Taking Responsibility!

I have a twenty-year old grandson who is beginning his first year of full-time employment.  He worked casual hours in 2022 and I was proud to know that he had saved a substantial amount of money.  In fact, he had enough to purchase a second-hand car.

His father suggested that he finance part of his purchase to build a credit rating and then talk with me to learn about how to invest widely.  I enjoyed being able to work with Jordan as I believe that knowledge is important when it comes to making wise decisions.

We shared a couple of virtual hours after which Jordan stated that he was somewhat overwhelmed and had a lot to think about.  Maybe you or your family members would benefit from some of the topics we covered:

1. Getting access to your Canada Revenue information. In order to set up an online account, you need to input your Social Insurance Number and other personal data.  A phone number is required to activate the verification system when you sign in next time.  Once you have set up the account, you will receive a security code in the mail to finalize the access.  That’s when you will begin to feel like you have some control (rather than just expecting an accountant or partner to know about your taxes).
2. Understanding the Income Tax system – There are only two important parts to this. One is the amount you earn.  The more you earn, the more you will owe.  The second part involves deductions that will reduce the amount you owe.  You can study this by searching for and reviewing the TD1 form for your province.  These are all online.
3. Optional deductions – When you do eligible investing, you can increase your deductions and therefore reduce the amount you owe for the year. This means receiving a refund or better yet having your employer adjust withholdings through a TD1 change.  There are two basic types of investments that I talked with my grandson about.  One is pension plans.  Often the employer will match a portion or all of your contributions.  What a wonderful way to plan for the future with “free money”!  Saskatchewan Pension Plan also has great returns and few restrictions.  These plans are vested which means you cannot take the money out until the retirement age.  Another tax-deductible investment is through Registered Retirement Plans which defer taxes until withdrawn.  I am not an accountant so it is best if you discuss this with an expert in that field.
4. The lure of debt – Of course it is a thrill to purchase a vehicle, but most people don’t understand that borrowing money means that you are tied to the lender. The thrill can diminish after a few months of making payments!  I showed Jordan how much the car was actually going to cost him if he followed the financing plan offered.  He was shocked!  Most people don’t know the effects of compounding interest or exactly what they are paying for houses, cars and credit card items unless they seriously do the math. Debt steals freedom.
5. Choices and responsibility – Would you be happy with the job and salary you have thirty years from now? Do you have plans to start a family, purchase a house, travel or fulfill other dreams?  Well, you have choices.  Money either works for you or against you.  Time is the same.  We definitely can’t control everything in life, but we do have the ability to make choices that will affect the future.

As a psychologist, I work with people who are stressed and worried about problems.  Many feel helpless and don’t know how to improve their situation.  My daughter always says, “When you are in a mud puddle, everything looks like mud.” 

One of the best things that I can do to help is to identify the things that are negatively affecting the client.  This usually begins with gathering relevant information and then making a plan. Once there is even the tiniest bit of progress, the client starts to feel better.  Success breeds success!

What are you ignoring that needs attention?  What information do you need to help you do better?  Are you ready to tackle the issues?

No better time to begin than today!