Financial planning a year-round process

Page 9

The Christmas season is generally a time of merriment, good cheer and giving. With its passing, however, a much less festive, but equally inevitable season takes its place - tax season. Although it too involves giving, most people find little merriment or good cheer in its observance.

But according to Anita Rosdahl, manager of the First Nations Bank of Canada's Saskatoon branch, with proper financial planning and management, tax season does not have to be dreaded.

"Year-round planning is important," said Rosdahl. "RRSP investments are very popular at this time of year, but it's easier to make these investments and enjoy their tax-deferment benefits if you have a plan for savings. Setting aside a little bit off your cheque each month-even $50 or $100 - is usually easier than coming up with a lump sum at RRSP time."

Even if you haven't saved in advance, however, Rosdahl noted that RRSPs are one of the surest ways of cutting down on your taxes. Like most financial institutions, the First Nations Bank offers low-interest RRSP loans to allow even those without the adequate savings to take advantage of the potential benefits.

"RRSPs do not simply cut taxes - they actually defer that portion of your income to the future. When RRSP contributions are cashed in, they are considered as taxable income. Most people, though, cash in their RRSPs at a time when their income has fallen, so less taxes are assessed than would be if the money was counted as income in the current year."

RRSP recommendations are a common refrain at this time of year, but proper financial planning goes far beyond this annual ritual.

"It's difficult to actually give specific advice," said Rosdahl, "because everyone has different, personalized financial needs."

There are, however, some broad tips that are applicable to anyone.

"An important part of a financial plan is knowing what you need, not only in the current year, but also what you will require in future years. Planning for savings is important, whether that involves setting up special accounts or some other way to put away on a monthly basis. Proper financial planning should include both short and long-term goals," Rosdahl explained.

Once such goals have been pondered and set, Rosdahl recommends seeking the advice of a financial professional.

"For investments, it really comes down to an individual's situation and the amount of risk they are willing to take. Stocks offer more risk but more potential for rapid profits, mutual funds are a little less risky. On the other end, there are GICs [Guaranteed Investment Contracts], which are safe and stable but provide lower growth opportunities."

Banks and other financial institutions have not generally been known for their commitment to the Aboriginal community, but this is slowly changing as more Aboriginal people enter the financial workforce and more companies such as the First Nations Bank are established.

"They [Aboriginal customers] come in here feeling that they're not going to be put in the back of the pile, that there's more of an understanding of their situation, where they come from and where their future lies," said Rosdahl. "The whole objective of First Nations Bank is to provide banking services for Aboriginals -although non-Aboriginal customers are certainly welcome as well."

The First Nations Bank was chartered in 1996, and opened its head office and first branch in Saskatoon in 1997. It has since opened full branches in both Ontario and Quebec, as well as smaller, limited-service branches in many northern communities and on several reserves across the country. This small but growing number of branches, which are often located in post offices and general stores, has brought banking to many areas previously without financial institutions, and the demand has exceeded all expectations.

"There are people available to help with your finances," said Rosdahl of what this trend means to the Aboriginal community. "That's one thing we foud that the Aboriginal community really needed, to have someone to sit down with that can understand where they're at, and where they're coming from."