By Alison Stafford, CFP®
Money questions often appear straight forward, for example: should I pay down my mortgage or contribute to an RSP? But rarely, if ever, is one decision about money not impacted or influenced by your complete financial situation. And it goes far beyond the numbers, some of the biggest factors to consider don’t involve numbers at all; they are your goals for next week, next month, next year, five years and on into retirement.
Part of my role as a Money Coach is to help people create a plan that encompasses their entire life. Their needs for retirement don’t stand in isolation from their dream to send their kids to university, or even to send them to summer hockey camp; it all has to be managed from the same income.
Returning to the “straight forward” question; should I pay down my mortgage or contribute to an RSP?, I would want to know a lot more about your current situation: What’s your mortgage rate? Are there penalties to prepay? How would you invest your RSP? What is your risk tolerance? What fees are you paying? Are there other goals you should be addressing first? Such as; paying down credit card debt or saving for your children’s RESPs? Are you considering home renovations? Are you thinking of selling soon? When is your mortgage due? Even very personal circumstances, such as; are you considering a divorce? may have an impact on determining the right answer for you.
