Engaged couples, new retirees, graduates, newlyweds and the like haven’t exactly had their dreams come true in 2020.
I’m one of them.
My husband and I eloped at the end of January, and we had plans for a reception in May and a honeymoon this summer. But the pandemic dashed our plans, and we even lost money in the process because one of our vendors fell victim to the financial pressures of COVID-19.
At first we wanted to rebook, but life has moved on and rebooking isn’t that appealing anymore. Saving that money is. Even if we do rebook, it will be at a drastically scaled-back level, because large group gatherings and international travel are just not happening, thus we will still save a lot of money.
Here are a variety of other ways to invest the money you’ve set aside for your big event. If you had committed a deposit, it’s prudent to see what you can do about getting that money back, or a credit for the future.
Start an emergency fund
Most financial educators suggest that you set aside a minimum of three months’ worth of essential expenses for “what if” scenarios like job loss or an unexpected uninsured incident in your home. But that was pre-pandemic. Now we recommend six months.
What’s the status of your emergency fund? Why not funnel the savings from your event into your high-interest savings account? And, if you don’t have an account, open a no-fee one.
Earmark the savings for a different big-ticket item
Life looks different from six months ago and your list of future big-ticket purchases has probably changed. Maybe you don’t need that new car, but do need to renovate. Maybe it’s time to buy a home and this money could kick-start savings for a down payment. Perhaps you want to blow the doors off on a pricey vacation when travel resumes. Or, maybe you’d like to reinvest in yourself with a degree or certificate upgrade, orthodontic treatments or a new laptop for your home office. My advice is to spend on what matters most to you, and based on your needs.
Open an RESP for your kids or contribute to one for your grandchildren
Registered Education Savings Plans (RESPs) are a terrific tool to help parents save for their children’s future education costs. When you contribute to one, the Canadian government matches a portion of your contribution (up to 20 per cent or $ 500, annually) through the Canada Education Savings Grant. So, if you contributed the amount that would get you the maximum match — $ 2,500 annually per child — your money is supercharged with another $ 500 annually per child. You may be eligible for more money through the Canada Learning Bond. So, consider rerouting your savings here.
Give this money
Not everyone is financially OK right now, even with government benefits. If a member of your family is struggling, this might be your chance to help them out with no strings attached (strings are usually bad news for healthy relationships). You may also consider making a donation to a charity that’s doing great things in your community. You’ll even get a tax receipt for donations to registered charities (typically issued if the donation is more than $ 25).
Make an RRSP or TFSA contribution
If you have room in your RRSP and TFSA accounts (check your available limits in CRA My Account), you could put your savings here, and invest it for the long-term. These accounts are tax-advantaged, and that means you’ll save money on taxes. The earlier you start to build up your long-term savings, the greater opportunity you give this money to grow through the power of compounded interest and reinvested returns.
Pay off your debts
Stats show that a good chunk of Canadians are struggling with debt, and that a lot of couples were planning to use credit to pay for their weddings and honeymoons. So these cancelled plans may have actually been good in that they have prevented further debt. Why not use any savings to decrease remaining balances on lines of credit, consumer loans or credit cards.
The social implications of cancelling your big event are hard to put a price tag on. But, this is your money. It’s your future. It was your event to begin with. My advice is to do what’s best for you, your health and your finances.