No matter your situation or what stage you’re at in your military career, it’s important to make prudent saving and investing decisions to ensure your long-term financial security.
Fortunately, best practices of money management can go a long way toward creating a solid financial future for you. As well, the Canadian Armed Forces provides a number of programs and resources to help their service members save, investInvest To use money for the purpose of making more money by making an investment. Often involves risk.+ read full definition and build wealth over time.
6 steps to manage your financial future
1. Create a balanced budget
A budgetBudget A monthly or yearly estimated plan for spending and saving. You work it out based on your income and expenses.+ read full definition can help you:
- Keep track of your income and expenses
- Stay on top of your monthly bills
- Avoid overspending
Use our Budget worksheet to create your budget.
2. Reduce or eliminate debt
Getting out of debtDebt Money that you have borrowed. You must repay the loan, with interest, by a set date.+ read full definition should be a priority. Here’s how to get started:
- Pay off high-interest debt first
- Budget a set amount to pay each month
- Set up automatic withdrawalsAutomatic withdrawals An arrangement you make with your financial institution to move money regularly from any number of different account types.+ read full definition
Use this calculator to pay off credit cards and debt.
3. Create a financial plan
A financial planFinancial plan Your financial plan should cover every aspect of your finances: saving and investing, paying down debt, insurance, taxes, retirement planning and estate planning.+ read full definition defines your short- and long-term financial goals and how you can reach them. A financial plan can help you:
- Prioritize your goals
- Determine an investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition strategy
- Provide peace of mind about your future
Learn how to make a plan.
4. Familiarize yourself with financial programs for the military
Canadian Armed Forces pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition
As a service member you may qualify for a Canadian Armed Forces pension, depending upon your length of service. A military pension is a valuable tool that can provide income for you in retirement.
Veteran Affairs Canada (VAC)
VAC offers a variety of financial programs and services for current or former members of the CAF or RCMP, or a family member, including access to financial planning assistance.
5. Plan for your retirement with an RRSP
Even if you have a Canadian Armed Forces pension plan, there are several good reasons to contribute to an RRSPRRSP See Registered Retirement Savings Plan.+ read full definition. It will provide you with supplement income in retirement. Your contributions are taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition deductible. Your savings grow tax-freeTax-free Money that you do not pay tax on.+ read full definition as long as your money stays in the plan. You can borrow from your RRSP to buy your first home under the Home Buyer’s Plan.
Learn more about RRSPs.
6. Save money tax-free with a TFSA
You probably have other life goals, such as getting a new vehicle, taking a vacation, or buying a home. A TFSATFSA See Tax-Free Savings Account.+ read full definition lets you save tax-free for any goal. As of January 1, 2019, you can save up to $6000 a year and withdraw it whenever you want without paying any tax on the income earned.
Learn more about TFSAs.
Use these resources and tools to help you manage your money and gain a better understanding of investing.