One of my very first posts was on putting a value on your work, then, a couple months back, I did one on cash flow. For the next couple of posts, I want to turn my attention to our future finances as self-employed artists, and for this, I’ve employed the help of an expert.

I’ve known Shelley for many years–her company, Blue Peanut Productions, was one of the very first companies to hire me to do publicity many, many years ago. Shelley has a background as an actor and an arts administrator, but lately, she’s gone through a career change, and has become a financial ad visor with Investor’s Group. And she is also my personal financial advisor. Which makes me sound way more grown-up than I am….

In this first of a series, we talk about saving for retirement. Read on for more information and all the questions you’ve been too afraid to ask.

TAoTB: I’ve heard this rumor that by the time I get to retire, there may not be anything left in CPP. Is this true? Should I be saving for my retirement?

S: In Canada, nearly everyone will be eligible for the Canada Pension Plan (CPP) – but that’s not enough. The Canadian government also offers Old Age Security (OAS).  This is a scaled benefit and is dependent on your income.  Not everyone will be eligible to receive this benefit either. As self-employed persons, we need to plan ahead by having both RSP (or Registered) savings AND non-registered savings (which can be defined as anything that is NOT included in an RSP or Registered Savings Plan).  We will not be receiving a pension, except for that which we create for ourselves. 

TAoTB: How can I get started saving for my financial future? What options are there? There’s so much information, it’s confusing.

You’re very right about that. It is confusing. There are as many products available out there as there are people who need them. That is why it’s important to create a financial plan with someone that you can trust, who has your best interests in mind and who has access to the best information to help you. This is what I (and my company, Investors Group) do.

TAotB: Do you have some ‘rules of thumb’ about how much money I should be saving?

S: One thing that I do is work things from Retirement backwards. How much money do you need to retire? What would you like your retirement to look like? What will your income needs be? Will you travel? Do you want to own your own home before you retire?

My rule of thumb is to save as much money as you can. Look at what you spend and where you can cut back: a simple exercise is to write down every purchase that you make for 1 week – and I do mean every purchase. How much did you spend on lattes? On eating out? How much are you willing to cut back to fund your dreams? What will that vacation cost? So many of my clients that have performed this exercise come to me at the end of the week absolutely gob-struck at what they’re spending money on – and where that money could have otherwise gone; whether it be those gorgeous new shoes, or a spur of the moment trip to Vegas. Just by cutting out your morning trip to Starbucks, you could save $25 a week, $100 a month… or $1,200 a year.

TAotB: Okay. I can see how cutting back on my morning lattes might help me save $25 per week, but that doesn’t seem like much. Is there a way to jumpstart my plan?

S: There are many options available. One of my personal favorites is the Leverage. It’s an Investment Loan that allows you to jump-start your savings/retirement fund while paying only a minimum each month. My personal loan is in the amount of $50,000 and my payments are only $208/month. I’m earning interest/dividends on $50,000 rather than $208/$416/$624, etc.

The biggest thing to remember, though, is that how much you save isn’t anywhere NEAR as important as simply saving. Create a plan and stay on top of it. With the help of your financial consultant, it’s easy to make modifications to a plan if your situation or circumstances warrant it.

Finally, I’d just like to remind you of the old saying about oak trees: The very best time to plant an oak tree was 20 years ago. The second best time is right now. Don’t forget to water.