We all want to kick off the new year on the right foot, and you can get started now by making sure you meet important tax deadlines coming up on December 31. Whether your financial goals include buying a house, saving for post-secondary education, or retiring comfortably, this post will give you a few simple things you can do to save money now, and keep more of it in your bank account when it’s time to file your taxes next year.
Charitable donations for tax deductions
Charitable donations can be claimed as income tax deductions. Ensure you have all receipts in order, and that your donations are made before December 31. There are limits to how much you can claim, so be sure to check with the Canada Revenue Agency (CRA) for the latest information. Help those in need and help boost your tax refund. It’s a win-win you can feel good about now, and come tax time.
Get the most out of your workplace benefits
If your employer offers workplace benefits, these likely expire at the end of the year, so use them up soon. These could include RRSP contribution matching, giving you an added incentive to save even more for retirement. You may also have unused dental benefits, and medical services. Making the most of all of these will ensure your benefits don’t go to waste.
Maximize TFSA contributions to take advantage of tax-free growth
A Tax-Free Savings Account (TFSA) is a savings account that lets you earn tax-free investment income. You can contribute a certain amount each year, and any investment income earned is tax-free, making it an important financial planning tool. If you have not yet maximized your contributions for the year, make sure you do so by the end of December for maximum growth.
Quick Tip
TFSAs and RRSPs are both important investment tools, but getting the most out of them calls for slightly different strategies. We break down the differences here.
RESPs: top up your savings to maximize matched government contributions
A Registered Education Savings Plan (RESP), is designed specifically to save for your child’s post-secondary education. In Canada, the government offers a grant that will match up to 20% of your contributions, up to $500 per calendar year. Did you know that your child doesn’t have to attend a Canadian school to benefit? Or that other family members can also contribute? There are tons of perks to opening an RRSP. If you are saving for school, make sure you maximize your contribution before the end of the year to boost your financial health.
Quick Tip
We offer free online calculators to help you figure out how much you need to save to retire in comfort.
Turning 71 this calendar year? Transfer your RRSP to a RRIF
If you have a Registered Retirement Savings Plan (RRSP), you need to convert it to a Registered Retirement Income Plan (RRIF) before December 31 of the year you turn 71. A RRIF is a retirement income plan that pays you a regular income out of your RRSP savings. Converting your RRSP to an RRIF allows you to continue to grow your investments while receiving a regular income.
Starting the year off right
Saving money is key for financial planning, but the details matter. Each method of saving offers unique benefits, and a bit of research, planning, and commitment will go far. Make those charitable donations, double check your TFSAs, RRSPs, and RESPs, and book a consultation with one of our advisors to make sure your finances are in the best position possible for the new year.