Shama Kassam

The Silhouette

Saving money is always difficult.

For students especially, we are often in situations where we make little to no income and have very high expenses. If we ever have money to spare, we often don’t know the smart way to save it. Saving money is one of the most important skills in life and is the key to being financially secure and independent in adulthood.

Often smart saving can make all the difference, even if you are earning less than what you would like to. It is important to always have a budget and when determining how much of your income goes to each of your expenses each month, set aside a certain percentage of your income to put directly into a savings account.

With any unexpected sources of income such as birthday money or even bursary money, a handy trick is to split it in half and spend half and save half. It’s surprising how fast this money can add up.

Savings accounts are a great way to put money away and help keep it there, while earning some interest. Savings accounts differ from chequing accounts because they usually have higher interest rates and limit the amount of transactions you can use from the account to limit spending. These two features make it an ideal vehicle to save money in.

The Tax-Free Savings account (TFSA) is a newly created Canadian savings account that creates incentive to invest in this account through strategic (and legal) tax-evasion. Available through all banks, this account allows anyone over the age of 18 in Canada to put a maximum of $5,000 per year into this account and this balance can be carried forward to the following years. This means that if in any given year you do not have $5,000 available to put into the account, the following year you are eligible to put $10,000.

Though in the life of a student this may not seem relevant, this means that as soon as you graduate and are earning a full-time wage, you have an easy option to avoid paying some tax. This is also important for students to be aware of because in our first few years of earning, aside from paying off student debt as fast as possible, we may have the ability to save money because our expenses are lower than they would be as fully-grown adults with other large expenses such as children, mortgages, cars and many others.

It is also important to note that owners of TFSA’s are also allowed to give money to their spouse (common-law or official) for them to invest in their own TFSA, up to their yearly maximum of $5,000 per year. This means that if you are making enough money to fill up your TFSA and you have extra, and your spouse doesn’t have enough disposable income to make their quota, as a couple you can put away extra money, tax-free. Filling up your yearly quota of TFSA’s should definitely be a priority.

These accounts differ from regular savings accounts because though they have comparable or sometimes higher interest rates of roughly 1.25%, any investment interest earned from this account is 100% interest free. This is a very easy way to save money and in fact make money, especially because any income earned from a TFSA nor any withdrawals from it affect eligibility for any income-based tax credits such as Old Age Benefit, Guaranteed Income Supplement and the Canada Child Tax Benefit.

Tax-free savings accounts are a great way to save money and make the most out of your paycheque. Though most students don’t have enough money to put away the full $5,000 each year now, we can start by putting in whatever we have and be diligent about filling up our carried-forward available balance in future years.  Budgeting for our regular expenses kamagra oral jelly is simple, but being prepared for unexpected expenses is always a challenge. Learning smart saving strategies from a young age gives us the ability to do more with our money and be prepared for anything that comes our way.

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