Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

During her marriage, Violet’s then-spouse managed the money. Now she needs to get back on her feet financially.

Glenn Lowson/The Globe and Mail

Recently divorced, Violet is living with her folks until she gets back on her feet financially. Her housing costs for now: $300 a month. She has two children, ages 5 and 8, one of whom has special needs.

Violet is 39 and earns $55,000 a year at a job with a good defined benefit pension plan. Her main goal is to provide security for her children by purchasing a home in the Toronto suburb where she lives. She has some savings in cash and guaranteed investment certificates.

During her marriage, her then-spouse managed the money, Violet writes in an e-mail. Now, she is seeking "a clear understanding of how I can best manage my finances to ensure security for my children and myself," she adds. She wants to save for her children's higher education and possibly upgrade her own education as well.

Story continues below advertisement

When they separated, her ex-husband agreed to pay for the children's private schooling instead of paying child support. They deemed private school best for their special needs child. Violet is financially responsible for the children's basic necessities.

"How much house can I afford?" Violet asks. "What should my financial priorities be?"

We asked Heather Franklin, a fee-only financial planner based in Toronto, to look at Violet's situation. Ms. Franklin holds the certified financial planner (CFP) designation.

What the expert says

Violet's first priority should be to set up a registered disability savings plan (RDSP) for her disabled child, Ms. Franklin says. The RDSP is a federal government program that allows parents of disabled children to save for long-term financial needs, including future living costs. Violet may well qualify for some government assistance under the program. Investment income earned is tax deferred.

Next, she should open a registered education savings plan (RESP) for her other child to help pay for postsecondary education. This way, she can take advantage of the federal education savings grant (up to a lifetime maximum of $7,200 for each child). "She could kick-start this plan with some of the monies held in the savings account," Ms. Franklin says.

Violet's next priority should be her tax-free savings account, the planner says. The current cumulative contribution limit is $52,000. The TFSA should form part of Violet's long-term investment strategy and so should be invested in a balanced portfolio of stocks and bonds. Given Violet's lack of investment knowledge, a low-fee mutual fund family such as Steadyhand or Mawer might be the most suitable. The planner suggests Violet set up automatic withdrawals from her pay to cover RDSP, RESP and TFSA contributions. As well, she could resolve to learn more about saving and investing.

Story continues below advertisement

As long as Violet is living with her parents, her monthly spending is not a big problem, the planner says. But "when she ventures out on her own, rent and utilities will come into play," Ms. Franklin says. "Violet will need to be more cognizant of her discretionary expenditures, especially dining out and entertainment."

As for the house, Violet cannot afford to buy "at this time," the planner says. Although Violet has substantial savings, "her present salary will not support mortgage payments and the necessary expenditures that are associated with home ownership," she adds. "The more reasonable approach would be to rent."

Among Violet's concerns is how to make the most of her savings, all of which are in bank savings accounts and guaranteed investment certificates earning nothing, or next to it, after subtracting inflation. The accounts are scattered across a number of financial institutions.

"Her need to consolidate is paramount," Ms. Franklin says. That means one RRSP and one TFSA at the same financial institution. "Consolidation allows for better control and monitoring of assets, as well as better diversification and asset mix," she says. "Further, she must move forward with actually investing her cash."

Violet is fortunate to have the option of shifting her RRSP holdings to her work pension plan – an opportunity she should jump at, the planner says. Not only would her investments be managed professionally, but the costs would be lower than other alternatives. "The inclusion of her RRSP within her [work] plan is a great solution."

Finally, Violet needs to set up an emergency fund to cover at least three months' expenses separate from her other investments. She could open a separate savings account or perhaps get a personal line of credit that she could draw on in an emergency.

Story continues below advertisement


The people: Violet, 39, and her two children

The problem: How to set priorities that will lead to long-term financial security

The plan: Use some of her savings to set up registered savings plans for her children. Consolidate her various holdings into a single TFSA. Roll her RRSP into her work pension plan. Forget about buying a house for now.

The payoff: A clear road map to a financially stable future.

Monthly net income: $3,310

Story continues below advertisement

Assets: Bank savings accounts $290,000; GICs $4,265; TFSA $40,235; RRSP $126,305. Sub-total $460,805. Plus estimated present value of defined benefit pension plan $153,400. Total: $614,205

Monthly outlays: Rent to parents $300; transportation $300; groceries $400; clothing $50; gifts, charitable $45; dining, drinks, entertainment $620; grooming $15; other personal $15; cellphone $45; pension plan contributions $380. Total: $2,170

Liabilities: None

Want a free financial facelift? E-mail

Some details may be changed to protect the privacy of the persons profiled.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies