Financial Feminist - BONUS: Guide to Canadian Finance

Episode Date: June 24, 2022

Have you ever wondered what the Canadian equivalent of a Roth IRA is? Want to know what your options are for a high-yield savings account? Tori is joined by Mallory Rowan for this special bonus episode breaking down options for Canadians when it comes to investing, savings accounts, and more! Pre-Order “Financial Feminist: Overcome the Patriarchy’s Bullsh*t to Master Your Money and Build a Life You Love”: https://bit.ly/3PpHvlC Get Mallory’s Canadian Finance Recommendations:  https://malloryrowan.com/resources Follow Mallory on Instagram: https://www.instagram.com/malloryrowan/    Follow Financial Feminist on Instagram: https://www.instagram.com/financialfeministpodcast/    Watch Exclusives from Financial Feminist on YouTube: https://www.youtube.com/c/HerFirst100K/featured    Follow Her First $100K on Instagram: https://www.instagram.com/herfirst100k/   Looking for more actionable money advice? Take our FREE money personality quiz! https://treasury.app/herfirst100k/money-journey-quiz    Leave Financial Feminist a voicemail: https://www.speakpipe.com/financialfeminist (US) Our HYSA recommendation [affiliate]: http://sofi.com/herfirst100k Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hello, Financial Feminist. It is bonus episode time. That's my rap air horn for you. And I purposely went off the mic for that. I didn't do it right up close because I protect your ears. I want your ears to be okay. We're hoping to give you a bonus episode at least every other month and sometimes every month. So if you listen to last month's bonus, you're already aware of the incredible Mallory Rowan. Or if you're following us on Instagram, either at Financial Feminist Podcast or Her First 100K, you've seen her face. And if you haven't listened to that episode, I would suggest maybe listen into that one before you listen to this one. But you can also get a ton of value just from today's episode. This previous episode, the bonus episode before this with Mal was from May,

where we introduced her and told her a little bit about her story. But today, Mal joins us for a special episode for our friends from the Great White North, aka Canada. And I can't tell you how often we get asked about Canadian finance. You might be shocked to learn that actually about 20% of our audience is international on the show. So again, if you're an international, hello, I'm waving to you, blowing you kisses. And it's actually closer to like 50% on social media. So again, if you're an international, hello, I'm waving to you, blowing you kisses. And it's actually closer to like 50% on social media. Over half of our Instagram is folks not based in the United States. So one of the many reasons we asked Mal to be one of our HFK creators is because she can speak to Canadian finance better than I can. I have a general knowledge of it. But like I said on Mal's episode before, literally every country is slightly different. Every country has their own different accounts

and different rules. And so hard enough just keeping track of the United States parameters. So I'm so excited to have Mal here today. And if you are an American thinking like, yeah, this isn't for me. Okay, you got two options. Listen anyway, learn something new. It's important to understand how other financial markets work and how other countries operate. And you're going to have some new nuggets of wisdom in your back pocket. And number two, if you maybe don't want to listen, send this episode to a Canadian friend who needs it. Because Sharon is Karen, eh?

That was for you Canadians. Okay. In this episode, Mal is breaking down some of the Canadian versions of American accounts that we discuss all the time, as well as an overall primer for your options as a Canadian investor. Can't wait for you to listen. Again, feel free to either tap out on this one if you're not based in Canada, or listen, enjoy it, learn something new, send to your Canadian friends. All right, without further ado, let's get going. Let's talk about Canadian finances. Okay. So we at Her First Intercade talk a lot about high yield savings accounts. I know you have a Canadian equivalent. Can you talk about what that is? Because it's

H-I-S-A, I think, right? Can you talk about what that is, what that means, and how it's slightly different than the States' high yield savings account? Yeah. So you're right. It's the I that's different, but it's otherwise generally the same thing. So we call it a high interest savings account. Same idea. A lot of them kind of took a hit with COVID. Honestly, this is the thing, and we could talk a bit about some of those differences, but Canadian banking, I feel like is generally way more regulated. So we just don't have a million in some options. So like a lot of banks now are coming out with their own high interest savings account. But overall, EQ Bank, I would say in Canada, unless you're Quebec, unfortunately, it's not available in Quebec. But EQ Bank is like a great spot for high interest savings accounts.

I do have if you go to malloryrowan.com slash EQ Bank, it'll get you set up there currently, at this time, 1.5% interest rate. Which is much better than the States right now. We're at a half a percent. A half? Yeah, we're at a half a percent. As of this recording, this is May 4th, 2022. Half a percent. Yeah.

Which is still better than your everyday average bank account, which is getting you like 0.01%, 0.03%. Totally. Yeah. About two weeks ago, they went up to 1.5. Through most of COVID, they've been 1.25. But still, I mean, you can't really beat that. It's also, I'm biased. I really like it because you can nickname your different accounts. And then you can put a little tracker. So you could say, if you were building your emergency fund, let's say, you can name an emergency fund. And then

you can say, my goal for this is 10,000. And it'll show you the little tracker. So it's super fun. So yeah, generally that is the same thing. Same idea. We're making like 0.0 nothing in regular accounts. So everyone should be using that for their savings. We know Canadians also invest in the stock market. What account options do you have for retirement slash investing? And I can pop in and give like, this is the like US equivalent. So can you break those down for us? Yeah. These always make me laugh too, Canada and the US. Sometimes it kills me because like, I feel like we're literally just like the upstairs

neighbors. And then I remember one time I was in the States and someone was like, do you guys have country music in Canada? Where do you think we live? I'm sorry. Shania Twain is Canadian. The queen of country. Yes, exactly. We started, we started naming Canadian bands. We were like, are you joking? Like, actually most, most of the hot music right now are Canadian artists, I'll say. But yes, we do invest in Canada, as you said. So the main accounts people would talk about is the TFSA and the RRSP.

So TFSA is tax-free savings account. And then RRSP is registered retirement savings plan. And then RRSP is a registered retirement savings plan. So I think I always forget your Roth art. Well, TFSA is, you have the option of investing with that, right? Or is it automatically an investing account immediately? No, it's option. Like you could have just a TFSA savings account or you can invest through it. Yeah. And I don't think we don't really have, we have like,

you could do that technically with an HSA, which is a health savings't think we don't really have... We have like... You could do that technically with an HSA, which is a health savings account. We don't really have an equivalent. Any retirement account that you do is typically an investing account. So that's, I think, one of the biggest differences. Yeah. I feel like our RSP gets broken into different categories for you guys, right? Like your Roth IRA and... Yeah. So the 401k is offered through the employer, right? It's the employer-sponsored plan. And then we have the IRA, which is the individual account that you'd have to open on your own. But both of those are retirement accounts that are tax-advantaged. So they're giving you tax breaks

in terms of savings. So yeah. Can you split... What was it? TFSA and then RRR? RRR. I'm like, I never have what was it? TFSA and then RRRR. I'm like, I never have to say it this many times in a row. And then there's RESP, which is like for your kids, like it's an education savings plan, which is a lot easier to say. Yeah. The American equivalent is the 529. Yeah. So that one's a lot easier to say. So I kind of wish we were done with that, but the RRSP and the TFSA. So they both have like contribution limits and it both like increases yearly. They're just managed a little bit differently. So TFSA usually like you're going to get 6K of space every year. And if you haven't previously filled up your contribution, you still have that space. So it's not like if I don't add 6K, I just lose it next year.

So as an example, I'm 29. Let's say if I have... Well, on Friday. Let's say I have invested nothing so far. I'm sitting at just over 71,000 in contribution room, right? So next year it'll add another 6K, that'll be 777. So it doesn't matter like if one year I'm contributing 20, the next three, whatever. So that's kind of how the TFSA works. And then the RSP is more based on your income. So it's generally 18% of your income from the last year, Like your claimed income is what you can contribute the next year. And there's a max with that. But honestly, the max is like $30,000 or something. So it's basically you'd be making like $160,000 salary if you're doing that,

which I feel like is not the main concern here, those people. So that one's a little bit more personal. What's cool with these is we have, I don't know, like you can let me know the equivalent. We have like a my CRA login. So our CRA, Canada Revenue Agency is like the IRS. So we actually have like a login and you can either log in through the major bank logins, or you can get like a, whatever, a different one, but it can actually tell you your personal limits. So if you've never invested in either of those, or maybe you invested a little early on and you're really not sure where you're sitting, as long as you haven't like taken stuff out this year, like it's always going to be based off last year's taxes, right? So it's

not like a smart machine, but it will let you know where you're sitting. So that's a really great tool. If you're like, I have not put money into either of these, that's a great place to just log in, check. Most people probably should have a login from like their tax stuff anyways, but it will let you know those numbers. And then there's some pretty cool stuff. Like some of the investing platforms, like Wealthsimple in Canada, they will actually track it for you. So you can invest in either TFSA or RRSP through them. And you just let them know any investing you've done prior to then, you can fill in and then it will track forward for you. So that's cool. If you're doing it through

one of those platforms, it's letting you know like, hey, you only have, let's say 7,000 left in this account. Maybe you have 20,000 left of contribution space in that one. I don't think there's probably something on the IRS, but I don't know how helpful it would actually be. So we break all of this, all of the American accounts, the retirement accounts down in episode 16 about retirement accounts. So you can go back and listen to that. For us in the States, the only percentage thing is for the SEP IRA for self-employed people or side hustlers. That's really one of the only ones that does the income limit thing. The rest of them are just a hard number. For 401k, it's like $20,500. That's it. So yeah, I think that that's the difference there. So

really, you have two basic accounts to save slash invest for retirement in Canada. Yeah. And there's the constant debate of people saying, which one should I put my money in? And it's such a hard call. People say, you want to take your RRSP out when you're making less than you currently are. Right. So when you're in theory, like if you retire. Is it similar with like Roth and traditional where it's how you're taxed? Is that the idea? Okay. Can you explain the taxes on either one? Yes. So the RRSP gets taxed when it comes out, I believe. I'm like, I've got to like triple check these. TFSA is taxed beforehand. So you can take out your TFSA money whenever. Okay. So that's like a Roth.

Yeah. That's why you want to be making less when you're taking from your RRSP. The RRSP would also be generally how most employers work with you if they are doing like employee matching. Got it. So like, we do have that. Obviously, I haven't been in corporate for a long time. But I would say like, most employers have some sort of matching program, whether it has like a limit. Some I know, like my last employer, you had to like stay with the company for two years. I didn't, obviously, but you just stay there for two years. I didn't, obviously, but you had to stay there for two years. I didn't even, that was the funny thing. I guess I knew I was going to go full-time at some point because I didn't bother investing in the match thing. Cause I was like, I won't be here

the two years, but some of them have that. Like you have to be here for two years and then anything they match, like you get to keep. Yeah. Those are like the main two. And like I said, there's no real right or wrong answer of like which one you're filling up first. We always say just like, just pick one. Like the analysis paralysis is real. I just want you to get started. Like as long as you're investing for retirement in some way, just pick one, go with it. Yeah. Make it happen. Yeah. Yeah. And there's talk right now of another one. But so with RRSP, there's a few different first-time home buyer incentives in Canada.

And one of them is that you can borrow from yourself in your RRSP. So you're allowed to take out like, I want to say like 30K or something, but yeah, it's per person. You're allowed to take out of it to buy your first home and then pay it back. They're talking about doing another like separate account that you could use for a home saving and take out and not have to pay back. But that's like very in the politics world right now, you know, so I don't know if that will be 100%, but that's something they're looking at. So in addition to accounts, retirement accounts, So in addition to accounts, retirement accounts, HY slash HISAs, what other like major differences are there or like things that if you're a Canadian listener, you should know about how to navigate?

I think like the overarching differences is like Canada is generally more federal in most things that we do. Like a lot of the times are federal, I would say guides the provinces more than the States. And part of that is like a population thing. Like Texas and California each have more people than Canada does. So before, like it wasn't until I was in the States more, I was like, wow, like this state is basically our country when it comes to the people. It's a full country. Yeah. It's very separate. So where you're seeing like all these laws in the States being developed that are way more like state dependent. In general, Canada, you can take like Canadian advice more so across the board.

That's what I would say when it comes to the money conversations. There's going to be small differences like your income tax or sales tax might be different in each province, but nothing is ever like so crazy drastic that advice you're maybe getting from a Canadian creator wouldn't apply. So that's like kind of a blanket statement of in general, if you're getting Canadian money advice, you're okay. Quebec's always, Quebec loves to be kind of its own thing. So like if you're in Quebec, that's the only one where I'd say like stuff like EQ Bank, like they can't operate there. So you will have, you will run into some stuff. I know some Quebec people where they're constantly, you know, going through loopholes that other people don't have to go through.

But in general, the advice you hear can apply to everyone. There's also a lot more, I would say, in Canada, like just consumer protection overall. So like I mentioned, the banks being, I would just say that Canada likes to take care of us a little bit better than America. Yeah. We're individualistic, man. Right. It's very like, you've got your independence. Like Canada's like, well, we're just going to like make sure you're doing okay. Home of the free, land of the brave. Yeah, exactly. That's America for you. Yep.

Very on brand. So that's one thing, Obviously, any of these issues can still occur. But I think we see less intense thing like credit card debt or debt pile up because our banking is more regulated. There's less banks, which also means there's less options coming at you all the time. It's harder to get approved for multiple credit cards from multiple banks. It's just not as much of a thing here. So that is one thing that's nice. I feel like just that cultural difference too. Like we're just less excessive, you know, like totally when we go to the States and we get a, like an iced coffee or something at McDonald's and we get a medium, we're like, what did you just hand me? Cause it's like an extra large and we don't even like, we don't even have

that size. That is your medium, you know? Yeah. That sounds about right. Yeah. It's the parks and rec where it's like, yeah, this is a, how is this a child's size? And she's like, well, it's roughly the size of a two-year-old child if they were liquefied. Yeah. No, I, yeah, I feel it. Yeah. I would, I would say just like a few other small things to keep in mind. If you're thinking about quitting your job and going full time, we definitely do have more of those health care advantages. So, you know, we have that basic health care that covers. And also, I would say our insurance plans are better.

Like, I know we've talked about you having insurance and then still having to pay a lot for certain things. It's a lot safer in Canada to quit your job at a young age and not have health insurance because you can still go to the hospital or even your family doctor for checkups and stuff. And the pricing I feel like isn't as wild because like I can go to the dentist. It's like 200 bucks or something. I feel like that's pretty fair. They're like in my mouth for an hour or whatever. You know, not my worst Wednesday I've ever spent. Yeah, sure. Right. But yeah, I would say you're Stanley. I'm not going to make any further jokes on that.

Oh, it's right there. It's right for the ticket. It will happen after we stop recording. But I would say like, generally, yes, you are safer. But I would say like generally, yes, you are safer. We actually just this year got ourselves a benefits package. And that's only because we hired a full time employee and we were like, we should offer her benefits and it wouldn't be a bad idea for us. I know in Ontario, I'm not sure if this has changed recently, but like people under 24, your prescriptions were covered. Like even if you weren't on insurance. Must be nice. Yeah. So stuff like that. I literally stocked up before my 25th birthday,

but things like that. It's a little bit, it's, it's a bit safer to make those calls. Things like housing, I would say for sure, for sure. Look into first time home buyers plan. Also we can link Josh, but like anything you can learn, if you're looking to buy for first time, there are actually, I mentioned the one incentive of the RSP. There's lots of incentives. They'll cover your land transfer tax if it's your first home, different down payment options. So that would be a big thing I'd say. And I'd say for real estate advice, don't listen to Americans as much because it's just, it is, it's really different in terms of they're like, go get a foreclosure house for 30k. Like things aren't foreclosing in Canada the same way because we have all this added protection for people, right? So that's the biggest thing I'd say.

Canadian money advice goes across investing, you can learn from your American friends, you just kind of mentally have to switch like those words for like RRSP and TVSA, the advice is generally applicable and i would say anybody who's listening you know outside of the us or canada or even you know consumes hfk's content and is canadian and goes like will this apply to me you always can google whatever i'm saying plus your country plus equivalent so it's like roth ira equivalent canada right or roth ir equivalent UK. And you will find information about that. So there's ways that you can take the kinds of advice that we give at Her

First 100K if you live outside of the United States and make it work for you. Mal, I'm so excited. The audience is going to continue to get to know you. What are you excited about most coming into the HFK fold? And what are you excited to teach everybody? Good question. I'm excited. Okay, I'm excited to bring and teach my slower approach to counter. You know, you're going you go fast and hard. I'm excited to like bring that energy because your team will be like, what is wrong with her? I'm not excited to teach your audience anything. I'm excited to teach you personally, Victoria Dunlap, how to slow the fuck down. With love, you know?

With love, for sure. No, but I'm excited to bring that side. I'm excited for the Canadian representation because I don't think there's enough money conversations for Canadians and we get left out on that stuff for no good reason. So I'm really excited to talk about that Canadian side to offer the resources and tools. There's a lot of cool stuff available to Canadians. And those are the fun things. I like to be kind of like, Josh calls it the gateway drug where I'm just going to plant those seeds and like you can run with it. And like as an audience

member, right, go learn further about those things. So I'm excited for the Canadian. I'm excited to nerd out about real estate because I also don't think there's enough women in real estate and it's a really exciting space. And I have a little new journey coming up with real estate investing that I'm excited to share about as well. But I'm also on the flip side,

just so honored to be part of it. I think it's such a cool thing. I love cheering you on from the sidelines. Even if I'm quieter on social these days, I'm always cheering for you. And I just love seeing all the people impacted, whether it's the Facebook group, the TikTok comments, like seeing all the good that people have been able to do. Even though, like you said, that 80% feels out of our control, the 20% you were like helping people max out that 20% they can do. Thanks. That's the whole goal is controlling what we can control and working to change the rest. Mal, you know, I love you. I appreciate you. Thanks for being here.

Obviously, you can find Mal now creating some content, contributing to her first 100k, both on our Instagram, I think on our TikTok we're still working that out but you'll see her face more and more where can people find you and what you're doing yeah uh pretty much everything's Mallory Rowan so on Instagram or TikTok or my website's malloryrowan.com amazing I love you thanks for being here love you bye thank you again to Mal as always for joining us. Please make sure to follow her on social media. And of course, keep an eye on the Her First 100K social accounts, which are linked in the show notes, because Mal will be sharing more of her journey as an entrepreneur,

more tips about managing finances in a partnership or in marriage, more advice around real estate, and of course, more Canadian personal finance tips. Thanks for tuning in Financial Feminists. I'll see you next week. Thank you for listening to Financial Feminist, a Her First 100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields, marketing and administration by Karina Patel, Olivia Koning, Sharice Wade, Alina Helzer, Paulina Isaac, Sophia Cohen, Valerie Oresko, Jack Koning, Sharice Wade, Alina Helzer, Paulina Isaac, Sophia Cohen, Valerie Oresko, Jack Koning, and Ana Alexandra. Research by Arielle Johnson, audio engineering by Austin Fields, promotional graphics by Mary Stratton, photography by Sarah Wolf, and theme music by

Jonah Cohen Sound. A huge thanks to the entire Her First 100K team and community for supporting the show. For more information about Financial Feminist, Her First 100K, our guests, and episode show notes, visit financialfeministpodcast.com.