Build Wealth

How can you build wealth?  By having extra cash each month.

Eliminating debt is the first step (that’s why you filed a bankruptcy or consumer proposal), because you can’t save money if it’s all going to debt payments.  Having a plan to manage your money is the next step because that’s how you free up cash (with a budget, or our No Budget system).

Great, I’ve eliminated my debt so now my income is more than my expenses each month.  What should I do with that extra cash?

Start by creating an emergency fund.  Your goal is to have readily accessible access to cash to cover your living expenses for a month or two.  If you get laid off tomorrow, you want cash in the bank to pay your rent next month.  Once you have an emergency fund, where do you stash your cash? That depends on your long-term goals.

Everyone with cash should consider a Tax Free Savings Account (TFSA). You don’t get a tax deduction for contributing, but your money grows tax-free.

If you want to save for retirement, a Registered Retirement Savings Plan (RRSP), is a good alternative, because your money grows tax-free (until you withdraw it), and you get a tax deduction when you put the money in, so you win twice!  If you have not owned a house for five years you can borrow from your RRSP for the down payment on a house.

If you haven’t recently owned a home, and want to save for a home, a Tax Free First Home Savings Account (FHSA) is an option.

A Registered Education Savings Plan (RESP) is a way to accumulate money tax-free for your children’s education.

If you have a child with a disability, or if you are disabled, a Registered Disability Savings Plan (RDSP) is a way to save money, and depending on your income the government will also contribute to building your RDSP faster.

You decide on your most important goals and allocate your savings to the investment plan that will help you build your wealth.