Taking Care of Your Finances Now

There is no question when financial markets are in turmoil we all feel uncertain about our own finances. Watching banks collapse and governments taking unprecedented actions to help with losses is unsettling at best. There are things that you can do to make sure your financial house is in order.

First take a deep breath and relax. Often our first response is emotionally driven by uncertainty and fear. This is not the time to be making quick decisions but to look at all your financial strategies. More than ever it is time to talk to your financial advisor about your current situation and your short and long term goals. That is where The Credit Union comes in – we are here to go over all your finances, even if all of your accounts are not held at The Credit Union. As your financial advocate we want to help you be in the best possible financial shape now and in the future. We have certified financial planners on staff that are well-prepared to help you figure out what the best strategies are given the current financial turmoil.

Now is the time to take a reality check on how you are spending and saving your money. It may be time to down size and it is certainly time for those of us living beyond our means to figure out where we have to cut back. Several experts suggest that credit card limits may be decreased or will disappear all together. Be honest with yourself about your spending habits. It is time to get back to the basics; pay yourself first, save for purchases and pay off debt as fast as you can. Figure out a savings plan with the help of your financial advisor.

Making sure that your deposits are well protected is one of the things that you can check into. As a Canadian you are protected by deposit insurance in the unlikely event that a Canadian financial institution fails. The Credit Union offers insurance through the Deposit Insurance Corporation of Ontario (DICO). The insurance premiums are paid by The Credit Union. DICO insures the following types of credit union deposits:

• Savings accounts and chequing accounts
• Term deposits including index-linked term deposits and Guaranteed Investment Certificates (GIC)
• Money orders, certified cheques
• Deposits held in one name
• Deposits held in joint names
• Deposits held in trust
• Registered savings plans

Insurance covers up to $100,000 in deposits. The amount covered is calculated by adding the following deposits held by a named depositor:

• Savings and chequing accounts
• Term deposits and GICs
• Money orders, certified cheques and drafts issued by DICO insured institutions (that are payable to you and not yet cashed)

If you hold deposits in a joint account then those accounts are separate and are under their own $100,000 coverage. The same goes for trust accounts. Registered savings plans are a bit different, with coverage being based on the registered plan or contract. Each separate plan or contract is insured up to $100,000. If you are not sure about how your deposits add up come by a branch, call or send us an email. We can help you understand your coverage.

DICO does not cover funds held in member shares, investment shares, mutual funds, contents of safety deposit boxes, foreign currency accounts, stocks, bonds, debentures or securities held for safekeeping.

The Canadian Deposit Insurance Corporation (CDIC) offers insurance protection up to $100,000 to their member financial institutions. The CDIC covers deposits as follows:

• Savings and chequing accounts
• GICs and other term deposits of 5 years or less
• Money orders, certified cheques, travellers' cheques and bank drafts issued by CDIC members
• Debentures issued by CDIC insured loan companies
• Some registered savings plans - not per contract like DICO
• Mortgage tax accounts

The CDIC does not cover the following:

• Mutual funds and stocks
• GICs and other term deposits of more than 5 years
• Money orders, certified cheques, travellers' cheques and bank drafts issued by non-CDIC members
• Notes, principal protected notes, bonds and debentures issued by governments, corporations or chartered banks
• Treasury bills
• Foreign Currency accounts

The CDIC has the same type of rules associated with single individual versus joint-individual deposits. To make sure that you have the maximum coverage for your non-credit union deposits it is best to talk to the financial institution where your deposits are held.

With planning, sound strategies, and a willingness to not only seek but also listen to financial advice the effect of the downturn can be lessened. Not sure where to start – we’ll show you how!