For many young families, the concept of financial planning might mean just struggling to get from paycheque to paycheque, but according to financial-planning experts, the sooner families start looking ahead to the future, the better.
That sentiment is not lost on Joe and Heidi Caldarone, a Powell River couple with two young children aged two and five. The Caldarones decided one way to secure their future was to purchase real estate. They entered the market in 2008 and now own two homes, one of which is rented to Heidi's mother.
"Eventually we'd like to have financial security when we retire," said Joe, "so we're thinking through real estate we can have that freedom."
Purchasing real estate is just one of many ways for young families to help secure their future, but the important thing, according to financial planners, is that the Caldarones are actively planning ahead.
If coming up with a down payment for a house is out of the question, starting with smaller financial-planning steps can be just as valuable for a young family, says First Credit Union (FCU) certified financial planner Scott Kovacs.
"The biggest thing would be to actually start," said Kovacs. "Some people get discouraged about the actual amount, where they can only afford $50 per month or something, so what's the point? So, the biggest step is to start a regular habit of investing."
Katryna Lawry, a personal account manager at FCU, agreed that getting a start is the most important thing, and most financial planners are happy to sit down with young families to initiate a conversation, whether they are in a position to invest or not.
"It's never a bad thing to start early, and sitting down with a professional is very important, and not to think you have to have extra money to start engaging in these types of topics," said Lawry. "Anyone can come in and see us and we can help them figure out what their goals are, and help them build their wealth and achieve those goals."
Whether the goal is to save up for a down payment on a house using a high-interest savings account, or to look at longer-term investments such as RRSPs or mutual funds, Kovacs pointed out that young families' financial positions usually improve over time, which is beneficial for investment activity.
"You start out with a job making a certain amount, and then you get a raise or a promotion, and it increases over time," said Kovacs. "Then you can afford more because you've already started something and you want to keep it going."
A huge help for Joe and Heidi was sitting down together and coming up with a budget, said Joe. Deciding what expenses were a necessity, and which they could eliminate, was a way to start saving money and working toward financial stability, he said.
"You don't have to change your whole lifestyle, but just do little changes that will turn into big changes over time," said Joe. "I'm not worried about our future at all. Everything we do has a purpose and there's always an end goal in mind."
Lawry and Kovacs suggested all young families have some kind of emergency fund in a high-interest savings account. Putting aside small amounts of money every month can also be very useful for saving for a down payment, said Lawry.
“It’s all about how can we get them toward saving for their down payment and ultimately being able to afford the purchase of a home and the costs associated," she said.
Other products that can be useful are Registered Education Savings Plans, which can be put toward the cost of children attending university, and Registered Retirement Savings Plans, for the longer-term future, depending on the family's income situation.
Working with young families like the Caldarones is what makes financial planners' jobs so fulfilling, said Lawry. Turning anxiousness or intimidation about finances into positive steps for the future is an important and valued job, she said.
"One of the most rewarding things is when someone comes in very intimidated and feeling so far from their goal, such as a home purchase, and then finding out they can afford it with their life situation, and that it's not so scary," said Lawry. "It's very exciting for them, and we get to feed off of that excitement."
