Your February Financial To-Do List

It's savings season in Canada - make sure your investments are getting maximum tax-efficiency by making the most of registered savings plans

Ruth Saldanha 5 February, 2021 | 4:38AM

 

 

Ruth Saldanha: Welcome to Morningstar. I'm Ruth Saldanha. Each month this year, we'll be talking about specific financial areas on which you should focus. This is your February financial to-do list. Now, February is savings season in Canada. This is when you need to put funds into your registered retirement savings plan or RRSP and registered education savings plan or RESP.

Now, let's start with RRSPs. Should you even have one? Well, if you have a low income of less than $38,000 or $40,000 per year, it may make sense for you to invest through a TFSA or tax-free savings account instead. If you earn more than that, then yes, you should consider an RRSP. An RRSP is a tax-deferred account, which means you invest now when your earnings are relatively high and pay tax later when you retire, and your earnings are low. It's a great tax saving tool. The 2020 deadline to contribute to your RRSP is the 1st of March 2021. So, now is the time to figure out how much you can contribute, what your limits are, and how you should be investing.

If you have children, now is also the time to start thinking about their RESPs. Remember, the government gives you 20% of what you put in up to $2,500 a year. Now, that's free money. Most experts recommend that you put in the $2,500 per year per child, if you can afford it, to get that $500 free. If you've done all that and still have some time leftover, good for you. You could start planning ahead for tax season. If you plan to do it yourself, get all your documents in place. And if you need help, as with all things, shop around. Ask your accountant for a quote and either price match or negotiate.

Until next month, good luck.

Get the Latest Personal Finance Insights in Your Inbox

Learn the latest here

About Author

Ruth Saldanha

Ruth Saldanha  is Senior Editor at Morningstar.ca. Follow her on Twitter @KarishmaRuth.

 
 
 

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies