WHAT NOW? (part one)
I know I told you already about my new job, or at least that I have one. What I may not have mentioned is that this particular job could afford me the opportunity for the first time in my life to seriously change my future. If I play things properly, I can pay out all my debt and maybe buy a place of my own within a couple of years. And with the money I have leftover, I can continue to dream so we’re good, I think.
I’ve been in this position before but I didn’t know it. I was never satisfied with what I had because I felt I wanted something more or at the very least, something different. Subsequently, in past employment situations, I did not take advantage of the opportunities I was afforded nor did I plan properly for the future. This time, I will not make those same mistakes.
The first thing I will do is go on a massive spending spree. Kidding. That would be horrible advice for a finance column. I would look great but it would still be horrible advice. No, the first thing I am going to do is get enrolled in my company’s investment plan. If you are fortunate enough to work for a reputable, successful company, you likely have a plan in place to invest in the company stock where the company will also match you a certain percentage. Last time out, I didn’t start investing in this plan until much later after I started. I didn’t think I was going to be there in the long term so I didn’t bother but it doesn’t matter. You should take advantage as soon as you can and for as long as you can. This is free money, people.
The next thing I am going to do is open a tax-free savings account. I will go into more detail on these accounts in a later posting but essentially, each individual who holds such an account can invest up to $5000 per year in stocks without having to pay any tax on the dividends earned as long as the investments come from this account. You can either do it all at once if you have that kind of money available to you or you can do what I plan to do, which is deposit a reasonable amount every time I get paid. You can likely set it up so that it gets debited directly from your account so you don’t even have to think about it.
Transparency is important here. When you set yourself up on an investment plan with your company, the money is debited directly from your pay before you are taxed on it. Yes, you will have to pay tax on it later when you decide to cash it out but hopefully the money earned on the matched investments from your employer will offset that and it won’t matter. The money you deposit in your tax-free savings account should also be debited on your pay day directly from your account. For me, this means that before I get used to a certain amount on each paycheck, I will budget for whatever amount I take home after these transactions. It’s like I never made that money but really it is sitting somewhere else getting bigger the whole time.
In part two of this column, I will continue on my path to financial fun times and I will let you in on how.
Joseph Belanger is a Toronto-based writer who blogs about film at www.blacksheepreviews.com
