Don’t get scared away from RRSPs by numbers and financial jargon. Here’s some of the easy-to-understand basics of RRSPs.

You’ve heard it a million times, you need to start saving for the future. And the answer is usually a list of excuses: When I get my next raise, after I pay down my school debt, after I get my new iPhone etc. But as the life expectancy for Canadians grows and the retirement age lowers, you may need to have enough money to live up to 30 years after retirement!

Short term RRSP advantage – you get money!

Contributing to your RRSP means you get money back when you do your taxes. When you do your taxes, the government takes every dollar you’ve put into your RRSP and “reduces” your income by that amount. Then they give you the tax you paid on the amount you’ve contributed to your RRSPs back. For example, you made $10,000 in a year. You put $2000 into an RRSP. Now you’ve only “made” $8,000 according to the government. So, they give you the taxes you paid on that $2,000 back.

Not everyone pays the same amount of income taxes. How much you pay is based on your yearly income and where you live. This link takes you to the Government of Canada website which shows the income per “tax bracket”, per province.

When can I take the money out of my RRSP?

The government wants people to save. That’s why they encourage you to put money into your RRSPs by giving you a tax rebate, and once it’s there, they try to get you to keep it there. So taking money out can happen in three circumstances with three very different results.

Retirement

At age 71, the government forces you to start taking an income (you can choose to take an income sooner). You open a new account called a Retirement Income Fund (commonly referred to as a RIF) and roll your RRSP into the RIF and start monthly income payments. You are then taxed on that money as you would if it was regular income from a paying job.

First Home Buyers Plan

You can take up to $25,000 out of your RRSP for your first home. But you have to pay it back. The good news is that you’ve got 15 years to pay it back and the repayments don’t start until two years after you took it out. So, if you took out $25,000 in two years, you’d pay it back over 15 years and that’s just $1666.67/year.

You just plain need it

You need the money, its not for retirement or buying a house. You can have the money, the catch is that you’re taxed on it. And not once, but twice. When you initially request your money (called a redemption) the fund company or bank will take what is called a withholding tax. The tax charged depends on how much you want to take out. This is the government’s way of making sure they’re getting at least some of the taxes right away. The money you take out is considered additional income on top of what you make at your job and is therefore subject to income taxes (that’s the second time). So you’ll have to pay the rest of what was owed when you do your taxes. They do it this way because the fund company or bank has no way of knowing what your income is, therefore they can’t tax you right away based on your income tax bracket.

Types of investments

We’ve all heard in the news over the last year about the spectacular nose dive the market took which was caused by the US Credit Crunch. So you may understandably be worried about losing all your hard earned money. Relax, there are plenty of safe investments. Many financial advisors would suggest investing a bit higher risk at a younger age, since we have time to recover any losses over the next forty or so years. However, if you plan on possibly using that money for a downpayment on a house, or youre just downright uncomfortable being in the market, there are lots of secure investments. Talk to a financial advisor about what suits you best.

Time is money

Even conservatively invested money is making interest, and that’s free money! And then that free money earns interest — more free money!

Take baby steps

Find a number that works for you and make a commitment to yourself. If you make it automatically come out as soon as you get paid, you’ll probably never even notice it’s gone. Try for $25 or $50 bi-weekly and notice how little it disrupts your lifestyle. If you really want a wake-up call, for two to four weeks record every penny you spend and you’ll be surprised how much money you could potentially be investing in an RRSP.

No one likes tax season but here’s some advice to get you through all the paperwork without pulling out all your hair…unless you can rock the bald look.

Please be advised that this article should only serve as a jumping off point for your taxes education and you should speak with an accountant for professional tax advice.

Organize your files

Before you attempt to fill out your income tax forms, you should have all of your information with you says Brad McNeil, an accountant and partner with Famme and Co. Professional Corporation in Stratford Ontario. Make sure you have a tax slip from every employer over the past year as well as any other tax slips received in the mail or documents marked for tax purposes.

McNeil advises to also gather any RRSP, medical, donation, rent, public transit and tuition receipts you have.

Make your tuition work for you

Both tuition and rent receipts may get you some money back.  Students can claim credits for both tuition and books and rent (rent receipts are required if you live off-campus).

Know your numbers

The education amount allowed is $400 per month for each month you are in school on a full time basis. The textbook amount provides an additional $65 per month. For part-time students the amounts are decreased to $120 and $20 per month respectively.

Take note that what you pay in rent can qualify for a tax credit if your income is under a certain amount for the year. You also may be able to claim moving expenses if you were a student at the time of the move (whether it was moving to school or moving home for the summer).

Plan ahead

A good tax refund is not always your goal says McNeil. If you receive a large refund, this may indicate that you paid too much tax during the year and simply prepaid your taxes.

If you are a student with a relatively low income, try requesting that your employer not withhold income taxes from your wages.  Your take-home pay will be higher and your tax refund will be smaller, and this way you are getting the money when you need it with each pay. “Having a dollar today is always better than having a dollar tomorrow,” says McNeil.

An ode to student loans

If your student load is registered with the government the interest you pay on it may be eligible for a tax credit but the principal payment on the loan is not deductible.

Get a helping hand

Because tax laws are complex and can change frequently, McNeil advises getting some help with your taxes to take advantage of all the benefits you are entitled to. Preparation is generally not too expensive and don’t be afraid to get a second opinion.

How you could reach a debt free lifestyle

By Paul Barker

Nowadays, while growing consumer debts have become a typical part of the way of life, many people dream of a time when they will be debt free but don’t know where to start. This article is full of debt free solutions to develop and maintain a debt-free lifestyle.

1. Change your thinking

You will need to change your mindset and the way you perceive spending your money. If you visit a designer store and want to purchase something, then you should go home and think about whether you really do need the items you are thinking about buying – you will need to resist impulse buying and commit to maintaining a debt free lifestyle.

2. Make a financial plan

You will need to plan your finances by reviewing your income and expenditure amounts and then looking at establishing a realistic figure you can spend each month. After you have established this you will be able to understand what amount of money you have left that you are able to go clothes shopping with and taking a trip to the movies.

3. Plastic is for emergencies

You should only use a credit card for those occasions then you have a true emergancy and if you can be sure to pay it at the end of the month. You should leave any cards you have at home as it will be a real temptation to spend if you don’t.

4. Pay your existing Debts

Pay off your existing debts. Pay more that the minimum monthly commitment, and if you have any extra cash, put it into your debts so they can be paid off more quickly.

5. Pick one credit card

When you are looking towards reducing your credit a quick way to do this is to limit the number of credit cards you own – you only need to have one or even two at the most. You should choose the ones with the most favourable interest rates.

6. Prevent impulse buying

By leaving your credit cards at home you will prevent most of the impulse buying that individuals get. Also, it you are looking to buy something that is large in value then you should talk through the decision with a family member or friend to help you make a final decision.

7. Sell unwanted things

Look around your house for the different things that you really don’t use and consider having a garage sale or selling the items on ebay to generate some extra cash.

8. Live within your means

If you want a lifestyle that is debt free lifestyle then you will need to spend no more a month than you earn. Utilizing a credit card as a tool is acceptable if you want to buy things and then pay them off, but you should not consider it to be part of your income that you can spend.

9. Set long-term goals

You need to look long-term if you want to be debt free, as debt-free means living within your means while having investments to increase your income.

If you are looking to get a debt free lifestyle then you will need to keep track of and know what your finances are, and you will also need to resist the temptation to spend more than you have. You should also ensure, as time passes, that you are reducing the amount of overall debts that you have, even if this process is very slow.

Courtesy of Article Directory: http://www.articledashboard.com

Paul realizes after years of having numerous debts what it is like to have none. If you are thinking how can I get a debt free lifestyle then he has the answers. Also, if you are looking for where can I get help on a debt free lifestyle then his site can help you a lot.

You obviously can’t escape spending money on food, so here are some easy tips that will not only save you money but make you a more savvy shopper in the process.

Coupon clicking
Coupons aren’t just for Sunday papers and grandmas anymore. There’s a slew of websites that offer coupons for popular brands. Save.ca and brandsaver.ca let you select the coupons you’d like, then mail them to you within a few business days. Company websites and e-newsletters can also be fabulous if there’s a particular product or brand you’re after.

Pro tip: Don’t be afraid to email companies and tell them how much you like a particular product. They love to hear from happy customers and will often send coupons or samples if you ask nicely.

Using flyers to save money
First, start reading flyers every week. This will tell you where to go for the week’s best sales. It will also give you an idea of how much things usually cost, so you’ll know when you’re getting a really good deal.

Next, it’s time to hit the stores. If the item you’re after is something you use frequently, is non-perishable, or freezes well—such as meat, bread, or butter—stock up! And if it’s sold out, ask the customer service desk for a rain cheque.

Pro tip: Combine sale prices with coupons to maximize your savings.

Kitchen essentials
There are a few staples you should always have on hand. These include frozen fruits and vegetables; canned goods like diced tomatoes, chickpeas, and tuna; meats such as chicken breasts, beef, and pork chops; and grains like pasta, barley, and rice.

These basics are nutritious, cheap (and almost always on sale somewhere), store easily, and can be combined to make a host of delicious meals.

Pro tip: Stay away from prepared/packaged foods like frozen pizza, canned soup, and microwavable meals. They’re usually pretty unhealthy and also substantially more expensive than making a meal from scratch.

Is Costco really cheaper?
The answer is that it can be—if you know what to look for. Some items at Costco are great deals, while some are more expensive than at a grocery store. There are two things you need to know to save money at Costco: how much things cost at normal stores, and how to calculate a unit price.

To calculate a unit price, you first need to decide on a unit. 100g (or ml) works well for most foods. Next, figure out how many units the item contains. For example, a 450g box of cereal contains 4.5 100g units. Finally, divide the price by the number of units. So, if the box of cereal costs $3.99, dividing that by 4.5 gives you a unit price of  $.89 per 100g. This will help when you’re trying to figure out the best price between differently sized items, which you’ll likely encounter when comparing Costco to grocery stores.

The good news is that food prices generally don’t change too much. So once you’ve figured out which items you should buy from Costco, you won’t have to worry about the math behind it.

Pro tip: Share a Costco membership between friends and family members to split the cost of the membership and any items that would be too big to use on your own.

Organizing your list to save time
While saving money is always great, saving time at the grocery store can also be important. When you’re making your list, organize it by food category (produce, bakery, deli, frozen, dairy, and inner aisles). That way you can knock each category off the list quickly and without having to zigzag across the store.

Pro tip: Always shop with a grocery list. You’ll be less likely to forget items you need, and you won’t have to search through the store trying to remember what’s on sale that week.

The store makes the difference
Some grocery store chains market themselves towards a higher income group so if you’re hoping to save money, steer clear of the luxury grocery stores in your region. For instance, Sobeys and Metro may have certain specialty items but your bill will be high if you do the bulk of your shopping here. Whereas, Price Chopper and No Frills offer bargains you may be sacrificing quality and selection.

Buying a car is a big commitment – take our quiz to find out whether you’re ready to buy your own car or stick with public transportation for now.

So you’re thinking of buying a car? Whether you’re tired of your daily transit commute, or just looking to get that extra level of independence there are many perks to having a car at your disposal. But, there are also many downsides to consider before you head out to the dealership with your hard earned money.

1. Your daily commute to work consists of:
a. Over an hour each way on public transportation.
b. Probably about half an hour, and the weather usually determines what your mode of transportation is.
c. You have no commute because you work from home.

2. Your weekend plans usually involve:
a. Out of town travel visiting friends or relatives.
b. You like to leave your options open and spontaneous.
c. You mostly stick close to home.

3. Your “in case of emergency” money is:
a. Well stocked and always being added to.
b. In pretty good condition, but it better not be a big emergency.
c. Non-existent. You might have spent the last of it on take-out last week – it was an emergency!

4. The last time you took a car out for a long trip, the items in your trunk were:
a. An emergency kit with flashlight, food, spare tire, jack and jumper cables.
b. A flashlight and a spare tire, but you wouldn’t know how to change a tire if it came down to it.
c. Your bag of clothes and a few cases of beer for the party you were headed to.

5. If the engine light was flashing, you would:
a. Pull over at the nearest service centre, pop the hood and pull out your tools.
b. Pull over at the nearest service centre, you’re pretty sure that can’t be good.
c. Not really notice, wasn’t that light always flashing?

6. Weather calls for snow tomorrow, you plan to:
a. Leave extra early, and wish for the millionth time that you had a car.
b. Instead of riding your bike you decide to hop on the subway instead.
c. Stay at home, who goes out in this anyway.

7. Your idea of buying a car is:
a. Researching your choices thoroughly, visiting many different car lots and talking to people who have purchased the car you are interested in.
b. Taking a look at a few different car lots and then making your decision quickly (and mainly based on the non-essentials like colour and leather seats).
c. You see it, you want it, you buy it. It’s always worked well in the past.

8. Based on the car you have in mind, your monthly payments would total:
a. Probably about five per cent of your monthly income, you have a good down payment socked away.
b. About 20 per cent of your monthly income, it’s a bit of a stretch, but you can do it.
c. About 30 per cent of your monthly income, and this might mean skipping some other bills.

9. How much driving experience do you have?:
a. Got your license the moment you turned the legal age and have even owned a car before.
b. Have had your license for awhile but have never owned a car.
c. I have a learner’s permit but I plan to get my full license when I need a car.

10. If you were handed the money tomorrow to buy a car, you would get:
a. Something well built, comfortable and good on gas.
b. Something well built, great to look at and a little pricey.
c. Something outrageously expensive and the shinier the better!

Results:

Mostly A’s: You should Buy A Car.

Responsible and mature, you are at the right stage of your life to buy or lease your own car. You have thought about the pros and cons carefully and you are well prepared both personally and financially to handle the day-to-day life of having a car.

Mostly B’s: You should Try Sharing A Car.

While you feel you are ready to be a car owner and you have some of the major issues thought out it isn’t essential to your lifestyle that you own your own car. You should try out a car sharing program like Zipcar or AutoShare. Allowing you the freedom to go pretty much where you want, when you want, and for minimal cost, these services give you freedom without the hassle of worrying about maintenance and sudden expenses.

Mostly C’s: You should Not Buy a Car.

Cars are huge money pits that absorb a lot of money, so if you’re not prepared financially you may find yourself swimming in debt. You should consider borrowing a friend’s car the next time you need to hit the road or renting a car on an as-need basis.