Who will spend your money?

You got your paycheque, or at least the amount that’s left after the government has taken its share. Who’s going to spend the remaining amount? Just you, or will other people help you?

You earned it, so it’s only fair that you get to decide who’s allowed to spend your money. You and your family will likely be the main focus of your spending, with the majority being spent quickly, eaten up by bills, mortgage payments, food and other day-to-day expenses. 

You may also put aside some money for future spending. Your mid-term goals might include saving up for a new car, home renovations, post-secondary education or that family trip down south, and your long-term goals might include retirement. Thanks to programs like TSFAs, RESPs and RRSPs, these savings can grow tax-deferred or even tax-free.

Any remaining money is given, either by design or by fate, to someone else to spend. By this, I am referring to the money that is either donated to charity, given away as gifts, or distributed by your estate after your passing. Your level of control over how the money is spent is lost once you’ve given it away, so if you’re concerned about how it’s spent, then you’ll have to think about how, and to whom, you give your money.

Charitable giving is an admirable endeavour but, with so many options, where should one give? The CRA maintains an extensive list on their website of charities and other qualified recipients that can issue donation receipts. When selecting where to donate, you should consider, among other things, these two factors:

  • The focus of the charity. It should align with your personal values, seeking to accomplish something that you consider important.
  • How efficiently your money will be used. Look into how much of your donation goes toward the programs you are passionate about, versus administrative expenses.

Lastly, there’s the money you give away to family and friends. This is either through your spending money on them, giving them the money directly, or leaving it to them via your estate. The main factor in these scenarios is determining the level of control you wish to exert over how the money is spent.

You retain the most control when you spend the money on behalf of these friends and family members. However, this may not be the most efficient use of your money, as you might not be purchasing what the person was looking for. If you were to gift the cash directly, the recipient would be able to use the money as they see fit, ideally in a way that is best for them and allows you to share in the joy it brings them. The risk is that they’ll use it in a way that you do not approve of.

Lastly, any money or assets that were not spent before your passing will be distributed via your estate, or based on the beneficiary on your investment accounts. With a proper will, you have a say regarding who will receive the money. Absent a will, your money and assets will be distributed based on the laws of your province, which may or may not be what you intended.

Keep the conversation going

While you might be the one who works and earns the money your paycheque represents, many different parties have a say in how it’s spent. Are you doing the planning that will ensure that money you earned through your hard work is spent as you see fit? Post a comment below.


The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

About the Author

Duncan Warren, CPA, CA, CFA

Duncan provides objective financial planning services to individuals.