Family First

Curious to know how parents really feel about money? RBC’s Mydoh commissioned a survey of 1,500 Canadian parents of children age 6-18 to find out how they feel about money, and what they hope to teach their children about financial literacy:

How do parents feel about money?

• –  90% of Canadian parents rank basic money management as the main skill they hope their kids will learn

 

• –  70% of parents believe that money should be openly talked about as a family

 

• –  68% of parents wished their own parents had taught them more about managing finances

 

What do parents hope to teach their children? How can parents motivate their children?

• –  Understanding wants vs. needs. Understanding wants vs. needs means that children can assess whether their spending choices are must-haves or nice-to-haves, and hopefully position them to avoid bad debt in future.

 

• –  Learning to budget. Getting smart with money and learning about budgets and expenses takes practice, and practice takes time. One simple way to do this is use the 50/30/20 budgeting rule. That means children put aside 50 per cent of their income (or allowance) towards needs, 30 per cent towards wants, and 20 per cent towards savings.

 

• –  Encouraging them. If your child has a brilliant business idea to start baking cakes, become a dog walker, or sell vintage clothing online, encourage them to explore their passions and earn their own money.

Market Moment

• – U.S. GDP strong in Q4 alongside moderate price growth. U.S. GDP jumped another solid 3.3% (annualized) in Q4 after surging by 4.9% in the third quarter. That leaves the annual growth rate in 2023 at 2.5%, up from 1.9% in 2022.

 

• – Canadian GDP ticked higher in Q4 2023. Canadian GDP posted a larger than expected 0.2% increase in November, with the early estimate for a stronger 0.3% increase in December. Taking the advance December estimate at face value, growth in Q4 is tracking an annualized increase of 1.2% which would mark a sixth consecutive quarterly decline (when growth is counted on a per-capita basis, as population growth continues to surge).

 

• – Canada’s Housing Market Outlook is expected to continue to be impacted by interest rates, with the first and second halves of the year showing different pictures. Slow activity and softer prices are expected to persist in the early part of the year, and a pivot towards rate cuts mid-year are expected to get the wheels turning faster.

 

• – Can Understanding Anchoring Make You a Better Investor? Anchoring bias is a behavioural economic term referring to the tendency to fixate on a specific piece of information and make decisions based on it. How can this potential problem be avoided when making financial decisions? Pausing and asking “Do I need more information before I take this action?”

 

Team Touch

A new year means new tax balances and deadlines. Below is a reminder of important registered account amounts/dates and tax disclosure/reporting dates:

• –  The deadline to make contributions to your Registered Retirement Savings Plan for 2023 is February 29, 2024. The maximum RRSP room is $30,780.

 

• –  There is no deadline to make your Tax Free Savings Account contribution. The new annual room TFSA room available as of January 1, 2024 is $7,000.

 

• –  The new First Home Savings Account maximum annual contribution room is $8,000, plus up to $8,000 of unused room carried forward from 2023.

 

• –  Trust tax returns (including Bare Trusts!) are due April 2, 2024. Trust disclosure and reporting requirements have become more onerous this year.

 

• –  Personal tax returns are due April 30, 2024.

 

As always, our team is available to help you! In fact, we’re already working behind the scenes to streamline tax deadlines and payments for you and your family.

Chart Corner

 

Your Thoughts?

Your suggestions for future topics are encouraged and welcome!

With appreciation,