Financial strategies tailored to you

In your 40s
Goal: Take a sabbatical
You might love the idea of travelling or spending more time with your kids. Talk to your company about whether this is a possibility and then save. For example, you might want to save a fifth of your salary for four years (living on 80 per cent of your salary) and then live on what you've saved in the fifth year. Just be aware that taking the sabbatical may affect how quickly you achieve other goals.

Goal: Larger home
Your family has grown, and you want to move to your dream home. Calculate the full cost of a move – it's not only the purchase price. You'll be paying for legal fees, provincial mortgage filing tax, property purchase taxes, new home warranty program fees, moving expenses, utility connection charges and more. And that doesn't include any upgrades or improvements you may want to make to your new home. Doug Gray, a former real estate lawyer in Vancouver and author of Real Estate Investing for Canadians for Dummies (Wiley, 2006, $29.99) suggests budgeting between five and 10 per cent of the purchase price of your home for closing costs and post-closing expenses. 

Goal: Retirement catch-up
If you have haven't started an RRSP or contributed much, this is the time to catch up. Though you likely won't accumulate as much as you would have if you had started early, saving something is better than nothing. You might consider taking a personal loan to catch up, suggests Woods. If you have a company pension plan, you may not need to invest as much in your RRSP, but you need to determine how much you'll be getting from the pension plan.

Going off the rails
If you're planning to upgrade your home: don't buy before you sell because you'll be obliged to finance both properties until you can make a sale, notes Bob Tillmann, vice-president of individual wealth management at Manulife Financial in Toronto.

Best financial bet
"Invest in yourself, if possible. Take a vacation because life is short," advises Woods.

What to do with your income tax return?
Fund a vacation, if you're in good financial shape, suggests Woods. Alternatively, if you borrow money ($30,000, for example) to play catch-up on your RRSP, you'll get a refund on the tax you paid on the $30,000, and Woods suggests using the refund to help repay part of the loan.

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