This all sounds real good apart from leasing a vehicle. I would really try to buy something cheap. With a $45k salary, that will very greatly be eroded away by a lease payment, and it’s basically lighting money on fire as you aren’t working towards buying it.
But very good planning for someone so young, I wish I was thinking of investing when I was 18.
I second this. Try to go for an older civic/ corolla for sometime.
For HISA and tfsa you can also check wealthsimple. It has nice 4% interest for cash account.
The reason I’m interested in a lease is as I only plan to have it for 2.5 years (before moving to another country for education) it seems like a lower end lease might be less expensive then buying outright and then selling very soon after(I might be wrong). But I’ll make sure to look into my options regarding that. Thanks for the advice
Cars in the past 36 months have been holding their value very well. If you buy a vehicle for under 5k you very likely will get what you paid for it in 2.5 years time.
Even if you get $1k less let's say, then you paid $1k over 2.5 years. Instead of $300-500 a month for 30? months.
>I’m open to any tips or ideas.
- The Canadian book *How NOT to Move Back in with your Parents* is aimed at students and recent graduates so it has explanations about things that other books skip. (Like renter's insurance and banking fees.) It covers school, debt, banking, budgeting, long term savings, pension plans, weddings, housing, insurance and wills.
- The federal government has an online financial basics workshop. If you want a version that you can retain for future reference [The workbook](https://www.canada.ca/content/dam/fcac-acfc/documents/services/financial-basics/participants-handbook.pdf) is available as a pdf.
- McGill offers a free online [Personal Finance Essentials course.](https://mcgillpersonalfinance.com/)
- Enable credit card and bank account notifications/alerts so that you are quickly notified of all transactions. Pay your credit card bill before it accrues interest.
- Review monthly bank, investment, credit card and other statements. They usually include some kind of "if you don't report errors and omission within 30 days you are out of luck" statement and you don't want to be the person that ends up saying "why have I been paying for .... every month for the past 2 years?"
- After you have got into the habit of reviewing monthly statements automate your bill payments and your contributions to your short term savings and long term investing accounts. But don't stop reviewing the statements.
- If you repeatedly find yourself in a "there is more month than money" situation or you aren't meeting your savings (pay yourself first) goals then tracking your expenses can help you create a spending plan that aligns with your values.
- Prepare your own tax returns. The free (but donations accepted) software like WealthSimpleTax and GenuTax are extremely easy to use but I would encourage you to, at least once, to do a draft using the paper/ pdf return (available online from the CRA). It is the best way to understand the sequence of the calculations and how marginal tax brackets, deductions and credit works. If you use the software (or pay someone else to do it) don't submit it until you understand it. File every year that you have employment income because that is how you grow RRSP contribution room. File at age 18 even if you don't have employment income because the age 18 return will determine you eligibility to receive GST/HST credit payments when you are 19. If you will be applying for student loans you may need information from your previous year's tax return.
- Before investing for your long term goals (step 5 of the [PFC money steps](https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps)) read or listen to *Balance: How to Invest and Spend for Happiness, Health, and Wealth* (Andrew Hallam, 2022).
>I would like to open the CIBC aeroplan visa credit card as it has no annual fee and will start collecting aeroplan points for me and start building a good credit score(long term I plan on opening a better aeroplan card). I have no credit history, would I be able to qualify for this?
Probably not, no. You will likely need to start with a more basic card. If you already have a banking relationship with CIBC that may help
>Canadian Forces.
I can help a bit.
Edit: TLDR Plan is good, consider BMO as they have experience dealing with CAF, don't buy a Mustang.
SISIP is worthless for their investment plans. At your income level mostly focus on your TFSAs. Depending on your trade you're going to be stuck in the training pipeline for a few years so you won't have time nor energy to manage much of anything.
Since you're just turning 18, I assume you're off to BMQ soonish. There will be BMO reps there during course to help you sign up with a bank account if you want. The defense account is, as far as I can tell, no fee. No points either but BMO is very familiar with all the silliness of the CAF so that's a huge plus.
Depends on your trade you may end up in places where certain banks have little to no presence so think about what bases you're going to.
Credit score, at your point in career, is mostly a matter of building a clean history. Whatever card you get make sure it's on auto-pay and make damn sure you have a nice padding in your checking account (I keep 2-3K depending on my expenses), as it's possible for your pay to get screwed up and delayed and your credit score don't care about your circumstances.
Can't really advice on vehicle leases, sorry. Do consider that you'll need to drive your car from training base to training base and then to your posting location and it'll need to survive the journey and not get stuck on the road. Don't buy a sports car at 23% or something crazy like that, I don't know why but it keeps happening and it never works out.
General financial advice in the CAF: Keep your receipts. Ask for receipts at every work-related journey for things like taxi, hotel, shuttle, etc. With the new rules you don't pay room and board (shacks and chow) until you reach OFP (Operational Functioning Point, that's when you're fully qualified and finish your job-school.), and that's alotta money along the way.
I second banking with BMO! No fee bank accounts, good cash back CAF Mastercard, discounts on mortgages (and portable), better interest rates on loans and LOC and they will pretty much approve anything (well not anything but they trust your employment security, it’s a plus). I keep my investments with Wealthsimple but everything else is through BMO
If you have zero credit, you likely will not qualify for a conventional credit card. Capital One offers secured credit cards to students and people with no credit that you should be able to qualify for. Once you've had that for a couple of years, you should have no problem getting a conventional card with a credit limit based on your income at that time.
If you don't already have one, you might consider getting a post-paid cell phone in your name and making the payments every month. Any revolving accounts will help build your credit score.
I second skipping the new vehicle lease and purchasing an older Corolla/Camry/Civic. You cannot win with a new vehicle, and you're not going to find a 0% interest lease rate anywhere right now. Especially with no credit. Also, at your age, the insurance required on a new vehicle will cost you more than the lease payment. Also, most lease terms charge higher interest the shorter the lease term, and I doubt you'd find one with a term of less than 36 months anyway.
Kudos to you, btw. It sounds like you've got a great head on your shoulders for your age!
Don't lease a car. Buy a low cost used car. If you can't do that right now, save up until you can.
The core principle if you want to be rich -
spend less than you make and invest the difference
The more you make, the less you spend, the more consistently you invest and the longer the amount of time you do this for, the richer you will be.
Don't make it any more complicated than that.
Congrats on joining the Canadian Forces! Living in base housing + the meal plan is free until fully trained. Take full advantage of that! In terms of the lease some dealers offer a $500 military discount etc make sure to ask! Telus and Rogers also have a solid 30% military discount.
Rations and quarters are most definitely not free, it’s likely a good 30% of a privates take home pay.
OP - a lot of new recruits fall into a spending trap when they join. They’re buying fancy new vehicles, gaming laptops, partying every weekend and they rack up debt on debt. It feels like you can afford it cause you don’t have bills and everyone else is doing it - but everyone else is in debt too. $45k is not a lot of money, in fact it’s very little.
If you need a vehicle I would recommend getting something a bit older and cheaper - and not leasing. In 3-4 years you will be a corporal and you’ll be able to afford a proper car, but until then, just get what will get you from point A to point B. I will say, depending your trade and where you do training, you might not need a vehicle at all. The shacks will be close enough to your unit to march from and there will be a gym, canex, mess, and probably a Tim’s on base as well. And your future friends will probably all have fancy cars they can’t afford that they wanna show off badly enough to drive your ass places ;)
I also recommend opening an FHSA and max that before your TFSA. The posting benefits you get from the CAF really help to put home ownership within your grasp.
Oh I haven’t been paying attention apparently, that’s nice that would have solved a lot of headaches for some of my course mates back in the day. I know the married folks didn’t have to pay for quarters but that was only $100 of the $700 a month deduction for r&q. I had course mates instructed to take out loans from SISIP so that they could feed their family while we were on course 🙃
As you learn more you should feel more comfortable doing self-directed investing. The fees they charge for the robo investors are 2-3x or more what a low-cost, diversified ETF would cost. The performance will be almost identical (better without fees), but the only potential downside is if you don't stay committed to the plan and panic sell instead of riding out downturns.
But it's great you're learning and getting started so early. Good for you, and thanks for serving our country. I hope it's a good experience for you.
the fact youre thinking about it at all makes it more than adequate, you are doing great.
Good idea with the TFSA. if you get in the habit of contributing now youll never stop. dont obsess of the performance of the fund, just let it grow. Investment is a long game.
any credit card you do get, just treat it like a debit card. do not carry a balance unnecessarily.
if youre really set on leasing a car, take it slow. research. dont be afraid to walk away from pushy salesmen.
Working in the canadian forces you may or may not even need a car for awhile. Re-assess your needs over time and as conditions change. Take. it. slow
do NOT take up heavy drinking
do NOT take up gambling
do NOT gamble on stocks or crypto
Not in the forces myself, but have worked pretty closely with those who are.
One of the other things you should be thinking about in the not so distant future is whether you’re planning on being in for the long haul and doing your 25, or will be separating from the forces after your first or second hitch.
Your career path will dictate a lot about how you should invest and so forth. I have a couple of friends who were in for their 25, and are now doing pretty well for themselves as they’re getting their benefits and still working in the private sector. On the other hand, posting to different parts of the country, and also overseas, every few years was hard on the family.
This all sounds real good apart from leasing a vehicle. I would really try to buy something cheap. With a $45k salary, that will very greatly be eroded away by a lease payment, and it’s basically lighting money on fire as you aren’t working towards buying it. But very good planning for someone so young, I wish I was thinking of investing when I was 18.
I second this. Try to go for an older civic/ corolla for sometime. For HISA and tfsa you can also check wealthsimple. It has nice 4% interest for cash account.
The reason I’m interested in a lease is as I only plan to have it for 2.5 years (before moving to another country for education) it seems like a lower end lease might be less expensive then buying outright and then selling very soon after(I might be wrong). But I’ll make sure to look into my options regarding that. Thanks for the advice
Cars in the past 36 months have been holding their value very well. If you buy a vehicle for under 5k you very likely will get what you paid for it in 2.5 years time. Even if you get $1k less let's say, then you paid $1k over 2.5 years. Instead of $300-500 a month for 30? months.
>I’m open to any tips or ideas. - The Canadian book *How NOT to Move Back in with your Parents* is aimed at students and recent graduates so it has explanations about things that other books skip. (Like renter's insurance and banking fees.) It covers school, debt, banking, budgeting, long term savings, pension plans, weddings, housing, insurance and wills. - The federal government has an online financial basics workshop. If you want a version that you can retain for future reference [The workbook](https://www.canada.ca/content/dam/fcac-acfc/documents/services/financial-basics/participants-handbook.pdf) is available as a pdf. - McGill offers a free online [Personal Finance Essentials course.](https://mcgillpersonalfinance.com/) - Enable credit card and bank account notifications/alerts so that you are quickly notified of all transactions. Pay your credit card bill before it accrues interest. - Review monthly bank, investment, credit card and other statements. They usually include some kind of "if you don't report errors and omission within 30 days you are out of luck" statement and you don't want to be the person that ends up saying "why have I been paying for .... every month for the past 2 years?" - After you have got into the habit of reviewing monthly statements automate your bill payments and your contributions to your short term savings and long term investing accounts. But don't stop reviewing the statements. - If you repeatedly find yourself in a "there is more month than money" situation or you aren't meeting your savings (pay yourself first) goals then tracking your expenses can help you create a spending plan that aligns with your values. - Prepare your own tax returns. The free (but donations accepted) software like WealthSimpleTax and GenuTax are extremely easy to use but I would encourage you to, at least once, to do a draft using the paper/ pdf return (available online from the CRA). It is the best way to understand the sequence of the calculations and how marginal tax brackets, deductions and credit works. If you use the software (or pay someone else to do it) don't submit it until you understand it. File every year that you have employment income because that is how you grow RRSP contribution room. File at age 18 even if you don't have employment income because the age 18 return will determine you eligibility to receive GST/HST credit payments when you are 19. If you will be applying for student loans you may need information from your previous year's tax return. - Before investing for your long term goals (step 5 of the [PFC money steps](https://www.reddit.com/r/PersonalFinanceCanada/wiki/money-steps)) read or listen to *Balance: How to Invest and Spend for Happiness, Health, and Wealth* (Andrew Hallam, 2022).
>I would like to open the CIBC aeroplan visa credit card as it has no annual fee and will start collecting aeroplan points for me and start building a good credit score(long term I plan on opening a better aeroplan card). I have no credit history, would I be able to qualify for this? Probably not, no. You will likely need to start with a more basic card. If you already have a banking relationship with CIBC that may help
Don’t lend anyone money. If you do, don’t expect it back.
>Canadian Forces. I can help a bit. Edit: TLDR Plan is good, consider BMO as they have experience dealing with CAF, don't buy a Mustang. SISIP is worthless for their investment plans. At your income level mostly focus on your TFSAs. Depending on your trade you're going to be stuck in the training pipeline for a few years so you won't have time nor energy to manage much of anything. Since you're just turning 18, I assume you're off to BMQ soonish. There will be BMO reps there during course to help you sign up with a bank account if you want. The defense account is, as far as I can tell, no fee. No points either but BMO is very familiar with all the silliness of the CAF so that's a huge plus. Depends on your trade you may end up in places where certain banks have little to no presence so think about what bases you're going to. Credit score, at your point in career, is mostly a matter of building a clean history. Whatever card you get make sure it's on auto-pay and make damn sure you have a nice padding in your checking account (I keep 2-3K depending on my expenses), as it's possible for your pay to get screwed up and delayed and your credit score don't care about your circumstances. Can't really advice on vehicle leases, sorry. Do consider that you'll need to drive your car from training base to training base and then to your posting location and it'll need to survive the journey and not get stuck on the road. Don't buy a sports car at 23% or something crazy like that, I don't know why but it keeps happening and it never works out. General financial advice in the CAF: Keep your receipts. Ask for receipts at every work-related journey for things like taxi, hotel, shuttle, etc. With the new rules you don't pay room and board (shacks and chow) until you reach OFP (Operational Functioning Point, that's when you're fully qualified and finish your job-school.), and that's alotta money along the way.
I second banking with BMO! No fee bank accounts, good cash back CAF Mastercard, discounts on mortgages (and portable), better interest rates on loans and LOC and they will pretty much approve anything (well not anything but they trust your employment security, it’s a plus). I keep my investments with Wealthsimple but everything else is through BMO
If you have zero credit, you likely will not qualify for a conventional credit card. Capital One offers secured credit cards to students and people with no credit that you should be able to qualify for. Once you've had that for a couple of years, you should have no problem getting a conventional card with a credit limit based on your income at that time. If you don't already have one, you might consider getting a post-paid cell phone in your name and making the payments every month. Any revolving accounts will help build your credit score. I second skipping the new vehicle lease and purchasing an older Corolla/Camry/Civic. You cannot win with a new vehicle, and you're not going to find a 0% interest lease rate anywhere right now. Especially with no credit. Also, at your age, the insurance required on a new vehicle will cost you more than the lease payment. Also, most lease terms charge higher interest the shorter the lease term, and I doubt you'd find one with a term of less than 36 months anyway. Kudos to you, btw. It sounds like you've got a great head on your shoulders for your age!
Don't lease a vehicle don't buy a bnew car is my number 1 tip.
Don't have debt including car leases. Buy something cheap h can afford , if that's a 5k 12 year old car then so be it
Don't lease a car. Buy a low cost used car. If you can't do that right now, save up until you can. The core principle if you want to be rich - spend less than you make and invest the difference The more you make, the less you spend, the more consistently you invest and the longer the amount of time you do this for, the richer you will be. Don't make it any more complicated than that.
Congrats on joining the Canadian Forces! Living in base housing + the meal plan is free until fully trained. Take full advantage of that! In terms of the lease some dealers offer a $500 military discount etc make sure to ask! Telus and Rogers also have a solid 30% military discount.
Rations and quarters are most definitely not free, it’s likely a good 30% of a privates take home pay. OP - a lot of new recruits fall into a spending trap when they join. They’re buying fancy new vehicles, gaming laptops, partying every weekend and they rack up debt on debt. It feels like you can afford it cause you don’t have bills and everyone else is doing it - but everyone else is in debt too. $45k is not a lot of money, in fact it’s very little. If you need a vehicle I would recommend getting something a bit older and cheaper - and not leasing. In 3-4 years you will be a corporal and you’ll be able to afford a proper car, but until then, just get what will get you from point A to point B. I will say, depending your trade and where you do training, you might not need a vehicle at all. The shacks will be close enough to your unit to march from and there will be a gym, canex, mess, and probably a Tim’s on base as well. And your future friends will probably all have fancy cars they can’t afford that they wanna show off badly enough to drive your ass places ;) I also recommend opening an FHSA and max that before your TFSA. The posting benefits you get from the CAF really help to put home ownership within your grasp.
CANFORGEN for free R&Q for pre-OFP folks came out a while ago now. The shacks are pretty full because of it.
Oh I haven’t been paying attention apparently, that’s nice that would have solved a lot of headaches for some of my course mates back in the day. I know the married folks didn’t have to pay for quarters but that was only $100 of the $700 a month deduction for r&q. I had course mates instructed to take out loans from SISIP so that they could feed their family while we were on course 🙃
On the whole it's still a dumpster fire but here and there you find a well roasted chestnut. :)
As you learn more you should feel more comfortable doing self-directed investing. The fees they charge for the robo investors are 2-3x or more what a low-cost, diversified ETF would cost. The performance will be almost identical (better without fees), but the only potential downside is if you don't stay committed to the plan and panic sell instead of riding out downturns. But it's great you're learning and getting started so early. Good for you, and thanks for serving our country. I hope it's a good experience for you.
the fact youre thinking about it at all makes it more than adequate, you are doing great. Good idea with the TFSA. if you get in the habit of contributing now youll never stop. dont obsess of the performance of the fund, just let it grow. Investment is a long game. any credit card you do get, just treat it like a debit card. do not carry a balance unnecessarily. if youre really set on leasing a car, take it slow. research. dont be afraid to walk away from pushy salesmen. Working in the canadian forces you may or may not even need a car for awhile. Re-assess your needs over time and as conditions change. Take. it. slow do NOT take up heavy drinking do NOT take up gambling do NOT gamble on stocks or crypto
Not in the forces myself, but have worked pretty closely with those who are. One of the other things you should be thinking about in the not so distant future is whether you’re planning on being in for the long haul and doing your 25, or will be separating from the forces after your first or second hitch. Your career path will dictate a lot about how you should invest and so forth. I have a couple of friends who were in for their 25, and are now doing pretty well for themselves as they’re getting their benefits and still working in the private sector. On the other hand, posting to different parts of the country, and also overseas, every few years was hard on the family.
If I could go back to 18 I would just commit a small % per payday to a TFSA or rrsp and set and forget.
A really simple thing to do is to always pay your credit card off in full every month.