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How to beer-proof your budget
by FCNB on 


How to beer-proof your budget 

One of my friends and I were talking about how she came to own a machine that carbonates water, despite the fact she barely drinks carbonated water. It turns out she’d bought it on impulse after dinner and drinks out with friends. So, although she rarely uses the machine she keeps it as a reminder that money and alcohol don’t mix. I’ll admit – I love online “window shopping”.  But I’m careful to do it with the right frame of mind. I rarely make a purchase unless I need something that I can find at a great price online, and I keep my credit card away from the computer desk.  I know that online shopping spree with a glass of wine or suds in hand may seem like a great idea at the time, but, along with the credit card statement, I’d also likely be dealing with a hefty case of buyer’s remorse.  Mixing shopping and alcohol can lead to blown budgets, credit card abuse, and even identity theft.

Alcohol knocks down our inhibitions, making us more impulsive and less able to stand up to temptation. We tend to spend more money after a drink or two.  Retailers recognize this and send “happy hour” marketing emails, or they launch online sales later at night to catch the post-bar crowd. To guard against such practices, check out our program “I’m Worth It”.  It’s full of spending and saving information to help you develop your skills as a smart consumer.

Here are some tips to “booze proof” your budget and to avoid waking up with a spending hangover:

Leave credit cards at home or in another room. If you know you’ll be sipping a little, leaving the cards at home can help remove the temptation to spend more than you have.  Leaving your purse or wallet in another room can also help.  The simple act of having to walk to another room may be enough to deter (or at least give you time to reconsider) the purchase. When shopping online, it’s also a good idea to not leave things in your cart that you could come back to and one-click buy later. 

Make a list and stick to it.  If you do have shopping to do, make a list of things you need to purchase.  Put the price of the items on the list for that extra reminder of your budget. That way, even if you do have a little extra “glow” while making purchases, they’re ones you have already included in your budget.  Even though you may get a great deal on an online purchase, if you didn’t budget for it or make a plan to pay off the credit card bill, the added interest charges can end up costing you much more in the long-run.

Shop first.  If you are meeting friends to do some shopping and socializing, and you know there will be alcohol involved, get the shopping done first.  Then relax and enjoy a social drink without worrying about waking up to find out you’re the proud owner of a new cashmere sweater that looks alarmingly similar to one you already own, or a leather recliner for your man-cave that you don’t recall purchasing.  And don’t forget to budget safe transportation home if you do enjoy a social drink or two once the shopping is done!

Always keep receipts. If you do wake up with a regrettable purchase, you may be able to return the item under the store’s return policy.  But remember, a store does not have to take the item back just because you changed your mind.  Each store sets their own return policy, so know the details before you make a purchase.

These tips can help you this holiday season to ensure you don’t end up with more than you bargained or budgeted for.

More information about smart spending, budgeting and preventing buyer’s remorse is available at http://fcnb.ca/consumer.html

 

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Is investing in the cannabis industry right for you?
by FCNB on 


Is investing in the cannabis industry right for you?

For some investors, the fact that cannabis is now legal in Canada might sound like a great investment opportunity. However, it is important to remember that investing in the cannabis industry is similar to investing in any emerging industry -  the hype can feel electrifying, and no one wants to feel they are missing out on a great opportunity - but before acting, be sure that the investment is right for you.

The bottom line with any investment decision is that you need to do your research before you invest your money– not only to ensure the investment suits your needs and goals, but also to understand the implications it could have on your daily life.   This is particularly important in an emerging industry.

Risks of investing in the cannabis industry

Every investment comes with some level of risk. If anyone tells you otherwise, it is too good to be true – and that is a red flag of fraud. Some risks are common across many types of investments, but some may be unique in an emerging industry such as cannabis:

  • Success isn’t a sure thing. This goes for every investment, but it’s especially the case with an emerging industry. Likewise, start-ups can be riskier ventures.  When you invest in an emerging industry or a start-up you should be aware and able to handle the financial loss if you lose your entire investment.

  • Changing regulations could have an impact on you. Growing an emerging industry comes with its fair share of milestones. Issues unique to the cannabis industry may arise as time goes on and industry regulations could change. This could have an impact on your investment, and influence how quickly your investment grows, or whether it grows at all.


Before you Invest

  • Review disclosure documents carefully, and get clarification on anything you don’t understand. You want to be confident in how the investment works as well as your money will be used and the risks you’re taking.

  • Talk to a registered advisor*. They can help you assess whether a particular investment fits within your overall portfolio and whether the risks involved are acceptable for you. You can check the registration status of an adviser at www.aretheyregistered.ca.

While it can be easy to get caught up in the excitement of a new industry, don’t let the flavour of the month push you off track from meeting your investment goals. Similar to any investment, talking with a financial advisor* and determining your financial situation and goals is critical to making an investment decision that is reasonable and suitable for your overall portfolio.

* The terms ‘adviser’ and ‘financial adviser’ used here generally refer to a financial professional (which may include securities dealers; advisers; dealing representatives; advising representatives; or other registrants) and do not indicate a category of registration.  The registration category is more important than a title – always check registration before you invest.


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Managing Money as a Student
by FCNB on 


Managing Money as a Student

Budgeting as a student can be tough. Not only are many students new to budgeting, they often also have irregular income and/or student loan funds to manage. And around the time of spring break, there is a crunch from six months worth of tuition, books, housing, groceries, bills, and more. Paying for post-secondary education while avoiding a heavy debt load is definitely a big challenge – but it is possible!

As a student, you may be relying on your student loan, which can be a great help – but what if you haven’t budgeted and now need to spread a smaller amount of money out over the remainder of the school term? Or, maybe you’ve gone through more of the loan than you thought and are worried about money for the rest of your school term.  Don’t panic.  You can start fresh by taking advantage of these tips and tools to help you manage the remainder of your lump sum of cash so it will last for the time you’ll need it:

Don’t Fall into the Debt Trap!

Students also need to be mindful of taking on credit during this time in your life. Post-secondary students have some big expenses and often turn to high interest debt, including credit cards, to cover these costs. .  Short-term debt can take a long time to repay, and can lead to credit problems in the future. In fact, three in four Canadian graduates have regrets about their student debt (this includes loans and lines of credit), and 25 percent wish they would have avoided adding to other debts, such as credit card debt*. The key here again is budgeting!  You need to budget to make sure you’re spending within your means, regardless of whether you’re paying with credit or not.

With studying and other stresses of school, it may feel impossible to take on one more task.  But taking a few minutes to get your budget in order will give you the peace of mind to get your papers and studying complete and still have some time (and maybe even some money) to enjoy the student life!

You may also be interested in these money tips for other areas of your life:

Money Milestones Series:

Blog posts:



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Inheritance Scam
by FCNB on 


Inheritance Scam

It’s scary the numbers of ways that fraud can get you. While the scam may seem obvious in hindsight, some scam artists can be quite sophisticated in their approach. A recent scam was reported to FCNB where the scam artist used the victim’s religious faith to build an immediate connection and establish trust. 

The victim was contacted by the scammer via a social media platform and encouraged to share their email address. Once the personal emails started, the scammer used the ‘inheritance scam’ to gather the targeted victim’s personal information.  This scammer used affinity fraud to approach the victim and gain their trust.

Affinity fraud targets groups, such as social clubs and ethnic or religious communities. The scam artist abuses our instinct to trust those who are like us. Affinity fraud is usually linked to investing scams, with the common ones being a Ponzi or pyramid scheme.  For more information on affinity fraud, click here.

How the inheritance scam works:

These scams offer you the promise of an inheritance, with the scammer claiming they have no-one to leave their money to. They may try to establish trust through a common charitable cause, religion or by claiming to be a long-lost relative. In reality, the scammer is trying to either steal your identity by having you reveal personal information, or gain access to your bank or credit card information, or both.

Typically, the initial contact comes from out of the blue in a letter, an email or phone call and now social networking messages. In this recent report to FCNB, the scammer relied on the victim’s faith in God and indicated that the money was to be used to promote religious activities.

Red Flags:

  • You are contacted by someone you’ve never met in person. (Red Flag: no face-to-face contact)
  • The scammer is located overseas, so meeting in person is not possible. (Red Flag: no face-to-face contact)
  • If the letter comes in the mail, there are often multiple addresses. For example, the postage stamp may be from one country with the return address being from another and the documentation you receive is from yet another location. (Red Flag: Inconsistent information)
  • The scam artist may provide documentation that looks legitimate, but it usually contains spelling or grammatical errors. (Red Flag: Not professional documentation)
  • The size of the inheritance is usually in the millions of dollars. (Red Flag: Too good to be true)
  • The scammer requests personal information such as birth date or financial information. (Red Flag: Being asked to provide sensitive information to a stranger)
  • The scammer uses faith or other means to try to establish an immediate connection. (Red Flag: Playing to people’s instinct to trust those who are like us)

What to do if you’ve been targeted:

  • When approached, whether online or in-person, about any transaction that requires personal information, think critically. Ask yourself, is it likely that a stranger you’ve never met would be willing to give you millions of dollars just based on an email?
  • Never provide money or sensitive information to anyone you don’t know, or have only met online.
  • Avoid any arrangement that asks for upfront payment via money order, wire transfer, bitcoin or other electronic currency.
  • Do a reverse image search to determine if any images are shared on other websites.
  • Do an internet search using the names or contact details, as well as the exact wording of the email or letter to determine any references to a scam.
  • Seek advice from a lawyer, accountant or other trusted professional if you have any doubts about the legitimacy of an offer.
  • If you think it’s a scam, simply delete the message. If you open the door, scam artists will try to manipulate you by playing on your emotions or beliefs to achieve their goal.

At FCNB we share information on the red flags of fraud and information about current scams circulating in the province in an effort to help New Brunswickers protect themselves and their communities. While scams change and adapt, the red flags of fraud tend to be common across different types of scams. The more people can recognize the red flags, think critically about offers and be vigilant, the fewer people will end up being scammed.



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Let’s Compare: TFSA? RRSP? Both?
by FCNB on 

Let’s Compare: TFSA? RRSP? Both?


This is the time of year when everyone is rushing to tuck away funds in to their Registered Retirement Savings Plans (RRSP), in many cases, to take advantage of the tax break it affords. While the tax credit is nice, how do you know if an RRSP is right for you, versus the many other savings vehicles on the market, such as a Tax Free Savings Accounts (TFSA), which is another tax-sheltered investment? Setting short-, mid- and long-term goals and understanding how these products can help you reach your financial goals will help you achieve financial freedom.

 

TFSA versus RRSP: It’s not to say that one is better than the other.  Both a TFSA and an RRSP can be enjoyed for similar and different reasons – it all depends on your financial situation and goals. 

Both can be used to help you reach your saving and investing goals. How you choose to use them may depend on the timeline of your goals, other income dependant benefits you receive and how you plan to use the money. 


TFSA and RRSP are not investments in and of themselves. They are the plan or envelope that holds individual investments sheltering those investments from tax. An RRSP and a TFSA can both hold a variety of investments such as cash, guaranteed investment certificates, mutual funds, bonds and/or stocks. Both plans allow you to carry-forward any unused contribution room. This is where the similarities end and the differences begin! 


Here’s how the two compare:  


RRSP

TFSA

Tax deduction for contributing (may result in tax-refund), which lowers your net income.

No tax deduction for contributions (contributions are made with after-tax dollars), which does not impact your net income.

Generally, the amount you can contribute to your RRSP, for a given tax year without tax implications, is determined by your RRSP deduction limit. This is often called your "contribution room." This amount is determined based on previous year’s limits and your annual income. To determine your contribution limit, check your Notice of Assessment or speak with Canada Revenue Agency.

The maximum amount you can contribute to your TFSA is limited by your TFSA contribution room. When TFSAs were first created in 2009, the maximum was $5,000 per year, and that was the same until 2012. In 2013, the amount increased and has changed over the years. Visit the Canada Revenue Agency’s website for information on how much you are eligible to contribute, as your TFSA room accumulates over time.

You have to pay taxes on money when withdrawals are made, unless you qualify for first-time Home Buyers Plan, or the LifeLong Learning Plan . Depending on your situation, some people do not want to have this tax burden when they retire. Talking to a professional accountant or financial planner can help you determine the best choice for your situation.  

No taxes are paid when withdrawing money. This flexibility makes it easier to withdraw money from your TFSA. Also, your contribution room is not impacted by making a withdrawal, which is another benefit. That said, you lose out on the tax-free earning potential by withdrawing from the account.

Withdrawals may reduce the amount you receive from Federal benefits that are income dependent.

Withdrawals are not considered taxable income, so will not affect the amount you receive from Federal benefits such as GST Credit, Guaranteed Income Supplement (GIS) and Old Age Security.

RRSP holdings can’t be used as collateral for a loan

TFSA holdings can be used as collateral for a loan

At age 71, an RRSP must be converted to a Registered Retirement Income Fund (RRIF) or an annuity or withdrawn and declared as earned income. At this point, it moves from a savings stream to an income stream.

There are no age restrictions on how long you can hold a TFSA. From the age of 18 on, you are eligible to contribute to a TFSA for as long as you like.


Finally, here is some food for thought about different ways to use the plans:


Consider using a TFSA to fund extraordinary expenses at any time such as a new car or taking a vacation, etc... Since you don’t pay additional tax on money withdrawn from your TFSA, it’s likely the most economical way to save for mid to short-term savings goals.

If you use an RRSP to fund a one-time, big ticket item such as a car or a trip, you’ll have to take in to account the price of the item as well as the additional tax you’ll have to pay for the larger withdrawal. Additionally, a larger withdrawal could bump you into a higher tax bracket.


You could also use a TFSA to satisfy your retirement goals if you’ve already maximized your RRSP contribution room. That said, ensure you watch any over contributions to both your TFSA and your RRSP. If you exceed the maximum allowed by the Canada Revenue Agency, you will be charged a percentage penalty per month until you withdraw the excess.


The long and the short of it is that both RRSPs and TFSAs may have a place in your financial portfolio depending on your financial goals. Visit our Investment Planning Workbook here, for more information on establishing clear financial goals.  




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