TORONTO, ONTARIO--(Marketwire - July 18, 2012) -
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As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense' for Canadians, BMO is releasing a financial tip every week in 2012.
BMO's Financial Tip of the Week: As couples prepare for their wedding day they should have "The Financial Talk" to help the transition from "my money" to "our money".
"Before two people get married, it's important that they have an open dialogue about their current finances. This is the ideal time to start developing a financial plan as a couple, including identifying short and long-term investment goals," said Tina Di Vito, Head of the BMO Retirement Institute. "It is especially helpful to have a financial professional at the table, not only to offer advice and assistance, but also to provide an objective point of view."
To ensure a "prosperous" relationship, new couples should take the time to discuss their financial future:
Address Debt: Communicate with each other the good and the bad, including any high-interest debt you may have. This will set a clear picture of how both of you stand financially and how you can work together to set priorities and eliminate debt.
Get On the Same Page: Establish how household expenses will be paid and how money will be managed. Also discuss your external investments and assets and ways to balance risk in your portfolios. Consider including a variety of products such as mutual funds, exchange traded funds (ETFs), guaranteed investment certificates (GICs) and bonds.
Be Honest: When purchasing your first home, be honest with your partner on what you can realistically afford and the sources of funding you will use for a down payment. Stress-test your budget using a mortgage payment based on a higher rate to make sure you can afford what both of you signed up for. Keep in mind that total housing costs (mortgage payments, property taxes, heating costs, etc.) should not consume more than one-third of your combined household income.
Be Tax Smart: Do some research into the tax implications of your new marital status. The government will look at your combined income to determine your eligibility for certain credits (e.g. GST/HST credit). Also, inquire about potential tax credits. For example, if one of you is in school, the student can transfer the tuition and education amount to the working spouse to lower the tax burden. Married couples are also able to combine medical expenses and charitable donations in their tax return.
Plan for the Future: Make sure that you both agree on your future investment goals and work together to develop a financial plan that will get you there. Although it may seem far away, do not forget to discuss how you envision your ideal retirement lifestyle, and the steps you need to take - together - to get there. Start contributing to your Registered Retirement Savings Plan (RRSP); consider Spousal RRSPs as well.
To learn more about saving and investing wisely, please visit www.bmo.com/smartinvesting or contact your BMO Bank of Montreal representative.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $525 billion as at April 30, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
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