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A new boat, a vacation, summer camp for the kids, a new deck – summer often comes with a giant price tag. At a time of year when many people are making larger purchases, it's important to consider the best ways to make your money work as hard as possible.

"Often, it comes down to taking a hard look at your personal balance sheet," says Alex Lucas,Vice-President, Product, Marketing & Business Development, at Manulife Bank & Trust in Waterloo, Ont. "You not only need to ensure you're earning a good return on your savings – you also need to manage your debt effectively."

Savings should be invested at the highest available rate, Mr. Lucas advises. "Most people are aware of the need to save, and putting aside surplus cash from time to time for something outside your normal expenditures is a great first step. However, when saving, it's also important to maximize your returns. People typically stop after they've chunked out the money and may not be aware that there can be large variations in interest rates from one account to another. It's important to check interest rates not just with your current bank but with competing banks as well."

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The other side of your personal balance sheet often gets less attention – your debt.

Focusing only on the savings side of the ledger is like looking at the forecast on a summer day and ignoring the humidity. Sure, the temperature looks good, but there's something in the air that will make you feel clammy and hot – debt.

"Not including the debt picture in your goal-setting is a pretty common mistake," Mr. Lucas says. "For many Canadians, the most effective use for their extra cash may actually be to use it to pay off their debt. Using your savings to repay your debt is a relatively easy way to make your money work harder."

An innovative way for homeowners to tackle that debt is by switching to a mortgage account that consolidates your savings with your debt, so that what you deposit immediately reduces what you owe while still allowing you to access that money.

An example is Manulife One, an all-in-one account that combines your mortgage with your savings and income. Homeowners who switch to this type of banking can typically borrow up to 80 per cent of the appraised value of their home, and use this money to pay off the balance of their existing mortgage, personal lines of credit and other outstanding debts. They end up with one multi-purpose "borrowing and chequing" account, and pay one low interest rate on each dollar they borrow.

Accountholders can even divide their debt among fixed or variable rates in whatever combination they choose. And, if the account is in a positive balance, their savings earn a competitive rate of interest.

"Every dollar you deposit reduces your overall debt," Mr. Lucas says. "Your chequing account is essentially attached directly into your line of credit, so when you deposit money it automatically reduces your debt." That could save thousands of dollars in interest costs over time, putting more money in consumers' pockets.

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"Banking more efficiently, in general, can help people reduce debt and maximize their savings for those bigger summer expenses," Mr. Lucas says.

Consolidating debt at a low rate and then using savings to repay the debt is an easy way to make your money work harder.  But if using savings to pay off debt makes the most financial sense, why doesn't everyone do it?

"Not all financial decisions are logical, and some people get satisfaction from seeing their savings and investments increase, even though they owe money in other areas," Mr. Lucas says. "For some people, having a pool of money in a high-interest savings account gives them a sense of security, and that's OK.  However, if you have outstanding debt and you want to get rid of that debt more quickly, an efficient banking structure can be a great way to make your money work even harder."

A financial advisor can help people reach their goals over the short- and long-term, he says.

"If you'd like to make your money work harder, but aren't sure where to start, the best advice is to speak to a financial advisor. An advisor can help you document your financial goals and structure your finances to help you achieve them. A good advisor will not only help with your long-term goals, such as saving for retirement and getting out of debt, but with day-to-day cash flow planning for nearer-term expenses," Mr. Lucas says.

When you have a shorter-term goal for a big summer purchase, a financial advisor can help you put a plan in place to achieve that goal without sacrificing longer-term objectives, he says.  With the right advice and strategies, you could be towing that boat to the lake sooner than you think.

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