Money & Career

Financial advice: Wedding gift-giving, how to improve your credit score

Ask Caroline: Those questions and more answered by our money expert, Caroline Cakebread

wedding gift money piggy bank

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Dear Caroline, I’ve been invited to a cousin’s wedding. On the invitation they’ve asked guests to give money in lieu of gifts. To me, this is really tacky. I’d rather give a gift – giving money doesn’t seem right. What should I do?

A: Jackie, you’ve hit on a huge hot button in the wedding world – the money instead of gifts request. A lot of couples are doing it this way now, especially older ones who are merging households and don’t need the usual wedding type gifts of china, towels and toasters. In fact, this site has a calculator designed to help you determine how much money you should give at a wedding. It’s actually pretty fun to check out, even though it’s based on U.S. locations (yes, apparently how much you should give does depend on what state you live in).

You might think it’s a tacky request to make, but here’s the thing: it’s your cousin’s wedding day. Do you really want to create a whole lot of unwanted drama by plopping your toaster down next to the donations box?

My advice: help make it a special day for your cousin by respecting his or her wishes. Simply take the money you would have spent on a gift and put it in an envelope. Give what you can afford and an amount you think is appropriate based on your history and relationship with the couple.

And have fun!

Dear Caroline, I just saw my credit report and my credit score is really low. Is there some way I can repair it quickly? My girlfriend and I are applying for a mortgage so we can put an offer in on a house and I’m worried we won’t get the loan.

A: I have bad news. You can fix your score – but unfortunately it could take years to do, especially if you have a long history of missed loan payments.

Start by checking your credit report really carefully – make sure all the information is accurate. You’d be surprised how many mistakes show up on people’s credit reports. If there are errors, then you need to alert the credit bureau right away and get them cleared up.

Barring any mistakes, then it will take time to boost your score. Doing this means paying your bills on time and in full and never missing a payment (ever!). Pay off debts quickly and don’t go over your limit on your credit card. Also keep your credit card balance low – the higher it is, the bigger an impact it can have on your score.

The Financial Consumer Agency of Canada has lots of tips about how to keep your credit score in check.
To readers: this is why it is so important to pay your bills on time and in full – all the time. Just a couple of missed payments can make it really hard for you to borrow money when you really need it.

Dear Caroline, My company has a great stock matching program and I am putting in the maximum allowed. I am also putting a good chunk into my RRSP each month. After I pay my mortgage, things are tight (only for a day) before I get paid. The stock-matching program is free money but is it wise to put that much into an RRSP? Should I be doing something else with it? I do spend more that I should on eating out etc.

A: For most people, the key to saving and investing is diversification. In your case you seem to be saving in three different pots: your home, your RRSP and your employee stock purchase plan. This is all good news.

While you seem to be worried about your RRSP, I’m a bit more concerned about the amount of money going into your stock purchase plan, especially because you’re worried about diversification. Without knowing how much you are putting into your company’s stock, I can tell you it’s all going into a single stock. Meaning that all of that cash is riding on the fortunes of your company.

And this runs against the whole diversification principle. Of course, this could go extremely well for you – I know a former Amazon employee who made a killing with his shares (he retired at 38). But I also know this other guy who had huge amounts of money in Nortel. If you’re comfortable with the risk and where you think your company’s share price is headed, then go for it.

On the other hand, your RRSP lets you diversify – you can put your RRSP savings in stocks, bonds, money market etc. Plus your contributions are tax deductible so you end up with a tidy tax return at the end of the year.

Then there’s another big area to look at – your spending. If you’re coming up short between pay cheques and you want to keep saving and investing, then you’ll quickly find extra money by cutting down on how much you eat out and spend on entertainment. A few cutbacks in this area will free up more cash and you can use that to diversify even more.

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