A few years ago, I did an exercise that completely changed how I see money.

I pulled my tax data for the last decade and summarized three numbers from each tax return:

• Total income (line 150)
• Taxable income (line 260)
• Income taxes paid (line 435)

Then I added an estimate of every other tax I paid over that period: payroll tax, sales tax, property tax, and so on. I calculated my tax rate by dividing total income tax by total income.

With that data in front of me, I asked myself:

1. Of all the income that flowed through my life in the last decade, how much did I actually keep?
2. How did I manage what I kept? How did I invest it, and how much did it grow?
3. What do I have to show for that income today? What impact did I create for myself, my family, and my community?

The result was sobering. It wasn’t a disaster, but it was mediocre. That made sense: for many years I lacked financial awareness and made costly mistakes. The difference now is that I’m more aware, I course-correct faster, and I see my finances as a lifelong learning journey.

I strongly encourage you to do this same exercise. It will likely surprise you—and it will give you clarity.

The power of the “GAP”

That exercise exposed one of the biggest financial mistakes I made for years: I ignored my “GAP”.

Here’s the simple equation:

[EARNED INCOME] – [EXPENSES] – [TAXES] = “GAP”

For a long time, I obsessed over increasing my income and paid almost no attention to the rest of the equation. I see the same pattern every day with clients.

Household debt is exploding because most people either have a tiny GAP or a negative one. This is also a common ingredient in high-profile bankruptcies, both personal and business.

Here are a few reasons why people struggle with their GAP:

• You think income is king: You probably know someone who earns $100,000 per year and lives a $100,000 lifestyle. But $20,000–$30,000 of that is going to taxes. So if you spend all $100,000, you’re in debt. That’s a negative GAP. This is how people earning millions still end up bankrupt—they spend everything and forget the taxman is coming.

• You’re under constant consumption pressure: In countries like Canada, we’re bombarded with messages to buy more, upgrade more, consume more. New instead of used. Latest fashion. Latest phone. We don’t just acquire what we need; we acquire what we’re told to want. That pressure quietly inflates expenses and shrinks (or erases) the GAP.

• You ignore taxes: For many people, taxes are their single largest lifetime expense. Yet most don’t treat tax planning as a controllable variable. They assume, “It is what it is.” That isn’t true. With better knowledge and planning, you can legally and significantly reduce your tax bill—and grow your GAP.

• You’re keeping up with the Joneses: Because we are social creatures, money often becomes a way to “show up” in society. We compare houses, cars, vacations, schools, gadgets—often trying to keep pace with people whose financial reality we don’t even know (and maybe don’t even like). This mindset pushes expenses up and turns a positive GAP into a negative one.

A better path to financial well-being is to obsess—not over income—but over your GAP.

When you do that, you naturally start paying attention to each variable: income, expenses, and taxes. From my own life and from working with many clients, I can tell you: if you don’t protect and grow your GAP, you will struggle financially. If you want to build wealth in a tax-efficient way, you must aggressively grow your GAP.

Practical ways to grow your GAP

Here are a few practical ideas that work in the real world.

1. Get clear on what you actually want

Start by defining what you want your life to look like—financially, emotionally, relationally, and professionally. Clarity gives you a filter: you stop spending money to impress people and start using money to build a life that matters to you.

I like William Damon’s definition of purpose:
“A stable and generalized intention to accomplish something that is at the same time meaningful to the self and consequential for the world beyond the self.”

When you have that kind of purpose, money becomes a tool, not a master. It becomes easier to say “no” to empty spending and “yes” to the things that truly move you forward.

2. Start with the easy wins: expenses

The fastest way to grow your GAP is usually to reduce expenses. Income growth and tax planning take time; expense changes can be immediate.

A simple approach:

• Do a 30–60 day “reset” where you cut everything non-essential.
• Notice what you don’t miss at all. Those expenses can stay gone.
• For the things you truly value, bring them back in—but look for cheaper, smarter ways to enjoy them.

Accountability helps. Share your plan with someone who will ask you how it’s going and keep you honest.

3. Invest in yourself

If you don’t consistently invest in yourself, it’s very hard to grow your income or your GAP.

Most people read a few books a year and spend hours every day on social media, news, or TV. Then they wonder why nothing in their life—thinking, income, relationships—looks different 10 years later.

Instead:

• Read books by people who already live the kind of life you want.
• Listen to podcasts and watch content that teach you skills that increase your value.
• Spend time with people who are ahead of you financially and professionally and learn from them.
• Implement what you learn quickly, even in small steps.

Your income is a reflection of the value you bring to the marketplace. Growing that value is one of the most reliable ways to grow your GAP.

Put your existing assets to work

Many people say, “I don’t have money,” while surrounded by idle assets.

Those assets can include:

• Your knowledge and skills
• Your professional experience
• Things you own but don’t use
• Space in your home
• Equity tied up in property

Get creative. Can you consult, tutor, coach, rent a room, rent equipment, or sell unused items? Often, there’s hidden income potential sitting right in front of you that can flow directly into your GAP.

Invest in real, understandable things

Once you build a GAP, what you do with it matters.

Many people chase shiny objects—crypto today, FX tomorrow, a hot IPO next week—without really understanding what they’re doing. That isn’t investing; it’s usually speculation or gambling.

To grow your GAP wisely:

• Focus on assets you understand and can explain simply.
• Favour real, productive assets like real estate, solid businesses, and, for some people, precious metals like gold and silver.
• If you invest in stocks, consider Warren Buffett’s approach: buy understandable businesses with durable advantages at reasonable prices.

I love this quote from Jim Paul and Brendan Moynihan in What I Learned Losing a Million Dollars:
“Most people don’t know whether they are investing, speculating or gambling, and to the untrained eye the activities are very similar.”

Know which one you’re doing.

The equation you can’t ignore

At the end of the day, financial well-being comes down to one simple equation:

[EARNED INCOME] – [EXPENSES] – [TAXES] = “GAP”

If you understand and intentionally manage each part of that equation, you can manage your GAP. If you grow your GAP, you build margin, resilience, and long-term wealth.

If you ignore it, the world will happily consume your income through lifestyle creep, taxes, and debt.

Hey, my name is Ken Green, CPA, CA, MBA. If your goal is to minimize taxes and grow your GAP, I can help. Book a call with me here and let’s talk about how to make your finances more tax-efficient and intentional.

A few years ago, I had the opportunity to interview two Canadians that achieved financial independence in their 30’s.

I was curious to hear from them directly and to get a better understanding of how they did it, what it took and their experience along the journey to financial independence.

One thing that jumped out at me during these interviews was that even though they achieved financial independence by deploying different strategies, they did it by focusing on a fundamental concept — increasing their savings rate very early on. Even though there are studies that show strong correlation between your savings rate and the number of years it takes to achieve financial independence, we’re not that good at saving, certainly not as good as our parents were.

I was horrible at saving early in my career. It was so bad that after my first 5 years of working, I had $0 (i.e. ZERO) in savings. It was later after I got married that my wife essentially saved me and together, we adopted a strategy that allowed us to put money away to invest.

Saving allows you to put away funds to invest and when you invest carefully, you’re certainly going to be on a path to financial independence.

What is financial independence?

A google search will reveal many answers. According to Wikipedia, financial independence is the status of having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others.

There is a big movement of FIRE (Financial Independence, Retire Early) that is gaining more and more popularity here in North America. Their definition of financial independence aligns well with the Wikipedia definition above.

I totally agree with this and I love all of the underlying concepts taught by the FIRE movement. To get a better understanding of financial independence at a deeper level, let’s explore what it isn’t.

To do this, it is helpful to explore the images that come up in our head whenever we hear or think of financial independence. What comes to mind?

Making a killing?

Inheriting a fortune?

Winning the lottery?

Exotic travels?

Living in Mansions?

Fancy jewels, cars and designer clothes?

This is what I imagine. As Vicki Robin noted in her brilliant book, “Your Money or Your Life”, most of us picture financial independence as an unreachable fantasy of inexhaustible riches. This is financial independence at a material level.

She goes on to make the point that if we look at financial independence at the material level, it will only require us to be rich. But what exactly is rich?

Rich exists only in comparison to something or someone else. What this means is that you may never be rich enough.

“Men do not desire to be rich, only to be richer than other men.” John Stuart Mill

According to Vicki, financial independence has nothing to do with rich. It is the experience of having enough — and then some.

Enough is when you get to the peak of your fulfillment curve. In other words, you have enough money to survive, and get all the comfort and luxuries you require to experience fulfillment in life.

It is quantifiable. It is achievable. Enough for you may be different from enough for your neighbor as what fulfills you may not necessarily fulfill your neighbor.

This concept of financial independence will allow you to dig deeper to find what fulfills you. It will allow you to plan and design the lifestyle that will fulfill you. More importantly, it will save you from all the hassles of trying to keep up with the Joneses.

Conclusion

I’m a fan of financial independence and my commitment is to help as many people as possible reach their goal of financial independence — the experience of having enough.

Getting to financial independence requires clarity. It requires purpose. It requires a change in money mindset. It will take careful planning. It requires a certain level of knowledge. It will require intentional execution using a strategy that makes sense for you.

In my book, Tax-Efficient Wealth, I provide a road map to help anyone achieve financial independence in a tax-efficient manner. You can grab a FREE copy here.

As you may already know, tax planning is all about minimizing or eliminating taxes. Effective tax planning requires time to implement. The earlier you start planning, the more tax-efficient you’ll be with your affairs. As we approach the end of the year, there is a limited opportunity to implement some tax planning. A good tax plan will often include strategies to deduct, defer, and divide.

1. Deduct 

In my book, Tax-Efficient Wealth, I discuss the difference between tax credits and tax deductions as most people don’t understand the difference between these two terms. 

A tax deduction (or “write-off”) reduces your taxable income, on which your federal tax is calculated. If you’re paying some taxes, a deduction is worth about 25% to 50% of your taxable income depending on your marginal tax bracket. A few examples of common deductions include:

• RRSP & Pension plan contributions
• Interest expense on money borrowed to earn income
• Union/professional dues
• Alimony/maintenance payments
• Allowable employment expenses
• Moving expenses
• Child care expenses

2. Defer

This is another term that is often misunderstood. As the name suggests, a deferral strategy allows you to move your tax liability into a future year. You owe the tax, but rather than paying it today, you can pay it at a future date. This strategy allows you to take advantage of the time value of money and also gives you some control over the timing of when you pay the taxes.

The most common tax-deferred account in Canada is the Registered Retirement Savings Plan (RRSP). Essentially, with these accounts, taxes on the income are “deferred” to a later date. This account has its benefits as you get the immediate advantage of paying less taxes in the current year. Promoters of this plan often encourage high-income earners to max out their tax-deferred accounts to minimize their current tax burdens with the assumption that when they retire, they will likely generate less taxable income and, therefore, find themselves in a lower tax bracket.

3. Divide

This strategy is more commonly referred to income splitting. This strategy allows you to spread income among different taxpayers to lower the effective tax rates for the combined family. When done correctly with planning, income splitting can result in significant tax savings as we have a marginal tax rate system in Canada.

Some common examples of how this can be accomplished include the following:

• Use of spousal RRSPs to split income in retirement.
• Splitting CPP retirement benefits with your spouse.
• Splitting pension income among retired couples.
• Investing non-registered funds in a family member’s account with a lower tax bracket.
• Payment of reasonable wages to family members (through a business).
• Use of partnerships or corporations to earn business income.

Conclusion

Often, we underestimate the impact of good tax planning. We don’t realize how much money we’re leaving on the table when we pay more than our fair share of taxes. I know tax is a complex topic but I encourage you to learn the basics. This is one reason I wrote the book, Tax-Efficient Wealth and this is why I continue to share valuable insights through this newsletter. You can get a FREE copy of the book here to start your journey to tax-efficient wealth. 

Remember, every dollar saved in taxes will help accelerate your wealth. You can use those extra dollars to improve your lifestyle, to contribute to your community, and to pass on to the next generation. 

If your goal is to minimize taxes, I can help! Book a call with me here and let’s discuss how I can help you become more tax-efficient.

An American tourist was complimenting a Mexican fisherman for his excellent catch and asked how long it took him to catch them.

“Not very long,” answered the Mexican.

“Why don’t you stay longer and catch more?” asked the American. The Mexican explained that his small catch was sufficient to meet his needs and those of his family.

“But what do you do with the rest of your time?” the American asked.

I sleep late, fish a little, play with my children, and take a siesta with my wife. In the evenings I go into the village to see my friends, have a few drinks, and sing a few songs. I have a full life.”

The American interrupted, “Well, you should start by fishing longer every day then you can sell the extra fish you catch. With the revenue, you can buy a bigger boat, which will bring in more fish and more revenue, until you have a fleet of trawlers. Instead of selling your fish to a middleman, you can negotiate directly with the processing plants. You can move to Los Angeles and direct your huge enterprise from there!”

How long will it take?”

Twenty, twenty-five years maybe?”

“And after that?” asked the fisherman.

“After that, you can retire in a tiny fishing village, sleep late, fish a little, play with your grandchildren, take a siesta with your wife, spend your evenings seeing your friends, have a few drinks, and sing a few songs!”

This story illustrates the devastating effects of endless desires on our lifestyle.

As Vicki Robin noted in her brilliant book, “Your Money or Your Life,” most of us picture financial independence as an unreachable fantasy of inexhaustible riches. This is financial independence at a material level.

She goes on to make the point that if we look at financial independence at the material level, it will only require us to be rich. But what exactly is rich?

Rich exists only in comparison to something or someone else. What this means is that you may never be rich enough.

“Men do not desire to be rich, only to be richer than other men.” John Stuart Mill

According to Vicki, financial independence has nothing to do with rich. It is the experience of having enough — and then some.

Enough is when you get to the peak of your fulfillment curve. In other words, you have enough money to survive and get all the comfort and luxuries you require to experience fulfillment in life.

It is quantifiable. It is achievable. Enough for you may be different from enough for your neighbor as what fulfills you may not necessarily fulfill your neighbor.

This concept of financial independence will allow you to dig deeper to find what fulfills you. It will allow you to plan and design the lifestyle that will fulfill you. More importantly, it will save you from all the hassles of trying to keep up with the Joneses.

So, how do you break free from this constant feeling of lack — the feeling that you don’t have enough?

Here are 9 ways:

1. Develop a better money mindset

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” — Ayn Rand

A money mindset is your unique and individual set of core beliefs about money and how money works in the world.

It is your overriding attitude about money.

It shapes what you believe you can and cannot do with money, how much money you believe you’re allowed, entitled, and able to earn.

It shapes how much you can and should spend, the way you use debt, how much money you give away, and your ability to invest with confidence and success.

If you don’t know your money mindset, it may be very challenging to make money. So, given the powerful impact your money mindset has on your relationship with money it is important to understand your money mindset.

When it comes to money mindset, there are two extremes — Scarcity/Lack and Wealth/Abundance.

Most of us will fall in between these two extremes.

If you think money is a scarce commodity, you’ll feel stressed and anxious. You won’t be generous.

On the other hand, if you think that there is enough money to go around, you’ll feel calm, positive, and optimistic. You’ll openly share and be more generous.

One suggested approach for uncovering your money mindset is to test yourself by marking True or False to the following statements:

• I’m no good with money
• I always make the wrong money decisions
• I’m financially learning disabled
• I’m no good with numbers
• Money can’t buy you love
• Money makes the world go around
• Rich people are snobby and shallow
• Poor people are hardworking and noble
• There’s a limited supply of money in the world

This exercise along with many other ideas can help increase your awareness of your money mindset.

2. Be intentional about your financial goals

I encourage you to start by considering what you want in life and how you want your life to look like including your finances, emotions, relationships, etc.

Once you know what you want in life, it is easy to plan on how to achieve it. Look at all aspects of your life and determine what your purpose in life is. Your purpose in life gives your life meaning.

Therefore, you must set financial goals. These goals will then inform your plans. By setting your goals, you recognize where you currently stand and where you want to go. Once you know where you are and where you want to go, you can quantify the gap you need to close. You then plan to close the gap by intentionally taking steps each day to accomplish your financial goals.

“If you don’t know where you are going, you’ll end up someplace else.” — Yogi Berra

Setting financial goals will allow you to create realistic plans, track your progress, force you to prioritize, and crate the accountability required to achieve your goals.

3. Know your GAP and live on a budget

I wrote about the GAP in an earlier article. You can read it here.

One of the greatest mistakes I made and one that most people make on the path to financial freedom is the lack of a strong focus on the “GAP.” The math equation below illustrates what the “GAP” is:

To avoid lifestyle inflation, you need to obsess about the “GAP”. If you do this, you will automatically pay attention to all the variables that make up the “GAP” — your income, your expenses, and your taxes.

By doing this, you will live within your means and you will increase your savings rate. Living on a budget will allow you to accomplish this. One of the keys to winning with money is simple: Budget!

With your budget in place, you’ll know exactly how much you can spend and keep lifestyle inflation at bay! A budget does not restrict you, rather it gives you permission to spend money…on those things, you’ve already budgeted for.

4. Join a community of like-minded people

Being a part of a community of like-minded people working together to accomplish shared goals is one way to break free from the feeling of lack in your life.

There is magic in a thriving community of like-minded people.

There is joy in being a part of something bigger than yourself.

There is joy in working towards a common goal.

There is joy in building skills and getting better together,

And there is the safety to be vulnerable and to navigate challenges together.

This is what community is all about. A place where you can share ideas, learn from others that are on the same path as you, and have the fulfillment that together, you’re all accomplishing your financial and life goals. Our Tax-Efficient Wealth Membership is an example of a community like this that you should consider joining.

5. Avoid costly money mistakes

Most of us start our journey in life with little or no preparation on how to manage our money…

We don’t learn it at school.

We don’t learn it from our parents.

We don’t learn it from friends.

So, we start our life journey without this important knowledge, and as a result, we end up making too many mistakes. Some will learn from their mistakes, others will not.

These money mistakes will derail you from your financial goals and will put more pressure on your feeling of lack. In my article, 9 Money Mistakes to Avoid, I share some money mistakes you can avoid to keep you on track with your financial goals.

6. Track and visualize your financial progress

Anything that is not measured is not improved.

By tracking and visualizing your progress each day, you accomplish two objectives:

1. You reinforce your habit through self-accountability.
2. You boost motivation as you visualize your progress.

So, why is measuring financial progress necessary?

Well, it is important because it is the only thing that will help you keep track of your spending and saving habits and assess where you are headed financially.

In addition, it will help you understand your risk tolerance, investment, and debt management strategies. Statistical research shows that people who track their progress and develop a plan in accordance with it are more likely to reach their goals faster.

7. Get an accountability partner

This is probably the most important step you can take. Establishing a good relationship with an accountability partner will have a significant impact on accomplishing your financial goals. However, care must be taken to ensure you get an accountability partner that is the right fit for the task you’re looking to accomplish.

You want someone that will encourage you, push you beyond your comfort zone, and provide support when needed. Your accountability partner may be a friend or coworker. It could also be a professional advisor or money coach.

8. Resist the pressure to keep up with the Joneses

This one is huge. It is huge because it is more of a money mindset. Because we are social animals, a lot of our money life is also about how we show up in society.

So, there is always enormous pressure to be like the neighbor next door even though we know nothing about this neighbor.

The fact that your friend’s daughter is playing soccer, basketball, and taking music classes doesn’t mean your daughter needs to do it too. You’re still a good parent if your child’s only extracurricular activity is swim lessons at the community pool.

You should not devalue your March break staycation or road trip because you were at a party where friends and other guests shared their experiences on a 14-night European cruise.

In her best-selling book Love Your Life, Not Theirs, Rachel Cruze says…

“Too many people allow cultural expectations and other people to dictate their own values and family priorities.”

This is so true. And it is worse today with the additional pressure from social media. As you scroll through the social media news feed, it’s so easy to take a peek into someone else’s life and compare yourself to their highlight reel.

So, resist falling into the trap of letting the way others spend their money dictate the way you spend yours. The truth is your friends and the Joneses you’re trying to keep up with are probably broke trying to keep up with others.

9. Build your knowledge

“Learning is not attained by chance, it must be sought for with ardor and attended to with diligence” — Abigail Adams

I had a chat with a friend a few weeks ago who recently invested $40,000 in a U.S Commercial Real Estate Education and Coaching Program.

When I asked him why he invested that much in a program, he replied “If I don’t invest in my education, who will?”

I watched this friend invest $20,000 in a similar program in Canada not too long ago. In less than two years, he did two commercial real estate transactions and made more than 10X the amount he invested in the program.

Most people stop their education as soon as they graduate with a Bachelor’s degree. They fail to realize that most Bachelor degrees don’t prepare you for financial success.

When you stop investing in continuing education, you don’t build the knowledge that is required for success.

You’re too busy at work and distracted by social media that you have no time to read. The majority of people will only read one book per year, thus missing out on an amazing learning opportunity.

You fail to realize that the more knowledge you have, the more competent and confident you will be. The more knowledge you have, the better your decisions. Decisions that can open opportunities for you.

Reading is part of my daily routine. I read and journal every day. I listen to audiobooks as I work out and as I drive. I’m constantly reading and listening to insightful content on topics that help me get better at my game.

You can do the same too. Make learning a priority. Make building knowledge and learning new skills a priority. If you do this every day, you will be a better version of yourself in a couple of months. And you will automatically earn more.

“Personal confidence comes from making progress toward goals that are far bigger than your present capabilities.” — Dan Sullivan

As you grow in your knowledge, you will start to take meaningful action that drives you closer to your long-term goals. As you take action and make progress, your confidence grows. And the more confident you become, the bigger actions you can take.

Investing in yourself is critical. It is fundamental to making huge leaps in your business or professional career.

Conclusion

You can break free from the feeling of lack in your life if you learn how to master your money from these nine ways I shared in this article.

You will win the money game if you develop the right money mindsets, and plan your journey to align with what matters to you.

Having enough and getting to financial independence requires clarity. It requires purpose. It requires a change in money mindset. It will take careful planning. It requires a certain level of knowledge. And it will require intentional execution using a strategy that makes sense for you.

As you learn to spend less, earn more, and invest wisely, you will naturally possess money.

Once you possess money, you have control. With control comes FREEDOM and the end of a feeling of lack.

P.S. I am on a mission to arm you with financial education. That’s one reason I wrote Tax-Efficient Wealth and this is why I’m also hosting the Tax-Efficient Wealth Summit again this year. To learn more about the summit and to join us, go here.

Why inflation will ruin you financially if you don’t protect your wealth

“Inflation is taxation without legislation.” — Milton Friedman

There is some element of truth to Friedman’s definition of inflation, but what really is inflation?

Inflation is the rate at which the general level of prices for goods and services is rising.

In my book, I refer to inflation as the silent killer as we rarely see it. While most people are familiar with inflation, we often underestimate the powerful impact it has on our ability to grow our wealth and eventually achieve financial freedom.

Ironically, we often think of financial freedom in terms of dollar value rather than in terms of the purchasing power of our dollars (the amount of goods and services you can buy). If you’re unable to acquire what you need when you need it, then you’re not necessarily financially free.

“Invest in inflation. It’s the only thing going up.” — Will Rogers

So, what’s the big deal about inflation, and why should we care?

If you had a $100,000 income 5 years ago, you could probably afford a decent starter home, take care of your expenses, and have little left to save and invest.

Today, if you earn $100,000 income, your purchasing power will be less than it was a few years ago. You likely cannot afford a house today (particularly in the metropolitan cities) and even if you can afford one, you will end up incurring debt to keep up with your expenses.

In simple terms, a $100,000 income a year ago with a 5% annual inflation is only worth $95,000 today. And if you consider the fact that the tax rate will increase with time, you can now see why inflation will quickly become a significant obstacle to building sustainable wealth.

“The natural tendency of the state is inflation.” — Murray Rothbard

For those that understand the world economy at a deeper level, you know that inflation will never go away. In fact, the Canadian government and other governments around the world intentionally create inflation with policies. They need inflation to deal with the rising debt crisis.

To provide a bit of insight, the global debt of the world adds up to $255 trillion. This amount is over three times world GDP, this ratio is even worse if you look at countries like the United States, Japan, and some European countries. This debt level will exponentially escalate as governments around the world are dealing with the ongoing health, war and economic crisis.

When our (any) government increases the supply of money, the purchasing power (value) of every dollar declines.

The chart below from The Resilience Group shows the massive decline in the purchasing power of one dollar from 1913. In the 100 years that were tracked, the purchasing power of a dollar decreased by 95 cents.

In his book, “The Bitcoin Standard,” Saifedean Ammous writes that the supply of money is controlled by the central bank, and they can increase the supply of money by:

1. “Reducing interest rates, which stimulates lending and increases money creation.
2. Lowering the required reserve ratio, allowing banks to increase their lending, increasing money creation.
3. Purchasing treasuries or financial assets, which also leads to money creation.
4. Relaxing lending eligibility criteria, allowing banks to increase lending and thus money creation.”

All of which they’ve done on massive levels. This is how they got us out of the 2008 market crash and the 2020/2021 Covid-19 pandemic.

As Judd Gregg writes in a recent article, When the dollar is worth 60 cents,

“In just the last two months of this federal fiscal year (2020), the deficit run up by the U.S. government has exceeded $1.3 trillion.”

He goes on to write,

“To give some context to the gigantic size of this spending, these two months of deficits exceed by a factor of three the largest annual deficit generated during the term of President George W. Bush, and blow past the largest annual deficit run up by President Obama.”

Even without further spending, Judd writes that the U.S. government is headed toward almost $4 trillion in deficit spending, accompanied by somewhere near $10 trillion of financial infusion by the Federal Reserve.

An important question to consider is: who will pay all of this debt? The reality is that these debts will never be repaid as they’ve grown to levels that is now unmanageable. As a result, currencies will continue to devalue, allowing this debt to be wiped away via inflation.

Eventually, with this trend, we will get to a point where countries will be forced to go bankrupt and our dollar will devalue to a point where we only get back pennies on the dollar.

“Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” — Milton Friedman

To the regular taxpayers, this may seem unlikely but to the tax-smart individuals, they expect this and this will inform decisions on planning strategies to invest wisely and to protect wealth.

So, what can you do to protect yourself? What can you do to fight this imminent inflation?

Here are a few suggestions:

• Invest in real estate — it is a great hedge for inflation.
• Invest in precious metals like gold and silver — history suggests that these metals hold their values when everything else crumbles.
• Invest in yourself — arm yourself with knowledge that no one can take away.
• Invest in your precious relationships — at the end of the day, we are social animals that rely on one another. To minimize anxiety, depression, and other mental problems, lean in on your relationships.
• Invest in your spirituality — whatever this looks like for you, know that we live and exist for something bigger than ourselves.

“Inflation is like sin; every government denounces it and every government practices it.” — Frederick Leith-Ross

P.S. I am on a mission to arm you with financial education. That’s one reason I wrote Tax-Efficient Wealth and this is why I’m also hosting the Tax-Efficient Wealth Summit again this year. To learn more about the summit and to join us, go here.

This is often misunderstood. To be clear, “tax-deferred” does not mean the same thing as “tax-free.” Tax-deferred is something that must eventually have taxes paid on it. On the other hand, tax-free will not need any tax payments made.

Tax-Deferred

Tax-deferred accounts allow you to realize immediate tax deductions up to the full amount of your contribution, but future withdrawals from the account will be taxed at your regular income rate. The most common tax-deferred account in Canada is the Registered Retirement Savings Plan (RRSP). Essentially, with these accounts, taxes on the income are “deferred” to a later date.

This account has its benefits as you get the immediate advantage of paying less taxes in the current year. Promoters of this plan often encourage high income earners to max out their tax-deferred accounts to minimize their current tax burdens with the assumption that when they retire, they will likely generate less taxable income and, therefore, find themselves in a lower tax bracket.

Tax-Free

Tax-free accounts, on the other hand, don’t deliver a tax benefit when you contribute to them. Instead, they provide future tax benefits, i.e. returns on the invested funds grow tax-free and withdrawals at retirement or at a future date are not subject to taxes. In Canada, the most common type of this account is the Tax-Free Savings Account (TFSA).

With these accounts, the benefits are realized further in the future as time is needed to grow the funds in the account and to subsequently grow the returns in a tax-free manner. So, this account is ideal for young adults who have more time to save within this account.

In general, low-income earners are encouraged to focus on funding a tax-free account on the assumption that they are not currently in a high-income tax bracket. Higher-salary earners are encouraged to contribute to a tax-deferred account to get the immediate benefit of lowering their taxable income, which can result in significant value.

While I love both of these plans and use them as tools for wealth accumulation, careful planning is required when investing in these accounts, particularly, in the tax-deferred account. There are a number of factors to consider when using these accounts to ensure you achieve permanent tax savings and not just tax deferral to a future date.

Some of these factors will certainly include how you intend to withdraw funds when you retire, the world economic trends, including rising government debt, government spending and inflation. It is important to consider these factors and intentionally plan how you use these accounts today to maximize permanent tax savings. I go into a little bit of details on the strategies you can use in my book, Tax-Efficient Wealth.

P.S. I am on a mission to arm you with financial education. That’s one reason I wrote Tax-Efficient Wealth and this is why I’m also hosting the Tax-Efficient Wealth Summit again this year. To learn more about the summit and to join us, go here.

Taxes are by far the largest cost that most households face, yet most people do nothing to manage their taxes

“The best things in life are free, but sooner or later the government will find a way to tax them.” — Anonymous

Whether you like it or not, taxes affect all of us. The news media is always talking about the top three costs for households:

1. Housing (rent or mortgage)
2. Car (loan payments and interest)
3. Education or Child Care (student loans or child schooling)

The truth is, they are wrong. Taxes are by far the largest cost that most households face, yet most people do nothing to manage their taxes.

Over the years, I have filed thousands of personal tax returns for a broad range of clients. From those earning half a million dollars per year to clients with little or no income.

With our marginal tax rate system in Canada, the more you earn, the more attention you should pay.

To help you plan better, I’ve put together the top 10 reasons why you may be paying too much in taxes.

These top 10 reasons are of course, my opinion. They are based on my experience from what I’ve seen over the years working with different clients.

Review them and consider what changes you can make today to save on taxes.

1. Lack of a periodic tax plan

“If you fail to plan, you are planning to fail.” – Benjamin Franklin

This is a big one. Most people will only discuss taxes once a year during tax filing season.

That’s a bad idea.

Planning is critical for both individuals and businesses to ensure that you’re optimizing your taxes.

Tax laws change from time to time and planning ensures you’re on top of these changes and positioned to take advantage of the changes as they occur.

If you are an individual with assets, you have to plan to ensure assets are transferred to your spouse or kids on a tax-efficient way to avoid significant tax consequences on death.

If you own a business, succession planning is critical as there are significant tax implications if you’re considering selling or transferring ownership of your business.

Overall, significant changes in life and the major transactions we make throughout our life will often have huge tax implications. So, you want to stay ahead of this with proper tax planning.

2. Employment income is your only source of income

“In today’s uncertain economy, the safest solution to be wealthy, be in total control and enjoy freedom for you and your family is to have multiple streams of income.” — Robert G. Allen

If employment income is your only source of income, you have minimal opportunity to manage the taxes you pay.

It’s worse if you’re a high income earner (i.e. you gross over $100,000 per year) as you will be in the high end of the income tax bracket.

The high marginal tax rates on employment income in Canada is one of the major reasons the average middle class person finds it challenging to save or get ahead in this economy.

Another reason is that the average employee pays for expenses using after tax dollars with additional sales tax on these expenses.

So, if you’re employed with high income, you have to be creative and to deliberately plan on how to shift income, income split and convert your employment income to other sources of income that are taxed at far better rates.

Strategies may include starting a side business, investing in real estate, negotiating compensation with your employer and creating opportunities to income split with other family members.

3. You never review your tax returns for opportunities to save on taxes

“I don’t know if I can live on my income or not — the government won’t let me try it.” — Bob Thaves

It is common to file your tax return and never review it for opportunities to save taxes in subsequent years.

How many times have you sat down with your tax advisor to discuss how to improve your tax position?

How many times have you reviewed each line on your tax return to understand the nature of income reported, and the marginal tax rate applicable to the income?

Without adequate review, you miss opportunities to adjust and plan ahead.

Often, tax credits and tax deductions you may be entitled to are not claimed as a result of lack of review.

If you don’t take the time to review, you will miss opportunities, and you will pay more than your fair share of taxes.

4. You don’t take advantage of the tax breaks from TFSA and RRSP Contributions

“There may be liberty and justice for all, but there are tax breaks only for some.” — Martin A. Sullivan

Whether you like it or not, whether you agree or disagree, Tax Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) provide tax benefits!

For RRSPs, taxes deferred to future years puts cash in your pocket today that can be invested, spent or put to other uses.

There are so many misconceptions out there about RRSPs.

One that I hear from time to time is that the government has control of your money.

This is not true!

You have total control of your RRSP investments if you self direct it or manage it yourself in a brokerage account.

Others simply refuse to contribute to RRSPs because they say you will pay taxes when you withdraw from the RRSP in future years.

Yes, you will. However, will you rather pay the taxes today or in the distant future?

For TFSAs, you contribute with after-tax dollars but the income and growth in the account is tax-free.

You certainly want to maximize your RRSP and TFSA contribution room before investing in non-Registered accounts to save on taxes. However, tax planning considerations should be taken into account when utilizing these tax breaks.

5. You’re either single or you act like you are

“The purpose of a tax cut is to leave more money where it belongs: in the hands of the working men and working women who earned it in the first place.” — Bob Dole

There is absolutely nothing wrong if you’re single.

However, if you’re single, the Canadian tax law is not your best friend.

Our tax system is more favorable to families as there are more opportunities to share credits and income split.

Despite the benefits of filing taxes as a family, I still find married couples acting like they’re single as they file separately. As a result, they miss out on potential benefits and tax savings had they filed together as a family.

Moreover, filing your tax returns separately is more likely to result in errors where different members of the family are claiming the same credit or deductions. Often, this will result in unfavorable tax reassessments.

6. You file your tax returns yourself

“You don’t pay taxes — they take taxes.” — Chris Rock

There is nothing wrong with filing your tax returns yourself with the number of relatively cheap or free tax software programs out there.

If you have a simple tax situation with only employment income and nothing else, you will likely be fine.

On the other hand, if your tax return is a little complicated with family, investment income, business income or rental income, you will certainly need the help of a professional if your tax knowledge is not strong.

Filing your taxes yourself with limited knowledge is certainly a recipe for missing credits and deductions and paying too much in taxes.

7. You don’t have a competent Tax Advisor

“Today, it takes more brains and effort to make out the income-tax form than it does to make the income.” — Alfred E. Neuman

And this is why you need a competent Tax Advisor.

Whether you file your taxes yourself or not, it is important to have a professional Tax Advisor that can give you a competent opinion and advice on your situation.

Professional Tax Advisors are held to a higher standard, belong to a regulated professional body that requires minimum educational qualification and ongoing professional development.

These professionals often undergo periodic review of their practice and are required to hold the public interest in high regard.

Also, even if you have a competent tax advisor you’ve been working with for several years, it is advisable, particularly for complex situations, to seek a second opinion just to get fresh set of eyes looking at your situation.

8. You lack basic knowledge of taxes

“The hardest thing in the world to understand is the income tax.” — Albert Einstein

Fortunately, today there are more opportunities for you to learn about taxes. So it’s no longer the hardest thing in the world to understand.

Ultimately, you are responsible for information reported on your tax return, not the tax accountant or filer!

At the end of the day, you have to sign and authorize the tax accountant to file your tax return. By doing so, you’re telling the Government (Canada Revenue Agency or CRA) that you have reviewed your tax return and you are comfortable that all information reported is accurate.

To do this correctly, you must have some basic knowledge of tax, without which you cannot complete a reasonable review of your tax returns.

Getting basic knowledge of taxes is particularly more important if you’re not engaging a reputable professional to prepare your tax returns.

9. You never negotiate the structure of your compensation

“We don’t need new taxes. We need new taxpayers, people that are gainfully employed, making money and paying into the tax system.” — Marco Rubio

Given that various types of income attract different tax rates and certain employment benefits are tax-free, there are opportunities to negotiate your compensation to minimize your taxes.

If you are a full-time employee, you can take advantage of these opportunities when negotiating with your current or future employer.

If you’re a contractor, you can also negotiate and structure how you want to be paid for maximum tax benefits.

10. You celebrate when you get a huge tax refund

“Next to being shot at and missed, nothing is really quite as satisfying as an income tax refund.” — F.J. Raymond

Many people celebrate getting a large refund, thinking of it as a surprise bonus.

In some cases, they give too much credit to the Tax Accountant for getting them a huge refund (assuming of course there is no tax fraud).

Often times, this credit given to the Tax Accountant is not warranted.

What it really means is that more of your money was collected for income taxes than necessary.

Rather than leaving that money with the government, you will be better off earning interest of 2 % to 3% on that money left in your savings account.

Careful tax planning can help ensure that you send only the amount necessary in advance tax payments. If you can, send less instead.

In Conclusion

“Some taxpayers close their eyes, some stop their ears, some shut their mouths, but all pay through the nose.” — Evan Esar

Don’t just read this and do nothing…you’ll be in the same situation next year!

Consider one tip you can implement now to be in a better tax position next year.

Remember, money saved in taxes could be put to other uses…

Save it.

Invest it.

Enhance your lifestyle with it.

Give it away.

P.S. I am on a mission to arm you with financial education. That’s one reason I wrote Tax-Efficient Wealth and this is why I’m also hosting the Tax-Efficient Wealth Summit again this year. To learn more about the summit and to join us, go here.

Did you know that you could plan your affairs to save on taxes if you know your marginal tax rate?

In the upcoming Tax-Efficient Wealth Summit that I’m hosting in about a week on Saturday, June 21, 2025, we will discuss the major obstacles that get in the way of your financial goals. And one of them is taxes.

The Canadian tax system is based on marginal tax rates. This simply means that the more money you make, the more taxes you pay. As your income increases, so does your marginal tax rate.

Marginal tax is the dollar amount of tax you pay on any additional dollar of taxable income. Let me illustrate this with a simple example for an individual taxpayer residing in Ontario earning regular income. In Ontario, below is the 2020 marginal tax rates (Combined Ontario and Federal Tax Rates):

Based on these rates, if you live in Ontario and earn $50,000 of employment income, you would be in the 29.65% marginal tax bracket and you would pay 29.65% in taxes for every dollar you earn above $48,535.

If you earn $100,000 of employment income, you would be in the 43.41% marginal tax bracket and you would pay 43.41% in taxes for every dollar you earn above $97,070.

Most people often misunderstand marginal tax rates by thinking that your marginal tax rate will be applied to your entire income to determine your total taxes.

For example, you may think that if you earn $100,000 in regular income, your taxes payable will be $43,410 because you’re in the 43.41% marginal tax rate.

This is incorrect, and it is a general misconception. Rather, if you earn $100,000 of income, your taxable income will be $23,848 calculated as shown in the table below:

Knowing your marginal tax rate is critical for tax planning and other financial decisions. Without this knowledge, you may end up paying more than your fair share of taxes and keeping less of your income.

Remember, wealth accelerates based on how much you can keep, not necessarily how much you make in gross earnings. Understanding marginal taxes will play a key role in building and accelerating the growth of your wealth.

In the example above, with adequate planning, it is possible to avoid the additional $1,272 in taxes by keeping your income below $97,070 in the tax year.

You could even save more taxes if you plan properly and keep your taxable income below $92,826.

You may wonder, what can I do to keep my taxable income below a certain threshold? It’s all about changing your situation. If you change your situation, you will change your taxes.

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Final Thoughts

Take a look at your most recent tax return and determine what your marginal tax rate is and start thinking of ways you can keep your income below that marginal tax rate a year from now.

Remember, every dollar saved in taxes will help accelerate your wealth.

In my book, Tax-Efficient Wealth, I go into some details on how you can tackle the major obstacles in a tax-efficient manner so that you can build your wealth faster.

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P.S. I am on a mission to arm you with financial education. That’s one reason I wrote Tax-Efficient Wealth and this is why I’m also hosting the Tax-Efficient Wealth Summit again this year. To learn more about the summit and to join us, go here.