It is common to find people spending more than they can earn. They may wish to save but they keep putting it off.

When you’re just starting out, it’s best to start a savings program, reduce debt  and plan for retirement as soon as you can. Putting it off will only makes things more difficult in the future as expenses rise.

Start with planning an emergency fund that will help you cover at least three to six months of basic living expenses. It may initially seem daunting with all the demands on your monthly budget but in the long run you can ease things out. At this stage, time is on your side. Compound your savings for maximum returns.  For example, by setting aside $25 a week over 15 years, you could end up saving as much as $31,000 on a 6% annual return. 

Debt can cripple people’s finances. It can ruin relationships. It can make you miserable. And it can handcuff you, keeping you from realizing your financial potential. This applies to any high interest debt. It could be a charge card or a department store and they could charge you up to 28% rate of interest.

You must develop a plan to attack for paying down your debts. If you have room on a line of credit, start transferring the credit card balances there. A credit card with a $5000 balance at 28% interest rate cost you more than $115 in interest every month. Transfer that to a line of credit that charges 5%, and you’ve saved yourself almost $100 per month. Now take that and pay down your line of credit. These days some companies offer low rate interest credit card to consolidate high interest credits.

The majority of Canadian families hand over nearly half their earnings to the government in the form of taxes. Don’t let even more money slip through your fingers by not taking advantage of all the tax breaks available.  Some of these tax credits may not seem huge but people make a mistake when they think they don’t add up to anything.

• CHILD TAX CREDIT: You can claim $2,089 for each child under the age of 18 who lives  with you. This translates into a tax savings of $310 per child.
• ELIGIBLE DEPENDANT AMOUNT: Once called the equivalent to-spouse amount, this gives single parents who are supporting children a tax break equivalent to that enjoyed by taxpayers who support a spouse. It’s a $10,320 credit with an actual tax savings of $1,500.
• CHILD FITNESS TAX CREDIT: Since 2007, this credit of up to $500 for each child under 16, enrolled in an eligible physical fitness activity program, results in a tax savings of $75 per child, enough to buy you more than a few lattes while junior is skating around the rink. Make sure you keep your receipt when you enroll your child in any of these programs.
• MEDICAL EXPENSES: Check to see if you have enough medical expenses to get a tax  credit. Get a year-end statement from your pharmacist and dentist and tally the expenses for the year. If you have a drug plan, the portion that is not covered can be  claimed as a medical expense. For example, if a family of four spends $5,000 a year on  dental care and only 80 percent is covered, the remaining 20 percent ($1,000 in this case) can be claimed. Remember too that premiums paid to a health plan are considered a medical expense. Only medical expenses in excess of the $2,011 (or three percent of net income, whichever is less) can be claimed. Note: You must include receipts for medical expenses when you claim the tax credit.
• TRANSIT PASS TAX CREDIT: Monthly and yearly transit pass users are eligible for this credit. The amount claimed is multiplied by the lowest personal income tax rate (15 percent). So if your monthly pass costs $100, you can claim $1,200, which would result in a tax credit of $180 ($100 x 12 months x 15 percent). You can claim these costs for any dependent children under 19. Be sure to keep your passes so you can substantiate the amount you spent.
• GST/HST CREDIT: The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low and modest incomes offset all or part of the GST/HST they pay. The amount is calculated based on your family’s net income and the number of dependent children for whom you have registered for the Canada Child Tax Benefit or the GST/HST.
• TUITION, EDUCATION AND TEXTBOOK CREDITS: These credits allow students of any age to reduce their income taxes by taking into account eligible education expenses. (Parents may be able to claim these amounts if they are transferred from the student). Total annual tuition fees are claimable as well as an education amount tax credit of $400 per month for full-time students ($120 per month for part time students); the textbooks tax credit is $65 per month for full time students ($20 per month for part-time students). If the student’s income is too low to claim these credits, they can carry them forward for future.

• CHILD CARE: If you send your child to daycare or hire a babysitter in order to go to work or school, you can claim child care expenses. The deduction limit is $7,000 for each child under the age of seven and $4,000 for children seven to 16 years of age. If your child is eligible for the disability tax credit (see below), the limit is $10,000. Fees paid to a nursery school or summer camp can qualify as child care expenses if you incurred them while you were working or going to school.