How much money do you put aside for...

[MommaL]

I'm just wondering how much money people put aside each month for retirement savings, disability benefits, extra home insurance, CPP contributions, income tax and savings for slower months? I'm worried that after putting money aside for all of these things, I'm not going to have any leftover for my regular monthly bills and groceries. Yet, if I don't save any money or have extra insurance, I might be in financial crisis down the road. Help!

[mickyc]

I wish!! I have starting paying CRA $20 every pay towards my 2015 taxes. I have been doing it for about 4-5 pay days now. I pay it directly to CRA now so I don't spend it. Other than that no savings. I am down one kid right now so we just tighten the belt a bit and hope it doesn't last long.

[5 Little Monkeys]

It varies month to month depending on our other bills and entertainment but make sure you budget something for things like these!!! This business is inconsistent and IMO, it's silly not to have savings. Mine is sometimes lower than I'd like but there's always something there. I try to have $2000-2500 saved for tax time but last year I was able to pay no taxes, just my cpp and EI which was awesome. I pay my taxes right away so I don't pay interest....they're already getting my money, they aren't getting the interest!! Lol. Any money left in my account the night before new dc payments are due gets transferred to my savings too. I also use my savings for my holidays.

IMO, the ones that don't last long in this business are the ones who don't have a decent amount to fall back on from time to time. We never know how long a spot will be open for and if I have low savings, it stresses me out big time! We are like any other small business owner, we always have to have plan B ...and C...and so on lol.

Good luck!!

[Suzie_Homemaker]

I'm just wondering how much money people put aside each month for retirement savings, disability benefits, extra home insurance, CPP contributions, income tax and savings for slower months? I'm worried that after putting money aside for all of these things, I'm not going to have any leftover for my regular monthly bills and groceries. Yet, if I don't save any money or have extra insurance, I might be in financial crisis down the road. Help!

I not make enough money for savings, benefits or anything else you mentioning. I set aside income from one child for CPP and taxes.

As for slower months, there not enough income from this job for those either. I luckier than some. My husband semi-retired now and his income pay for our bills and our mortgage paid off long time ago. But if we had mortgage or if my daycare had pay for our day to day living, we would be in trouble in slower month.

This unpredictable income. Someone can leave with no warning. Vacancy can sit for long time. For me, I very picky about my client and often not take parent who wanting to come due to them thinking hours negotiable or being wrong personality type.

It depend on where you are and what daycare fee is but around here, fees are $35 without food and milk and so after expenses, there not spare money for saving. On average year, with just one vacancy maybe sitting for 4-6 weeks, I barely make min wage so no pension or saving from my earning.

[5 Little Monkeys]

Suzie...that's smart to aside one child's fees for tax time!

[MommaL]

Oh dear, I'm starting to worry. So no one has disability insurance or retirement savings? I'm not so much concerned about the present, but if anything ever happened to me (e.g. an illness or injury) that prevented me from working, I don't know what we would do - especially since we still have a mortgage and rely on my income as well. Plus, at some point, I would like to retire - though that's still a long time away.

[5 Little Monkeys]

I choose to pay into EI and RRSP's plus we all pay into CPP at income tax time, both the employer and employee portion

We are fortunate enough to be mortgage free but still a long ways away from retirement. Right now we are able to enjoy jobs we love because our debt is pretty non-existent and our monthly expenses are within our means. If it wasn't like this though, I honestly don't know how we'd make it...this job is one I love and hope to do forever but the long term finances of it do worry me from time to time

[mickyc]

I pay into EI as well although it wouldn't be much if I ever had to collect. We also have insurance on our mortgage so if I was off work due to illness or injury then half my mortgage payment would be covered.

Retirement.... Hmmmmm I doubt I will ever retire. We spend too much! Lol

[Crayola kiddies]

I pay into an rrsp , and 2 resps for my kids, plus i pay $150/month to rev can for my taxes so that come tax time i dont have such a huge amount owing ......i also have life ins..... and TFSA....is tough

[torontokids]

How do you set up the monthly payments to the CRA? I wanted to do this, this year but forgot to ask my accountant.

To answer OP- I have savings set aside for tax time. I basically have a separate account for my business (it is just another PC Financial free account) where all their payments and deposits go. I have a "pay day" for myself where I withdraw a set amount biweekly. The rest remains in the account for taxes and to pay my DC mastercard which is what I use for all DC expenses/groceries. I stopped RRSPs last Dec as we needed the money and I never started them up again. I'm not concerned though because this isn't my career and I will start contributing again in the spring. I have life insurance and EI.

[Crayola kiddies]

just go into your bank account and set up a bill like you would for hydro or bell...and choose CRA installments ....and then each month pay towards it ....i have a spiral notebook andi wirte all my payments down and the day i paid them so come tax time i know exactly how much ive already paid

[kindertime]

Oh dear, I'm starting to worry. So no one has disability insurance or retirement savings? I'm not so much concerned about the present, but if anything ever happened to me (e.g. an illness or injury) that prevented me from working, I don't know what we would do - especially since we still have a mortgage and rely on my income as well. Plus, at some point, I would like to retire - though that's still a long time away.

I have short term and long term disability insurance, also life insurance and a drug plan - all rolled into one monthly payment. This is because in Que., the subsidized home daycares are unionized. We actually had a vote (5 years too late IMO,) on whether we wanted to keep this insurance. Won't know for a month or so if we will.
I have the most basic plan that is available - for a single person with no kids. If I was married and/or with kids, it would be way more expensive. And for me it's $150/month.

[ebhappydc]

Have moved my inlaws into a seniors home this past weekend A huge eye opener to me after researching various homes of how much money is needed down the road to live in a half decent place with good caregivers. And people living longer. My inlaws both have good pensions but makes me realize that not having a pension or being able to contribute to RRSP is a huge deficit for us who can't. I told my kids ill be living with them (I'd never do that to them) my son says he can't wait to boss me into cleaning my room when I'm under his roof... Seriously though, it really hits home when you have to start looking into how to care for parents and realizing you're next even if it's still far away.

[bright sparks]

I just spent the last 8 months as a full time student with no income and living off of my husbands wage only. He works 55-60 hours a week on average and earns a good income. That being said, we struggled, a lot! Kids are getting more expensive as they get older and home maintenance is a big drainer. It was a huge eye opener for me, hence why I've started daycare again and will be continuing my degree online and in the evenings for the time being. There was also an unexpected death in the family in November and we had to foot the bill to fly my husbands mum over from Portugal as she has no money. This sucked up our emergency fund in it's entirety when all was said and done, and was a great example of how life can just change in a second.

We have life insurance....most people are under insured, we are well covered with private term life policies and my husband has good life insurance through work which includes spouse and dependants. Costs less than $100 a month. We had mortgage and long term disability insurance a few years ago and after reading the policy in great detail, realized it was a massive con. We now use that premium money by adding it to our mutual funds. My husband has a great RRSP and DRSP plan through work. He pays 4% and his company pay 6% which was initially a hard deduction to manage as it could have been used day to day, but we have gotten used to it and it will pay off a lot in the future. I don't pay EI. I came to Canada in 2005 and didn't get landed status until 2012 so wouldn't have been entitled to claim anything had I paid. My husband being employed had to pay and wasn't able to opt out although he wasn't entitled to claim EI during that time period. Seems like EI really doesn't pay much either and I'd be better off just putting a bit away each month if I'm able to.

Going to school made us adjust the way we spend, eliminate unnecessary things, even if we were convinced we needed them and we really cut back. Lots of research resulted in cheaper television and internet options, cheap bulk meat purchasing ($2.41 for 1lb of ground turkey), free or almost free entertainment options that could include the kids. I even traded hair services for wine lol I trained as a hairdresser straight out of school. Now it is our goal this next year or two to figure out how to be able to live entirely on one wage, with enough money left over which is key, so I can go back to school on campus, or in case something should happen. I should also mention that I am paying for me degree entirely out of pocket which is a huge burden on the family.....many times I saw that idea as unnecessary but my family pushed me to go for it as I have put it off for years.

Monthly payments to CRA should be something I do to cover the following years tax bill but unfortunately I am still paying off the last.

[superfun]

I don't know how I missed this discussion before, but I'm here now. Lol
This is the first year since starting daycare that I've contributed to my rrsp. I'm happy I did, because now I know how great it is in Manitoba. I made my contribution at the end of February, and the province has already put money back in my back account, 50% of what I put it. :)
I have life insurance and critical illness, but no disability. And I don't ever take the insurance a bank wants to put on your mortgage. That's the biggest scam, in my opinion. I'm so happy someone gave me that advice when I bought my first house.
I have an automatic withdrawal every 2 weeks into an online bank, to cover large expenses. I should increase that amount, because I would like to start saving for things like home renos, etc.

[Wonderwiper]

I save one childs fees to cover tax/ cpp and pay it in a lump sum.

I think we all need to contribute something to an rrsp/tfsa/savings account for retirement. The maximum payouts from cpp/oas are really pitiful. The "basic" level of care in a nursing home is not always the nicest and waiting lists for even the least desirable places are ridiculous ( 12 months+) in Ontario.

I think many people are very unprepared for retirement or even "if sh#t hits the fan". Starting now with little bits will help.

I also agree with Brights parks about life insurance. Term policies can be very affordable and in my opinion are essential.

[MommaL]

And I don't ever take the insurance a bank wants to put on your mortgage. That's the biggest scam, in my opinion. I'm so happy someone gave me that advice when I bought my first house.

Agreed! I learned this when a family friend who had insurance on his mortgage became sick. He was basically told that he wasn't sick enough. He appealed the decision, but was declined again. He hired a lawyer, but ended passing away before anything could be resolved. Such a sad situation. One definitely has to read all the fine print.

[superfun]

I feel really bad that so many people trust their bank, and that insurance. They'll never find out that they aren't properly covered, until something like that happens to them or someone close to them. And by then, it's basically the worst time in the world to find out you don't have the right insurance.

[Van]

Agreed! I learned this when a family friend who had insurance on his mortgage became sick. He was basically told that he wasn't sick enough. He appealed the decision, but was declined again. He hired a lawyer, but ended passing away before anything could be resolved. Such a sad situation. One definitely has to read all the fine print.

That is so sad Mommal- the banks always find a reason not to pay, for anyone who has a mortgage insurance with their bank just know that you can cancel it at anytime just by calling them as it is a waste of money that can go towards something else

[Kath]

Last year was my first year and after all was said and done, claimed a loss for tax time (we bought a huge house with a huge mortgage to do the Dayhome). But, with this said, there are some predictable costs. We have mortgage insurance - that's our life insurance as my husband is often in between jobs and going to school. If either of us die, the mortgage is paid. You can also add disability to that (haven't done it yet but I will). We won't keep the mortgage insurance forever - there's a point where the mortgage becomes smaller - at that point we'll put that $50/month into savings or another plan - this insurance isn't through our bank.
Insurance for my Dayhome is $600/year. I can't use my homeowners insurance because it's a business.
RRSPs pay back so little these days, if we have extra money we put it against our mortgage or in the kids' RESPs.
Smart idea if you have 5-6 kids to put one kid's fees in a tax account. Those of us running with 3 or less aren't turning much of a profit to pay taxes at all (if you write off all that you are entitled to).