Good news and bad news: It’s tax season, and most of us are likely getting a refund. That’s both the good news, for obvious reasons, but also the bad news.

Most people tend to think that a tax refund is free money. As a result, they tend to treat it as such, and generally blow it. Unfortunately, it’s not found money – it’s just refunding money that you overpaid all year long.

A big refund is bad news in that you have had too much money deducted from your pay each month. All you’ve done is given the government an interest free loan. You need to go to your payroll department and increase your exemptions. When you do that, it’ll increase your net income on each paycheque.

When you now have that money on each paycheque, you can use it all year long and not the government. If it’s a big increase in your net pay, use it to immediately start an RRSP or Tax Free Savings Account. You’ll be funding it with free money and your net pay won’t be any less than it was before you fixed your deductions!

One more question with this being the big tax refund month. I was thinking the other day where exactly all our money is, and has gone.

Sometime today, just add up what you’ve earned over the past ten years. Or make it five years if you haven’t worked for a decade. It’s not hard to do, and close counts. Take your T4 slips, or a calculator, and multiply your income by the last 120 months. Sure, you had raises, promotions, or whatever. Close counts.

What you’ll have is a pretty staggering number. Your pay over the past ten years has added up to a huge amount of money. Someone earning $3,000 a month has made $360,000 in the last decade. Yet, most people have never thought of that.

Now add up what you have in RRSPs, saving, and investments. The difference between what you have in savings and what you’ve earned is spent and gone. I know, I know – lots of that money includes rent, mortgage payments, groceries, utilities and the likes.

But, if you’re like most people, what you have in savings is less than 5% of what you’ve earned. That should scare you, or should be a huge wakeup call. I’m not even talking about adding up your monthly bills or the total debt load you have.

Just comparing your 10-year income to what’s actually left is enough food for thought. Now think of how many more decades you can, or choose to work. If you do another decade what you’ve done for the last decade in borrowing, not doing a budget, and not saving much, where will you be? Financially, can you afford another decade like the last one?