Nothing stresses me out quite like tax time. I hate doing my taxes. No, I loathe doing my taxes. In fact, I can probably count on two hands the number of fights my husband and I have had in our marriage, and at least half of those revolved around doing our income tax returns.
There are myriad reasons why doing my taxes stresses me out, but a big one is because of that looming RRSP deadline. After we had kids, my husband and I found ourselves a little tighter in the pocketbook than we would have liked, and contributing great gobs of money to our RRSPs just wasn’t feasible. We managed to scrape together a small amount each month for a payment, but that was it. No big, lump-sum investment before the RRSP deadline for us.
Which meant no real tax breaks either. And that meant no big tax returns to pay off loans or go on a vacation. While saving that little bit of money every month was good, at some point, we were going to have to start seriously contributing or risk not having enough money for our retirement.
This year, we decided to get a little advice – and what we discovered made us very happy. By taking out an RRSP loan and buying up a huge chunk of RRSPs, we would be able to save a bundle on taxes, plus add a nice little deposit to our savings. We could use the money we got back to pay off part of the loan, then continue paying it off in small, reasonable monthly payments. While we were doing that, the money in our nest egg would continue to grow.
It’s not a strategy for every year, but it certainly helped us catch up on our investing and really start planning for our retirement. And it’s certainly not a strategy for everyone – we all have different financial needs and different goals for retirement. But what we discovered was that by asking for help, we were able to find the answer that worked for us.
If you’re struggling with RRSPs and investments, be sure to check out our “Financing your future” article this week on Primacy Life. In it, two financial experts outline why you should start saving money in your RRSPs as soon as possible, and even have some advice on where to find the extra money to do so.
I also highly recommend meeting with a financial advisor, even if you don’t have a lot of money to invest. An advisor can offer a keen set of eyes and see opportunities you may have completely overlooked.
And I’m happy to say that for the first time, my husband and I didn’t fight once at tax time!
A journalist with more than 10 years experience, Alison’s work has appeared in a number of top Canadian publications, including glow, Oxygen, Canadian Running and more. She is the former editor of a number of well-respected Canadian and American trade journals and recipient of a Kenneth R. Wilson Gold Award of Excellence in feature article writing. She is a part-time faculty member at Sheridan College’s journalism department, as well as an avid runner and fitness enthusiast.