Lifestyle | The chance to take back financial control

Even if we have already multiplied the bad financial decisions, it is possible to take control. And sometimes life presents good opportunities to improve one’s lot. Just enter them.

Posted at 6:00 am

Martine Letarte

Martine Letarte
special cooperation

The situation

Nadine* didn’t have the opportunity to develop good habits for managing her personal finances at a young age. “My parents always struggled to make ends meet, and saving wasn’t part of our vocabulary at home,” she says. I started working very young but I didn’t know how to manage my income. »

From university, she went into debt by multiplying credit cards, getting a “huge” student loan, taking out high-interest personal loans, etc. At 40, she filed a consumer application. “I got out, I’m more disciplined with my finances now and I can even save. »

Nadine has worked in healthcare for 22 years and contributes to the Government and Public Employees Retirement Plan (RREGOP). She had a retrospective pay rise of more than $34,000 this year after union negotiations at the Equal Pay Actin addition to bonuses related to COVID-19.

I feel like I have a second chance to finally make good financial decisions and would like some advice. I want to avoid paying too much tax this year and keep saving for my retirement when I’m 60.


Nadine is the mother of a young adult who has just moved into an apartment and a teenager who will be 16 in the fall. She’d like to pay into the Registered Education Savings Plan (RESP) for him, but wonders if it’s too late. She also plans to help her daughter fund her master’s degree, which she will start in September.

In three years, she wants to buy a triplex worth about 1 million in Montreal that she wants to live in to have access to a courtyard. His daughter would own 25% and his son could also buy 25% of the building if he could afford it. “I wonder if this is a realistic project. »


Nadine, 48 years old

  • Annual salary 2022: $92,000 (previously $82,500)
  • Bank Account: $16,600 (from wage capital)
  • TFSA: $15,800 ($10,000 from payroll shares)
  • MSRP: $11,300 ($125 automatic payments every two weeks)
  • Paid Car: Value of $2000
  • Current annual living expenses: $48,000
  • Expected annual living expenses at retirement: $44,000
  • Cumulative RRSP Post Space: $36,621

The answer


Julie Paquin, Financial Planner and Vice President, Private Management, at Optimum Gestion de Placements

Having lived through difficult years financially, Nadine has several options open to her. “She has made great efforts to get her finances in order and her budgetary discipline is on the right track,” says Julie Paquin, financial planner and vice president, private administration, at Optimum Gestion de Placements.

For the RESP, on the other hand, it is too late for Nadine. “She should have contributed at least $2,000 in her case last year because to receive the 30% federal subsidy, the child must be 15 on December 31 of the contribution year,” says Julie Paquin.

Reduce your taxable income

As Nadine’s taxable income has skyrocketed this year due to her salary increase and retroactive equal pay payment of over $34,000, her marginal tax rate will increase from 37.12% to 47.46%, according to Julie Paquin.

Contributing to your RRSP is a priority to reduce your tax bill this year. Since she has unused RRSP contribution space, I advise her to take $15,000 from her checking account and $10,000 from her TFSA and deposit them into her RRSP.

Julie Paquin, Financial Planner and Vice President, Private Management, at Optimum Gestion de Placements

The financial planner also suggests she increases her automatic payments in her RRSP to $185 for the next two years. “Then she can add that amount to her TFSA contributions,” she says. This allows him to use his unused rights in his RRSP and continue saving for the down payment to become a homeowner. »

Maximize the TFSA

To achieve her goals, Nadine is also interested in setting up an automatic payment in her TFSA every two weeks.

“I advise him to transfer $200 every two weeks,” says Julie Paquin. The TFSA is attractive because returns and withdrawals are not taxable. »

She also advises Nadine to keep a portion of her TFSA as an emergency fund, which equates to about three months’ spending. “A financial cushion gives you security,” says the financial planner. However, several factors can affect the amount needed, such as the details of his disability insurance. He must also invest this sum in safe and flexible investments in order to be able to withdraw amounts if necessary. »

Assess the feasibility of the Triplex project

For the triplex question, Nadine and her daughter have to go to their financial institution to check their creditworthiness and get pre-qualified for a certain sum. “This will be a good indicator of the realism of the project,” says Julie Paquin.

A $1 million building requires a 20% down payment if you want to avoid paying the Canada Mortgage and Housing Corporation (CMHC) mortgage loan insurance premium. “So we’re talking $200,000 down payment and $4,652 mortgage payments per month at a simulated interest rate of 5%,” estimates Julie Paquin. Nadine could also opt for the minimum down payment for a triplex which is 10% but she would then have to pay the CMHC premium and of course a lower down payment means she has to borrow a larger sum and therefore more mortgages. »

According to the savings scenario proposed by the financial planner, Nadine will have nearly $33,000 in TFSAs in 2026 and she will be able to take advantage of the Homebuyer Plan (HBP) by withdrawing the maximum allowed in her RRSP, i.e. $35,000.

While buying an investment property can be attractive, it also comes with a lot of obligations that need to be considered. “According to the retirement analysis that was conducted, Nadine can retire at age 60 without buying a property with a cost of living of $44,000,” says Julie Paquin. Nadine could also decide to postpone purchasing the triplex or explore other options such as purchasing a condo with a courtyard. One thing is for sure, it is essential that she is accompanied by real estate and personal finance experts to make the best decisions and maintain her budgetary discipline. »

*Although the case highlighted in this section is real, the first name used is fictitious.

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