Ep. 29 | Stop Guessing: The Employee's Guide to Financial Order of Operations

Most employees guess their way through financial decisions. That leads to debt, missed opportunities, and slow progress. In this episode, Tré lays out a clear, step-by-step plan for employees who want better results and are willing to do the work.

You'll learn which financial decisions matter most and in what order — so you can stop guessing and start building real financial momentum.

This episode is for Canadian professionals who want to take control, avoid costly mistakes, and use their income with purpose.

What you’ll learn:

• Why mastering your cash flow is the foundation of everything
• How to protect your most valuable asset (hint: it’s not your house)
• When to use TFSAs vs. RRSPs based on your future tax bracket
• The cost of inefficient debt and how to avoid it
• Why building ownership is essential—even for employees
• What financial freedom actually looks like (and how to get there)

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Transcript

Tre 0:00

Hello and welcome to the Plain English Finance Podcast, the podcast dedicated to helping you make smart financial decisions. I'm your host, Tre Bynoe, certified financial planner and chartered investment manager. I'm a financial planner with TCU Wealth Management and Aviso wealth. For more details or to send in your questions, check out the show notes at trebynoe.ca/podcast. If you want to learn more about me, start with episodes one and two. So let's get into the... 29th episode.

Sierra 0:26

Wow. We're really moving along.

Tre 0:29

Yeah. Do you remember what this one was about?

Sierra 0:31

No. I have no idea.

Tre 0:33

Do you remember what the last one was about?

Sierra 0:34

Oh, I, yes, vaguely. It was the checklist for corporations. Like the order of operations.

Tre 0:42

Yeah, exactly. This one is on the order of operations for employees. So this one should apply to the vast majority of people that are employees. A caveat, 'cause I thought about this after filming the other one. This, this order is more for people that want to try to be exceptional with their personal finances. There are a lot of reasons that people, if you are not ambitious at all financially, I mean, you could just do what everybody else does, right? There's, there's certain,

Sierra 1:13

Like what?

Tre 1:15

Just... I don't know, maximize your... just put money into RSP's, get into debt, get into... buy your vehicles with loans, you know, you could just be average.

Sierra 1:27

Yeah.

Tre 1:28

This is specifically for people that want to do more than average.

Sierra 1:32

Mm-hmm.

Tre 1:32

And are willing to put in the work and let that compound.

Sierra 1:35

Okay.

Tre 1:37

Just figured I would mention that. Okay. So

Sierra 1:40

We just lost some viewers. I'm just kidding. Hopefully not.

Tre 1:44

It's their choice.

Sierra 1:46

Yeah.

Tre 1:47

Um, okay. What do you think is first on this list

Sierra 1:50

For employees? Again, master cash flow.

Tre 1:55

Yeah. Master their personal consumption. That is gonna be first for all of them. Why would that, why should that be first? Why would that be first?

Sierra 2:02

Because if you can't... if you can't do that or you don't know what your numbers are, then it's impossible to do the other stuff correctly.

Tre 2:12

Yeah.

Sierra 2:12

Or in an efficient way or whatever. Like you could, sure. You could throw a hundred dollars into your TFSA, but

Tre 2:17

It's... it's not gonna be efficient. It's not gonna be correct.

Sierra 2:19

Yeah.

Tre 2:19

Simple as that. If you do not know what you spend, you... planning, tax planning is next to impossible to do.

Sierra 2:27

Yep.

Tre 2:28

First stage is still master personal consumption. Then what do you think... what's next?

Sierra 2:34

Um, then I would probably think TFSA.

Tre 2:37

No, it's the same as the last one. So you want to be covering

Sierra 2:40

Oh,

Tre 2:40

that personal consumption

Sierra 2:41

Insurance

Tre 2:42

with insurance. Right. Okay. Again, biggest

Sierra 2:45

asset

Tre 2:45

biggest asset.

Sierra 2:46

Is your house. Just kidding? Um, it's your, it's your ability to earn.

Tre 2:52

Yes. Correct. So therefore you need to make sure that you have coverage. A lot of people will just assume they have enough through their work plans. Actually check, actually understand the coverage that you have. A common thing that will happen is, I dunno if we talked about this on the last one, but, uh, did we look at own or... like own occupation versus any occupation disability insurance.

Sierra 3:18

I think we talked about that in the will and estates. Okay. Yeah. So

Tre 3:23

The key thing to know is that there are different definitions for disability coverage, so there is own occupation and any occupation. One means that you can do any job. One means that you can't do your own job.

Sierra 3:34

Mm-hmm.

Tre 3:34

A lot of personal plans, like, sorry, business plans, like... employee plans, they will switch, around the two year mark, so... make sure that you understand the coverage and make sure that it's enough. If you're in a job that requires a certain type of skillset and you're higher income, it's likely you'll want to protect your occupation over

Sierra 3:58

Any.

Tre 3:58

...your ability to work in any occupation.

Sierra 4:01

Yep.

Tre 4:01

Okay?

Sierra 4:02

Mm-hmm.

Tre 4:02

After you do the, the protection and protect your biggest asset, what comes next?

Sierra 4:09

Then, I'm thinking, TFSA max out, start investing...

Tre 4:14

start investing would be on there, but same thing as the previous one.

Sierra 4:18

I can't remember.

Tre 4:18

So we pick a long-term tax bracket.

Sierra 4:22

Okay. Okay. Yeah.

Tre 4:23

Okay. So today actually, I was doing a presentation of teachers, and that's a focal point that a lot of teachers will basically, they're told to contribute to RSPs no matter what.

Sierra 4:34

Mm-hmm. Yeah.

Tre 4:35

It's the wrong advice. Remember, that RSPs are for what purpose?

Sierra 4:39

To defer tax.

Tre 4:41

Yeah. Move income from one year into another. So it doesn't necessarily defer tax. It might increase your tax bracket, but what it does is it moves income from one year into another.

Sierra 4:51

Yep.

Tre 4:52

So next step is to pick your long-term tax bracket. Some people have issues with this, struggles with this. You basically just look ahead at your career path. Certain career paths have certain income projections.

Sierra 5:07

Yeah.

Tre 5:08

It's really that simple. If you are in, if you're in trades, let's say you're a plumber, look at what your, ask what your boss is making, you know, Google it. The average income, if you're a first year apprentice, you know, roughly you are gonna eventually make, if you work hard, you'll make, you know, $150,000 ish. Then plan around that is your, is your tax bracket, right? Yeah. So, but then you do RSP contributions according to your tax bracket. So

Sierra 5:40

Right.

Tre 5:41

That's where you would start contributing. Make sure that you, in the tax bracket that you, that you select

Sierra 5:46

mm-hmm

Tre 5:46

The rest, now we get to TFSA's,

Sierra 5:49

Finally.

Tre 5:50

The rest goes to TFSA's, and then, uh, and this is where it really depends, a lot of people should set themselves up in a position to take advantage of opportunity that comes their way.

Sierra 6:05

Yep.

Tre 6:05

So even if you are an employee, I would say, as somebody that understands, in order to build something for you, you need ownership. Yep. So it means eventually... being like working for yourself, working or owning part of the company that you work in. So you still want to be prepared for those type of scenarios, but maybe you wouldn't be as focused on that as if you were on an inner career that you knew that was the track.

Sierra 6:33

Yeah.

Tre 6:34

Right. So think of engineer versus a McDonald's manager. McDonald's manager, a great career path, 'cause they may lead you to owning a McDonald's that can be very lucrative. Um, but you don't know that for sure. So again, there are, there is you, part of it is looking ahead and just thinking what type of things would you like to, to accomplish and achieve

Sierra 7:01

Question.

Tre 7:01

Yeah.

Sierra 7:02

Okay. So if you're, what if you don't want to own let's say you are an employee. You want to do excellent things in your financial life, but you don't want to own your own business or you don't feel you're in a position to take ownership of something, I guess. I don't know. I'm just, what else could you,

Tre 7:28

Well, what would you be saving for

Sierra 7:31

Retirement.

Tre 7:32

So if it's strictly for retirement, then RSPs and stuff would make sense to, to a degree. The issues come, where people will over contribute to those events, those events, that event, that big event, um, retirement will over contribute to retirement and sacrifice some efficiencies that they could achieve today,

Sierra 7:54

Mm-hmm.

Tre 7:54

to be able to save more for retirement.

Sierra 7:58

Okay.

Tre 7:58

So, for instance, somebody might decide... okay, I'm gonna put everything towards an RSP and that means that I have to then take a car loan. Well, the, the interest you are paying... if you think of tax as a tax, as something that takes money out of your pocket, interest is the second one to that, that we all are impacted by. That will also take a lot of money out of your pocket. Yeah. So setting your finances up in a way that you minimize how much money is being taken out of your pocket is a really good way to be able to save more for retirement.

Sierra 8:32

So I guess my other question is, if not owning a business, what, like, are there other things somebody could own? I'm thinking real estate, I'm thinking.

Tre 8:45

Yeah, absolutely.

Sierra 8:47

I guess that would be investing. You would be owning shares.

Tre 8:53

Yeah,

Sierra 8:54

I'm just, yeah, I guess what opportunities would you be looking for? But then I'm thinking, why not save for opportunities? I don't know. Well, maybe you're not in a position to own something or be an entrepreneur or have a business today, but you don't know what it's gonna be like in 10 years or

Tre 9:10

that that's part of it. And think that even if you're just investing in the markets, you're still owning. Right. You're still owning when it comes to, like hierarchy of things that will get the biggest bang for your buck by investing in, yourself is number is very high on that list. So increasing your own actual skillset. Your, especially if you're an employee, your income is your, is your the engine for you building anything, it allows... it will determine what you do.

Sierra 9:38

Mm-hmm.

Tre 9:39

There are different levels of income depending on the skillset that you have.

Sierra 9:45

Mm-hmm.

Tre 9:45

So if you are earning 50, $60,000 a year and you think you've capped out, it's because you do not have the skillset yet and you need to go and get to the skillset.

Sierra 9:56

Yeah.

Tre 9:57

No matter what that looks like, different episode. But there, there are definite things that almost everybody can do to increase the amount of value that they can bring to another individual, therefore, increasing the amount that that individual will pay them.

Sierra 10:12

Right. Adding to their own value. Yeah.

Tre 10:14

Yeah. Because you are, the harder you are to replace and the more value that you provide, the more you'll get paid.

Sierra 10:21

Mm-hmm.

Tre 10:21

So when it comes to employees and how you determine how much an employee gets paid, it's those two things. How harder you to replace?

Sierra 10:29

Mm-hmm.

Tre 10:29

And how much value do you provide? If you don't have both of those things, you will not get paid very well. So for instance, if you provide a ton of value. But your skillset is really easy to replace. You're replaceable.

Sierra 10:41

Yep.

Tre 10:42

Doesn't matter. If your skillset is really, really hard to find, but you add no value, who cares?

Sierra 10:48

Yeah.

Tre 10:49

I wouldn't hire you anyway. You don't provide any value to me.

Sierra 10:52

Yeah.

Tre 10:52

So if you're going to be an employee, you need those two things. You need to be... to find a skill set that is hard to replace and you need to provide valuable value to the company.

Sierra 11:00

Yep.

Tre 11:01

And this comes into place across the board. When you are, when you're moving jobs, when you're moving firms, when you're moving companies, when you are negotiating for a pay raise, those two things, you need to keep it in mind. There's no, you can't negotiate from a, from a position of no value.

Sierra 11:18

Yeah.

Tre 11:18

You say your boss, I think I deserve a $20,000 pay raise. Why? Because

Sierra 11:24

Groceries are getting expensive.

Tre 11:25

Groceries are expensive. That's not my problem as an employer,

Sierra 11:28

Right.

Tre 11:30

You have to be worth the value that I'm, that I'm providing you. And I mean, many people might not like that, but that's,

Sierra 11:37

It's business.

Tre 11:37

That's the system we live in. You can't just expect people to give it to you. You have to provide the value in exchange. Right. A business, an employee employer relationship is a business is an exchange of value.

Sierra 11:49

Mm-hmm.

Tre 11:50

You give me something valuable and the value needs to be more than what I'm giving you.

Sierra 11:54

Yeah. And which is why being an employee is.

Tre 11:58

Oh yeah. You, you never, if your, if your goal truly is to own your own time to, to build, well, you have to

Sierra 12:08

Take that step.

Tre 12:08

Bridge, that gap. You have to, you have to be an owner in some capacity, whether that's owning a, I would rather own a small business that I can kind of dictate myself, then work for a company with no personal upside. Right? Like you're just working really hard for somebody else to

Sierra 12:28

make money. Yeah.

Tre 12:29

To, to succeed. And for their family to, to have to see more of them. And for like, it just, it's this never ending what you get out. So that's why I would recommend, even if you're in this gap, in this place as an employee

Sierra 12:42

Yeah.

Tre 12:42

That you still put yourself in a situation where you can potentially take the opportunity that if it does come up.

Sierra 12:50

Mm-hmm.

Tre 12:50

Okay, because you already mentioned, you mentioned real estate, you, there's other places that you can invest.

Sierra 12:54

Yeah.

Tre 12:54

You can do things on the side and there's lots of things you can do.

Sierra 12:57

Honestly, though, I've never met somebody who is so like who who's able to make business ideas out of, it's always in your mind. I don't know how to say this out loud, for example.

Tre 13:13

I think there's lots of people like that.

Sierra 13:14

I don't know about that because I have, I never think about that. And you're constantly saying, oh, I could... that would be a great business idea. Oh, we could rent washers and dryers or, I guess you didn't say that, but you watched a video on somebody who did it and many things.

Tre 13:30

There's so many things that you can do.

Sierra 13:32

Many, yes. There's so many things you can do. It's just hard to, sometimes I find sometimes people get stuck again in the streamline. This is what everybody does, so I'm just gonna do what everybody else does. Mindset.

Tre 13:44

Well, then you'll end up where everybody else ends up.

Sierra 13:46

For sure. But even owning, I'm thinking same thing. Oh, I could never own a business and they're thinking of a corporate.

Tre 13:54

Yeah. Most people are in the same boat, but

Sierra 13:57

Exactly. Exactly. But there's other things to own is what

Tre 14:00

Yeah. And you have to be responsible if you're gonna own. There's lots of, it comes with plenty of stress and of its own, but at the same time, and this again only applies to people that are trying to build something. Right? Because you can just take the, take the other route, but then you can't be too upset when it doesn't work out the way that you had hoped for it to work out.

Sierra 14:24

Mm-hmm.

Tre 14:24

If you just expect that your employer, I mean, we've had this conversation so many times.

Sierra 14:28

What are you saying?

Tre 14:28

If you, if you just expect that your employer is going to value you because you stick around longer than everybody else,

Sierra 14:36

Yeah.

Tre 14:36

You will be disappointed in the end. We see it all the time on the news. People getting laid off and they spent 40, 50 years at the company.

Sierra 14:43

Yeah.

Tre 14:43

They just, you know, they just let go because they don't provide the value anymore. It's, it is, unfortunately, it is an exchange of, it's an exchange of services. So if you're not trying to make yourself, you like marketable outside and you're not trying to improve your own skillset, then you know, you will slowly get left behind. But, and the same thing, I think that this, our generation is a little bit different than. The older generation where they would work their way and I felt like our generation kind of saw that and was like, that wasn't worth it.

Sierra 15:17

Yeah.

Tre 15:17

So we tend to switch roles and switch companies a lot more often, like millennials. I say we... millennials tend to switch roles a lot more often. Yeah. Than than the previous generation, for sure.

Sierra 15:28

Yeah. Even paths, I would say career paths.

Tre 15:33

Mm-hmm. Yeah. More willing to... I think also the world is a smaller place, bigger place. Whereas we can see more, we have more information at our disposal compared to that generation.

Sierra 15:45

Yeah.

Tre 15:45

So therefore we

Sierra 15:47

Companies are hiring people from Mexico, Europe.

Tre 15:50

Yeah.

Sierra 15:51

India, you know, everywhere because they can now.

Tre 15:55

Mm-hmm.

Sierra 15:55

Versus before it was

Tre 15:58

...you kind of whatever was in your city and that was it. Yes. Your city or town.

Sierra 16:02

Yeah. That's, that's all you get

Tre 16:03

Interesting to think about. Anyway. Okay. So I would say yes, after you maximize the TFSAs, if you are ambitious, uh, you need to start building a non-registered account or you need to start building a non-registered account to avoid any debt. Right. So no, no bad debt. No.

Sierra 16:18

No cars.

Tre 16:19

No cars, no. It's those type of things that get people into trouble.

Sierra 16:23

Yeah.

Tre 16:24

Again, if you've mastered your personal consumption. All of that is so much easier.

Sierra 16:28

Yeah.

Tre 16:28

Because the money that you do save in interest, the thousands and thousands and thousands of dollars a month, think of that as an extra tax that is just leaving your pocket for no actual personal value to you.

Sierra 16:42

Yeah.

Tre 16:42

So if you can avoid it, it makes a big difference to the amount that you can spend. So somebody that avoids those car payment, the interest on the cars and things like that. You can buy more cars.

Sierra 16:54

Yeah.

Tre 16:54

You can very literally buy more cars. So it's... interest is something that people, that don't understand finance very well, pay a lot of it. And those people that do, earn a lot of it.

Sierra 17:07

Yeah.

Tre 17:07

So it, unfortunately, is directly correlated to financial literacy. It's sad, but it's, it is the way that it is. So, you want to put yourself in this position, where you can avoid all bad sources of debt. And I say bad sources of debt. I don't include your mortgage in this, but depending on what room I'm in, I would include your mortgage in this,

Sierra 17:28

In bad debt? Are you talking about?

Tre 17:30

Yes.

Sierra 17:31

Wait, wait, wait. Dave Ramsey, not Gordon.

Tre 17:34

No, no. Dave Ramsey pro. I dunno what he'd would say about it. Um,

Sierra 17:36

Doesn't he hate debt.

Tre 17:38

Yeah, he does. Yeah, no, I, I'm saying that people putting money towards their primary residence isn't an investment.

Sierra 17:44

Right.

Tre 17:44

So therefore it doesn't put money into your pocket. It takes money outta your pocket. I could argue very easily that it is not good debt.

Sierra 17:52

Right.

Tre 17:53

Especially when there are ways to make it tax deductible. I would say if you are gonna have a mortgage... which is the next one, is Debt Efficiency. So whatever that you do choose to carry, it needs to be carried in a way that is efficient.

Sierra 18:09

Give an example.

Tre 18:10

Just mortgage, like the, the typical make your mortgage tax deductible. You know, so for an employee, the only real way to do it effectively is going to be... save up enough in a non a registered account that you can pay off your mortgage. And if you choose to carry debt, then you can borrow it back and

Sierra 18:28

Reinvest,

Tre 18:29

invest it, right?

Sierra 18:30

Right.

Tre 18:31

If you choose not to carry debt, then you can leave it paid off and get rid of your mortgage. Right. So

Sierra 18:36

Yeah,

Tre 18:36

Two, two ways to do it. But the goal is to not have any non-tax deductible debt.

Sierra 18:43

Right.

Tre 18:44

Okay. And I did want to clarify a, so there is a... two schools of thought, which both have merit. Some people will even recommend paying off your, to get into a position where you can make your mortgage tax deductible before contributing to TFSAs.

Sierra 19:02

Okay?

Tre 19:03

The numbers don't really support it in a vacuum. So with all outs being equal ,putting money into a TFSA because the growth that you would expect on that money is tax free, and if you held that in a non-registered account, you are eventually taxed on that growth, even if you do get to deduct your mortgage. So in a vacuum, it, it doesn't really hold up, but I can see the argument for it for sure.

Sierra 19:26

Yep.

Tre 19:27

I was thinking, 'cause I like to think of what places where it wouldn't apply, you know, where

Sierra 19:32

You?

Tre 19:32

it kind of breaks and I, I thought of a few that I could, I could see it both ways. Um, one of them would definitely be if you knew you could maximize your TFSAs in a short order. So let's say I knew over the next, even like five years, I would be able to make my mortgage tax deductible and maximize my TFSAs.

Sierra 19:55

Mm-hmm.

Tre 19:56

I could definitely see an argument for maximizing, sorry, making my, making my debt tax deductible first, and then maximizing my TFSAs. I, I could see that. I think either one of them, once you're at that point, either one of them would be great paths to take.

Sierra 20:16

Um, yeah, I feel like we're getting into the super fine optimization where I, again,

Tre 20:24

I, 'cause it depends on how they're invested. It depends on so many things.

Sierra 20:27

It, it's not that I hate optimization. I, I just find people get bogged down when you are taking in all of this information. Then you do nothing.

Tre 20:38

Mm-hmm.

Sierra 20:39

Because it's overwhelming. So some of those things it's good to know and good to talk about, but again, like you said, it's either one would be good.

Tre 20:48

Yeah, absolutely. Yeah.

Sierra 20:49

Yeah.

Tre 20:50

And I thought of another one as well.

Sierra 20:51

Oh,

Tre 20:52

uh, so I thought of, another one would be if you was purchasing a house, same principle applies that you can maximize your TFSAs in a very short order. And I'm thinking of scenarios where it'd be easier to just get a clean, make your debt clean, so get it tax deductible as opposed to overcomplicating it. So one of those I thought of was buying a house. So let's say you was buying a house for a million dollars and you had $800,000 in your non-registered account and $200,000 in your TFSA. Well, I could definitely see the argument for taking it all out, buying the home.

Sierra 21:31

Oh yeah. And then take it back out

Tre 21:32

and

Sierra 21:33

Right. Like you could take re. Take out the mortgage again, but reinvest it.

Tre 21:38

Yeah. If you're choosing to, but then that would mean that your TFSA wouldn't have any money in it. And

Sierra 21:43

For how long though?

Tre 21:44

That's the key thing. I think if it is a short term thing that, you know, you can just, then I, I can see the argument to do that.

Sierra 21:51

Yeah.

Tre 21:51

Right. To, to keep it clean, just and then re re contribute. I can definitely see the argument for that. So. Again, I, I would say in, in the overall though, maximize your TFSA's first, then work on the, the debt side of things and making sure that's clean. But I think either way, again, either way is a good, at that point you are splitting hairs as it were, like

Sierra 22:14

Mm-hmm.

Tre 22:15

They're both great.

Sierra 22:15

Yeah.

Tre 22:16

Yeah. Okay. And then after that, then you'd be looking at just maximize your RSPs and things like that. Just be careful not to over contribute to the point where you are running into big tax issues down the line. So again, watch the tax brackets. If they are the, these are the long term tax brackets, you can kind of reverse engineer the math and you kind of have an idea of what you are aiming for.

Sierra 22:41

Mm-hmm.

Tre 22:41

For, for income. But RSPs are great. They're great, great tool. And at this point

Sierra 22:48

There's just a way to use it.

Tre 22:49

Yeah. But at this point, it's you, you already have enough, uh, liquid to ensure that you don't take on any personal debt. You, you're, if you do have debt, it's very tax efficient and you have enough in a non-registered account, you've maximized your TFSAs. At this point, you would've been putting probably significant amounts into your RSPs anyway. I can see just maxing them out and being done with it. There, there is a good, great use for them. They, you know, they're great use for them.

Sierra 23:20

Yeah, just

Tre 23:21

I, it would come after doing those other things for me, maxing them out, just trying to. Maximize them.

Sierra 23:26

Yep.

Tre 23:27

Uh, and then simply once you've achieved your retirement savings goals and things like that, once you've done that, then you can look at the other things that you can do with your, with your money. So a lot of people will call this area like financial freedom, where you can then make work optional or whatever it is that you're trying to achieve.

Sierra 23:48

Yeah.

Tre 23:49

Again, depending on your goals. It's likely, like most people that truly achieve like financial independence end up investing or owning something like, and then you're on a different, slightly different path. But that's kind of the, that's kind of the order that I would, the order of the goals I would, I would set out for, for somebody that is an employee and kind of doesn't have access to the other side of the tax code.

Sierra 24:16

Yeah. Okay. Summarize it really quick. Do like, step one this, step two this ...I love short recap list.

Tre 24:23

Okay. Or will you tell me, can you tell me?

Sierra 24:25

Step one, master your cash flow.

Tre 24:29

Okay.

Sierra 24:29

Step two, NOT TFSA because that's... step two Insurance.

Tre 24:36

Yep. Protect your biggest asset.

Sierra 24:38

Step three, pick your tax bracket. Bracket. Bracket,

Tre 24:44

yeah.

Sierra 24:45

Step four, TFSA.

Tre 24:47

Yeah.

Sierra 24:49

Step five, RSP's?

Tre 24:53

Non-Registered Account. If you're ambitious, you want to avoid any debt,

Sierra 24:57

Right.

Tre 24:57

So save enough to avoid any debt outside of your TFSA's.

Sierra 25:00

Okay, so those five,

Tre 25:02

that's five, yeah.

Sierra 25:03

Six. Is RSPs even on the list?

Tre 25:08

Yeah.

Sierra 25:08

Okay. Is it six?

Tre 25:10

No.

Sierra 25:13

What's six

Tre 25:14

Debt Efficiency.

Sierra 25:15

Oh, right, right, right.

Tre 25:17

Remember, interest is, think of interest as a tax. Yeah. Takes money outta your pocket. You need to plan around it.

Sierra 25:22

Get rid of the interest payments.

Tre 25:24

Yes. If you can deduct $10,000 a year from your income every single year because you've made your income tax deductible, that is like a $10,000 RSP contribution. Without the other side of pulling income out, if that makes sense.

Sierra 25:44

Yeah.

Tre 25:44

It's just less income that you are taxed on.

Sierra 25:47

Yeah.

Tre 25:47

There is no downside to it. It is purely, if you think that you've maximized your RSPs, Hey, here's another $10,000 every single year until you pay it off. During COVID, it was a lot higher 'cause the interest rates were a lot higher.

Sierra 26:03

Yeah.

Tre 26:03

Whatever it is, it's, it's like an RSP, it reduces your income. Every year that is tax deductible. Do it. Big, big goal that not enough people prioritize. They don't, yeah. You need to understand how big of an impact the interest makes on your life, so,

Sierra 26:19

Yeah. Yep.

Tre 26:20

Okay, so six is Debt Efficiency.

Sierra 26:23

Okay. Seven RRSP's.

Tre 26:27

Yes, it is. Well done.

Sierra 26:31

In my head. It's step one, Master Cash Flow. Two, TFSA Three, RSP. You're done. Don't listen to me.

Tre 26:43

Oh boy. Yeah,

Sierra 26:43

Yeah.

Tre 26:44

No, that's,

Sierra 26:45

We've got our more concrete lists. Yeah. Seven items. You can write those down.

Tre 26:50

Yeah.

Sierra 26:50

On your piece of paper.

Tre 26:51

I mean, technically you could say RSP's are like third, right? Because

Sierra 26:56

Well, yeah,

Tre 26:56

depending on the, because

Sierra 26:57

we did talk about, yeah, yeah. Because

Tre 26:59

the way that you select your long term tax bracket is you are picking a tax bracket and you are making RSP contributions to bring yourself according down to that tax bracket. So you're making RSP contributions accordingly. So yeah, in this scenario, you could be. Making them straight out of the gate. But if you were doing this from early career, it's likely you won't be.

Sierra 27:22

Yeah.

Tre 27:22

'cause you would be waiting until you was in higher income years in order to make your RSP's.

Sierra 27:27

Yeah.

Tre 27:28

And something that I didn't touch about touch on here was things like first home savings accounts and R ESP's and stuff like that, which have more niche uses. Definitely useful,

Sierra 27:40

Yeah.

Tre 27:41

You could, I could argue that number three, like selecting your long term tax brackets, instead of contributing to RSPs, if you can, you would contribute to a first home savings account.

Sierra 27:52

Right.

Tre 27:54

Again, probably adding a little bit too much complexity to this episode. We will, we should actually do an episode on, I'm sure I have that on the list somewhere, but they act the same as an RSP contribution, so it again reduces your income. So, when you're thinking long term tax bracket? I wouldn't say just RSP's. I would say look at all the options you have available to reduce your income

Sierra 28:18

yeah,

Tre 28:18

to that tax bracket.

Sierra 28:19

There's lots of

Tre 28:20

accounts, there's lots of accounts, there's even ways for income splitting. There's lots of things you can do, but that's, you pick what tax bracket you're planning around.

Sierra 28:29

Okay.

Tre 28:29

If that makes sense. Okay. And then the last one.

Sierra 28:35

Wait, so there's eight?

Tre 28:37

Yeah, but the last one's kind of gimmicky. It was just Achieve The Retirement Savings Goals. And then,

Sierra 28:43

sorry, I shouldn't roll my eyes and then have fun everybody.

Tre 28:47

No, then you, then you reevaluate, right? Like once you get to the point where you have saved enough and you've reached that velocity where you can pretty much stop saving.

Sierra 28:56

Yeah.

Tre 28:57

Or save very little based on, you know, basically you don't have to save as much. You can be the world's your oyster. You can choose different things. You can take more risk in some cases or whatever. It's, anyway, that's it for this episode. The next episode will be on, retirement planning for teachers. So we will, we'll cover that, cover the defined benefit pension plan and review that type of stuff.

Sierra 29:23

Perfect.

Tre 29:24

Perfect. I'll see you guys in the next one.

Sierra 29:26

Bye.

Tre 29:27

Bye. Thanks for listening to this episode of the Plain English Finance Podcast. Tre Bynoe certified Financial Planner. Chartered Investment Manager is a financial planner with TCU Wealth Management and Aviso wealth. You should always consult with your financial, legal, and tax advisors before making changes. This podcast is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell any securities. The views expressed are those of the individual and are not necessarily those of Aviso Financial Inc. Mutual funds and other securities offered through Aviso wealth, a division of Aviso Financial, Inc.