How to make more money

By Anne Chun, C.A., CFP

Everyone wants to make more money--it's not what you make, but what you keep!

If you feel that money is always tight, read on and see if you are focusing on what is important. What is important is the amount you keep after expenses and after paying the taxman.

In order to keep more of your hard earned money, there are a number of items to consider. The first is your goals and priorities-determine where, when and how you want to spend your hard-earned money. These should be listed and reviewed periodically as your priorities change. If you change jobs, get married, start a family, become separated or if you are planning to retire, your priorities will change.

The second is the effect of income taxes. We live in a country where the more you make, the more taxes you pay. However, when it comes to taxes, a dollar is not a dollar because income is not taxed at the same rate. What you have left over after paying taxes is the "after-tax return". This "after-tax return" is higher for dividend income than interest income.

The third is to match the timing of your cash inflows with your cash outflows. To help you do this, prepare a cash budget listing all your income and expenses but also look at what dates you get paid and what dates your rent/mortgage/expenses are due. Determine if you can change the timing so that you have money when your bills are due. Examples include calling the credit card company to change the statement and due date to coincide with your payday, and the same could be done with mortgage payments. Discretionary spending such as entertainment and shopping can be scheduled accordingly.

Focus on what you keep and not the amount you make.

If you are spending more than what you're keeping, you may have a credit management problem and should consult a financial planner.