I remember in fourth year University my best-friend and I were talking about jobs and our financial situation. I was living at home and she was out on her own. Besides being best-friends and not having any topic off limit, we were also business school (soon-to-be) graduates, so talking about finances was not taboo. My friend told me how she had a small “fortune” (at least what seemed like one at 21) saved up in her RRSP account. She told me that she maxes out her RRSPs every year! I’m pretty sure I just stood there with my mouth wide open. Here she was, living on her own with money saved and here I was, living at home, with not much to account for. After the shock wore off, I realized that it was one of the best eye-opening conversations I could have had. It really changed my mind set and how I viewed personal finances. I’m proud to say that I’ve been saving ever since.
Business School Graduation
Luckily, my place of work had a matching program for RRSP contribution. I always made sure to max out that amount since it was like receiving free money. Also, since I was young, I was comfortable taking on more risk with my investments for a higher rate of return in the long-run. However, not everyone has an employer matching program or is in the life stage where they should take on more risky investments at immediate connect. My understanding is basic: the sooner your save, the more you’ll have when you’re ready to retire. In the same token, the more you invest (and the sooner you do it), the more comfortable you’ll be on your way to the bank once you retire! As a parent, I would encourage my kids to maximize their retirement savings as soon as they have a full time job. It’s also great because you can use a portion of it to put towards your first house purchase (without a penalty); which I did.
Our house – bought 10 years ago
Tax season is on right now and RRSP contribution deadline this year is February 29 (thank-you Leap Year)! So if you haven’t contributed yet, it’s not too late. Just make sure you’re armed with the correct information (like, What Is An RRSP?) before you run off to make a contribution. If you’re not sure where to begin or have limited knowledge about RRSP, I would highly recommend signing up for RateSupermarket.ca’s RRSP bootcamp e-mails. They are packed with great information and lots of helpful tips like How to Start an RRSP, a Contribution Deadline Checklist, Everything you need to know about GICs and FAQs. As an added incentive, everyone who signs up will be entered to win a $2,016 cash prize. Ratesupermarket.ca will also provide you with a (free) list of the best registered GICs and TFSAs so you can make an informed decision when selecting your investments for your RRSP this year.
I found this video very interesting but not surprising. Clearly, we need to focus on educating our kids about the importance of saving!
I received fantastic advice when I was about 21 and I started contributing to my RRSP. When we purchased our home (at 30 when we got married), between my husband & I (RRSPs and other savings), we were able to put a 27% downpayment on our house.