Thursday, February 14, 2019

Going to the Chapel





Is this your song or maybe your children’s? 

Valentine’s Day, February 14th, is known for creating sparks of love and affection between couples and also for being one of the most popular days of the year for marriage proposals.

The excitement of, “Yes, I will marry you,” is followed with the wedding plans. The flurry of excitement suddenly becomes overweighed with decisions about the guest list, venue, food, music, flowers, photographer, and so much more.  (Oh dear, I forgot the wedding dress!)  When considering all the details, the most vital question which needs to be in the forefront, “How much do we want to spend on the most important day of our lives?” Or rather, “How much can we afford to spend?”



One quick search on the Internet reveals hundreds and hundreds of checklists and ideas on how to craft the perfect wedding. First, couples should share their thoughts about what their perfect day looks like before hunting for information.  Making this first decision as a couple, whether to be frugal, extravagant, or meet somewhere in the middle, is the prelude to a lifetime of decisions about money as a married couple.  It’s not a secret that the leading cause of divorce is arguments over money.  For all we know, the way a couple handles the costs of their wedding could be the real test and testimony to their life choices about money.



Nothing speaks louder and clearer about, “What will the wedding cost?” than a calculator and pencil with an eraser.  The formula is simple. Add all the associated costs.

This + That + These + Those = $$.$$

We want to know the total cost commitment for our dream wedding.  Only then can we decide whether we want to cut corners or where we have to cut corners.

When we know how much the wedding will cost, the next step will be easy. We know how much money we have to save.  We have a goal to work towards our big splurge.  This is far better than the alternative, relying on credit to pay for the wedding.  If anyone thinks saving money before the wedding will be difficult, imagine borrowing the money and making payments (with interest charges) after the wedding.



Quite often, parents may be willing to share some of the wedding costs.  Parents should know in advance the cost of their commitment.  Making a verbal agreement beforehand might become quite a shock if specific details are not shared in advance. The same question asked previously, also applies to parents, “How much can we afford?”  Rather than share the costs, parents may opt to give a specific amount of money towards the wedding expenses, so they don’t destroy their piggy bank.  

  

Some key takeaways for the soon-to-be newlyweds.

q Do your homework in advance.

q Determine your options and the cost of the important must-have details. 

q Take appropriate steps to set limits on the wedding expenditures.

q Understand who is involved in sharing the costs and their commitment.

q Lastly and most importantly, have fun on the most memorable day of your life.

q Enjoy every moment.


If anyone has previously planned a wedding and has any advice to offer, please share in the comments below.

Thursday, January 31, 2019

It Doesn’t Have To Be this Way


 
 
 
 
You’ve heard it. I've heard it. Or have we?

 “The definition of insanity is doing the same thing over and over again and expecting different results.”

I’ve walked down this path countless times.  I expected things to be different without a shift in my focus, a change in my attitude, or the use of a different approach.  Honestly, all I had was a whole lot of “nothing” and a heck of a lot of “frustration”.

Has that ever happened to you?

We know something has to change but what we sometimes don’t realize is that it begins with us.  This theory applies to everything and anything we need fixed: our health, relationships, or finances; and even the simple things in life, like an Internet connection that has a frequency of its own. 

One current problem is the way personal finances are handled. The latest survey indicates that that 46% of Canadians are $200 or less away from financial insolvency at month-end.  This statistic jumped from 40% in the previous quarter.  Apparently, this news is better than the 2017 numbers when MNP said more than half of Canadians were living within $200 per month of not being able to pay all their bills.

Those numbers are staggering. As I read, I feel the anguish and frustration in the responses.  If the poll is accurate, nearly half of Canadians are on the brink of a financial disaster.  It isn’t only frustration in these numbers; the fear is real, describing a financial situation at its worst. 

In a Global News interview, Kelley Keehn, a personal financial educator, shared tips for changing behaviour to attack the money problems. As I listened, I nodded in agreement.  I have written about these strategies in my blog posts as well.  


Any Certified Financial Planner® Professional or credit counsellor will tell us the same thing.  The only way to attack our fears and money problems is with action.  Doing the things we are encouraged to do is the way to fight back and gain control.

Honestly, I sometimes feel no one listens.  Like Kelley, I feel people get discouraged, say “Whatever!”, and walk away defeated.  But I believe it doesn’t have to be this way. Everyone can start with small steps and walk away encouraged. 

If we can’t increase our income, then the only thing we can do is decrease our spending.  When we tap into other useful resources, Gail Vaz-Oxlade has a list of tips to put into action. Below is one we can borrow and apply in our lives. Like she points out, “What do you have to lose?”  

Gail writes:
Figure out what it takes to live modestly for a month.  You’ll need to cover your regular bills like mortgage or rent, utilities, car payment, gas for work, food.  Once you think you’ve got the bare bones covered, look at how much cash you think you’ll have to spend.  Planning to spend $600 this month on everything from groceries to gas to your sister’s birthday present? Cut that in half and challenge yourself to live on less.

Before you throw your hands up and say, “Ridiculous,” just try it.  There’s no failure here.  It’s an experiment.  It’s to see whether it can be done.  After all, even if you miss by $150, you’ve still spend much less than you thought was possible.  Hit the mark and you’ve experienced living modestly and saving money at the same time.  Double whammy!

Frankly, even if we aren’t in financial difficulty, a couple of wrong turns between now and then can place us unintentionally in a mess of financial doo-doo. So perhaps we need to pay attention and listen to the advice handed out. There is nothing wrong in learning new skills in money management from the experts.  And there are plenty of skills to learn! We only need the desire to make the necessary changes so we are not included in any future grim statistics.

Everyone should consider doing Gail’s homework assignment.  If you happened to be the one who does, feel free to share the results of your experiment in the comments below.        

Thursday, January 17, 2019

Turning Your Finances in the Right Direction


Dear Younger Me. 

The premise of the song, “Dear Younger Me”, written by the band, MercyMe, is to provide advice to a younger self.   I love the idea of writing a letter to myself filled with advice of what to do and not to do in life and with life.  My mature perspective would come from grounded experiences that taught me valuable lessons. 

Of course, my letter would be written with the anticipation that I would listen to myself.  But who am I trying to fool?  We all know when we are young we feel invincible. We have our whole lives in front of us filled with opportunities we hoped we would and could achieve.  Yet somehow life turns in the completely opposition direction than we predicted.

…Of course, we will make mistakes.  Sometimes, the worst mistake is mismanaging our finances.  Painful and sometimes devastating mistakes may destroy our credit and dreams.

I wished there was a magic fix to make our financial woes go away.  Unfortunately, there isn’t one.  Sheer determination and a solid commitment are the tried and true ingredients.  Let’s not forget…education is a requirement to turn your finances in the right direction.

When we desire to learn something foreign, a couple of basic examples instantly come to mind. To properly handle a gun, we would take a gun safety course.  If we were interested in quilting, we would sign up for a sewing class.  Naturally, when we are fine tuning our finances, we would look for suitable venues.


Three Options to Improve Your Financial Outlook.


1.  Dive into a book written about finances.  

Any one of these three might be of interest.  Remember to take the ideas which fit your situation best.  Not everything written is applicable to your needs. 

Moolala, Why Smart People Do Dumb Things with Their Money (and What You Can Do About It) by Bruce Sellery.

Smart Couples Finish Rich, Steps to Creating a Rich Future for You and Your Partner, authored David Bach.

How to Eat an Elephant, One Day a Month to Financial Success, written by Frank Wiginton.
  

2. Follow-up on helpful articles found at websites. 

The key is to find information which interests and applies to you and is easily understood and applicable.   Money matters do not have to be complicated. 


When we need advice, the best place to find helpful solutions is from a professional.   You need to be assured your financial plan fits your goals and dreams.  When you are not certain whether you are headed in the right direction, you may check with a CFP® professional.


The Tools.





Napoleon Hill wrote, “Do not wait; the time will never be ‘just right’.  Start where you stand, and work with whatever tools you may have at your command, and better tools will be found as you go along.”

This quote seems to fit with anything new we may try. We can’t expect perfection with our first attempt.  This is especially true about financial roadblocks. The language may be difficult.  Our understanding of the method may be awkward.  And even fear may hold us hostage, pushing us to talk ourselves out of turning things around with our finances.  Our willingness to try is the first step.  With some encouragement, know-how, and stamina anything is possible.  I believe our attempts will be worthwhile.
   
What is your roadblock stopping you from turning your finances in the right direction?  Please share your concerns.   

Thursday, January 3, 2019

Don’t Look Back; Don’t Give Up; Don’t Give In!




Inspiration can come from any place.  I was flipping through a book which sat on my shelf for many years deciding whether or not to keep it.  I stumbled onto a page with the heading, “Harness the Power of Positive Pressure”.

You have to read this:  

I’ve noticed that many people who begin their transformations with full force end up losing their drive after a few weeks.  One way I help them overcome that setback is to teach them how to harness the power of positive pressure.

My observation is this:  Most people in America have been conditioned (that means someone or some system has taught them) to believe they should “coast” through life as much as possible – they should avoid “pressure situations” and gravitate toward circumstances where no one is demanding anything from them.  This is not good.  It’s not good at all, especially if you’ve decided to change your body and life.  You see, contrary to popular belief, deep down inside, you want pressure; in fact, you need pressure to feel excited and passionate about life.

Real-life examples of people performing heroically under pressure can be seen everywhere:  the fireman who rescues a child from a burning building, without a moment to spare; the quarterback who scores the winning touchdown, with time running out on the clock; the doctor who saves a dying patient’s life.

The fact of the matter is, we are all capable of so much more than we might believe we are, but our ultimate potential is often smothered by what society teaches us – that pressure is a bad thing, that it hurts rather than helps our efforts to improve and become successful.  Eventually, after years of conditioning, most people see pressure as an obstacle, not the powerful, driving force it really is.

You see, the truth of the matter is that it’s through pressure or “stress” that we evolve—that we grow. 

This insight, the power of positive pressure, amazed me. 

As we venture into a new year, we could all use a fresh perspective. This simple but effective philosophy delivers encouragement as people vow to do better with their finances, health, relationships, and job performances.   

We often compare physical wellness with financial wellness.  These two are similar in terms of measuring health in both areas.  So it should not be surprising that the inspiration just shared was from Bill Phillips’ book, Body for Life.  We could have just as well read this from a book titled Money for Life.   This advice is applicable to all areas of our lives.

Let’s continue.

Think about it:  The fundamental principle of building a stronger body is the process of overcoming stress, or “resistance”.  We force our muscles to work, and this effort in turn forces our muscles to adapt.  If we put no pressure at all on those muscles, if we present them with no resistance whatsoever, what happens?  They atrophy. They dissipate. They weaken.

The same equation applies to our growth in the areas of our careers, our relationships, and our knowledge.  It is only through the right amount of pressure that we continue to move beyond the level of mere existence or “comfort”.

To harness the power of positive pressure, start with regularly subjecting your muscles to a healthy dose of stress by working out.  Then, invite other challenges back into your life.  Rather than run from pressure situations, or pretend they don’t exist, face them.  Seek them out.  In doing so, you’ll find that positive pressure brings out your best.  You’ll be raising it to a new, higher level.

And that, in every aspect of our lives, is what we should do.

That is what positive pressure can do.  

Improving our finances can be as challenging as improving our physical bodies.  No pain, no gain.  This is why persistence is important when we meet resistance.  We can so easily look back at our previous attempts to stay on track with our budgets.  In frustration, we give up and give in to our desire to escape the hard road and opt for the easy road and simply coast. 

When we heed the advice to harness the power of positive pressure, we vow to work harder at improving our financial muscles.  When we force ourselves to make changes to our spending and saving regimes, we are forcing our financial muscles to adapt.  Yes, we are putting pressure on ourselves in an attempt to become financially stronger. That’s a good practise to adopt for the beginning of a new year.

“Don’t look back! Don’t give up! Don’t give in!”

That’s your prescription for this new year. Repeat as required.

Do you have a prescription you would like to share for everyone’s benefit? Please post your comments below.

Thursday, December 20, 2018

It’s NOT About the Money




It’s a strange thing to say!  “It’s not about the money.”  But you have to believe me when I say this.  It’s all about “The Plan”.  More specifically it’s all about “Your Plan”.

As we wrap up this year, a review of some key financial points is in order.   I have often repeated myself saying, “You can have anything you want in life.  You just can’t have everything.” All we have to do is figure out the things we most want to have and to do. This step in making choices is critical.  

A client told me, “I chase squirrels.  The minute I get an idea in my head, I run after it.”  In his situation, he was talking about spending money on the “latest thing” he wanted to purchase.  His attention easily becomes diverted from his true list of goals and dreams on his family’s must-do and must-have list.  And he is not alone. 

A financial plan is freshly written, designed with specific goals and dreams. Quite often, an unexpected and unintentional change occurs. There’s a new vehicle parked in the clients’ driveway which was not included in the plan. My question is always the same. “How did that happen?”   

Two culprits which often steal our dreams are fixation and distraction.  These culprits can appear on the scene whether we have a financial plan or not.


Fixation

Have you ever said, “I can’t afford it!” whatever “it” may be?  When we are fixated on the lack of money, then we need to shift our eyes onto a plan. We don’t want to rob ourselves of any worthwhile dream just because we don’t have a plan.   I said at the beginning, “it’s not about the money.” The plan is what helps us to focus on our desires.  When we have a plan, we are likely to chase after the things we want rather than the things we only think we should have.


Distraction


Distractions come in different shapes and forms. We often have to resist the power of influence which distracts us from achieving our goals and dreams.  To prove my point, examine your bank and credit card statements for the past year.  Find those pesky financial transactions -- the purchases you didn’t intend to make at the beginning of the year.  With a financial plan, money is funneled in the direction of our genuine intentions: holidays, home renovations, and education and retirement funds.   




Determination




Incidentally, my thoughts turned to a childhood story about a little blue train engine who had a big mountain to scale to the other side.  The goal was to deliver packages of toys and food to the people.  Although the trek up the mountain was hard slugging, she kept repeating four magical words, “I think I can!” “I think I can!”  And she reached the top. 

Slugging away at our goals and dreams, fixated on the plan and determined to avoid distractions requires every ounce of our energy and financial resources.  When we give up too easily, we face the risk of disappointing ourselves.   When we repeatedly tell ourselves, “I think I can! I think I can!” we instill belief in ourselves and our goals and dreams.

This story of The Little Engine That Could is filled with inspiration.  Positive self-talk can override our skepticism in our ability to achieve seemingly impossible goals.  The real power kicks in when we believe in our financial plan.

Do you still have doubts about where your focus rests? Please share your skepticism and comments with me.           



Thursday, December 6, 2018

K.I.S.S. Keep it Super Simple -- A List of Eleven Do’s and Don’ts for the Christmas Season





Were you ever involved in a pilot study or project to evaluate whether something was worth putting into practice?

Most businesses or governments will conduct a feasibility study or short-term experimental trial on a small scale to determine the feasibility, time, cost, and adverse events prior to implementing a project on a large scale. 

Think of it this way.  We may need to implement a pilot project for our Christmas practices.

I often hear how stressed people are during this festive season.  Year after year we identify where we go wrong but the problem is we forget our errors until it’s too late.  We’re in the month of January staring at our plummeted bank balance in horror and attesting to the fact, “We overspent on Christmas again!”  

The last thing Christmas should be is s-t-r-e-s-s-f-u-l! 

So what if we conducted a pilot project to determine what we need to keep doing, stop doing, and start doing so Christmas can be enjoyable.

A Do’s and Don’ts guide may help keep our plans in perspective during the holiday activities and the Christmas giving season. By sharing our thoughts and ideas, we can help each other spread a little more joy and happiness.  



The Do's

To begin on a positive note, let’s focus on the Do’s.

1.  Do keep the enthusiasm going.

We are coming off the month of November which promoted smart financial planning techniques and ideas.  We are revved up! “Rah! Rah! Rah! Go after what you really want!”  And then what happens?  We run smack into December and fall into a slump of repeating old habits. But this year will be different! We have a guide to prevent us from falling into those small old traps. I, too, am guilty of being lured into these same traps.

2. Do be aware of what you can and cannot afford. 

Be brave and honest with family members about the money you can reasonably afford to spend on Christmas.   Hiding the fact that you can’t afford to be generous is a hindrance. Having a heart-to-heart family meeting and setting limits on your Christmas gift exchange is a wise step. Coming together to discuss suggestions like a recycled gift exchange may alleviate the financial stress. There’s an old wise adage, “One person’s junk is another person’s treasure.”   This may serve two purposes:  scaling down on items you no longer use and passing on an inexpensive gift. 

3. Do keep in mind as people get older, the last thing they need is more “stuff” they don’t need.

A common theme seems to exist.  We can all look around our homes and garages and notice our accumulation of “stuff” we no longer need or use.  We may also have received gifts which sit on our shelves or are packed in the back of our closets. Be conscious of wasting money on gifts your family and friends won’t use. Many times people say, “Whatever I need I go and buy for myself.”  This may lead to family and friends negotiating whether gifts should bought for anyone over eighteen.
  
4. Do keep a list of useful gifts. 

If in doubt, buy socks!  That’s what my elderly neighbor Caroline always did.  She had a generous heart with a limited budget.  Her heart was always in the right place.  She gave socks as a Christmas gift because she knew they would be used and not stuffed in a corner or be a dust collector for someone. If socks are not your “thing”, then you can always give a plate of homemade goodies.  No one says “No!” to food unless of course it’s January 1st.   There’s no straight answer for the ideal gift.  If the gift comes from your heart, then the recipient will feel the love which comes with the gift. 
  
5.  Do be conscious of a child’s toy collection. 

Our grandson has way too many toys.  I refused to buy another tractor for him to add to his accumulated collection of five.  My ideal gift is a book but even books can easily become dust collectors. Recently, I stumbled upon the ‘four-gift’ rule which is a custom where you buy only four gifts for your children: what they want, what they need, something to wear, and something to read. I realize some will scoff at the idea of downsizing the number and the cost of their gifts to their children.    We all have choices. That’s understandable.  We earn our money and we have a right to spend it how we choose. The word of caution is to watch for being “excessive” with our Christmas purchases.  We might use this season of giving as a teaching moment for children to share with others who are less fortunate.

6.  Do look out for the craziness in the cost of some items. 

Lately, I became aware of one increasingly popular “toy”, Crazy Aaron’s Thinking Putty.  The jaw-dropping price of a small can of just putty may amuse or dumbfound you. If there ever is a time to attract people to pay good money for entertaining stuff, it certainly would be Christmas.  The proof is in the pudding (or in this case the putty!)



The  Don'ts
   
Now our attention turns to the Don’ts.  Just nod as you read through the list when you catch yourself saying, “I do that!”  Our focus is to stop and think about what we are doing.  These may be our greatest Christmas money-wasters.

1. Don’t overstock on groceries.
  
With the additional company between Christmas and New Year’s, we seem to be brainwashed into believing we will run out of food.  We have a tendency to prepare more than we will ever eat. 

We tend to be overly cognizant of our needs for chocolate and nuts. These Christmas cravings lead us to overspend on these luxury treats.  We justify the need for extra boxes as Christmas gifts or a kind gift offering to the hostess for inviting us for a meal. What happens? We find ourselves still eating these leftover chocolates in June. There is nothing wrong with eating chocolates any time of the year but stockpiling beyond our limit at Christmas is silly. 

2. Don’t prepare too much food.   

The extra baking and casseroles tend to go into the freezer and later have to be tossed. Hands up if you do that?  Mine is the first!  Do you know what happens when you try to give food away?  When New Year’s Day comes, no one wants it because (surprise!) everyone is dieting. It’s their New Year’s resolution. 

3. Don’t leave your Christmas shopping until the last possible day.

When we have a tendency to delay our Christmas shopping, we find ourselves rushing through purchases which results in the wrong and costly choices.  We may miss possible sale prices on items and we are forced to pay full price.  

4. Don’t shop to impress. 

Generous hearts lead to generous gifts when we lavishly want to spoil our loved ones.  Our love should not be reflected in the price we pay for any gift.  If it is, I must stress that we need to be prepared for the financial consequences. One article I read tells it like it is, Enjoy the Holiday Season without paying for it in January.  And I might add, in all the months which follow.   

5. Don’t be swayed by marketing schemes.  

When you are shopping for Christmas d├ęcor, the fanciest tree, the brightest and prettiest lights, and the most beautiful wreath all come with a price. The best time to shop for these items is on Boxing Day.  For some, our wallets won’t allow it because we have exceeded our Christmas budget by that time.   So as we pack away the decorations this year, the infamous line, “preparation relieves (financial) pressure” tells us to start planning for next year.  I can hear the rant. “We don’t have the same selection at the end of the season as we do at the beginning.” I believe the compromise is tucking money aside in a savings account in advance for the things you want.   




The Bonus   

This bonus list is a must in our guide to a “Merry Christmas!” 

  • Take time to appreciate what you have. 
  • Take time to slow down even for a minute. 
  • Take time to determine what you really want. 
  • Take time to remember the people who are less fortunate.


Just “nod” as you read through this list when you catch yourself saying, “I do that!” and your Christmas is sure to be merry and bright. 

If you have any improvements to add to our Christmas pilot study, please pass along any advice on what to stop, start, or keep doing so that you can K.I.S.S. and have a Merry Christmas. Leave me a comment below!




Thursday, November 22, 2018

Happy 10th Birthday, TFSA!


 It seems like yesterday.  But it’s not! 


It has been ten years since the “new kid on the block” was introduced to Canadians.  This coming January we sing, “Happy Birthday!” to the Tax Free Savings Account (TFSA). 

When the TFSA was first introduced in 2009, I was working as an Investment Specialist.  I remember those initial conversations with clients. The contribution limit of $5,000 for some seemed so insignificant; they could not see the benefits of investing their money in a TFSA to shelter the modest investment income they would earned in that first year. However, for a couple, sheltering the income on $10,000 proved to be a great starting point.

Now look at the total contribution limit! 

Canada Revenue Agency (CRA) recently announced the contribution for 2019 would be raised to $6,000, a modest increase from the previous three years’ limit of $5,500.  If an investor has been faithfully socking away money into this favorable investment account, as of January 1st the total limit will be $63,500.  What first may have appeared as an insignificant amount ten years ago has certainly become attractive for any individual or couple looking to protect investment income from being taxed. 

The majority of seniors who held money in non-registered investments embraced the new investment account.  Every year they would transition money subjected to taxation into the haven of the TFSA where taxation was prohibited. Rightly so!  They lowered their total income.  In turn, they could take advantage of the potential tax credits and government benefits.  
  

What You Need To Know


1.  Which is better?

The confusion begins with people who are currently employed and cannot decide whether TFSAs or RRSPs are a better fit for their needs.  Like any investment products, both have their pros and cons.

When money is invested into Registered Retirement Savings Accounts (RRSP), the contribution reduces the annual taxable income (advantage).  When the money is withdrawn from this safe-haven, the withdrawal amount, like employment income, adds to the annual taxable income (disadvantage).  The opposite is true with a TFSA.  A contribution to a TFSA does not reduce taxable income and likewise a withdrawal from a TFSA does not increase taxable income.


2.  Where’s the answer?   

Deciding which investment account is better suited to your needs, the answer is determined by asking, “What are your goals?”  The diagram below is quite clear about identifying three things: your goals, time horizon, and risk tolerance.  Playing the guessing game to determine which investment product will work is pointless.  Once you clearly recognize what you want to achieve, then you can evaluate your time horizon and risk tolerance.  




3.  What’s in a name?


Many articles place blame on the name, Tax Free Savings Account.  Most people associate the word, “savings”, with an investment made in a low-interest earning account.  What you need to know is the sky’s the limit when you are deciding where to invest your money. Your choices are everything from a daily savings account to GICs, stocks, bonds, mutual funds, and exchange-traded funds.

4.  Where’s the secret?     

If you are one of many people who are caught at the impasse of saving for retirement and cannot decide which investment account is more advantageous, the secret is in your taxable income.  Your marginal tax rate (MTR) is your deciding factor.  The MTR is the rate of tax you will pay on your next dollar of income, both federal and provincial.  As your income climbs higher from one tax bracket to the next so will your marginal tax rate. 

For example, if your annual income is $50,000, then your marginal tax rate (MTR) is 33% (20.5% Federal + 12.5% Saskatchewan).     




5. What’s the difference? 

Once you know your MTR, then you are ready for the next question. 
“Will your retirement income be higher or lower than it is currently when you make the contribution?” 

Once you know this, you have your choice.



6.  What’s another tactic?


To simplify the process, the chart below asks you to pick an answer (higher or lower) to determine an appropriate strategy. 

If your MTR for RRSP contribution is (higher or lower) and the MTR for RRSP withdrawal is (higher or lower), the following is more advantageous.   





7.   When’s the right time?

I understand timing is everything.  Many Canadians are self-employed and their savings are invested back into their businesses for good reasons.  These Canadians have not capitalized on the Tax Free Savings Accounts yet because the opportunity has not been presented.   Whenever the sale of their businesses or real estate does occur, they will seize the chance to tuck money into the TFSA.  The benefit of the TFSA is the ability to carry forward the contribution room into the future.  If you are one who has not opened a TFSA account, you should know that you can when the time is right for you.  The interesting fact is you can give money to your spouse and children to invest in their TFSA without any questions. 


8.  What’s the hidden trick?

A point of interest that deserves your attention is your TFSA contribution room may actually increase without your knowledge.  When you earn money on your investments (interest, dividends, or capital gains) and then opt to withdraw funds from your TFSA, the following year you can replace the full amount of your withdrawal plus the current year’s new TFSA limit.  In all likelihood, your deposit may exceed the total contribution room offered to a first-time TFSA investor.

Here’s why.  The new annual calculation includes: your TFSA dollar limit, any unused TFSA contribution room from previous years, and any withdrawals made from the TFSA in the previous year.  It’s your earnings that essentially increased your contribution room.

In a nutshell, your annual contribution room can become uncertain if you are making regular deposits and withdrawals.  As a cautionary measure, always keep a record of your transactions to take advantage of topping up your TFSA and to avoid any penalties for over-contributions.


9.  What’s the benefit?      

The Tax-Free Savings Account has served Canadians well over the past ten years. I believe they have their place in everyone’s financial plan.   This investment account can serve multiple purposes depending on individual or household needs.  Whether you are saving for something specific, like a vehicle, or funding discretionary items, like the occasional winter getaway, money can be tucked away inside a TFSA so it’s out of sight and out of mind. 



Happy 10th Birthday, TFSA!


You’re making dreams and wishes come true!

But I believe we have to do our part.  

The encouragement is “Never under-estimate your effort, no matter how little.  Every effort, little or great is a step closer towards the actualization of your dreams.” (Chinonye. J. Chidolue)

If the effort simply means we open a TFSA account, commit to regular deposits and save money on taxes, then we are closer to our dreams.  Are we willing to give this task a little effort? Your answer needs to be a resounding, “Yes!”