I’m not sure if there are a lot of people out there who are aware that they’re able to get free money. There are things that you can take advantage of to get you a little bit ahead so I’m not sure why they’re not doing it. But then again, I think that people aren’t away of it because no one is telling them about it. So I try to make it known whenever I can.
My company has a program that will match a certain percentage of my RRSP contribution. I took advantage of that the day that I started working. My company will match up to 4% of my contribution which means that my investment makes a return as soon as I make a contribution. There’s really nothing to lose when you’re offered something like this so I wonder why some people don’t take advantage of it.
The most ridiculous reason as to why someone wouldn’t take advantage of this program is because they’re “not planning on working there for two years.” From what I’ve heard, some company will only let you keep their contribution if you stay at the company for a minimum of two years but I still don’t see that as a valid reason not to contribute to your RRSP. Even if the company doesn’t let you keep their contribution, you will still have your contribution and every little bit helps.
When you make an RRSP contribution, you’re saving up for your retirement. The fact that your company isn’t going to let you keep their contribution is beside the fact. And who knows, if you do manage to stay at that company for two years, you’ll have that extra contribution. But if you’ve worked there for two years and haven’t started contributing, you’ve just wasted two years’ worth of free money. I have a few more months before I reach my two year mark at my present job but if I didn’t make it, I’d be happy knowing that I’ve managed to save close to $8,000 for my retirement.
RRSP aren’t the only thing that you can take advantage of. I tell my friends who have children to sign up for an RESP for their kids. I have one friend who is trying to save up for her kids but things come up and they have to dip into it. I tell her that it’s not money that she supposed to be using for emergency. The money that she deposit into that account should stay there until her kids reaches the age where they continue their education. I’m not sure where she stands on the RESP but I don’t think she’s doing it right.
I’ve been contributing to my younger brothers’ RESP and as to date, the account is sitting at $3,224.40 which is slightly down from what it should be. But if you take a closer look, I’m not down at all. I deposited $1500 for each of them so the account should be at $3,000 but it’s higher. The reason why it’s up $224.40 because the rest was deposited by the government.
If your income is really low, you can qualify for a lot of extra money. The Canadian Learning Bond (CLB) can give you an addition $600 up to a maximum of $2000, I believe. On top of that, there’s the Canadian Education Savings Grant (CESG) which will match 20% of your contribution. There’s a limit as to how much they’ll match every year but I forgot what that amount was. I didn’t qualify for the CLB because I made too much but I did get the CESG. The addition $300 might not sound like much but it’s better than nothing.
My brother Tonee turned 17 years old a couple of weeks ago which means that the CESG will continue to match my contribution for another year. Kevin still has about six more years to go before they stop contributing to his account but by the time that happens, I’ll have almost enough in the RESP to cover all of his post secondary cost.
It looks like there’s free money available to people but they just have to know where to look for it. I try to be on the lookout for anything like this and relay the information to my friends. Whatever they choose to do with that information is up to them. I just hope that they’re smart enough to take advantage of an opportunity when one comes along.