helping you to reduce stress and build a happier and more financially-secure future
TRANSCRIPT
w w w . e d u c a t o r s f i n a n c i a l g r o u p . c a
THE KEYS TO FINANCIAL WELLNESS
Presented by: Karen Hubbard, CFP Moderated by: Bruce Sellery
The Keys to Financial Wellness
Meet your moderator
Founder of Moolala (a personal finance training company)
Bruce Sellery
The Keys to Financial Wellness
Meet your subject matter expert
Financial Planner – CFPEducators Financial Group
Karen Hubbard
The Keys to Financial Wellness
About the webinar
Will I be able to get a copy of the slides after the webinar?
Is this webinar being taped so it can be
viewed afterwards?
The Keys to Financial Wellness
Our financial wellness agenda
• What is stress?• How to deal with the top three
financial stress factors:- High debt levels- Low savings- Lack of financial literacy
• Q&A/wrap up
The Keys to Financial Wellness
Common symptoms of stress
• Increased anxiety• Extreme mood swings (irritability)• Inability to cope (feeling loss of control)• Chronic fatigue (even after excessive sleep)• Inaction (due to feeling so overwhelmed)
The Keys to Financial Wellness
There are several contributing factors, however we’re going to focus on the top three:
1. High debt levels
2. Low savings
3. Lack of financial literacy
What causes financial stress?
The Keys to Financial Wellness
1. Communicate: Open the dialogue about money with your spouse and your Educators financial specialist.
2. Plan: Get your head out of sand and come up with a plan to get a handle on your money.
3. Care: Take care of your physical and mental health.
The keys to financial wellness
The Keys to Financial Wellness
Main cause: - Spending more than you make
Risks: - Inability to pay bills on time- Damage credit rating- Bankruptcy
Stress factor 1: high debt levels
The Keys to Financial Wellness
Types of debt: the pros and cons
Vehicle Pro Con
Personal Loan • Set payment term• Can be paid off anytime
• Higher rate of interest
Credit Card• Low minimum payment• Revolving limit
• High interest rate• Can have debt for life
Line Of Credit• Revolving limit• Can be paid off anytime• Like a low-interest
credit card
• No set payment term• Can have debt for life
Mortgage• Set payment term• Lowest borrowing rate
• Pre-payment restrictions• Long amortization• Not easily refinanced
The Keys to Financial Wellness
Stop paying high interest rates
=The average department store credit card charges 20%
The average bank credit card interest rate = 14%
Educators Financial Group 5-year mortgage rate = 3.04%
Consolidating high-interest debt into your mortgage can help you become debt-free faster.
The average line of credit interest rate = 8%
The Keys to Financial Wellness
Chart out your debt strategy
Strategy VISA Loan PLC Consolidation
Balance $10,000 $25,000 $15,000 $50,000
MonthlyPayment
$300* $506.91 $470.05 $920**
Interest Charged 19% 8% 8% 4%
*Monthly payment is 3% of balance. **Based on an Educators line of credit (in partnership with Teachers’ Credit Union) at a 4% interest rate and paid out in 5 years.
Combined monthly payment: $1276.96 Save: $356.96/mo.
Consolidating the various high interest rate debts above into one lower rate monthly payment has the potential to save you $21,417.60 in interest over the duration**.
The Keys to Financial Wellness
Accelerate your mortgage payments:
Look for more ways to save
*Over the duration of the mortgage – based on a $200,000 mortgage at a 5-year fixed term/25-year amortization period and a 4% rate.
Payment Strategy
Total Mort.Payment
Interest/Time Saved*
(Over life of mortgage)
Slow and steady(Regular)
$1,052.00(per month)
None
Accelerated $526.00(bi-weekly)
$16,849.00(plus 3 years off amortization)
Accelerated +(Add $180)
$706.00(bi-weekly)
$53,826.00(plus 11 years off amortization)
Turbo charged(Add $180 + $5,000 annual lump sum)
$526.00(bi-weekly)
$72,513.00(plus 15 years off amortization)
The Keys to Financial Wellness
Take control – take action
• Stop paying high interest rates• Consolidate high-interest debt if possible• Increase amount/frequency of payment(s)• Round up payment to nearest $100• List all balances from highest to lowest
- Record interest rates for each debt- Pay the highest rate with the lowest balance first
The Keys to Financial Wellness
You can do this by:• Always paying at least the minimum payment
on time
• Never exceeding your credit card limit
• Minimizing the number of credit applications you make
• Use your card regularly
Protect your credit rating
Keep tabs of your credit rating online:www.equifax.ca and www.transunion.ca
The Keys to Financial Wellness
Stress factor #2
savings
How to deal with:
The Keys to Financial Wellness
The Keys to Financial Wellness
Main causes: - Other financial commitments(pension contributions, day-to-day living expenses)
- No budget in place- Frivolous spending- Low cash flow
Risks: - No emergency fund- Potential to keep using credit- Possible pension income gap
Stress factor 2: low savings
The Keys to Financial Wellness
By first understanding where your money goes:
Road to savings: where to start?
Net Income
Day-to-dayexpenses
Debt repayments
Surplus/Shortfall
Retirement pension plan(OTPP/OMERS)
The Keys to Financial Wellness
Start by penciling in your budgetMonthly Net Income(after pension contributions) $3,000
Monthly ExpensesMortgage/Rent $1,220Food $500Cable/Internet $85Insurance $150Student Loan $200Entertainment $250Misc. $300Income Minus Total Expenses $2,705
Use our Go Figure calculator online to figure out your budget: www.educatorsfinancialgroup.ca
The Keys to Financial Wellness
Set your savings goals
Do you want to:• Create an emergency fund?• Travel a few times a year?• Take advantage of a Deferred Salary Plan?• Purchase a home/pay down your mortgage?• Save for children’s
education?
The Keys to Financial Wellness
Putting away just $100 a month with 5% growth:
Start saving then watch it grow
Compounding Amount Actual Monthly Contributions
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034$0K
$10K
$20K
$30K
$40K
$50K
$60K
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034$0K
$10K
$20K
$30K
$40K
$50K
$60K
$6,000$6,808
$13,200$17,503
$58,801
$30,000
Source: Go Figure calculations based on $100/month contributions at 5% growth.
The Keys to Financial Wellness
Don’t cut – cut back:
Think before you buy:
Spend smart:
Reduce spending
Set yourself limitations – reduce trips to mall/online spending
Ask yourself “why?” – do you really need this or simply want it?
Spend in positive ways that contribute to improving your health and wealth
The Keys to Financial Wellness
Stress factor 3: lack of financial literacy
Did you know…According to the Canadian Council for Learning, only 50% of adult Canadians are financially literate.
The Keys to Financial Wellness
Learn about educator-specific challenges
Education-specific item Learn how to…
OTPP / OMERS pension• Minimize potential income gaps• Navigate pension income
fluctuations• Manage cash flow challenges
Gratuities • Minimize tax implications
Summer time • Optimize cash flow (i.e. Summer Freedom mortgage)
Deferred Salary Plan • Develop a plan for DSP while minimizing the income pinch
The Keys to Financial Wellness
Tap into free resources such as…
• Workshops and webinars• Our quarterly newsletter, Insights• Online through The Learning Centre• Regular eNews – our email communications• Free one-on-one financial
planning sessions
The Keys to Financial Wellness
Create your budget (i.e. use our Go Figure online tool)
Determine your financial goals
Take advantage of our free educational resources (i.e. sign up for The Learning Centre and eNews)
Call us/visit us online: 1.800.263.9541,www.educa to rs f i nanc ia lg roup .ca
Homework
The Keys to Financial Wellness
1. Communicate: Open up the dialogue about money with your spouse and your Educators financial specialist.
2. Plan: Get your head out of sand and come up with a plan to get a handle on your money.
3. Care: Take care of your physical and mental health.
The Keys to Financial Wellness
The Keys to Financial Wellness
DisclaimerThe information provided is general in nature and is provided with the understanding that it may not be
relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice.
Attendees and readers should consult a financial planner and their own accountant and/or legal advisor
for specific advice related to their circumstances. Educators Financial Group will not be held
responsible or liable for any losses, costs, damages or expenses incurred by reason of reliance as a
result of the aforementioned information. The information presented was obtained from sources that are
believed to be reliable. However, Educators Financial Group can not guarantee their completeness or
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