Are you ready?

The new school year will be here in a few weeks and the advertisers are already reminding us that they are here to help us get ready for “Back to School”.

Remember, that the advertisers’ job is to make as much money as they can for their shareholders, and they know just how to place those adverts to catch our attention. They also understand that if they can’t get adults to spend, they can get their kids to get them to do it. Have you noticed that children are now selling cars in the commercials? Kids might not be able to drive cars, but they are dressed up to hook us into buying something to make little Johnny feel better about our parenting.

Before you grab the flyers and begin the mad rush to mall or store, take an inventory of some of the clothes that Johnny and Suzy already have in their closet; consider whether they can get another month of wearing before they grow out of them. September is pretty warm; can they still use some summer clothes?

Also, think twice before grabbing that 28.9% credit card. Have you made a list of what they really need? Would it be wiser to wait for the sales on some of the things they need?

Another option is to shop on a weekday; on the weekend, everyone is also shopping and the crowds tend to contribute to you spending more or buying things you did not plan to buy.

Wherever possible leave the kids at home with a sitter; you will save more than the price of the sitter while shopping without the kids.

Finally, make a list and really check it twice. Stick to your list. Know how much you have to spend and try to stay on target.

Happy Shopping!

Pay Yourself First — three simple tips for saving on a low income

Even if you are working, you know how challenging it can be to save money. 

You have heard experts say you should save 10% of your gross income. You have tried and it does not seem to work. Furthermore, you might have a low-income and with all your expenses, there seems to be no way you can save. You are thinking: what you can tell me about paying myself first that I have not heard?

pay yourself first

Let me share what I did for myself so very long ago, and which I still do today. Perhaps it could be something you might consider trying.

I have three rules for Paying Yourself First:

1.  Save the smallest amount you can -

Try this: figure out your hourly income (if you only know your annual income, an online calculator can help figure out your hourly rate). Save the value of the first hour you work every day. If this is too much, keep dividing until you come up with an amount you can handle. The most important thing is to save something, no matter how small.

2.  Have it deducted automatically –

Your bank is happy to take your money and will do it for free. (Remember that your money is added to give someone else a loan; that person will pay 9% interest to the bank. So, if the bank gives you 1% interest on your savings, the remaining 8% is their profits. So, the bank needs your money to make money!)

3.  Save your annual raise –

When I started working, my philosophy was (and still is): I did not have it last week, so I will do without it this week. Raises are not hefty, so if left in a Chequing Account, it’s like feathers in the wind and will be gone before you blink. In a Savings Account it will grow as you keep adding to it, year after year.

Try it. It works.

If you have any tips to share – comment, or email jvsonline(at)jvstoronto(dot)org – we might add them to our blog!

Financial Advice: Tax Free Savings Accounts

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Now that the Registered Retirement Savings Plan season is over, it is important that you stay on the Savings Train for your future.

The Government of Canada implemented the Tax Free Savings Account (TFSA) in 2009 to encourage Canadians to save money for their future. The Government is planning to track your TFSA from your income tax return so it is to your benefit to file your return even if you did not have an income in the previous year. By filing your income tax you will qualify for HST which you can then invest in your TFSA.

Starting in 2009 every Canadian resident 18 years or older can begin saving a maximum of $5,000 a year in a Tax Free Savings Account (TFSA). If you make a withdrawal, the amount you withdraw will be added to your contribution room for the following year and can be re-contributed in future years.

Funds contributed to a TFSA are not tax-deductible and the contribution room can be carried forward indefinitely. Funds earned in the TFSA will be tax-free and you can make tax-free withdrawals from a TFSA at any time.

If you have a TFSA you are allowed to hold the same type of investments you would hold in an RRSP, which would include cash, bonds, mutual funds, GIC’s , and shares or stocks of some corporations.

TFSA is not the same as an RRSP. The contributions made in a TFSA are not tax deductible, and you do not pay tax when you withdraw the funds from the TFSA as is done with an RRSP. You do not have to withdraw a certain amount like an RRSP at the age of 71. The TFSA does not have a beneficiary; therefore it should be listed within your will.

Everyone should have a TFSA account. With it, you are able to save to buy what you want when you want it.