple is looking for advice on how to continue saving for retirement, while knowing their children might still need a bit of financial help over the next few years.

The couple are about 10 years away from retiring and wondering how to make the most of their income between now and then. They still plan to travel and experience new adventures now that the kids are out of the house, but they want to ensure they are continuing to save and spend wisely so they can retire when they want to, without sacrificing their current standard of living.

There’s more than one way to save for retirement

Sally and Charlie decide to meet with an SCU specialist to discuss their retirement plans, their current savings, and to discover ways they can ensure they are able to help their adult children, if needed, without causing them to stay in the workforce longer than they planned. 

While Sally started saving for retirement at the age of 25 and continued to contribute a modest amount to her RRSPs each month, Charlie started saving later in life. But being a high-income earner allowed him to contribute more money each month, which means he was able to catch up to Sally. 

When meeting with the SCU specialist, they go over their finances in detail to ensure they are currently on track in meeting their retirement goals. During this meeting, they review their current monthly cash flow to determine how much excess money they have. From there, they discuss what is reasonable for them to spend on travel and determine how much they can comfortably set aside for other needs after adding to and topping up their RRSPs. 

Staying on top of your goals

Meeting with an SCU specialist regularly is a great way to tap into all the resources available and ensure you are staying on track with your financial goals. They’ll walk you through your financial needs, review your investment performance, and help you determine how best to diversify your portfolio to meet your short-term and long-term goals.

If Sally and Charlie had been in a different situation, where their financial review indicated they had limited excess cashflow, the SCU specialist would have helped them to re-imagine their goals and discuss how they might modify their retirement plans or reduce their current standard of living or travel plans now to help them stay on track in the future.

Ready to get your retirement plans in shape? Book an appointment with an SCU specialist.
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Learn more about Sally Saver and Charlie Chill in Financial Fitness and RRSPs: Two roads to retirement

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