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Tips for Debt Management by building tax-free savings account

Tips for Debt Management by building tax-free savings account

Anyone can be in debt from smallest to largest and it can be hard for the person to manage it. But for the long-term advantage, you have the option for debt management by building tax free savings account. It helps you to save enough money by the end of the year which you can pay off the debt and slowly it will be over the head. Debt cannot be paid all of a sudden for loans, car payments, mortgage, credit cards and more. It can cause stress to the people who are in the burden of debt to make it a priority to pay it off in every possible way you can. It should be the first thing to consider when you have debt on you. You have to plan and then before you know it, the debt will be paid off. 

Tips for Debt Management with Tax-free savings account 

It is always better to have a tax free savings account which works as secure savings by the end of the year. People are able to save almost R30, 000 annually with the help of funding account. If you are looking to save long term then it is better to have the tax free savings account. You are able to do the debt management by building tax-free savings account as well.  None of the tax is applicable to your capital or the interest which you earn through the account. 

For the young people, it is recommended that as soon as they start earning, they should have the tax savings account which can help them save more eventually by the end of the year. The upfront contributions are saved due to this account and while you cash out the investment, the best value is gained. The money grows by itself through the interest so you do not have to worry about any cut in taxes. 

If you are fond of donating then know that there is a limit of 100k per year which you can donate and if you donate more than that then it can have the implications of a tax on you. Prefer not to keep the money idle in the bank account and always keep on rotating it. The account needs to be active with the money going in and out so that the interest is paid. 

Purpose of Tax-Free Savings Account 

This account is for the purpose of having the savings with having a goal in mind. Suppose, you have to pay off debt and since you know it is your priority, you would want to get the tax free savings account. You are able to earn on the investment without having the tax cut on the account. People who are above the age of 18 are able to save about $10,000 a year with the help of tax-free savings account. The income is considered as tax-free as well and if you can save this much money, then you are able to pay off the debt within few years. 

You have to invest your money in different items like bonds, GICs and mutual funds which can bring in the money for you. You do not have to deposit the money into your account like normal banking. You have all the flexibility to use the tax-free savings account however you want. So if you have children who have to go to college in the near future, you can open up the tax-free savings account so it can save them or you from any kind of debt management. Simply when it is the time to pay their tuition fee, you are able to withdraw the money from the tax-free savings account and pay it off. 

Debt Management by building tax-free savings account is a great idea to get rid of debt as soon as you want. if you are in debt then talk to your relatives and check on them if they have the tax-free savings account. They can help you with the savings and you can be debt free. So make sure to make the wise choices before you get stuck in the debt for a long time and stay stressed all the time. 


Unifirst Financial & Tax Consultant
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