Happy New Year! What’s your “economic potential” in 2015?
It’s a great phrase used by Finance Minister Joe Oliver on January 2nd, in the context of the federal government’s continued commitment to a balanced budget in 2015 so he and his department could improve our collective standards of living. Mr. Oliver wants to improve economic potential for Canadians with a balanced budget for three specific reasons:
- To make more tax dollars will be available for social services, by paying less in interest costs.
- To encourage confident consumers and investors to spend and save to help create jobs and economic growth.
- To better manage future financial risks due to an aging population, unexpected global economic shocks, and global security threats.
Improved economic potential for savvy Canadian households is also achievable in 2015 and beyond. There are a few key reasons for this, based on statistics released late in 2014:
- Canadians are working at debt reduction. While the average Canadian household owes $1.62 for each dollar of income earned, the growth of household wealth is up by 10.5 per cent according to Statistics Canada. Canadian household wealth grew by 1.3 to an average of $232,200, while debt grew by 1.5 per cent. But the CBC reports that according to a CIBC poll, debt reduction has been the top financial priority over the past five years and in 2015 it is a priority for 22 per cent of Canadians, up from 16 per cent last year. After paying down debt, the poll reports that 12 per cent want to increase savings as a top priority.
- Canadians are well educated, which increases job prospects and wages. According to a report released by the OECD, almost two-thirds (65%) of Canadians aged 25 to 64 had completed a postsecondary education and in 2012, almost 9 out of 10 people (89%) aged 25 to 64 had completed at least high school.
- Canadian families will receive tax relief and increased refundable Child Tax Benefits, Children’s Fitness Credits, Universal Child Care Benefits and bigger child care expense deductions in 2015, as well as the opportunity to save up to $2,000 by splitting family income.
This provides the opportunity to pay off bad debt (expensive, non-deductible consumer debt), and to build asset-backed wealth to manage unexpected economic shocks, interest rate hikes or currency fluctuations. In addition, early counsel from a qualified tax and investment advisory team can help taxpayers decide what comes first: debt repayment or early investment in TFSAs, RRSPs, RESPs and non-registered accounts.
It’s Your Money. Your Life. How will you meet your economic potential this year? Now is the right time for DFA-Tax Services Specialist and MFA-Retirement or Succession and Estate Planning Specialists to help clients achieve their goals.