Financial tune-up: Making your money work for you

It may not be easy,but you are sticking to your budget.You invested time and thoughtfully weighed out the things you want versus the things you need.You trimmed or cut out expenses at every corner to squeeze as much cash into your savings. You have given every dollar a job.

So how are you making your money work and what are you working towards?It is one of the first questions financial account manager Charlene Bart asks when clients come into herAssiniboineCredit Union office.

"I like to sit down and do a 'money fit' checkup.It's not that you are sick;it's just to make sure that you are on track," she said.

Then comes the discussion about trying to determine whatgoals both long-term and short-termpeople may want to achieve. Bart says it is different for everyone.

"Really, if you are just establishing yourself young, just out of school, starting a family you are going to be looking at different things than someone who is winding down a career and gearing up for retirement," she said.

If you are just starting to work,Bart says it is important to establish a credit rating and manage your cash flow and set priorities and goals early.

If you are nearing retirement,you need to take stock of what your after-retirement income will look like, how much savings you have,and how much debt you have, she said.

"Saving is really important,but heading into retirement with debt can be really harmful too," said Bart.

If in retirement,you still have a mortgage or debt,it may be harder to pay off if your income has decreased.

What is retirement to you?

"What does retirement look like to you? Are you going to the cottage to read books and relax,or do you want to travel and golf at the top 100 courses around the world?" Bart asked.

It is an important question and one that will likely look a little different for everyone.Once you set a goal,you need to attach a set of basic costs to those things so that you can anticipate and budget for it.

"Work backwards.How much is that lifestyle going to cost you? How much will your debt be costing you,and what will it cost you in retirement?" she said.

"What will your income be for your expenses,and then how much do you need to save to have enough?"

When you have those numbers,you can start to get a sense of how much you need to put away each and every month or pay period to put yourself in that financial position down the road, Bart said.

RRSPs versus TFSAs

When it comes to registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs),Bart saysboth savings tools have their advantages.

"They are both excellent tools to eliminate tax burden, though it is different advice for different level earners.It is different for everyone," she said.

RRSPscan save you money on your taxes now by differing paying taxes on that income until you take the money out of theRRSPat a time down the road when your income is less and you would in theory fall into a lower tax bracket.

TFSAsare another good savings option as the interest earned on the savings is tax-free. They also give youeasier access to your savings to meet short-term goals.

Bart has often recommended looking at saving into anRRSPfor long-term goals and then taking the rebate from that contribution at tax time and putting that into aTFSAfor any shorter-term goals.

Life happens,though.People change employers, have kids, buy and sell houses.

"Everything changes," she said."You need to sit down and shift your long-term goals as things in your life change."

Let's get adiscussion started in the comments section below. Doyou have any short-term financial goals? How do you plan on spending your retirement? Are you on track to hit your goals?