TFSA Accounts: You need one

Everyone needs a TFSA!

A Tax-Free Savings Account is a type of savings account that was introduced by the Canadian federal minister of finance in 2008, the amount of people saving in Canada has been a record low while debts are record high. It exists to encourage Canadians to save more money with the incentive of avoiding taxation. Each person is eligible to deposit (or contribute) $5,500 a year tax-free. If you contribute more, you will be taxed. Any unused room, you can carry forward to the next year. For example, if in 2015 you contributed $3000, then in 2016 you will be allowed to contribute $5,500+($2500 left over from 2015)= $8000. Your contribution room begins at the age of 18 or starting the year of 2009. If we start counting on the year of 2009 the total contribution room will be $36,000. Always check Canada Revenue Agency http://www.cra-arc.gc.ca/myaccount/ to see how much you are allowed to contribution.

If you withdraw money, the extra contribution room will not count until the next year. 
For example:
In 2015, I contributed $5,000
In 2015, I withdrew $1000
** Remember: The maximum is $5,500 - ($5000 total contributed this year)= $500 left for year 2015. Even though I took out $1000, my contribution room will only allow for $500. The extra room will count towards year 2016. Again, go to the website above to check your allowable contribution room. If your contribution room is $20,000, then you have more room to adjust your account.


Other things to know about TFSAs

• The money you earn within this account is not taxed 
• This account is not protected from creditors during bankruptcy or legal financial judgement
• Anyone the age 18 or over can open an account
• You can withdraw money whenever you like
• This money will not count as income for government pensions, which means the government won't tax you if you take money out of this account during retirement

Investing 101: Treat it like your business

For those of you who are new to investing, please watch these videos to better understand my investment blogs that I will be posting in the near future. Although these videos don't go into detail, they will provide a great introduction to powerful concepts. In my blogs, I will go into further detail to synthesize all these concepts together and make it work. Make sure to watch and re-watch these videos until you understand it. Treat this like your business! As a business owner, your role is to take notes, track your progress, know where your money is going and educate yourself in order to maximize your profit. So get yourself a personal finance binder and lets get started!

What is Investing?

What is Compounding?

What is a TFSA?

Please keep in mind the contribution limit is subject to change depending on the Canadian government, always check the CRA website to make sure. You can also see your maximum contribution amount when you register on http://www.cra-arc.gc.ca/myaccount/

What is a RRSP?

What is a Stock?

What is a Bond?

What is a GIC?

What is a Mutual Fund?



What is an Exchange-traded fund (ETF)?

Santa works on a budget - holiday spending plan

'Tis the season to hand over your wallet 

As Christmas approaches fast, we are spending more and more on outings, gifts and party supplies. But sometimes that's the sacrifice we have to make to celebrate this annual tradition. This year I have two rules to share to keep you from being broke this holiday season.

Here's two very simple concepts you need to keep in mind when shopping for the holidays:
1. Don't spend more money than you have
2. If the money isn't in your bank account then IT'S NOT YOURS! 

The second concept is where people tend to make their mistakes, many assume they will receive a big fat pay cheque for all the hard work they've put in over the past few weeks, and they assume the bonus will be enormous, but only to find an unpleasant surprise. For example, you assume you'll have $3000 by the time pay day comes so you decide to buy a fancy new Apple Macbook Pro for $3000 and swipe it away with your shiny credit card. However, when pay day comes along, you check your bank account only to see $2000 instead of the $3000 you've anticipated for. So now what do you do? You're short $1000, how are you going to pay back the credit you just spent? Do you ask mom and dad for cash, or dig into your savings, should you forget about the bill and pretend it never happened?

The sensible answer would be to return the product because you can't afford it. But sadly, many don't. Many people continue to swipe away money they don't have and dig into their savings to get what they couldn't afford. Over time they create a mountain of consumer debt that puts them into the biggest financial hole of their lives. So in order to avoid this catastrophe this holiday you will use no cash advance, and no credit cards. We're going to use cash.

Here's what you'll have to do

Golden rule of budgeting is to write down everything you spend, it's as easy as it sounds. I will provide you with a structure on how to get things done. For the next steps I'll be using Gail's budget plan to explain this budgeting strategy, please see: Gail's Holiday Spending Plan. Or, if you're good with excel you can go ahead and create your own spreadsheets. 

1. First, take a look at your bank account, how much do you have? How much money can you spend without jeopardizing the other essential areas of your life, for example food, transportation, rent/housing, bills, etc. If you have little money, you might have to find cheaper alternatives, free events or stay indoors. On this budget plan, fill in the top the amount of money you have to spend and who will you be spending it on. Here's my example:

2. Second, input the amount you plan to spend in each category including the after tax cost: 

As I continued to work on my budget I realized I could combine categories together to save both money and time

3. Now scroll down to the bottom to see if you are under or over budget. If you are over budget you will have a negative sign (ex. -12.34). If this happens you will need to readjust your budget to see where you can cut cost.

Here you see I am $27.51 under budget. On the left, there are other categories you can use to help fill in your planned spendings. I won't be needing them so I'll leave those categories blank.

4. If all is good, then you can print this out and keep track of it while you're shopping. Once you've done some shopping, scroll back up to the top and start filling out what you've actually spent.

In each gift, I've found ways to save money. Either through friend's connections, coupon deals, going to a more affordable restaurant, or not going to a party altogether.

5. After filling out what you've actually spent, scroll down to the bottom to see whether or not you went over or under budget.

I was $204.86 under budget!

I'm always happy to see left over money and a plan that works and what you do with the money is up to you. Remember to keep it simple, don't spend money you don't have and you won't be in trouble.

Have a safe and Happy holiday!

Love,









- the plush duck

I love money

Money, the biggest oxymoron I know. It's the most well known topic that nobody ever talks about. It used to be a super taboo subject and was considered rude to discuss outside the home. Now, I think no one talks about it because no one's got a single clue on the subject! Our Canadian school system taught us nothing about money and all my parents could advise me to do was to not waste and save my money. We all lack the simple foundations of personal finance which is why the poor continues to be poorer. 

I first discovered money at the young age of 5, I received my red pocket money from all the adult relatives during lunar new year and counted each pocket as I receive them. I kept the red pockets stored in a little green plastic treasure chest with a lock and key, making sure no one would touch the things I valued most inside. And to my surprise, even after our place was broken into, my amount of $125 was not touched. Who would have thought a little green box next to all the creepy dolls and sailormoon cards would have anything inside? Clearly wasn't worth the robber's time to check. Instead he opted to take our VHS player and broke a few of our tapes. As I grew older, my love and interest for money continued to grow. Very often I would take out my red pocket money that I've accumulated over the years to count and recount for my amusement. During my teenage years I spent a lot of time spending the cash I had on social events instead of saving it; my biggest regret.

I was studying to major in sciences because.....well that's what everyone else was doing. It's strange that neither my parents, nor myself, was able to notice my love for money and viewed it as my future career. But that's ok because my interest for money sparked and returned during grade 11 and I discovered the show "smart cookies." I saw the hosts as smart, talented, and beautiful young women who had a clue and knew what to do with their money. Their financial independence made them attractive and I wanted to be just like them, in fact, I vowed to surpass them. 

With my blog I hope to inspire you (the reader) to take control of your finances and build a future with a solid foundation. You'll discover what investment means and how to properly define wealth because one of the biggest misconceptions of money are the individual definition that come with it. A high salary profession doesn't make you rich. Whether or not a person is wealthy is relative to their lifestyles. If Person A makes $1 million a year but he is also spends $2 million a year, then he is NOT rich, in fact he is broke beyond broke. He needs to pay the bank back completely in order to be considered broke. How sad is that? In contrast, if Person B earns $50,000 a year but only spends $30,000 a year, then I consider this person to be more wealthy compared to Person A.

So what I'm trying to say is, managing your money really isn't that bad. It takes practice and commitment, but overall it's really simple. Once you get the hang of it, you'll easily acheive financial independence in no time.