Do your own taxes. File your own taxes if you have a straightforward tax situation. "It's not that difficult to do, and it gives you control of the process," Biscott says. Plus, you'll save on the accountant's fee. It's easy to file on your own with tax software, such as QuickTax, which walks you through the process. To help you maximize your savings, the Canada Revenue Agency has an A to Z menu of topics online.
Give to a charity. Not only will it help to make a difference in the world, but contributing to a registered charity will also earn you a tax credit. Make sure to get an official tax receipt. The Canadian Book of Charities allows you to search for information about a charity and donate directly online.
Insurance
Buy life insurance to protect your children. "Work out the level of income you need to replace and how much capital you need to invest to produce that income," Biscott explains. Often you need a policy worth seven times your gross annual income.
Determine the best type of coverage for you. Generally speaking, there are two different types of life insurance: term and permanent (whole life). With term, you purchase insurance for a set period of time – five, 10 or 20 years, or 100 in the case of term to 100. It's less expensive initially, but premiums increase as you get older. Also, there’s no investment component; you pay only for the cost of the benefit. With permanent, you pay in every month and your premiums never change. It's more expensive, but you can cash in your policy for the money that you accumulate. So what's right for you?
"It really depends on your situation, but, for many people, term insurance is often enough," Foran says. Be wary of insurance policies with low monthly premiums and no medical exams, though. "These really only pay out enough to bury you," he adds.
Reduce your disability premiums. If you work for a company, you likely already have disability insurance, but if you're self-employed, you'll need to purchase it. Reduce your monthly premiums by choosing a longer waiting period before the insurance kicks in. "Instead of having it start one month after you become disabled, choose to have it start three or six months after, and prepare to self-insure for that initial period," Biscott recommends.
Get car insurance tailored to your needs. Some insurance companies will be more receptive to your particular situation (the car you drive, your driving record, your location) than others. Visit the Insurance Hotline.com to compare auto insurance quotes. Foran advises against making a claim unless absolutely necessary. "If you file a claim and then get a speeding ticket, you can actually be denied coverage by your insurance company," he says. Other recommendations to minimize your rates include keeping your insurance active, taking only necessary coverage and fighting every ticket.
Page 3 of 4 – Find out bad money habits that you should break on page 4.
