Every year around this time, I get a little anxious.
I get anxious because you start to hear more and more about tax season and all the deadlines that come with it.
Not only is this that time where I hit myself and say “whyyy didn’t I just put that receipt in the box like I was supposed to??” but I’ve also just downright had some annoying and frustrating interactions with our revenue agency.
April: Heeeeeere’s your refund!!!!!!!
June: Whoops, we were wrong. Give it back.
Sorry… what? Give it back?
….but I spent it. You said I could. *sadness.*
Ugh. So I’ve since learned that any monies the government gives me is something that I don’t really “acknowledge” until a few months pass by and it actually qualifies as “for keepsies” money. Not until then is the money mine to squander as I see fit. (Usually on bills. Not even fun stuff.)
And this time is also the time of year when I remember to procrastinate about contributing to my RRSP fund. Somehow I always forget that it’s around the beginning of March, which is why I’ve had many February 27th and 28th RRSP slips – some that almost didn’t qualify because they were “issued” after the deadline. Whoops. It’s probably because retiring is one of the last things I have on my mind right now.
One thing I like about RRSPs is that we were able to withdraw ours last year as part of the Home Buyer’s Plan. It definitely helped beef up our down payment and we have 10 years to pay it back. In fact I think there was a turning point a few years ago where I was contributing to my RRSPs solely for this purpose – because the house comes way before retirement, right?
I also like the way Ratesupermarket.ca put it: “think of it as a box that shelters anything you put inside from being taxed.”
RRSPs are a win-win: it forces you to save money for when you are retired and no longer earning an income, and it can also reduce the amount of taxes you pay this year, sometimes resulting in a refund (but, you know, don’t spend it right away). And if you want to contribute to your RRSP but not claim the deduction, you can carry it all forward until it is beneficial for you to claim the deduction and swing you into a lower tax bracket. This is great if you can’t contribute that much, or if your income is currently low but increasing year after year.
Do you have your RRSPs set up for the future? Are you retirement ready?
If you’re thinking about RRSPs but don’t know the first thing about how to start one or even if it’s a right fit for you, Ratesupermarket.ca has an awesome RRSP Boot Camp that you can sign up for. The RRSP Boot Camp is a series of 4 emails sent over 10 days explaining what an RRSP is, how to get started, how to contribute, and how to amp up your savings.
I like how instead of sending you straight to the banks, the emails outline what you should do to make sure you get the maximum tax benefit owed to you. With a little strategy, you can determine how to get the most from the money that you’ve already earned. My favourite email was the last one, giving you stealthy savings tips on how to work the system using GICs (Guaranteed Income Certificates).
It’s also nice to get these gentle nudges step by step over the course of 10 days, rather than expecting you to do it all at once. If you follow the schedule, you’ll be hooked up with your RRSP in a week and a half.
Best of all, everyone who signs up for the free RRSP Boot Camp is entered into a draw to win a $2,016 cash prize (see what they did there?)!
If it just ain’t gonna happen and you aren’t ready to contribute to your RRSPs this year but want to get the ball rolling for 2017, here are some money saving tips that’ll give you a headstart.
- Pay yourself first. You know that money you have laying around after you pay your rent/mortgage, utilities, cell phone, daycare, diapers, Netflix? The money that you don’t use for things like groceries and transportation but pretty much nickel and dime away at little things like lattes, new clothes or that “cheap thing” from AliExpress (you know what I’m talking about)? Don’t wait till the end of your pay check to leave it flapping in the wind! Set a specified, realistic amount each month to save right away, and do that first. If you have money to spend, you have money to save.
- Automate the savings. When you figure out what that magical monthly number is, set up an automatic transfer that moves the money into your savings account as soon as it comes in. You can easily do this through online banking, and direct them to separate accounts for different “goals”. Having your savings automated takes away the discipline variable so that you don’t even have to see the money you’re “losing” (but actually gaining, because you won’t have the chance to lose it later!). This happens regardless, by the way – but not by you. Before you get your pay check, you’re already getting deducted tax, EI, union dues, and whatever else your employer or government deems necessary. What would happen if they waited until after you paid your bills and splurged on the whats-it they had displayed at the entrance of Costco? Why are they the only ones with first dibs?
The RRSP deadline for the 2015 tax season is February 29th, 2016. Now you can’t say you didn’t know. And neither can I.
This post was sponsored by Ratesupermarket.ca