We started this challenge with the aim to do a priority check on our year-end financial goals. It seemed like the perfect time to check in, with us stncers fresh off a summer of finding clever ways to save — not to mention the RRSP deadline and tax season now just six months away!
After completing the kick-off challenge where we (A) identified the people in our lives who are affected by our financial decisions, and (B) took stock of our long-term necessities, we’re now ready for the next course in taking our money back to school!
The ABCs of saving for the future
Before you decide which savings combination will best assist you in building your future, let’s get back to basics by getting reacquainted with the main options:
RRSP — A Registered Retirement Savings Plan is a fund that helps you save for retirement. Here are some key characteristics:
Choose your key ingredients
Now that we’ve laid out some basics to help you distinguish one option from the other, it’s time to test your priorities against our handy list of shortcuts. You can also take a few minutes to dig deeper into RRSPs, RESPs and TFSAs.
Your priorities: take stock of what you need for yourself and the people in your life as you look towards the future. When your top necessities become clear, the recipe for your future will formulate, one savings ingredient at a time.
If you already have a plan for your retirement, test your priorities against the list we already made; maybe you’ll uncover something new!
To get you on the path to your personalized financial plan, here are some examples of priority checks:
Priority: I need to contribute as much as I can to lower my taxable income, but by the end of the year I don’t usually save enough to make an impact.
- You and RRSPs sound like a match made in heaven! Luckily there’s still plenty of time before the RRSP deadline, so you still have the opportunity to make a healthy dose of contributions. If you’re prone to waiting until the last minute and are looking to change that, you can set up automatic monthly contributions from your bank account.
Priority: I want to start saving for the future and earning interest, but I’d also like to access the money when I can, for future purchases like buying a car.
- Hooray for TFSAs! Not only can you contribute up to $5,500 per year, but you can also invest in equity funds and earn tax-free capital gains.
Priority: I have two small children and I’m worried about how they’ll pay for tuition when they’re ready to go to university.
- An RESP can help pave the way to a brighter educational future! Start contributing now and know that any capital gains you earn won’t be taxed until your child accesses the funds (potentially at their lower tax rate!). The added perk? The Canadian Education Savings Grant is a way to get more for your contributions.
Try your other priorities on for size, and see how it helps you draw a clearer picture of your overall financial plan.
After you’ve done all that savvy financial planning, check out our latest article from Borrowell on debunking the top 3 credit score myths!
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