Back to school – back to work, the fall feels like a natural time to review and adjust your habits.
Where to start?
Your TFSA and RRSP are both great vehicles to max out contributions.
1. Calculate your Net Worth
It is the snapshot of where you’re at right now. And if you’re trying to figure out how to get somewhere, you need to know where you are in order to plan the best route.
It’s a straightforward calculation: add the value of any properties, any investment accounts, work pensions, bank balances. Subtract from that all your debt: mortgages, loans, lines of credit etc.
2. Save Automatically
By far the most successful way to save is to set it and forget it. Set it up to draw from your account after your paycheque comes in. When you get a raise, increase it by the same percentage. It needs to be a habit and the best habits are ones you don’t even realize you’re doing.
3. Take Advantage of Free Money
If your employer has a pension with a matching component, sign up for the maximum that you can to earn the full match portion. It’s free money!
Other free money: RESP and RDSP. The government matches components of each of these accounts. One is for you children’s education, the other is for someone with a disability.
4. Consider your Cash Flow
If you don’t see how you can save any more, it might be worthwhile to track your expenses for a while to see where it is going.
5. Make your Money Work for You
Is your money invested? If it’s sitting in a bank account, it’s not working for you. Interest doesn’t grow your money when inflation is factored in. It may be okay for emergency funds, BUT, these funds should not then be in a TFSA! Remember it is only the growth that is tax free. If you are not growing the funds, then what’s the point?
6. Be Patient
It takes time for money to grow, and it doesn’t always go in a straight line. Don’t panic and sell when things start moving in a way you didn’t plan for.
Staying the course even when the course get’s confusing is how you make real progress.
Questions? We can help.