|Depending on where you are living, government help through different program might become a very important part of your personal finance. However, we are always under the threat of seeing a law abolished. So here’s my question: “Should we include tax break and other financed program into our financial planning?”. As it is the case for many topic in personal finance, the answer is “it depends”. However, I prefer to count on them and I’ll explain why in this post.|
|We are talking about your moneyToo often, we tend to forget that the government represents (or try!) the population. In other words, we are the government. Believe it or not, laws are being voted in the best interest of the pollution… I mean the population! Okay… maybe I am a bit naive here. Let’s put it that way: if the government elects a program that you can benefit from, well take the money and run! Tax rebates and allocations should never be the main reason why you are modifying your personal finance. However, if you are about to clean up your financial mess, you are better off using some Mr. Tax Break to clean up your stuff. Since you should never take any decision based on government programs, it is normal that you budget it. In the end, you have very high chance to get your money back. This should count as “cool money” where you can use it for anything.
You should review your finance once a year
It is not rare to find blogs that are reviewing their personal net worth every month. I would suggest to perform this exercise at least once a year. If you do so, you will notice that most laws or programs do not change in a span of year. Remember that the government is a huge mammoth (yeah, like banks, but even bigger!). Before they change a program or a law, you will hear about it and have enough time to rearrange your finance for the next year. All it requires is to watch the news once in a while or to follow good finance blogs ;-). The help received from the government could help you out creating a safety net or accomplish bigger projects such as renovation faster than you think. You need to budget carefully and plan this money in advance.
Some laws are very stable
You have to go with the major tendencies. For example, governments need you to invest money in the market. They need to keep a certain liquidity so the economy can grow at a good pace. Therefore, they will generally propose laws that encourage investment such as tax refund on interest paid for leverage strategies. Another major tendency is related to our future. The Government runs on our taxes. If the population is too small, he will not be able to accomplish what he wants and support the elderly generation. Hence, he will create program that helps family such as child allocations, tax break or extra contribution to RESP (in Canada). Those sources of money might be alternated over the year but they are there to stay; they are part of our economy mechanic.
This is why I think we should count government’s help in our budget. Depending on where you live, there is always a way to get benefits from the programs in place. The real key is not to know if you should count on them or not but really how you can count on them.
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