March 1st. The day every year where Canadians rush to the bank to contribute to their Registered Retirement Savings Plans (RRSPs).
The benefit is real: contributions made before the deadline can be deducted from a Canadian’s taxable income in the 2017 tax year, which either reduces a tax hit or can generate a refund. Meanwhile, RRSP money grows on a “tax-free” basis (more on that later…), with the withdrawals getting tax deferred treatment in retirement at a lower rate (ideally, if you plan it right).
Not so long ago, I was living in the proverbial millennial malcontent. Underpaid, underemployed, and feeling defeated. Whatever jobs I secured were usually on a part time or contract basis and missing things like benefits, vacation time, or sick days.
Even though I was young and healthy (I like to imagine I still am J), the reality was that I was always scared. Scared of the flu. Scared of slipping on ice and hurting myself. Scared of needing emergency dental surgery. I was acutely aware that any illness or injury could keep me unemployed and even more cash strapped.
I have lived most of my life on financial edge. First it was school, then it was contract jobs. There was never a moment of financial stability until about 2 years ago when I transitioned into full-time employment.
In that time between steady job and what felt like drifting, I was a hoarder. I’d save as much as my pay check as I could and stick it in a savings account, watching it grow a measly 0.5% at the time (this is pre-discovery of Tangerine and EQ Bank). My savings allocations were basically 100% emergency fund, 0% investments.
I had an interesting conversation with a colleague of mine a few weeks ago. I overheard two of them talking about Skechers walking shoes and I couldn’t help but chime in as a brand advocate (they are, by the way, simply the best walking shoe I’ve ever owned).
My girlfriend’s parents are lovely people. They did everything right. They worked hard, raised a wonderful family, and saved and invested diligently. They met all of their financial goals, having saved enough to retire, send their kids off to their own lives, and travel the world.