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moneysense.ca, 6/11/06
Financial Advice For Parents
I thought this article on MarketWatch.com gives good financial advice for parents:
- Purchase Life Insurance: We bought term-life insurance as soon as the boys were born. In hindsight, we should have started the process well in advance as it takes anywhere from 2-4 months to complete medical tests and get approved.
- Purchase Disability Insurance: Both of us have disability insurance through our jobs.
- Make a Will: We are still in the process of getting our wills done, but we did speak with a lawyer.
- Save for Retirement: Our financial priorities are contributing the maximum to our RRSPs and pre-paying the mortgage in that order.
- Save for College: We contribute to an RESP, which is invested in TD eFunds.
And while on this topic, this column from The Globe and Mail is full of solid advice for new parents.
moneysense.ca, 6/11/06
Thanks for the tips! I’ve got a baby on the way in a few months, so I’ve been looking in to this.
Do you have any RESP accounts that you recommend. Most I’ve seen charge an administration fee, and I’d like to avoid that.
Why life insurance for kids? I have it from work because it costs nothing, and it is really only enough to cover funeral arrangements and such?
–C8j
Alex: Congratulations. We use TD eFunds account for a RESP. Here is an earlier post that might help you get started:
RESP: Getting Started
Big Cajun: The life insurance is for us, not the kids. I have life insurance from work too, but I don’t think it is nearly enough should something happen to us.
Capital advice, Canadian Capitalist! Tell me though: do you have an opinion about getting life insurance for kids? The general consensus seems to be that you’re much, much better off putting that money into an RESP instead, since there is a far greater chance of your kids going to university than there is of them, well, dying while still children. Do you have a different or similar take on this sort of thing?
Aaahhh… yes indeed, ok I misunderstood. Yes life insurance is very important, and TERM life insurance too, no whole life silliness.
–C8j
Interesting to note you focus on padding the RRSP over paying off the mortgage. I’m very debt-averse myself so I’d probably plow any excess money I had lying around into paying down major debts first before topping up my equity investments.
But different strokes for different folks, I guess. I suppose that impulse will wane as I get better and better at investing. My RRSP is up about 15% already this year, so maybe the tide’s starting to turn.
[...] As I noted in yesterday’s post, my wife and I purchased term life insurance for each of us as soon as our kids were born. Some of the comments I received inspired me to write this post. [...]
Maybe a studid question, but is a lawyer doing your will? You mentioned you spoke to one but that you’re still working on it. My wife and I have a 15 month-old son and we’ve been meaning to do a will since we were married over 2 years ago!!
A little bit out of PF line of discussion, but do you have your household emergency plan?