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Money 101: Every Canadian's Guide to Personal Finance PDF

289 Pages·2002·0.58 MB·English
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money101 This page is intentionally left blank money101 Every Canadian’s Guide to Personal Finance E l l e n R o s e m a n WILEY Copyright © 2002 by Ellen Roseman All rights reserved. No part of this work covered by the copyright herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical— without the prior written permission of the publisher. Any request for photocopying, recording, taping or informa- tion storage and retrieval systems of any part of this book shal be directed in writing to CANCOPY, 1 Yonge Street, Suite 1900, Toronto, Ontario, M5E 1E5. Care has been taken to trace ownership of copyright mate- rial contained in this book. The publishers will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions. This publication contains opinions and ideas of the author. They are not presented to provide a basis of action for any particular circumstances without consider- ation by a competent professional. The author and pub- lisher expressly disclaim any liability, loss, or risk, person- al or otherwise, which is incurred as a consequence, direct or indirect, of the use or application of the contents of this book. National Library of Canada Cataloguing in Publication Roseman, Ellen, 1947- Money 101 : every Canadian's guide to personal finance / Ellen Roseman. Includes index. ISBN 0-470-83236-3 1. Finance, Personal--Canada. I. Title. II. Title: Money one hundred one. HG179.R674 2002 332.024'00971 C2002-905390-0 Production Credits Cover & interior text design: Interrobang Graphic John Wiley & Sons Design Inc. Canada, Ltd Printer: Tri-Graphic Printing Ltd. 22 Worcester Road Printed in Canada Etobicoke, Ontario 10 9 8 7 6 5 4 3 2 1 M9W 1L1 Contents 1 Introduction 5 Part One: Getting Started 7 Keep track of your spending 9 Find areas where you can cut back 11 Seven easy ways to save money 13 Get the best deal on banking 17 Save money with online banking 20 Consider joining a credit union 23 Take care when using debit cards 26 Know how your savings are protected 30 Put your savings to work 32 Set aside money for emergencies 34 Protect yourself with life and disability insurance 38 Top up your health insurance Contents 41 Insure your home and belongings 45 Protect your car against theft and accidents 50 Keep in touch with your auto insurer 52 Be cautious about buying extended warranties 55 Part Two: Borrowing Money 57 Shop around for a mortgage 62 An RRSP loan can cut mortgage costs 64 Are you pre-qualified or pre-approved? 68 Save money on your car loans 72 Check out zero per cent financing 74 Don’t think car leasing is cheaper 78 Watch out for car lease penalties 82 Don’t carry a balance on credit cards 86 Pick the right card for your needs 91 Find out how interest is calculated 93 Check out the benefits of premium cards 96 Preserve your good credit rating 99 Check out your credit report 103 Protect yourself from identity theft 107 Part Three: Saving for Retirement 109 Deal with debt before saving for retirement 113 Don’t count on early retirement 117 Maybe you’ll never retire 121 Get to know your retirement benefits 126 Find out how your company pension works 131 Top up your pensions with an RRSP 136 It’s never too late to start an RRSP 140 Build a nest egg outside an RRSP 144 Your home is not your retirement plan vi Contents 148 Find a good financial adviser 152 Do you want to pay for advice? 156 Beware of free investment seminars 161 Part Four: Investing Money 163 Get a handle on your emotions with investing 168 Put your investments on autopilot 171 Buy stocks with dividend reinvestment plans 173 Buy stocks as an inflation hedge 178 Test drive your broker before signing up 181 A few things to ask your broker 184 Buy bonds for income and stability 189 How to pick mutual funds 192 How many funds do you need? 194 How to save money buying funds 198 Look at low-cost index funds 201 Beware of the year-end surprise 204 Wrap accounts can be costly 206 Surf your way to investment knowledge 209 Part Five: Financial Planning 211 Practise safe income splitting 215 Get Ottawa to subsidize your kids’ education 220 Questions to ask about RESPs 225 Look at in-trust accounts for kids 228 Life insurance can be used for education 230 Search for scholarships and bursaries 232 Think of marriage as a business partnership 234 Understand obligations of common-law partners 237 New rights for same-sex partners vii Contents 239 How to share assets after divorce 243 Ending fights about child support 245 Preserving financial health for widows 247 Dealing with a terminal illness 251 Write a will for family harmony 255 How to cut probate taxes 258 How to cut estate taxes 262 Don’t forget a power of attorney 268 Read a good estate planning book 270 Now get going! 273 Index viii Introduction You want to make your money go further and set a little aside for sav- ings. But your eyes glaze over when you hear about the dividend tax credit, dollar-cost averaging or derivatives. This book is for you. Money 101 is about mastering personal finance without pain. Think of it as a slow jog along the highway from idiocy to literacy. My aim is to make the information understandable to everyone. This means breaking each topic into bite-sized chunks and keeping the writing simple (but not condescending), lively and opinionated. The goal is to demystify money, to defeat the impression that only a math whiz can grasp the ins and outs of the subject. That’s why there are no graphs or charts in these pages. I want you to sense the urgency of getting a handle on your finances, even if you’re uncomfortable with numbers and never follow the business news. Why is it so important for everyone to go through a basic course in financial literacy?

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