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26 MARCH 2020
 First things first
Linda Levesque: With the financial plan, there’s a lot of information we still need to fill in. We have to get them to reveal their cash flow. They don’t look like savers. She’s been working for 10 years and has no savings, other
than her inheritance [and her pension]. Wilson only has $40,000 in a TFSA.
We have to go through a personal financial analysis including any debts, their goals and objectives, and their risk tolerance. Then we come out with their investment strategy, retirement planning, estate planning and what we need to do to implement a plan.
Rory Tufford: They need to try and align their priorities. It seems like they’ve got some discrepancies of what their ultimate goals are, as far as where they want to live and
if they want to buy a house. So while we can run multiple scenarios through our financial plans, they need to get on the same page as far as their future plans.
But I would recommend trying to create a budget where they can start to put some money into savings toward
the kid’s education or their retirement. Maybe that’s done through automatic monthly contributions — something that’s in their plan that they can stick to, no matter what. Matthew Ardrey: As much as people write out a budget and say, “This is everything I spend,” 99 times out of 100, when I run it through the cash flow, there’s some form of leakage. That’s usually a big eye-opener for people. If you’re out $100 a month, that’s probably not a big deal. But if you’re out $1,000 a month, that’s signifi- cant. It’s all the discretionary spending that’s not being accounted for. So budgeting is going to be the corner- stone of their plan.
They also need to realize the risks in their overall plan. A lot of young people don’t think about dying. No wills in place, especially being common-law, is definitely problematic. They have no rights to any assets, unless
specified in the will.
It’s about saying, “You’ve got a child now: Who would
be guardians of that child? You have these assets: Who would be the trustee if you were both gone? Could you survive on one of your incomes? If not, what sort of income replacement do you need through life insurance? Do you have disability insurance coverage through work?”
I try to delve into the nastier side of planning to make sure these things are in place in the event something terrible happens. We all know life doesn’t always go as planned.
Implementing insurance
LL: If Wilson went on disability leave, he would get short-term employment insurance (EI). We need to know his fixed costs to determine whether disability will cover them. But he needs to be able to support his family, especially while Natalia’s on mat leave and possibly through her career transition.
He needs to look at disability insurance as well as life insurance. I recommend a small, permanent plan that never goes away, with a higher term policy while the child is a minor. For example, if Wilson wanted to make sure his income was replaced without encroaching on the capital, he may need a 20-year term policy for $1 million. The permanent coverage would depend on their budget.
I would recommend at least $50,000. This would cover funeral expenses and there would be some extra cash on hand. It would be very inexpensive, given their ages, as long as they’re in good health and hopefully non-smokers. MA: Often, people go out and pick Term 10 because it’s the cheapest. But it may not be in the long run. If they’re looking at term, a Term 20 policy takes them out to age 50. That way the premiums are known. It’s a little bit more expensive than Term 10, but when you’re that young, it’s not that much more.

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