As a business owner in the Okanagan, you understand the importance of creating a plan for the future, having control over your financial journey and being prepared for the unexpected. You also appreciate that financial literacy and good habits, not just income, are the true drivers of financial wellness—and putting the building blocks in place to develop financial autonomy can be a great way to set your child up for success.
Encourage an entrepreneurial mindset
It’s never too early to start thinking about the financial future of your child or to have conversations that begin to establish financial literacy and financial wellness, from either a personal or business-focused mindset. Let’s break down what these terms really mean.
- Financial literacy encompasses understanding money management, including budgeting, saving, debt management, and investments. It’s knowledge that drives informed financial decisions.
- Financial wellness represents feeling secure and confident about your financial situation, characterized by stability, resilience, and reduced stress around money matters.
The relationship between these concepts creates a powerful cycle. Improved financial literacy leads to better decision-making, which enhances financial health and reduces stress. This increased financial security often motivates further financial education, creating an upward trend of improvement.
Practicing good habits with your child now, such as opening their own accounts, saving in small, regular amounts or learning about cash flow can be the foundation of creating financial resilience.
Leverage tax-sheltered tools to build wealth
There are many strategies for how to begin to contribute to your child’s financial future. One of these is with registered accounts. Two accounts that offer government incentives to Canadians are the RESP and RDSP.
- Registered Education Savings Plan (RESP): These plans can be an excellent option to begin contributing to your child’s financial future. From the 20 per cent bonus top up from the federal government to the tax-deferred compounding that occurs in this type of investment, contributing to an RESP is a great way to pay for rising post-secondary costs. Here are four steps to maximize your child’s education savings.
- Registered Disability Savings Plan (RDSP): These plans are a powerful tool designed specifically to help individuals with disabilities and their families secure long-term financial peace of mind. Navigating the lifelong costs associated with a disability can be daunting, but the RDSP acts as a robust financial anchor. For parents, opening an RDSP is one of the most effective ways to build a nest egg for a disabled child’s adulthood without compromising their access to crucial provincial disability support programs. Learn more about how to set up and maximize your child’s RDSP in order to establish long-term financial security.
As a business owner, there may also be unique opportunities to consider and these accounts can quickly become complex, depending on your individual circumstances. It’s best to consult with an advisor and together, make a personalized plan for your child’s future. Take the next step by speaking with a Wealth Advisor at the ATB Wealth Kelowna office.
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