It's Your Money  

Get that free money

If you have a child born between 2007-2009, the deadline for free money from the B.C. government is only weeks away.

Any child born after 2006 is eligible for the $1,200 B.C. Training and Education Savings Grant (BCTESG), but the final chance to claim this grant is fast approaching. The best part is that there’s no catch and all you need to do is signup to get the money.

The deadline for those born in 2007, 2008 or 2009 is Aug. 14, 2018, or the day before the child’s ninth birthday – whichever is later.

While many parents have already taken advantage of this grant, to the tune of $125 million in allocations, many more have not yet done so.

There are 75,000 eligible B.C. children who’s final application date is this August and that have not yet enrolled and that equates to $90 million of free money that will disappear next month.

Out of the 280,000 total eligible children in B.C., 176,000 are not yet enrolled to receive the grant when their deadline for applying comes due.

There has been ample coverage about the BCTESG and the pending deadlines to apply but confusion over the program still exists and that must be the reason many parents have not yet signed up.

It’s free money for your kids, costs you nothing and only takes about 15 minutes to enrol. What else could be keeping people away?

Here’s how it works:

  • To be eligible for the $1,200 BCTESG, a child must be born in 2006 or later and both the parent and the child must be residents of British Columbia.
  • The parent(s) setup a Registered Education Savings Plan (RESP) that should not cost anything to do.
  • The RESP provider (financial institution) sends in the BCTESG application on the parent’s behalf
  • $1,200 is deposited into the RESP account by the B.C. government

Yes, it’s really that simple. It’s free money that can be put toward your child’s post-secondary education. OK, maybe “free money” isn’t the right term since it’s money that you and I paid in taxes. But for the eligible children, it’s there to take for free if their parents choose to do so.   

Almost 80 per cent of job openings in B.C. over the next decade will require some form of post-secondary education and this RESP grant may be used for full-time and part-time studies in a wide range of programs. It’s not just full-time bachelor’s degree programs that qualify.

As mentioned above, there are no additional fees or financial contributions required to receive the $1,200 grant, so parents who cannot otherwise afford to put aside savings for education at this time can still open an RESP account and receive the BCTESG.

That money can be invested to grow and will ideally be worth a lot more than the $1,200 amount by the time these children are ready to use it.

If you or anyone you know has children born after 2006, I urge you to send them a copy of this column and make sure that they’ve signed up to take advantage of this program.

Feel free to send me an email if you have any questions!


Is that really a good idea?

Are you considering helping your child buy their first home? If so, you’re certainly not alone.

A recent survey commissioned by the Financial Planning Standards Council found that 38 per cent of Canadians plan to hep their child purchase their first home.

A significant portion of those surveyed also admitted that the money they will use to help their child’s home purchase are funds that would otherwise have gone to fund their own retirement or reduce debt.

On the surface, this appears to be an admirable gesture and many feel that it is the only way their kids will get financially established themselves with the current sky-high real estate prices. But this generous act may have some dire financial consequences and should not be undertaken without careful consideration.

Any parent considering helping their adult child out with their first home purchase should review (or create) their comprehensive financial and retirement plans first.

If you can’t clearly and confidently answer the questions of when you’ll retire, how much you will have saved at that time and what safeguards you have in place to deal with future unexpected financial surprises you are in no position to make this kind of a decision.

There is no doubt some parents have sufficient financial assets to help their kids and this may be a good idea if you’ll end up leaving them a considerable inheritance when you pass away.

But many other parents will be cheating themselves out of a comfortable retirement by passing on funds when they can’t afford to, and many won’t realize this until it’s too late.

A certified financial planner (CFP) would not stand in the way of a parent’s desire to help their children out, but they will arm the parent with enough information to help them make an informed decision. Take the time to plan appropriately and don’t rush to make a rash decision.

Helping your child financially is usually fuelled by emotions and we all know by now that emotions can lead to poor financial decisions. Owning a home isn’t necessarily the peak of reaching adulthood and financial stability like it used to be and it may not be the best choice even if you can afford to do so.

The child’s own financial situation should be analyzed as well to see if they’re in the right position to take on home ownership.

You should also consider what happens if the real estate market drops in value or if your child decides to pick up and move to a new city for their dream job. The child that you’re considering helping should have their own financial plan drafted up to see how it would all work and if their income and other debt loads will work.   

A proper financial plan is a vital tool that needs to be in place before you take this big step. Once you see what kind of impact this financial gift will have on your own retirement plans, you can make your decision properly.   

Financial togetherness

When meeting with new clients, there is an all too common statement made that causes concern every time.

I often hear one spouse tell me that they handle the finances so there is no need to have the other spouse involved. 

This one notion can be more damaging to a couple’s financial planning path than almost any other destructive behaviour. My response is always to strongly recommend that both partners be involved and here’s just a few of the many reasons why:

One of you will very likely outlive the other

If the spouse who handles the finances passes away first, then the surviving spouse is left to handle everything on their own without the benefit of learning about the finances over the years and being properly equipped to take this on.

In addition to grieving the loss of your partner and trying to take care of final expenses, funeral plans and other necessary arrangements, the survivor needs to simultaneously spend considerable time and effort trying to figure out where they’re left financially.

This scenario is, unfortunately, way too common since men still handle house finances more often than women and men typically pass away first.   

Your financial goals will be more achievable

Mutual financial goals require a mutual commitment to reach them and buy-in from both spouses is critical. If one spouse commits to living within a set budget to free up cash flow to pay down debt, but the other keeps spending whatever comes in each month, the goal will never be reached.

However, if both spouses set the financial goal together and both commit to achieving that goal, the odds of success are much higher.    

You will have a happier and healthier relationship

It has been well documented that money and finances are the No. 1 stressor in a marriage. While I have heard people argue that they can avoid this stress and fighting by just letting their partner deal with the finances, I can tell you this strategy never works.

Frequent honest and open conversations about your current state and future goals is a much healthier approach to take. Jointly celebrating the attainment of a mutual goal is a lot more fun than bearing frustration or resentment for a decision made by your partner that you weren’t aware of. 

Exercising financial discipline is easier with a buddy

Much like going to the gym and not skipping a workout when you’re too tired, sticking to a budget is easier if you’re using the buddy system. The resolve and support of your spouse will make it easier to stick to your financial plan and not make emotionally driven financial mistakes if you’re in it together. 

Spouses may have different ideas of what the right goals are and how they should reach them but a well laid out plan with some compromise on both sides should result in a financial plan that both are happy with.  

While you don’t have to make joint decisions on every small aspect of your finances, a combined effort on the planning and execution of the bigger ones is strongly encouraged.

Even if one spouse feels like they’re clueless about money matters and the other ones is fairly astute, any big discussions and all regular financial planning reviews should involve both parties. 

For the currently un-involved spouse, sitting through a review with your financial planner that your spouse normally goes to alone may feel painful at first, but as you learn more and become more aware, I promise you a higher level of contentment will follow.  


Trump's tweets costly

Are your investments at risk from protectionism?

Will U.S. President Donald Trump’s Twitter happy fingers cause permanent damage to your retirement plans?

These are the questions that many Canadian investors are asking right now and the answers they’re receiving seem to be varying wildly.

With ongoing NAFTA uncertainty and talk of global trade wars in the headlines daily, many investors are wondering what it all means to their personal finances.

The protectionist risk has been on the table since Trump took office last year, but has certainly increased in the last month.

The chances of a new NAFTA deal before the Mexican presidential election (July 1) are near zero and a new agreement before the fall mid-term U.S. elections is looking unlikely as well.

If NAFTA is shredded, the participating countries would, as World Trade Organization members, likely default to the most favoured nation tariff rates.

These tariff rates alone would not pose a significant threat and the positives from U.S. tax reform would still outweigh the negatives from this new world order.

The tariffs applied and threatened (so far at least) represent more of a modest global economic drag than a full-blown crisis. Protectionist measures would need to increase significantly more still to reach real trade war status.

So globally, things aren’t looking too bad (yet).

Canada has, however, a very un-diversified economy and we could be hit harder domestically at the already proposed protectionism levels.

Currently, all eyes are on potential auto tariffs as this is one of the few industries we participate in outside of resources. Furthermore, Trump appears to look at the auto sector as a symbolic issue of what he believes is wrong with the current NAFTA rules and he may push more forcefully in this area.

Unfortunately, Canada has the most to lose if things continue to intensify.

A significant trade spat with China has much bigger global consequences though we’re not near there yet. In response to recent announcements of new U.S. tariffs on Chinese imports, China announced that it would retaliate in kind.

But U.S.-China tensions don’t end there; Washington is also set to release a June 30 proposal to limit Chinese investments in the U.S. unless they agree to ease U.S. investment restrictions on their soil.

$1.2 trillion of U.S. debt is held by China and some have speculated that they may flood the market with this debt if the trade spat gets bad enough.

Having said that, while the number is a big one, it represents approximately five per cent of all U.S. debt and there would likely be enough buyers (including the U.S. federal reserve) to absorb this amount.

Such a move would additionally pose economic hardships for China as well, so they likely won’t act on this unless forced into desperation. 

While the global trade situation is not at a critical level yet, there are a few things you can still consider to ensure that you are well protected.

As I’ve written before, portfolios at the most risk are the ones that still hold too much of their investments in Canadian equities.

A broadly diversified portfolio across companies, industries and regions is imperative. Canada is only three per cent of the world markets, yet it represents as much as 90 per cent of investment portfolios for many people.

It may not hurt to take a little more risk off the table as well if your accounts are equity heavy.

I don’t think that you need to be fully positioned for a massive trade war at this time, but you can’t ignore it completely either.   

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About the Author

Designated as a chartered investment manager and certified financial planner, Brett holds life insurance and investment licenses in B.C., Alberta and Ontario.

In addition to being the owner of Kelowna-based SPEIR Wealth Management Inc., Brett also serves as the vice-chair of the Financial Planning Standards Council of Canada’s board of directors. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations for the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FPSC board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected].

For more information or to see a database of previous columns, visit www.speirwealth.com.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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