Household budgets should include a savings account for unexpected emergencies. Tax Free Savings Account, or TFSA, is a good saving account for Canadians as it allows them the freedom to contribute and withdraw dependent on their lifestyle.
TFSA Account
Tax sheltered savings account is available to all Canadians over the age of the 18. Canadians are able to contribute $5000 annually. The interest earned on the investment is not taxed. As well, clients can withdraw the money at anytime without penalty. In addition, they are allowed to repay the withdrawn amount without penalty. TFSA is a savings account that allows clients to save for their specific lifestyles.
The account is similar to the RRSP and RESP but it gives more freedom to the clients. The only drawback is the money invested cannot be deducted from their personal income tax statements. TFSA is offered at many financial institutions and it is up to the client to find the best provider. The best place to begin the conversation is with a financial adviser. A financial adviser's job is earn money for the client while a bank representative first job is to earn money for the bank.
Saving Money Today
The first step to saving money is to open a TFSA account. It is best to open an account that gives the client privileges to withdraw and contribute via the telephone, online, or in person free of charge. The next step is for the client to begin to contribute to the account. The rule of thumb is to save 10% of your net income each month. Net income is the total money after taxes are deducted. If 10% is too high it is best to contribute as much as possible. Contributing $20 a month is better than $0.
Saving money is a challenge in difficult times but without savings, unexpected emergencies can create havoc with the family budget. Dig deep into the budget for savings. Instead of the extended cable package, save the extra cost. At first glance it is difficult to find extra money in the budget but with a little reorganization of funds, it is usually possible to contribute at least a few dollars a month into the savings account.
It is important for Canadians to find the best savings account for their lifestyle needs. The biggest incentive for the TFSA is the investment earnings are not taxed by the government. Tax sheltered savings account is just one option for Canadians to earn a few extra dollars by holding their money in a financial institution.
Debbie DeSpirt - Debbie DeSpirt is an Elementary Teacher for the York Catholic District School Board in Ontario, Canada. Her post secondary education ...
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