Momentous occasions. Big moments. Life-changing events. Milestones. We all have them. While these events may not be the same for everyone, and they may happen at different times, with a little knowledge and some good money management practices, planning and saving for your milestones will make the big money moments in your life a little less stressful.

Buying or leasing a car

Owning a car is an exciting milestone for many people. A car gives you freedom of movement and a sense of accomplishment. It’s also a significant financial commitment. Most people lease or finance the purchase of a car – either directly through a car dealership or through a financial institution. Buying a vehicle with a conventional car loan is straightforward. You borrow money from a bank or credit union and make monthly payments for a set number of years. You build equity in the car and when the loan is paid, you own it. With a lease you make a set payment (typically lower than with a purchase) each month over a specified period of time, but you don’t build equity in the car and, unless you buy it at the end of the lease period, you won’t own the car.

Most banks and credit unions offer conventional loans specifically for the purchase of a car. If you already have a mortgage or other loans with your bank, you may qualify for special rate discounts. If you have an existing line of credit at a low interest rate with available room, you might consider using that to buy the car if the interest rate is lower. You will need to be careful, however, to make sure that you are making more than the interest payments on your line of credit so that you don’t end up paying more in interest than you would have with a conventional loan.

Whether for lease or purchase, many car manufacturers will offer incentives for you to finance the car through them or to select one of the purchasing options over the other. For example, if you choose to finance, you might not qualify for other discount incentives and that could end up costing you more over the length of the finance period. Depending on your credit score, you might also discover that you don’t qualify for the lowest interest rate that the manufacturer has to offer. In the end, leasing traditionally costs more than an equivalent loan. You are paying money for something you never own and if you lease one car after another, monthly payments go on forever. Lease contracts also generally specify a limit on the number of kilometers you can drive during the lease period and if you go over that limit, you will have to pay an excess mileage penalty. Whichever option you choose, you will want to make sure that you understand the full terms of the agreement and factor in the total cost in your decision. To learn more about your options when buying a car, including a vehicle lease or loan calculator, check out this resource from the Financial Consumer Agency of Canada (FCAC).

Living together as a couple

Getting married or moving in with a partner can be both a very exciting and a very stressful time – personally and financially. Having a conversation about how you will manage your money can go a long way to relieving some of that stress. One of the first decisions you will likely have to make is whether to combine your money or keep it separate. There are advantages and drawbacks to both.

Combining your money may make it easier to manage. Because all your money goes into and comes out of the same account, there is no need to determine who is paying for what. You will, however, still need to plan and make sure there is enough money in the account to cover the bills.

One of the challenges to this approach is agreeing on how much, and on what, you will spend your money so that neither person feels as though they are spending too much or spending on unnecessary items. Both parties will have equal access to the funds, which means transparency and potential friction over spending habits and financial decisions. Additionally, if the relationship ends, untangling joint finances can add complexity. Be aware that joint accounts can expose individuals to claims by creditors if their partner falls into financial difficulties, such as debt or legal issues.

Keeping your accounts separate will require more active cash flow planning because you will need to decide on who will pay for what and each person will need to keep track of their spending. This arrangement can encourage healthy communication about spending and savings goals. It can also lead to anxiety and resentment if one or both of you are not sticking to the agreed upon plan. You can reduce some of the pitfalls of this approach by setting joint financial goals, putting a limit on what each of you can spend without discussing it with the other and having regular “check-in” conversations.

Moving to a new home

If you rent, you probably understand and feel the pressure of rising rents in many of our urban areas in the country. Best practises suggest keeping your housing costs, including rent, utilities and insurance at no more than 35% of your gross (before taxes) monthly income. This has been a long-standing rule of thumb for decades. However, many people, especially those early in their career that are living in our most expensive urban areas might feel like this rule of thumb is unachievable. A better approach is to take a close look at all your expenses to determine your average monthly spending. Analyze your essential expenses like rent, food, transportation and debt payments, and your non-essential expenses like entertainment expenses, shopping and eating out. Start with your non-essential expenses and see what you can cut or reduce. Are there under utilized memberships that you can cut? Can you switch to your local community centre instead of the expensive gym? Can you commit to cooking two or more meals at home each week? Look for expenses that you can trim down or cut out for good but try to avoid using your successes in trimming your expenses as an excuse to sign a bigger lease that undoes all that hard work! Finally, if push comes to shove you may need to consider ways to pay less rent by living with a roommate, moving further away from the city center or by looking for a smaller place.

If you are looking to buy a house, it is likely one of the largest purchases you will ever make. In addition to the cost of the home, you will have many other expenses like property taxes, utilities, and maintenance costs so understanding how much you can afford is essential. Deciding on the type of mortgage that is best for you, is an equally important decision.

When choosing the size of your mortgage, you should consider the impact that changing interest rates may have on your payments, either during your contract for a variable rate mortgage or upon renewal for a fixed rate mortgage. You will also want to consider whether, and how, you might pay down your mortgage faster. Most lenders offer several options – accelerated payments, double payments, increased payments and pre-payments. Your mortgage lender will have tools and mortgage specialists who can talk to you about how you can save thousands of dollars in interest costs by choosing an option that’s right for your current financial situation and your goals. You can find a host of tools and information on the CMHC public website.

Having children

Little bundles of joy are miracles, but they also bring additional bundles of expenses. How and what you spend your money on will need to be reprioritized. You may need to consider whether your current housing situation can accommodate another person. Can you afford the additional costs for diapers, food and clothing? Will you need childcare services? Will you have the money to pay for college or university? These are all important questions that you will need to consider – and plan for.

If you are considering having children, or you have one on the way, you will need to review your current spending and determine how you will find the money you need for these additional expenses. You may be able to reallocate money that you used to spend on restaurants or bars, vacation or other adult-only activities that will likely be reduced when you have a child – especially in the early years. Even if you still have several years to go before you have children, consider putting aside some savings now that you can draw on when needed.