Don’t Leave “Easy Money” On The Table
Money doesn’t grow on trees. But, sometimes it is like low hanging fruit and ready for picking. Just like a 1/2 price sale on your favourite jeans that you needed to replace anyway. Maybe a poor analogy, but you get the point.
People often forget about “easy money”. One of the most common examples is not fully understanding your employer’s compensation and benefit offerings. Maybe there is some form of employer matching for your contributions to retirement, savings or investment plans. Or a discount on company stock purchases for employees. Some employers pay a portion of expenses for further education or skills upgrade that can raise your earning potential or marketability.
These benefits are like a “guaranteed” form of return that can be difficult to pass up.
Another example is saving for your kids education inside an RESP. If you contribute $2,500 each year per child, the government will give you an additional $500 (max. $7,200 per child). Equivalent to a 20% guaranteed return! Over 16 years, just the “free money” portion could grow to over $11,000 (assuming 5% interest earned per year). Even money earned within your tax free savings account is free of tax forever. This may not seem like much today but can make a substantial difference over the long term. Especially, if your marginal tax rate goes up.
For people who can manage a credit card wisely, many cards offer cash back programs or travel rewards. If you have the discipline to only buy what you can afford and pay your balance in full each month, these cards can be a gift. Each year I earn over $1,000 of free travel rewards (which I would spend anyway) from simply buying my daily purchases on my credit card. Or maybe your employer has negotiated several deals for employees from their preferred suppliers like travel, sports, retail or insurance providers. Of course, the key point here is to only spend what you need or otherwise would; not more! If these benefits turn into “extra spending”, they no longer make sense.
Think about your own examples of “easy money” that you can access. By taking advantage of these opportunities for many years, you might be surprised how much you save to make your dreams come true.