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Make the Most of Extra Money

Tax refund? Or perhaps a bonus? Should you spend it… save it… share it? A financial planner can help you balance your priorities, set realistic goals and understand your options. 

If you find yourself with either a bit of a windfall or if you have extra funds sitting in a bank account and not earmarked for a specific purpose, it can be difficult deciding how to use that extra cash. 

Five Questions to Consider To Assist You: 

1) Do You Have an Emergency Fund? Consider keeping three to six months of living expenses in an account that’s easy to access. You can contribute up to $6,000 per year in a Tax-Free Savings Account (TFSA), where growth and income is tax-free, and you can withdraw your money at any time. 

2) Are you Carrying High Interest Debt? If you have outstanding balances on a credit card, line of credit or loan, reducing or paying off this debt could free up cash to reach other goals. 

3) Are You Taking Full Advantage of Registered Plans Like RRSP and TFSA? Think about topping up your Registered Retirement Savings Plan (RRSP) or TFSA contributions to make your savings work as hard as possible for you. It is also worth noting that you have all investment options available to you in both your RRSP and TFSA. A big misconception of the TFSA is that it is just for cash savings. In fact you can hold mutual funds, stocks, etc. 

4) Have You Set Up an RESP for Your Children or Grandchildren? Consider contributing to a Registered Education Savings Plan (RESP). With built-in tax benefits and government grant programs, it’s the best way to save for a child’s education. 

5) Do You Have an Estate Plan in Place? If not, consider using your extra cash to create a Will and Power of Attorney(s) (Mandate in Quebec) and to make sure you have sufficient life and disability insurance coverage.


Jennifer Taylor, CFP®, PFP, Financial Planner, RBC Royal Bank


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