How much money you do spend every month? Can’t answer that? Does it concern you? Join the club and read on.

Budgeting, tracking expenses – or whatever you want to call it – is a daunting task for most of us…and I mean “us”! With a young family of our own it feels like our money is flying out the door every time we blink. It’s quite scary sometimes. Recording every dollar we spend is a massive undertaking. Trust me, I’ve tried it and it never takes.

So, what’s the answer to the budgeting dilemma most of us face? I have come up with the most simple and irrefutable way to figure out monthly expenses. Call it your “burn ratio”, household budget, lifestyle expenses, discretionary income, surplus funds…whatever you like, it’s all the same. Here’s how to do it….

1. Look at you last year’s tax return to get your total income (line 150 of your T1 General) – that’s what you earned from all sources and if you don’t have it ask your accountant for it
2. Subtract total tax payable (line 435 of your T1 General)
3. Subtract regular mortgage and loan payments (multiply monthly payments by 12 to get annual totals)
4. Subtract contributions to all savings plans (look at either your bank account or investment statements for this information)
5. 5. Subtract insurance premiums (home, auto, life, health)

The leftover is what you spent last year. Divide it by 12 and that’s what you spent every month – and there’s no denying it. I really don’t care how it was spent. That is a personal thing. Although I do enjoy watching Gail Vaz-Oxlade telling people how much to put in each money jar….her approach works well too. Really well! But good luck with it.

Trudi St Marie from Zavitz Insurance is a strong supporter of funding research to find a cure for Duchenne. Her cousin’s son Louie, who is currently 4 years old, was diagnosed with the disease. It causes a degeneration of his muscles causing them to die off. This disease puts kids in wheelchairs and shortens their lifespan to an average of 25 years.

To help raise money, Trudi organized a trivia night at Zavitz Insurance where 90+ people participated. The event was a huge success and raised $2200.

In addition, Louie’s grandpa is walking 500kms from Owen Sound to London. To show her support for his grandpa and the disease, Trudi will be walking 100kms from May 12 -19th. She will also participate in the Jesse’s Journey walk on May 6th. To show our support for Trudi and this cause, Zavitz Insurance has donated $1500.

To learn more about the walk for Duchenne and how you can contribute or participate, please watch this short video: http://www.youtube.com/watch?v=H38dNvJk39c

The last thing any of us want is to burden our families. We use different types of insurance as a means to protect our families – and ourselves – from financial hardship. So what happens when we die? Who is responsible for paying off debts, taxes, funerals? The answer is, it depends. At death, the need for life insurance can depend on if you’re married, have children, or have debts that are co-signed. So when is the right time to buy life insurance? How much do you need? Despite what anyone might tell you, everyone’s needs are different. Here are a few guidelines to help you know when the time is right:

1. You have debts that someone has co-signed. If your debt is not co-signed and the answer to number 2 is ‘no’ then the bank can only take whatever assets you have to cover what is owed to them.

2. You have debts and are married. Once you are married, your debt becomes your spouse’s and vice versa. If something happens to you, your spouse is left with your debts.

3. You are married and your lifestyle is built based on total household income. For example, if you and your spouse are accustomed to a lifestyle that requires both incomes to afford, then the loss of one of those incomes would have a financial affect on the surviving spouse. Life insurance provides for a continuation of the lost income.

4. You have children. Whether or not your marriage is still intact, your children depend heavily on both you and your spouse for income and care.

5. You are concerned about your future insurability. The ability to get life insurance always depends on your health. By getting it now, you will lock in your insurability and do not have to worry about the state of your future health. If there is no other financial reason to have it then this results in an unnecessary expense but does provide for peace of mind.

There are many other more complicated reasons to get life insurance but these are the basics when you are first starting you careers, families and financial lives.

Many young families find it hard to make ends meet. You might not be earning your full income yet, and if you add a couple kids to the mix things can get tight fast. So how do you decide where to put your money? Here are the top 5 financial priorities that all young families need to address.

1. Protect your income. You and your family will not have any money to use if you can’t earn it. So what happens if you become ill or die prematurely? Life insurance and disability insurance are essential for young families.

2. Track spending and avoid debt. If you spend more than you earn by using credit cards and lines of credit without a thought, you are digging yourself a big hole. Figure out what your life costs every month. It’s unfortunate that this simple and free strategy is the one that is most often neglected.

3. Have a source of emergency funds. I used to tell people to have the equivalent of 3 to 6 months worth of expenses in a savings account in case of emergencies. Currently, that’s hard to justify with near zero returns on savings. Another option is to leave room on a line of credit. If you are desperate (not for a vacation or spa – I mean real emergencies) you can access these funds without ruining your financial plan. If the interest rate environment changes this advice may change as well.

4. Start saving for retirement. It is hard to plan for something so far away, but your retirement won’t take care of itself (even with a pension you will need your own savings). A dollar invested at age 25 has a lot more time to work for you than one invested at age 35 or 45. Start soon, even if it’s a small monthly amount.

5. Start saving for the kid’s education the year they are born. Do you want to pay for your kid’s education? There are many great options for education savings. But it comes fast, and it’s costly, so the earlier you start the better.

Don’t have enough money to cover the top 5? Talk to a financial planner to prioritize your financial priorities. The earlier the better!

I met with a client last week who just finished medical residency. He is in quite a bit of debt from medical school, has a mortgage and is finally making money. He came to me and our in-house financial planner, Jenn Morrison, with a question…what do I do with my income? Do I focus on paying down debt or do I invest since it is cheap to carry debt right now? Where will it be most effective? In the end, our conclusion was – Do both.

There are many arguments to maintaining your debt level in a low interest environment since debt is cheap. However, at the end of the day, no one can time the markets to know when you will achieve an amazing return on investments. You could potentially miss out on these returns if your money is not already in the game…not to mention the impact that compounding returns have over a long investment time frame. Just like you diversify your investment portfolio to hedge against these uncertainties in the market, so too should you diversify your debt repayment and saving mix. Regardless of how cheap debt is, you will still save a lot of money in the long run by paying down your principal faster. You will also avoid increased expenses should interest rates rise.

As simple as his question seemed to us at the time, it was a reminder to us of the value in diversifying and of obtaining advice. Not only did we help with finding a good mix of paying down debt and saving, we also provided him with the most tax efficient means of doing both and set him up with a financial plan that we can reference every year moving forward.

When you’re sick, do you call your doctor? When you need financial advice, do you call an advisor?

There are so many times when we want to do it ourselves. I’m a sucker for that. Why pay someone when I am perfectly competent? But there are also many times when we should consult the experts – one of which is for financial advice. Here are 5 reasons you should use a financial advisor:

1. Advisors are educated and have experience. I don’t pretend I could do without my doctor. Sure, Google might be consulted first but let’s be honest…doesn’t the internet always tell you it’s possibly cancer? Even if you do take the time to learn about financial issues, it changes overnight. What you learn today may not be appropriate or possible tomorrow. Advisors have access to the most up-to-date information in order to ensure we always know what’s relevant.
2. Financial planning is comprehensive! It is not simply about where to invest your money. It involves decisions like whether to pay down your mortgage or invest in an RRSP, or how to pay for your child’s education in the most tax efficient manner. It also involves estate planning, tax planning, retirement planning, risk management…the list could go on! All these pieces have to work together and advisors understand how to do that.
3. Advisors have relationships with the companies they deal with. Have you ever called Rogers or Bell and felt infuriated by the fact they didn’t understand your problem and were not helpful in finding a solution? I know I have! Advisors are your middle man so you can avoid phone calls with the large companies. They have relationships with you so can empathize with your issues, and they have relationships with the large companies so are not treated like they’re just another “number” when they call.
4. Advisors make sure that their clients stay on track through constant contact and reviews. Once a plan is implemented they want to make sure that life changes like buying a house, getting married, having a child, changing careers, market downturns and upturns, etc. are all taken into account and will recommend and implement changes to your plan accordingly. This helps clients remember their overall financial objective and the process to reach it. It also ensures diligence and execution!
5. Finally – Advisors are trained to see issues in their clients’ plans well before the client, and they can help plan accordingly before it is too late. There have been an astounding number of articles printed lately about people outliving their money in retirement. Advisors have the tools and knowledge to monitor that and work to prevent such an occurrence. We can’t predict the future, but we can try to plan for the worst possible scenario.

View our YouTube video to learn why you need disability insurance and what to look for:  Shopping For Disability Insurance

There is a lot to know about disability insurance. Different provisions exist and variations of these provisions can complicate the process of finding the right fit for you. Simply looking at a price will not ensure adequate coverage. “You get what you pay for” is not always true, but in the world of disability contracts it is the golden rule. So what do you need to know about your disability contract?

1. Definition of total disability: are you covered if you cannot do the duties of your regular job? Or will they try to determine whether or not you can do any job to which you are reasonably suited, and if so how do they determine what is reasonable?
2. Partial benefits: does the policy pay a monthly benefit in the event that you can still work part time? If so, how do they pay the benefit? Is there more than one option for claiming when working part time to ensure maximized benefits depending on your circumstances?
3. Exclusions: what is not covered in your policy?
4. Guarantees: can the insurance company change premiums, provisions, or cancel the contract on you at any time?
5. Renewability: when does the contract expire? Will it allow you to continue your coverage if you decide to continue working beyond age 65? If so, for how long?
6. Satisfying the waiting period: how is the waiting period satisfied? Is it necessary to be totally and consecutively disabled? Or can you add up total and/or partial days of disability over a period of time?
7. Recurring disabilities: is there a provision that allows for an automatic continuance of benefits if a disability of the same or related cause returns? Or will you be asked to satisfy the waiting period again?
8. Others: are there other clauses such as presumptive, catastrophic, or recovery?
9. Additions: are there extra riders that can be added to your policy to enhance your contract? Some important clauses include options to increase coverage, cost of living adjustments, and own occupation (relevant for specialized professions).
10. Price: the lowest price is not always the best. The reality with disability insurance is you can pay less for a policy and never receive any benefit from it, or you can pay more and get something out of it.

These are great points to know about before you purchase. If you already have a policy and are unsure what you have, you should call your advisor for a review.

For a list of definitions relating to some of the terms found within this article, pleasevisit the disability insurance section located under “Products & Services.”

As of May 1, 2010, travellers to Cuba will be required to present proof of emergency medical insurance before being allowed entry into the country. Upon arrival in Cuba you will be asked to show proof of insurance covering the duration of your stay, or you will be forced to purchase travel insurance at customs. Documentation can include a policy, certificate, or travel assistance card that is valid for the time frame you are visiting.

Some of you may have travel insurance through your employer’s plan and were given an emergency travel insurance card. Depending on the insurance company, you may need to request a letter which confirms that you have coverage in place for the duration of your stay. Your medical emergency card often does not indicate this and will not be sufficient proof of coverage.

Travel insurance can be obtained a number of ways and it is definitely a good idea to shop around. Look online at sites like www.useblue.com or www.gms.ca. Also talk to your travel agent and insurance broker to see what they can offer.

You never know what the quality of travel insurance is like in Cuba or what is costs, so be sure to take all the right steps before you leave so you can enjoy your vacation right from the beginning!

It is not news that the economy has gone into a downward spiral damaging investment portfolios, employment rates, and retirement plans. However as we watched our investment statements decline and the cash values in our Universal Life policies diminish, one thing stayed constant…Whole Life Insurance.

Whole life insurance lost momentum in the 1970s, however those who chose to purchase a policy have seen little to no change during the economic downturn. The annual dividends were paid and the cash values continued to grow. If we look at Great West Life, despite the economic destruction they were able to maintain their current policy dividend levels into 2009, offering their policyholders stability and confidence.

Why you ask? Well let’s look at how whole life works. The premiums of participating whole life policies are more expensive than the other alternatives. This is because the insurance company uses conservative projections on death claims, investment returns, lapses and administration charges. Every year they tabulate the actual expenses incurred and refund a portion of the difference in the form of a policy dividend. This portion is usually quite high; looking at Great West Life again, they distribute 97.5% of the surplus to the policy holders. These dividends increase the cash value and death benefit over time. All funds are invested by the insurer’s team of professional investment managers. The dividend payments are not guaranteed; however once they are paid out they are automatically vested in the policy and cannot be reduced by the insurer.

During the economic decline, factors which determined the dividend payment did not experience substantial losses. Mortality rates did not change, expenses remained constant, and the majority of the policyholders’ assets are held in fixed income or money market securities providing for a very conservative asset mix.

You may be thinking… but it’s life insurance, not an investment. True, whole life policies are life insurance but these policies accumulate a cash value within the policy which earns tax free returns. Policy holders can borrow against this cash value or take a policy loan giving them access to the funds during their life time. By accessing the funds in this manner, the money received remains tax free. Also, dividends are still credited to the policy and the cash value still earns returns as if the loan does not exist. The outstanding loan, including interest is then repaid by the cash value should you cancel the policy, or paid from the death benefit in the case of death. Simply stated, this untaxed financial vehicle allows individuals to dump in extra cash that grows tax sheltered and draw upon it when needed without losing sleep over market downturns and fluctuations.

As stated by investment guru John E Girouard, “Few people know that the life insurance industry was one of the few economic sectors to survive the Great Depression intact. It was one investment that kept its promises.”

If you would like more information as to how whole life insurance can work for you, please contact our office.