A Personal Finance Guide

The “giving season” is nearly upon us! Not only are the malls full of Christmas decorations, and the advertisements full of toys and perfume, our mailboxes are full of year-end charity fundraising requests too. While most charities operate and have expenses year-round, they have learned that the largest chunk of their donations come in November and December, partly because of tax laws. When it comes to tax exemptions, charitable donations are tied to the calendar year, and this is your “last chance” to make a difference for 2008.

But hold on a second… if the primary reason you make a donation is for tax planning purposes, you have made one of the biggest money mistakes you can. Giving has nothing to do with tax planning, and likewise, if all your giving plans are put off until your death and your estate is settled… you have missed the whole benefit of giving all together.

Over 100 years ago, the steel magnate Andrew Carnegie put into action an ambitious plan of giving. He began to pour the money he made from business into funding requests for public libraries and other educational institutions, and he started long before his death in 1919. When he sold U.S. Steel in 1901, giving away his money became his full-time work. As a result, literally thousands of towns in Canada, the US, the UK and around the world have a “Carnegie Library”.

In our time, Bill Gates, once seen as someone who didn’t do a lot for charity, has become the world’s biggest giver, focusing on treating AIDS in developing countries and providing access to education.

While it’s easy to say, “But they already had a lot of money so it’s simple for them to make these huge donations”, for every Bill Gates or Andrew Carnegie, there are dozens of people swimming in money, yet they have stored it all away for themselves. This is either because they are afraid of lo (more…)

Good financial management is how to make the best use of your limited income, so that you can meet your current necessary needs as well as how to implement strategies to achieve your short and long-term goals.

I. Direct compensation

Direct compensation is the money that you earn or money that the company pay directly to you without going through any third party.

1) Salaries and wages

These are the most common types of direct compensation

a) It is governed by provincial or State employment standards/legislation.

b) It is a collective agreement between union and employer , or by an individual contract between employer and employee.

2) Commission agreements

a) Unlike salaries and wages, a commission does not establish a legal employer-employee relationship.

b) Any independent contractor may receive a commission as long as he or she provide actual work for an employer.

3) Tips, gratuities, and bonuses

These also a direct compensation and must be reported as income.

II. Indirect compensation

It is the money that you have been contributed when you are at work and will pay back to you later on as benefits

1) Government pension plan

a) Contributions are directly related to your level of income

b) Contributions are mandatory and are deducted from your earnings by your employer

c) You receive a tax credit of 25% of the premiums you pay

d) Self-employed persons must pay both contributions.

2. Government Unemployment plan

a) Contributions are mandatory, and are directly deducted from your pay check.

b) Your employer’s contributions are not considered as a taxable benefit to you.

c) You receive a tax credit of about 25% of the premiums you pay annually.

d) Self-employed persons do not contribute to unemployment insurance and cannot collect ben (more…)