Financial Safety Nets: What the Experts Say Every Family Needs

Parenting
Written By TD

Written by Jaime Burnham

Find out what you need to know about raising and building a financially responsible and literate family. I sit down with four experts who want you to know the basics when investing in your family.

In a world where there seems to be a new ‘GoFundMe’ drive every day, one has to wonder if there’s a better way to protect our families in the event of an unforeseen life event. Whether it has touched us personally or someone in our orbit, we have all witnessed the devastation that comes with an unexpected loss…the death of a spouse, a battle with cancer, a health crisis that translates into job loss. Growing up in a financially literate household, I was one of the lucky few to be taught the basics of financial planning. Without that open financial dialogue, many Canadians do not grow up planning to put a strong safety net in place. With that notion, I decided to sit down with four women who are on Canada’s cutting edge in the field of financial planning.

Stephanie Burnham (CPCA, EPC), Cheryl Campbell (CFP), Kerry Edwards (CPCA, EPC) of London, Ontario, have been changing the face (literally) of the financial industry for the past 30 years. Burnham, Campbell, and Edwards all hold their life insurance licences; Burnham and Edwards are also Certified Professional Consultants on Aging (think retirement planning), while Campbell is a Certified Financial Planner and holds her Mutual Funds licence. The four women have found success in this predominantly male profession by going back to the basics and not just selling to, but educating their clients.

Four Things Everyone Should Know:

1) Open an emergency fund.

This could be a tax-free savings account (TFSA) or Critical Illness Policy (CI) should you be diagnosed with a life-threatening illness to cover treatment/travel/life expenses.

Edwards, who had her own medical scare with a breast cancer diagnosis 15 years ago, pleads for parents to consider purchasing a Critical Illness policy.

“A critical illness cheque is the cheque that you hope you never get – it means that the situation is life-threatening, and the reality is that you don’t suffer alone, your entire family suffers along with you. What I know is that the cost of being sick is real”, Edwards explains. She continues by reminding us that, “Critical illness coverage doesn’t change what is happening to you; however, it does provide an emergency fund to help with life’s ongoing costs that do not stop because someone in the family is sick.”

2) Write a will.

Burnham says she is shocked by how many clients lack a will. Sadly, she told me that many believe having a will is almost like tempting fate. “You have to know where your money is going after you pass, so your family and the government don’t decide it for you. If you have children, you want to know who’s caring for them.”

3) Consider an RESP or RDSP.

If you have children, consider a Registered Education Savings Plan (RESP) for post-secondary educational expenses, and for lower-income families with children with disabilities, look into the Registered Disability Savings Plan (RDSP).

Campbell and Burnham explain that money put away in an RESP can be used for expenses beyond just tuition. Books, housing, and other post-secondary essentials can be paid for by your RESP account. “Even if you are unsure your child will attend university, an RESP is an important way to create a nest egg,” Campbell adds.

4) Purchase a life insurance policy. 

Ensure your family is looked after in the event of your passing; don’t depend on a GoFundMe campaign to care for your loved ones.

“When you are young and healthy, you think nothing can ever happen to you,” says MacKenzie Campbell, Cheryl’s daughter, who is following in her mother’s finance footsteps, “but then there is a death or a devastating diagnosis, and the last thing you want to worry about is having enough money to care for yourself and your family.”

The team adds that for a small expense like twelve dollars a month, an individual could have a life insurance policy providing peace of mind should anything ever happen to them. Even with recent celebrity deaths, we have seen GoFundMe drives pop up when incurable diseases or tragic accidents take the breadwinner of the family, and financial planning has not preceded the diagnosis or event.  Remember, Burnham adds, “once you receive a life-threatening diagnosis, it can be near impossible to be insured.” Bluntly put, it will be too late to create that financial security for your loved ones.

Let’s Review…

RRSP - registered retirement savings plan designed to save money for your retirement; contributions are tax-deductible 

TFSA - tax-free savings account is a registered savings account that functions like an investment account. It can hold cash savings and investments that generate tax-free income.

RESP - registered education savings plan to help families save for post-secondary education it allows for government contributions to the savings through grants and bonds.

RDSP - registered disability savings plan for lower-income families living with a child(ren) with disabilities.

Life Insurance  - a contract between an insurer and the policy owner that guarantees a sum of money to the policy’s named beneficiaries when the insured dies.

CI policy - Critical illness insurance is provides you and your loved ones with financial support in the event you experience a severe health condition. If you’re diagnosed with a covered critical illness, your insurance can provide you with a one-time lump-sum payout that can be used to cover anything that you and your family might need.

Tools to get you started:

Being financially literate means being financially responsible for yourself and your family, should the unforeseen happen. We don’t want to put our family’s security in the hands of the possible success of a GoFundMe. Start planning now so that you have peace of mind for the future and for your children’s future. Talk to the experts to find out what policy or plan is right for you.

To learn more about or to contact the advisors featured in this article:

Cheryl Campbell
https://www.ccandassociates.ca/
Email: cheryl@ccandassociates.ca

Stephanie Burnham
https://www.pinkinkinsurance.com
Email: stephanie.burnham@hubfinancial.com
Insta: @pink_ink_insurance

Kerry Edwards
Email: kerry@maplewoodinsurance.ca

MacKenzie Campbell
Email: mackenzie@ccandassociates.ca

TD
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