5 Reasons to Open an RRSP

5 Reasons to Open an RRSP

Saving can be really difficult, and laden with temptations, but having a Registered Retirement Savings Plan (RRSP) is a sure-fire way to achieve your financial goals with ease. This is a method that keeps some part of your income in a private account, against retirement. Not sold? Here are five amazing benefits of opening an RRSP.

1.  Dip for essential needs

RRSP makes adequate provision for your needs through plans that enable you to withdraw the needed capital as long as you pay it back in the stipulated time frame. One of these options is the Home Buyers’ plan that allows you to take as much as $25,000 from your savings plan, in order to make down payment for your intended home. There is also the Lifelong Learning Plan that allows you to take up to $20,000 for costs incurred during an academic pursuit by you or your spouse. This way, saving with RRSP does not hinder your needs, but rather supports you in achieving them.

2. Spousal consideration

You may have noticed the provision for your spouse in the first point above, but it gets even better! If your net income is a higher amount than what your spouse makes, you can support their retirement savings by creating a spousal RRSP. As opposed to bearing the weight of higher tax deduction, the retirement funds that you contribute will become split across the both of you and that automatically reduces your tax payment on each income. A spousal RRSP emphasizes the ‘better half’ reference to being a couple. 

3. Growing savings

With RRSP, your savings are no longer money you simply keep for rainy days. It grows with tax-free investments that are promoted by the government, so your savings actually grows faster with earnings in your RRSP.

4. Post-retirement income

The whole point of an RRSP is saving towards retirement but instead of getting your money in divisible huge chunks, you can switch the plan to a Registered Retirement Income Fund (RRIF) after retirement. This way you get monthly payment, that is taxed based on your income bracket. So you still have a secured source of income that can aid your life plans. 

5. Tax eduction

Saving only gets better when it balances your income. With your RRSP contributions, you get a deduction on the amount you pay for tax since the federal government calculates your savings split from your income before deriving your tax payment on that salary. The higher you earn, the lower your designated tax payment. 

Creating an RRSP early is advisable because it just means a higher total of savings by the time you’ve hit retirement age –and you have the added option of progressing with an RRIF!

5 Money Saving Tricks for Students

5 Money Saving Tricks for Students

An average student’s problems rotate around classes, friends, relationships and constantly running out of money. It gets more difficult when saving seems impossible. But it is, with the right tricks –five of which we have highlighted for you!

1. Budget 

This should be the first thing you do when you get your allowance (or paycheck, if you work). Outline your priorities and plan according to the money you have, makings sure to include funds for emergencies and other contingencies. The trick to saving right is to be prepared for at least ninety percent of all your expenses and the best way to do that, is to have a budget. Creating a detailed budget is one thing, sticking to it is another. Discipline is all you need to spend wisely!

2. Lifestyle 

Your lifestyle may just be the reason why you are spending so much and saving so little if any. Cutting down on the outings, eat-outs and expensive fun time can have a tremendous effect on your savings because you get to spend less. Naturally, by spending less of your income, you have enough to set aside for rainy days, or concrete expenses. It doesn’t mean you have to be the killjoy in your group of friends though, you just have to adapt your lifestyle choices to the best fit for your account balance so you don’t end up with a deficit simply because you wanted to remain a cool kid.

3. RRSP 

If saving was ranked based on academic degrees then, a Registered Retirement Savings Plan (RRSP) is the PhD. of having a savings account. Registered by the federal government, the RRSP is an account that you contribute to on a schedule (usually, a monthly basis) and can only access completely when you retire. It is advisable to create an RRSP as early as your college days so that your retirement funds will be considerably higher. Also, having an RRSP gives you access to the Lifelong Learning Plan, an education fund.

4. Thrifting 

Thrift shopping is the best and most effective way to curb your spending and save more. Stay off the limited edition racks and opt for sales and thrift items instead. You look cool and spend less doing so!

5. Recycling

One thing that takes up your money which you may not notice, is buying stuff that you could have recycled. Your pajamas top has a cut and you start looking to buy a new one when you have old tees that you aren’t wearing anywhere. Basically, you need to invest in a lot of DIY so you can shave off unnecessary expenses.

Saving helps you live smarter and worry less!