how to eat an elephant: achieving financial success one bite at a time
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CONTENTS
Acknowledgements ix
How to Use this Guide xi
Introduction 1
PART ONE: Understanding Your Finances 3
Chapter 1: Setting and Achieving Goals 5
Chapter 2: Where Are You Now? 19
Chapter 3: How to Save a Lot of Money! 31
Chapter 4: Income and Debt Management 53
PART TWO: Protecting Your Finances 71
Chapter 5: Benefits 73
Chapter 6: Risk and Living Insurance 93
Chapter 7: Life Insurance 107
PART THREE: Growing Your Finances 131
Chapter 8: Retirement and Estate Planning 133
Chapter 9: Investing 163
Chapter 10: Tax Planning 187
PART FOUR: Ensuring Financial Success 211
Chapter 11: Wills, Powers of Attorney, and
Personal Care Directives 213
Chapter 12: Finding the Right Advisors 237
Conclusion 257
About the Employee Financial Education Division 259
Index 261
About the Author 273
ftoc.indd 7 9/21/2012 8:15:57 PM
1SETTING AND ACHIEVING GOALS
The greatest danger for most of us lies not in setting our aim too
high and falling short; but in setting our aim too low, and achieving
our mark.
—Michelangelo
IF YOU ASKED MOST PEOPLE if they had goals, almost everyone would
say they did. So the real question becomes, why is it that most people don’t
work toward achieving their goals? The main reason is that their goals
aren’t in front of them on a daily basis. Another reason is that when they
set their goals, they don’t do so properly. For example, someone might tell
you something like, “I want to go to Hawaii.” Although this is a goal, it is
not set up properly to be met with success. Let’s look at what needs to be
done to increase the likelihood that goals will be met.
One Frank Thought
You may be wondering why a personal finance book has goal-
setting as the subject of the first chapter. The reason is to help you
identify the things that are most important to you so that, when you
are making financial decisions later on, your focus and priorities will
be on these goals.
c01.indd 5 9/3/2012 12:20:44 PM
How to Eat an Elephant6
Write It DownThe first step, and the biggest, is to write them down. Studies have shown
that those who not only make goals but also write them down dramatically
increase their chance of success in achieving their goals.
Define ItThe second step in setting a goal is to ensure that you have defined all of
the components of a goal. You likely have heard the acronym “SMART,”
which stands for Specific, Measurable, Attainable, Realistic, and Timely.
So, the SMART version of the goal mentioned above would look like this:
I want to take the family to Hawaii for three weeks, at a cost of $8,000, in
two years’ time.
You could even take it a step further and say: I want to go to the islands
of Kauai, Oahu, and Maui for one week each. It will cost me a total of
$8,000. I will need to save $333 a month, and I will be there from February
7 to February 28, 2015.
Specific: Trip to Hawaii for three weeks.
Measurable: Cost is $8,000; time to attain goal is two years.
Attainable: I can save $333 a month; I will have accumulated vaca-
tion time; I have no issues with flying or travelling to the United
States.
Realistic: I can afford it.
Timely: Two years to plan and execute is sufficient.
So now you can see the difference between just having a goal in your
head and having a goal that is SMART. It’s now easy to understand that,
when a goal is defined properly, the probability of achieving it goes up
tremendously.
Setting Your Goals and Yourself Up for Success!First, I want you to daydream about all the goals you want to attain and the
things you want to do. I don’t want you to have any restrictions on what
goals you set. I want you to dream big! I want you to think about all the
c01.indd 6 9/3/2012 12:20:45 PM
Setting and Achieving Goals 7
different areas of your life and the goals you want to achieve. I want you to
be comfortable and not put any restrictions on yourself, because anything
is possible: you just have to figure out how to achieve it. So, the first step
when setting goals is to dream big!
Start by making a list of 50 things you want to do right now. Don’t
worry about making them specific, measurable, attainable, realistic, or
time-specific at this stage. I just want you to dream and write! Your list
might look something like this:
• Take a trip to Hawaii
• Buy a new car
• Ask for a raise
• Start a blog
• Spend more time with my family
• Go to the gym at least once a week
• Take my lunch to work every day
• Donate some of my time to my favourite charity
• Get my personal financial situation in order
• Read two books a month
• Get my will done
• Learn to speak Spanish
• Get my master’s degree
• Help my children buy a house
• Learn to scuba dive
• . . .
Continue writing down goals. Write as many as you can. Get to 50?
Great! If you write down 100 goals, that’s even better!
Think about what you want to have, what you want to be, what you
want to do, what you want to see, and with whom. What are you passionate
about? What do you want to learn? Ask yourself questions such as: Why do
I do what I do? What is my life mission? What is the legacy I want to leave?
Write down all the different things you want to accomplish. Think about
what you want for your family, for yourself, for your health, for your wealth,
and for your overall wellness (nutrition, fitness, mental health, and career).
Think about self-improvement. Think about spirituality. Think about your
c01.indd 7 9/3/2012 12:20:45 PM
How to Eat an Elephant8
career. Think about your favourite charity. Don’t put any restrictions on
where your thoughts take you.
Once you have your list (and you can always add to it later), you need
to start organizing it. The easiest way to do this is to start by identifying
the time frame during which you want to accomplish your goals. Give each
goal a specific time frame. It could be within the next month, the next year,
or the next five, 10, 15, 20, or 25 years. Write down the period within which
you want to accomplish each of your goals.
Your list now might look like this:
• Take a trip to Hawaii—2 years
• Buy a new car—4 years
• Ask for a raise—2 weeks
• Start a blog—2 months
• Spend more time with my family—daily
• Go to the gym at least once a week—weekly
• Take my lunch to work—daily
• Donate some of my time to my favourite charity—monthly
• Get my personal financial situation in order once and for all—1 year
Now you are ready to organize your goals in the order of their time frame.
What Is the Financial Cost to Accomplish Your Goals?The next step is to figure out what the cost is to achieve these goals. This
may require a little bit of research on your part to learn and understand
what steps are involved. For example, it’s easy to say that you want to go
to Hawaii in two years’ time, but without understanding what’s involved
and how much it costs, it’s going to be difficult to know what you need to
do to achieve your goal. Therefore, you may want to speak with a travel
agent or spend some time online researching how much such a trip costs.
Your time frame and cost estimate might look like this:
• Take a trip to Hawaii—2 years = $8,000
• Buy a new car—4 years = $40,000
c01.indd 8 9/3/2012 12:20:45 PM
Setting and Achieving Goals 9
• Ask for a raise—2 weeks = $5,200 a year
• Start a blog—2 months = $50 + time
• Spend more time with my family—daily = $0 + time
• Go to the gym at least once a week—weekly = $55
• Take my lunch to work—daily = $0 + time
• Donate some of my time to my favourite charity—monthly = $0 + time
• Get my personal financial situation in order once and for all—1
year = $ variable + time
One Frank Thought
Before you can truly say whether a goal is realistic financially, you
need to better understand your financial situation. Keep working
through the chapters and exercises in this book, and I promise you
will know what is and isn’t possible.
Identify What You Need to SucceedNext you need to identify the major things that need to happen to accom-
plish each goal. At the same time, it would also be a good idea to try to
foresee what obstacles might prevent you from achieving these goals.
Going back to the Hawaii example, if you are not a U.S. citizen, you
will need to ensure your passport is up-to-date (or maybe even get a pass-
port).You may want to research the best time of year to travel there and
check with your boss that you can get the time off. So, let’s look at the
Hawaii goal all together:
Specific: trip to Hawaii
Measurable: for three weeks
Attainable: up-to-date passport, time off work
Realistic: do we have the time and money? Yes or no
Timely: in two years’ time
By now you can see that building a list of goals and writing it down can
go a long way toward making your goals become a reality.
c01.indd 9 9/3/2012 12:20:45 PM
How to Eat an Elephant10
Review Your List RegularlyBe sure to keep this list in a handy place where you can review it on a daily
or weekly basis. Keeping your goals top of mind helps to motivate you to
work toward them continually. Maybe you will keep your list in a journal
that you write in each day. Then you could keep it on your nightstand to
read over every night or first thing in the morning. Maybe you will stick
your list to the fridge door or on the wall beside your desk. One colleague
of mine has his as the desktop image on his computer! Wherever you keep
it, be sure to update it and add to it on a regular basis.
Share Your Goals with OthersThere are three main reasons to do this. First, when you share your goals
with family members and friends, the goals become more real. What I
mean by this is that you become more accountable because other people
now expect you to work toward and accomplish them. The next time you
see those people, they may ask what you have learned about your goal.
For example, they might ask, “Have you decided which islands in Hawaii
you are going to visit?” This kind of community accountability helps you
to achieve your goals!
Second, by sharing your goals with others, you can learn from their
experience. Many people like to share their thoughts and experiences and
offer opinions on how best to achieve goals. Sometimes this can be a deter-
rent, but many times it can be enlightening and encouraging.
Third, for the most part, when you share your goals with others, they
will do one of two things: they will either get on board to help you achieve
them or get out of your way. It is highly unlikely that someone will actually
try to prevent you from achieving one of your goals. People have their own
goals and are too busy to stand in your way. When you share your goals,
people may offer useful tips, saying, for example, “Oh, you know who you
should talk to?” or “I learned to scuba dive with this company and had a
great experience! Call them and talk to Jason. He was wonderful!”
Next thing you know, you are well on your way to accomplishing
your goal!
c01.indd 10 9/3/2012 12:20:45 PM
Setting and Achieving Goals 11
Anna
As part of her New Year’s resolution, Anna decided that she was finally
going to lose the weight that she had been trying to take off for years.
She had tried many strategies in the past; the latest trendy diets, listen-
ing to her friends, taking advice from her family, and working with a
trainer at three of the mass-market gyms. Although she did see some
results, they tended to be minor and never really lasted.
Anna admitted to herself that the lack of results was in part due
to her behaviour, but she felt that it was also due to the people from
whom she was getting help. In some cases she walked away because
she felt the person was more interested in selling her additional prod-
ucts and services than in helping her to lose weight. Anna made the
decision to find an independent trainer who only dealt in fitness and
nutrition. It is very important to reach out to people who can help us
achieve our goals. After researching online, interviewing three differ-
ent candidates, and contacting referrals from two of them, she was
excited to start working with her new personal trainer, Ken.
In their first meeting, Ken asked a lot of questions about Anna’s
schedule, weight-loss history, and the goal she had. She replied that
she wanted to lose weight, increase her energy, and increase her con-
fidence. Ken recommended that she write her goal down. Following
the SMART methodology, he helped her to make her weight-loss goal
more specific and, therefore, more achievable.
On or before December 31, I want to celebrate having taken con-
trol of my health after losing 100 pounds (45 kg) to achieve my goal
weight of 140 pounds (63.5 kg). Since it was early February, she felt
that this was a realistic goal. However, Ken recommended that Anna
cut her goal in half to make it more attainable and realistic. Now it
was time for her to step up.
If Anna wanted to keep the weight off, Ken said, she would need to
create habits that would be with her for the rest of her life (instead of
crash-dieting and then rebounding). Anna could see how she had
c01.indd 11 9/3/2012 12:20:45 PM
How to Eat an Elephant12
done the latter many times in the past and agreed to try a “slow and
steady” approach. Ken helped her draw up a daily schedule. Anna
was sure she would never have made such a detailed plan without his
help. Now she could see how positive daily habits and having a plan
would lead to long-term success.
The first few weeks of exercise were difficult, but Anna persisted,
and the weight started to come off. Then, about two months into
the program, she twisted her ankle when she was walking to work.
Her first thought was, “Now I won’t be able to workout!” She called
Ken to cancel. He patiently explained that this was a very common
occurrence and they would work through it together. An accident that
could have derailed her fitness plan became nothing more than a
minor obstacle.
He assured her that he would be there to help keep Anna on track
during the inevitable setbacks. Anna had never been taught a system
that dealt with setbacks and was happy to hear that her job was to
“climb back on the horse” as quickly as possible.
At her monthly weigh-in, Anna found that she had met her goals
and could now treat herself to the reward of a new workout outfit—in
a smaller size. On her trainer’s recommendation, she started to see a
nutritionist who taught her to make healthier choices at the grocery
store and when she was hungry.
At her September evaluation, Ken congratulated her on a tremen-
dous life change. Her weight was down 35 pounds (16 kg), and, more
importantly, Anna had been working out steadily for eight months
and had developed some powerful, healthy habits. She had better
posture, more energy and self-confidence, and fit into clothes that
were three sizes smaller! With the help of her support network, Anna
took it one day at a time and made it through the holidays without
gaining the usual 10 pounds (4.5 kg). Thrilled, she celebrated New
Year’s Eve with her friends having lost 46 pounds (21 kg).
Anna succeeded in reaching her weight-loss goal by writing it
down, developing an action plan, and finding a support team. The
goal gave her the focus she needed to invest in herself, ask for sup-
port, and overcome the inevitable obstacles. Anna took her new
c01.indd 12 9/3/2012 12:20:46 PM
Setting and Achieving Goals 13
knowledge and confidence and set some additional weight-loss goals
for the next year—keeping them SMART and knowing that she would
be able to meet the challenges.
Don and Cindy
Don and Cindy, a couple in their early thirties, had decided it was
time to start a family. Both had secure jobs and earned a good liv-
ing, but they were anxious about their current financial situation and
the effect having a child would have on their day-to-day living and
financial decisions. In July 2010 they attended one of my financial-
planning seminars and, afterward, set up an appointment with me to
go over their situation. We evaluated the different goals they had with
respect to their finances and their soon-to-be-growing family.
When we looked at their credit card and consumer debt, I knew
it was time for a reality check. Cindy had used a student line of credit
to help put herself through law school, and Don had student loans
as well. Although they had paid the debts down since graduation,
they were still sizeable. Not only did Don and Cindy have student
debt, but they each had two credit cards that were very close to
their limits, as well as loans for their two luxury cars. Their debt
came to a total of $120,000, $30,000 of which was on high-interest
credit cards.
Even worse, they had no system to keep track of all the bills that
came into the house and, as a result, were often late with their pay-
ments. When I pulled their credit reports, I saw credit scores that were
lower than recommended. I explained that with better credit scores,
they would be able to qualify for a better mortgage rate.
It was obvious to me that they were living on credit and that
an unexpected “rainy day” would drive them into financial hard-
ship. Certainly, the addition of a baby would bury them unless they
developed better spending habits and a system to take control of
their finances. When I laid it all out in front of them, they knew it was
c01.indd 13 9/3/2012 12:20:46 PM
How to Eat an Elephant14
serious and asked what they could do. I introduced them to creating
SMART goals, and this was their first one:
By June 30, 2012, we will have reduced our credit card
debt to zero and our overall debt load to $50,000.
This met all of the SMART goal criteria because:
• It was specific and measurable with dollar figures and a
deadline.
• It was attainable and realistic given their incomes and
determination.
• It was timely because it had a definite due date.
From this overall SMART goal, we were able to create several
smaller, monthly goals that would get them to their target. The money
they saved during that first month, and in the months that followed,
was put directly toward reducing their credit card debt. That first
month’s goal looked like this: By January 31, 2011, we will eat dinner
at home eight times (this month) with food that we prepare ourselves.
As a young corporate lawyer, Cindy was rarely home before nine,
and they almost always ate out—a habit that can lead to financial
and health issues. Don was able to rediscover his love of cooking
because he could focus on making just eight meals a month; the next
month they increased the total to 12 meals. They began to take lunch
with them to work to save even more money, and each week they
reviewed their progress and planned accordingly with the help of
their specific goals.
If they had tried to do everything in that first couple of months,
they would have set themselves up for failure: proceeding slowly,
specifically, and steadily was the key. Don and Cindy were amazed
at how much less they were spending with just a few small tweaks
to those habits that had had such a direct effect on their financial-
planning goals.
c01.indd 14 9/3/2012 12:20:46 PM
Setting and Achieving Goals 15
Over the next year, they exchanged their luxury cars for a
mid-sized sedan, which reduced their monthly payments signifi-
cantly. They also rose to the challenge and began to examine each
purchase they made with a critical eye, no matter how small it
seemed. When I pointed out to Dan that his daily cappuccino cost
him $1,000 per year, they purchased a cappuccino maker so that
Dan could get his caffeine fix at home and put more money toward
reducing their debt.
I was relieved to see how well they were doing with taking
charge of their debt reduction. Although each change they made
was small in itself, the total impact on their spending was huge. As
a reward for their hard work, they looked through the real estate list-
ings in their areas of interest. And although Cindy’s heart belonged
downtown, they knew it made more financial sense to live a bit fur-
ther away, where their money would buy more house for a growing
family. Thanks to great public transit routes, downtown would still
be easily accessible.
Although their goal was to pay off their credit card debt by the end
of June 2012, they had succeeded in paying off their cards by the end
of 2011! The rest of their debt was down by more than 50% by the
original deadline.
These improvements to their finances, plus the systems we put
in place overall, meant that their credit scores had come up to very
good levels. Don and Cindy had learned that specific financial hab-
its were the key to their future success. Importantly, their plan now
included a safety net for their new family.
In July 2012, Don and Cindy found a great home for a great price
and used part of their savings for a down payment. In September
2012, they became the proud new parents of Cynthia, a beautiful,
healthy girl. We still have regular meetings to ensure that they are on
track, but the stress that was caused by their finances has now been
replaced by the stress of being new parents—a great trade as far as
they’re concerned.
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How to Eat an Elephant16
Chapter Summary • Dream big and make a list of 50–100 goals you want to achieve.
• Identify when you want to achieve your goals.
• Organize your goals chronologically.
• Do some work to learn the financial implications of those goals.
• While researching your goals, identify any obstacles that need to
be addressed for you to achieve them.
c01.indd 16 9/3/2012 12:20:46 PM
Setting and Achieving Goals 17
How To Eat An Elephant.ca—Web Tools
Goal-Setting ToolNow that you have an understanding of how to write down your
goals, it is time to build your list. Start by logging into www.how
toeatanelephant.ca and fill in your profile. When you have completed
your profile, you will arrive at the menu page.
Take a minute to read the welcome message and watch the video.
When you are ready, click on the Goal-Setting Tool. Here you will see
the five steps to go through to set up your goals properly as outlined
in this chapter. So let’s get started!
STEP ONE: Enter a goal in the box provided and click on the Add
button. Keep repeating this process until you’ve entered as
many goals as you can think of that you wish to achieve.
Click on the Save button to ensure that they are saved.
You always have the option of editing or deleting a goal.
Once you are finished entering your goals, click on the Add
Timeline button.
STEP TWO: Go through each of your goals and enter the time-
frame in which you wish to achieve your goals. For example,
you may wish to buy a new car in four months. Beside your
goal of buying a new car, enter the number “four,” and select
Months from the drop-down list. Do this for each goal and
when you are finished click on Rank My Goals. You will have
the option of ranking your goals alphabetically, by their time
frame, cost, or amounts saved.
STEP THREE: Now go back through all your goals, entering how
much it will cost to achieve each of them and how much you
currently have saved. If you have one large savings account
for all your goals, you will need to decide how much to
allocate to each of them. If there is no financial cost to your
goal (for example, one might be to make your lunch every
day) simply enter “$0” as the cost and the amount currently
c01.indd 17 9/3/2012 12:20:47 PM
How to Eat an Elephant18
saved. Once you’ve done this for all the goals, click on the
Save button and then click on the Enter Obstacles button.
STEP FOUR: This is an optional step where you have the oppor-
tunity to list any foreseeable obstacles to achieving each of
your goals. If you press the Add an Obstacle button beside
each goal, a field will appear in which you can enter the
obstacle. When you are finished, simply click on the Save
button and then click on the Get Report button.
STEP FIVE: Here you are presented with your report, which you
can download and print as a PDF document.
I encourage you to spend some time working with this tool to ensure
that you have all of your goals listed. Come back and visit this tool
often to update and change your goals as needed. Keep a copy of
your goals in a place where you can review them on a daily or weekly
basis. Be sure to share a copy of these goals with the people who are
important to you, to help keep you accountable for achieving them.
c01.indd 18 9/3/2012 12:20:47 PM
INDEX
Aabsenteeism, 259
accounts,
chequing, 21, 159
high-interest savings, 21,
164, 183
investment, 21, 150, 154, 222,
223, 235
joint, 20, 26
savings, 21, 37, 123, 144,
164, 195
activity expenses, 32
additional funds, 51, 109, 193
age of majority, 218–19, 225, 229
AIG Insurance, 175
Air Canada, 175
annual payments, 38, 101
annual return, 120–21
appraisals, 61
artwork, 21, 198
asset allocation, 124, 173, 184
asset preservation, 156, 179
assets,
liquid, 21
liquidating, 59, 222
personal, 21, 172
attorney, 226–27, 228, 231, 235
Bbank statement, 37, 46, 50, 126
bankruptcy, 56, 57, 58–59, 86,
124, 181, 206
trustee in, 59
banks, 34, 48, 84, 169, 183, 238, 250
beneficiaries, 110, 111, 129, 150,
152, 153, 201, 207, 215, 216,
217, 218, 220, 221, 222, 223,
224, 233
naming, 124, 154
beneficiary designations,
222–23, 235
benefit plan, 74, 79–80, 83, 99,
114, 138–39
flex-benefit, 73, 76–77, 81
healthcare spending accounts
(HSAs), 73, 75, 76–77
traditional, 75–76, 77, 81
benefits,
child care, 74, 78, 190
dental, 73, 75, 76, 77, 87
bindex.indd 261 9/21/2012 7:06:33 PM
Index262
educational assistance, 75
eye care, 73
fitness-club memberships, 74
health, 79
life insurance, 76, 81, 82
long-term disability, 73, 75, 76,
77, 99
low-interest/interest-free loans, 74
paramedical, 73, 75–76, 77
prescription drug, 43, 73, 75–76
retirement funding, 73–74, 85
taxable, 74, 75, 78, 79, 188
wellness programs, 74
benefits coverage booklet, 74
bills, 13, 20, 21, 26, 28, 32, 36, 39,
40, 46, 58, 60, 61, 81, 87,
126, 128, 129, 194, 201, 204,
205, 217, 239, 253
bonds, 21–22, 123, 135, 137, 165,
166, 167, 168, 170, 174, 178,
179, 181 ,183, 184, 195, 239
bonus pay, 55, 76, 128, 174,
180, 239
borrowers, 23, 24
brokerage account, 22, 172, 182
budget, 31, 33, 34, 35, 36, 37, 38,
40, 46, 47, 48, 49, 50, 53,
54, 55, 58, 61, 63, 65, 66,
84, 85, 86, 88, 106, 122, 159,
160, 181, 206, 233, 254
apps, 34
built-up cash value, 110
business ownership, 89, 109,
110, 116
buy-sell agreement, 109
Ccable, 32, 42, 43, 45, 49, 60
Canada Pension Plan (CPP), 37,
100, 139, 140, 144
Canada Pension Plan Disability
Benefit, 100
Canada Revenue Agency (CRA),
20, 37, 54, 79, 192
Canada Savings Bond, 21, 22,
165, 170
Canadian Investment Managers
(CIM), 242, 244, 245, 261
capital gains, 54, 139, 150, 153,
187, 192, 195, 196, 198, 199
capital gains tax, 152, 220
capital loss, 192, 196, 199
car insurance, 32, 94
car loan, 23
career, 7, 8, 27, 66, 80, 86, 121,
193, 208, 253
caregiving arrangements, 218–19
cash donations, 198
cash-flow statement (see also
budget), 31
cash value, 21, 43, 110, 111
cashable savings bond, 21
cellphone, 32, 36, 42, 45, 60,
78, 208
certified cultural property, 199
Certified Financial Planner (CFP),
155, 160, 161, 162, 191, 198,
205, 221, 242, 246, 249, 254,
258, 261
Certified General Accountant
(CGA), 244, 255
bindex.indd 262 9/21/2012 7:06:34 PM
Index 263
Certified Management Accountant
(CMA), 244, 245
charitable donations, 153, 198
charitable remainder trusts, 153,
198, 199
charity, 7, 8, 9, 43, 152, 153, 198,
199, 207, 220, 221, 230
Chartered Accountant (CA), 244,
246, 255
Chartered Financial Analyst
(CFA), 243
Chartered Life Underwriter (CLU),
244–45
Chartered Strategic Wealth
Professional (CSWP), 243
children, 7, 25, 27, 38, 43, 47, 88,
104, 108, 109, 112, 125, 126,
127, 128, 129, 147, 148, 150,
151, 154, 157, 158, 172, 183,
184, 190, 194, 204, 205, 206,
207, 209, 210, 213, 215, 216,
218–19, 223, 225, 230–31, 232,
233, 234, 235, 252, 254, 261
Chilton, David, 41
client references, 248, 255
collateral, 109, 110
collectibles, 21, 54, 169
commission, 87, 111, 238, 239,
240, 241, 247
common shares, 166, 168, 184
company pension plans (CPP),
138–39
company stock plans, 21
employee stock-purchase plans, 21
profit-sharing plans, 21
condo fees, 32, 60
consumer debtor, 58
consumer proposal, 58, 59
convertible debentures, 167, 179
co-op, 22
corporate bonds, 21, 165, 183
costs, 8, 42, 44, 45, 55, 60, 61, 78,
81, 83, 84, 95, 98, 99, 101, 114,
120, 145, 177–78, 191, 194,
197, 200, 208, 226, 257, 259
cottage, 21, 29
Credit Canada, 59
credit card statement, 35, 51
credit cards, 13, 22, 26, 35, 39, 40, 45,
55, 56, 60, 63, 65, 66, 108–09
credit counselling, 58, 67
credit-counselling agency, 58
credit counsellor, 58
credit limit, 23, 30
credit risk, 165, 171
credit scores, 13, 15, 66
credit unions, 243
creditors, 58–59, 110, 111, 113, 124,
152, 223
Ddeath certificate, 217
debentures, 21, 167–68, 179, 195
debt,
bad, 60
consolidation, 56, 57, 67
destruction, 55–56, 67, 69, 159
good, 60
pyramiding, 56, 57
repayment, 23, 24
bindex.indd 263 9/21/2012 7:06:34 PM
Index264
debt management program, 58
debt service ratios, 59–60
deductible, 37–39, 95
defined benefit pension plans
(DBPPs), 83
defined contribution pension plans
(DCPPs), 83
derivative products, 179
designations, 222, 235, 237, 239,
242, 243, 244–45, 249,
251, 256
disabled dependent, 201, 224
diversification, 86, 124, 163,
174, 178
dividend tax credit, 187, 195–96, 225
dividends, 54, 150, 152, 166, 173,
179, 181, 195, 196, 199,
204, 225
divorce, 151, 205, 206, 213
donor-advised funds, 153,
198, 200
down payment, 15, 86, 88, 254
Eearner,
high-income, 20
low-income, 20
eating out, 37, 45, 49
eBay, 22, 54
ecologically sensitive land,
198, 199
ego, 177
electronics, 21
emotion, 80, 107, 175, 177, 179
employee assistance programs
(EAPs), 79–80
Employee Financial Education
Division (EFFD), 259–60
employee stock purchase plans
(ESPPs), 21, 83, 85, 86,
174, 198
Employment Insurance (EI), 37, 100
Employment Insurance Sickness
Benefit, 100
Enron, 86, 175
entertainment, 32, 37
equity, 21, 26, 143, 156
estate, distributing, 220–21
estate lawyer, 155
estate planning, 115, 116, 120,
129, 240
exchange traded funds (ETFs),
169, 239
executor, 198, 215, 217–21, 226,
231–32, 234, 235
exercises, 2, 9, 85, 145, 237
expense-elimination method, 108
expenses, 20, 24, 26, 32, 33, 34,
35, 38, 41, 42, 43, 44, 46,
47, 48, 49, 51, 54, 58, 60,
61, 64, 65, 68, 74, 75, 77,
78, 91, 99, 100, 101, 102,
105, 108, 109, 118, 128,
134, 145, 148, 149, 159,
161, 190, 191, 194, 208,
217, 221, 225, 232, 233
FFacebook, 246
fair market value, 152, 192, 195,
198, 199
family trusts, 205
bindex.indd 264 9/21/2012 7:06:34 PM
Index 265
fee-only financial planning, 240
Fellowship of the Canadian
Securities Institute (FCSI), 244
financial,
advisors, 170, 180–81, 237, 238,
244–45, 255
implications, 16
planner, 20, 41, 109, 155, 160,
161, 182, 191, 198, 205, 221,
238, 240, 242, 243, 246, 248,
249, 252, 254, 255, 258, 261
planning/plan, 1, 13, 14, 74,
137, 148, 150, 155, 157, 158,
187, 205, 240, 242, 243, 246,
249, 252, 254, 255, 258
records, 167
risk, 94, 96
situation, 1, 7, 8, 9, 13, 20, 26,
101, 130, 146, 163, 175, 200,
214, 227, 235, 246, 247, 257
Financial Advisors Association of
Canada (Advocis), 255
Financial Management Advisor
(FMA), 243, 261
Financial Planning Standards
Council (FPSC), 242, 246
flex-benefit plans, 73, 76, 81
flexibility, 62, 76, 78, 84, 111, 164,
165, 178
funeral expenses, 217, 221–22
furniture, 21, 23, 60, 61
Ggain, 120, 152, 165, 168, 177, 196
general anti-avoidance rules
(GAAR), 188, 194
General Motors, 175
gift assets, 154
gift-buying, 47
gifts in-kind, 198
goals,
list of, 9, 251
obstacles in the way of, 9, 16,
18, 106
organizing, 8
sharing, 10
time frame, 8, 17, 178
writing down, 7
government-appointed
trustee, 213
government bonds, 21, 165, 183
groceries, 33, 37, 44
gross debt service ratio (GDS), 60
gross family income, 60
Group Life Insurance, 82, 90,
114, 126
growth stocks, 166
guaranteed insurability, 82
guaranteed investment certificate
(GIC), 21, 164
market-linked, 167, 183, 184
guardian, 223, 225, 233, 234
choosing a, 218–20
Hhealth, 7, 11, 14, 73, 74, 75, 79,
80, 87, 88, 114, 115, 120,
129, 134, 143, 144, 188, 217,
219, 226, 227, 228, 229, 232,
235, 245, 254, 259
healthcare spending accounts
(HSAs), 73–74, 75, 76–77
bindex.indd 265 9/21/2012 7:06:34 PM
Index266
hedge funds, 169, 179
home, 15, 21, 25, 54, 60, 65, 66,
67, 75, 128, 142–43, 191,
205, 206, 254
home buyers’ plan, 60, 88,
136, 193
home inspection, 61
home ownership, 142–43
household expenses, 26, 32, 233
Human Resources (HR)
department, 74, 87, 259
hybrid investment, 167–69
IiExpense, 34
income,
non-taxable, 78, 79
retirement, 139–44, 145, 146,
161, 201, 203
surplus, 59
taxable, 123, 139, 141, 147,
148, 150, 162, 189, 192,
193, 196, 201, 202, 203,
206, 209
income-replacement method, 108
income-splitting, 109, 147, 194,
203, 204, 209, 210, 223,
224, 234
independent financial planners, 240
independent insurance brokers,
240–42
index units, 168–69, 178,
182, 239
individual life insurance policy,
82, 114–15, 116
inflation, 101, 105, 108, 109, 128,
142, 157, 164, 167, 171, 183
inflation rate, 108
inheritance, 63, 64, 65, 146, 147,
157, 158, 159, 180, 181, 182,
213, 232, 235
insurable annuities, 205
insurable interest, 113
insurance,
agent, 238–39, 240, 245, 254
broker, 43, 106, 129, 130, 240,
248, 253
car, 32, 94
companies, 77, 113, 169, 213,
240–41
coverage, 74, 75, 76, 77, 80–81,
82, 87, 88, 89, 90, 94, 96, 97,
98, 99, 100, 106, 108, 110,
111, 112, 113, 114, 117, 118,
119, 120, 122, 126, 128, 130
critical illness, 26, 95, 96–97,
98, 100, 102, 103, 104, 105,
118, 126, 127, 240
disability, 95, 98, 99, 100, 103,
104, 106, 188, 245
living, 95–99, 102, 106, 257
long-term care, 95–96, 98, 101,
103, 105, 106, 184, 240
policies, 26, 28, 32, 43, 82, 90,
96, 97, 106, 112, 114, 115,
117, 118, 120, 121, 123, 130,
143, 153, 154, 199, 210, 217,
222, 223, 224, 233, 235
premiums, 37, 38, 68, 82, 96,
97, 99, 105, 106, 107, 109,
bindex.indd 266 9/21/2012 7:06:34 PM
Index 267
110, 111, 112, 114, 117, 118,
121, 122, 123, 126, 143, 188,
194, 199, 204–05
temporary, 112
Term 100, 106, 112
term-life, 77
travel, 80, 81, 90
interest, 13, 21, 23, 24, 29, 30, 42,
54, 55, 56, 57, 58, 59, 61,
62, 65, 67, 69, 70, 74, 78,
110, 113, 118, 134, 148, 150,
152, 153, 159, 164, 165, 166,
167, 168, 170, 173, 183, 190,
194, 195, 197, 199, 205, 209,
218, 224, 232, 252
interest income, 150, 195, 209
internet, 32, 42, 45
investment accounts, 21, 150, 154,
222, 223–24, 235
investment counsel, 239–40, 251
investment/rental property, 22, 54,
60, 169, 197
investment return, 109, 110
investments,
equity, 21, 26, 143, 156
fixed income, 21, 122, 173, 185
short-term, 21
iPhone, 34
Jjewellery, 21
joint account, 20, 26
joint first-to-die life insurance, 115
joint last-to-die life insurance,
115–16
Kkey person insurance, 116, 232
Lland transfer fees, 61
leave of absence, 80, 191
legacy, 7, 122, 129, 207
legal bills/fees, 61, 191, 214, 232
legal language, 218
legislation, 142, 214, 222, 227, 228
Lehman Brothers, 175
lenders, 23, 59, 62
liability protection, 95
life insurance donation, 199
life insurance policy, 21, 90, 112,
113, 114, 120, 123, 143, 144, 152,
153, 157, 159, 199, 204, 207, 232
lifelong learning plan, 193
lifetime tax bill, 123, 129, 149,
150, 152, 160, 200, 201, 204,
205, 207, 221
limited partnership, 21, 180–81
line of credit, 13, 23, 26, 55–56,
59, 63, 64, 65, 105
LinkedIn, 94, 246
loan, 13, 23, 29, 32, 46, 55, 56, 57, 60,
65, 74, 78, 88, 109, 110, 190,
193, 194, 195, 197, 199, 208
long-term care facility, 103
loss, 108, 109, 117, 142, 164, 165,
170, 171, 172, 174, 182, 184
Mmacro-economics, 176
maintenance fees, 32
bindex.indd 267 9/21/2012 7:06:34 PM
Index268
MasterCard, 59
maturity date, 21
medical screening, 115, 119
micro-economics, 176
Microsoft Money, 34
money management, 169, 178,
179, 225, 243
money market mutual fund, 21
monthly cost calculator, 51
moral hazard, 113
mortgage,
additional payments
against, 62
amortization period, 63
balance, 22–23
fixed-rate, 62
payments, 60, 61, 62, 65, 66,
67, 104, 217
penalty, 49, 62, 140
prepayment option, 62
rate, 13, 61, 159
renewing your, 63
statements, 22–23
variable-rate, 63, 67
mortgage life insurance, 117
moving expenses, 61
mutual fund, 21, 84, 135, 156, 168,
169, 178, 181, 182, 191, 196,
238, 239, 242, 250–51
advisor, 238
Nneed vs. want, 38–39
net worth statement, 19–20, 22,
27, 28, 29
networking, 94
non-registered investment
accounts, 223
Nortel, 175, 176
notary, 215, 216
nursing care, 103, 104, 105, 231
OOld Age Security, 104, 139, 141,
144, 146, 202, 210
threshold, 202
once-a-year expenses, 32
optional expenses, 32, 49
Ppartnerships, 167, 171, 179, 181
paycheque, 36–37, 45, 46, 53, 54,
81, 88, 125, 138, 140, 146,
188, 190
paying rent, 60
payments, 13, 15, 23, 24, 29, 32,
46, 49, 55, 56, 59, 60, 61,
62, 63, 65, 66, 67, 104,
147, 159, 191, 197, 205,
206, 217
payout, 83, 86, 96, 97, 100, 105,
107, 110, 116, 117, 118, 123,
124, 128, 140, 143–44, 224
pension assets, 21
permanent life insurance, 110, 117,
123, 152, 199, 204
personal care decisions, 229
personal care directive, 26, 213,
214, 222, 226, 227–28, 230,
231, 234, 235, 236, 253–54
personal corporation, 205
personal driving, 79
bindex.indd 268 9/21/2012 7:06:34 PM
Index 269
personal finances, 102, 237,
245, 258
Personal Financial Planner
(PFP), 243
personal loans, 32
phone, 32, 34, 36, 42, 44, 45, 49,
60, 78, 208
pocket money, 32–33, 34, 39, 49
policy loan, 110, 199
portfolio of investments, 111
power of attorney, 26, 214, 222,
226, 227, 231, 233
preferred shares, 21, 166, 179, 184
presenteeism, 259
private client management, 239
private company, 152, 166
private placements, 166, 167, 171,
179, 181
probate, 147, 152, 153–55, 184,
205, 216, 217, 223 224
professional lawyers, 214
progressive taxation system, 189
propaganda, 176
property taxes, 32, 60, 61, 109, 217
provincial security commission, 239
proxy directives, 228
public transit, 15, 94, 191
QQuicken, 34
Rrate of return, 83, 108, 118, 123, 135,
144, 167, 170, 171, 172, 185
real estate,
bubble, 142
market, 125, 142
refinancing penalty, 61
Registered Financial Planner
(RFP), 243
Registered Health Underwriter
(RHU), 245
Registered Retirement Consultant
(RRC), 243, 261
registered retirement income fund
(RRIF), 201
registered retirement savings plan
(RRSP), 21, 27, 28, 37, 46,
54, 62, 67, 76, 77, 83, 85,
88, 135–37, 138, 139, 144,
146, 147, 154, 155, 159,
161, 162, 172, 173, 183, 187,
189, 191, 192, 193, 196, 200,
201–02, 203, 204, 205, 206,
209, 201, 223, 224, 232, 233
contribution, 27, 46, 62, 75,
76, 77, 83, 84, 89, 136, 137,
138, 139, 159, 161, 162, 170,
188, 191–92, 193, 204, 206
group, 84, 89, 90, 139
registering assets in joint tenancy,
154–55
renovation, 61, 65, 205
rental property, 22, 54, 60,
169, 197
research, 8, 9, 11, 16, 87, 101, 145,
181, 197, 246, 252–53, 255
residue, 220, 221–22, 234
retirement,
goals, 53, 123, 134, 142
lifestyle, 83, 134, 143, 145, 146, 148
planning, 85, 134, 143, 242
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Index270
return-of-premium (ROP) rider, 97,
118, 157
reverse mortgage, 146, 205
revolving credit, 23
riders,
guaranteed convertibility, 119
guaranteed renewability, 119
limited pay, 117–18
paid up, 117–18
return of premium, 118
risk,
avoiding, 93, 94
credit, 165, 171
currency, 171
inflation, 171
interest rate, 170
investment, 107, 129, 163,
169–70, 179, 183
liquidity, 171
managing, 93, 95
political, 170–71
reducing, 93, 94
retaining, 93, 95
sharing, 94
tolerance, 183
Ssalary, 33, 48, 76, 88, 194, 208,
238, 239
saving money, 32, 50
savings accounts, 32, 50
savings box, 139
segregated funds, 169, 239,
240, 241
self-employment, 98, 109, 194
self-improvement, 7
shareholders, 109
shares, 21, 152, 166, 167, 168,
174, 176, 179, 183, 184,
191, 192196, 198, 199,
220, 222
sheltered investment, 151
shopping, 41, 257
small business, 78, 117, 196, 197
SMART, 6, 11, 13, 14, 86, 158
social assistance, 206
software kit, 234
specific gifts, 220, 221, 222, 234
spending habits, 13, 49, 50,
67, 150
Spenz, 34
stock certificates, 22
stock exchange, 167–69, 171
stocks, 21, 22, 123, 135, 137, 166,
168, 169, 170, 171, 174, 175,
178, 179, 181, 183, 184,
191, 239
stress/anxiety, 15, 25, 58, 67, 80,
88, 106, 107, 126, 129, 145,
158, 163, 184, 205, 234, 259
student loans, 13, 60, 190
sub-index, 168–69
support payments, 191, 205, 206
TT4 slip, 79
tax,
accountant, 79, 155, 238, 248
bracket, 136, 189, 190, 191,
193, 194
bindex.indd 270 9/21/2012 7:06:35 PM
Index 271
deduction, 43, 62, 99, 137, 138,
189, 190, 191, 192, 193, 209
expert, 221
liabilities, 221
planning, 20, 85, 138, 187, 191,
193, 200, 205, 209, 254, 258
sheltering, 112, 116
tax contribution receipt, 191, 192
tax credits,
non-refundable,190
refundable, 190–91
tax-deductible interest, 197
Tax-Free Savings Account (TFSA),
77, 83, 85, 137, 138, 144,
151, 159, 161, 162, 173, 195,
200, 202, 204, 206, 209
tax-planning tools, 85, 187
TD1 form, 54, 167
term insurance, 76, 81, 110, 112,
117, 119, 120, 121, 122, 128,
129
The Wealthy Barber, 41
time-share, 22
Toronto Stock Exchange, 169
total debt service ratio (TDR),
60, 66
transaction account, 164
travel, 32, 64, 65, 75
travel medical insurance coverage,
80–81
treasury bills, 21
trust companies, 243
trustees, 153, 192
trusts, 153, 155, 169, 187, 196,
198, 199, 205, 216, 238,
239, 243
for minor children, 225, 235
Twitter, 246
Tyco, 175
Uunion dues, 37
Universal Life Insurance, 111, 112,
127, 128
utilities, household, 32, 42, 109
Vvalue stocks, 166
Visa, 55, 56, 59
volatility risk, 170, 184
WWhole Life Insurance, 110, 111, 128
will,
common disaster clause, 216
dying intestate, 215
English Form, 215
mirrored, 216
Notarial, 215, 216
will kits, 214
withdrawal fees, 164
Workers’ Compensation Board
(WCB), 103
WorldCom, 175
bindex.indd 271 9/21/2012 7:06:35 PM
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