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Cash Management

What is RRSP, RESP, TFSA and other government tax incentive program really does is sending out a message that we must save for ourselves. Saving for a family vacation, kids’ education and retirement are challenge to most Canadians after paying off daily expenses. It is a reality that we need to better manage our money in order to achieve more in our life. There are ways in fact will help you find your hidden money that can help you boost savings for your goals.

 
Cash flow study – review your household spending 
Most people will be surprised if they track down their spending. People will find unexpected items or unexpected volumes for certain items and don’t believe what they have done. Sort out essential and must have items and budget discretionary items on a regular basis that you can free up your money and become more conscious in spending.
What we do with freed up money, we can set them aside regularly and save for your specific purpose and goals. Depend on the time frame you have set for your goal; the way of managing your money will be different.
 
Debt consolidation – manage your debts 
Paying off higher interest loans and consolidates into a lower monthly payment to free up cash flow. Debt swapping is also a good strategy that swaps non-deductible interest loan to interest deductible loan to save you money for other goals.
 
Get tax back – pay yourself first 
People have all kinds of excuses not to save for RSP but complain paying too much tax. The money you put into RSP is your saving and where can you find a saving program will give you back your taxes dollar to dollar? Get your tax back, let CRA fund your vacation, kids education while you saving for your retirement.
 
Restructure debt – pay it off sooner or later 
Carrying debts are viewed very negatively by most people. Ask yourself a question, how big companies are expanding their business? At today’s interest environment does it make sense to aggressively paying down your home (biggest debt for most Canadian) and leave out other higher return opportunities? We are living on cash flow every day and if you build up extra equity in your home, it might make sense to use that to help your savings.
 
Article written by Nicole Dronca, CGA
E-mail: info@ndcga.com

Web: www.ndcga.com