by yncuniversity | Jan 17, 2023 | Investing
WHY YOU NEED TO START AN RRSP TODAY
Tuesday, January 17, 2023
Retirement is something we should all be thinking about, regardless of your age or where you are in life. A Registered Retirement Savings Plan (RRSP) is a government approved plan created to help you financially prepare for retirement. Your allowable contributions, which change annually, are tax deductible, and the investment gains will be tax-deferred until you begin withdrawing. So, what does that mean? We’ve compiled everything you need to know about RRSPs and why you need to start one today.
What are the benefits of an RRSP
An RRSP allows you to invest money when you can most afford it – during your peak earning years – to build up a comfortable tax-sheltered retirement fund. Since 100% of these earnings can be reinvested and compounded, the growth of your RRSP can increase rapidly over time. Your retirement savings will also increase significantly if you make each RRSP contribution as soon as allowed, for example, early in the year.
Making an RRSP contribution can potentially reduce the amount of tax you will be subject to pay on your income tax return. The CRA will use your RRSP contribution amount to reduce your taxable income for that year. You can also choose to defer claiming your deductions and use them on a future tax return if you suspect an increase in income that will put you into a higher tax bracket.
Another benefit is that all of your RRSP investment growth is tax-deferred, meaning your investments will compound much faster without the drag of annual taxes, which can be quite significant. The average Canadian family would experience a 15% drag due to capital gains tax and a 30% drag due to the tax on interest payments. Over 40 years this can cut $300,000+ off of your retirement savings. This can easily be avoided by using an RRSP.
Relax, your money won’t be locked in with an RRSP. Withdrawals are permitted before retirement but will be subject to a withholding tax unless being used to fund certain life expenses, such as purchasing your first home through the Home Buyers’ Plan or funding continued education through the Lifelong Learning Plan. These types of withdrawals won’t be taxed as long as you pay them back to your RRSP within the set time period.
Your RRSP account is also protected from creditors. Your RRSP can’t be used to cover liabilities from either a lawsuit or bankruptcy, similarly to a pension. This is what sets RRSPs apart from Tax-Free Savings Accounts and Registered Education Savings Plans, both of which can be seized to cover personal liabilities.
Is an RRSP right for you?
Once you have taxable Canadian “earned income”, even if you’re a non-resident, we suggest contributing regularly to an RRSP. Contributions can be made until the end of the year in which you turn 71 years old. Don’t worry if your income is below the taxable threshold, you should still file a tax return to report your earned income and create RRSP deduction room. The earlier you start, the better – compound interest and upward market trends will be on your side over time. Plus, who doesn’t want their savings to grow faster and tax free?
Ready to be proactive about your financial future?
If setting up an RRSP with YNCU is something on your mind, we have a number of investment options and offer spousal RRSPs. We also offer flexible RRSP loan options to assist you in making your maximum RRSP contribution. Our RRSP loan options include a quick approval process with a flexible repayment plan.
Start looking into a RRSP today! Your future self will thank you.
For all your general financial inquiries and how you can plan out your financial goals, come talk with someone at your YNCU branch!
by yncuniversity | Dec 23, 2022 | Financial Literacy
HOW TO TAKE CONTROL OF YOUR HOLIDAY SPENDING
Friday, December 23, 2022
For many of us, the holidays quickly become a money-spending spree. Between the family get-togethers and the never-ending holiday activities, we can get a bit carried away (especially financially) and before we know it, we’re overspending and taking on debt. Not the best way to start a new year. Here are some tips on how to keep control of your finances this holiday season so you aren’t starting the new year with a financial disaster on your hands.
Create a Budget
If you haven’t done this already, create a list of all the gifts you NEED to purchase and how much you can afford to spend on each person. Give yourself a bit of wiggle room but make sure to stay within your set budget. Bring your list everywhere you go and check it often to ensure you don’t pass your limit. Don’t forget about all the other expenses that come with the holidays. There’s food, entertainment, holiday decorations, and travel costs to consider, as well.
When you’re making your budget, make sure to cover all these expenses, in addition to your regular monthly expenses. Calculate how much you can afford to spend over the holidays and keep track of your spending to make sure you stay within your limit. By tracking your spending, you can also help yourself financially plan for the next holiday season and set some realistic boundaries for your expenditures. If at the end of the holidays there’s room left in your budget, consider putting it towards your existing savings plan or as a starting point for an emergency fund!
Be strategic with your gift giving
Consider buying the same gift for multiple people on your list, if you think it’s something they would enjoy. This enables you to take advantage of those buy-one-get-one deals, saving you time and money. You could vary gifts by choosing different colours, styles, or features. If you’re crafty, consider making your gifts. Not only does this add a personalized touch, it keeps you away from busy malls where you may be tempted to purchase things you don’t need.
Paying with your credit card is fun, until it’s not
Credit cards can be a useful tool to cover some of your holiday spending, if you’re using it correctly! It’s important to pay attention to your spending so you don’t end up wracking up a ton of high-interest debt. When creating your budget, keep in mind any existing debt you may have. If you plan to use your credit card, how much can you realistically pay off?
A good tip when buying gifts with your credit card is to consider your payment due date. Most Canadian credit cards have an interest-free grace period of about 21 days. If you know when your billing cycle ends, you can spread out your repayments by as much as 6 weeks by buying some items in one billing period and others in the next. But if you don’t think you can pay off your holiday debt before you start accumulating a ton of interest, it’s probably best to keep your credit card at home.
For all your general financial inquiries and how you can plan out your financial goals, come talk with an advisor at your closest YNCU branch!
Don’t forget to follow us on Facebook, Instagram, Twitter or LinkedIn for more honest money talk tips!
by yncuniversity | Nov 25, 2022 | Financial Literacy
THINGS TO KNOW BEFORE LIVING ON YOUR OWN
Friday, November 25, 2022
Eager to live on your own? Have plans to move out of your parents’ place? At YNCU we know how exciting it is to get your own place and start your own journey. We also know that school does not always prepare you for the financial responsibility that comes with moving out. We are here to help! Here are some financial tips on how to live on your own:
Budget
Budgeting is very important as it ensures you are able to buy your essentials and still have a little money on the side. Figure out how much money you are making monthly and what your monthly expenses are. From there you can allocate portions of your money to different areas and determine how much wiggle room you have each month. YNCU has helpful tools that will make this easy – like our household budget tracker and student budget tracker. Using these tools can ensure you are not running out of money before your next pay day.
Pay your bills on time
As important as it is to budget for your bills, it is equally as important to ensure you are paying these bills on time. By paying your bills on time with your credit card, you will build up good credit and have an easier time securing a loan in the future. Avoiding paying your bills can have negative consequences on your finances and can even lead to debt or late fees. Set yourself up for success by setting a reminder for yourself to pay your bills promptly every month.
Save each month
As you plan out your budget, make sure you are planning to save some money each month. This will help keep you financially stable. You never know when you may need to have a little extra money so plan to set some aside each month. These savings can go toward your retirement, paying off any debt or anything else that may happen. It is also a smart idea to plan for emergencies. Emergencies can happen at any time (take the pandemic for example) and you never know when unexpected costs will arise. YNCU can help you with planning your emergency savings account. Learn more about the Emergency Savings Plan here!
Monitor your financial transactions
Make sure you are keeping an eye on your financial transactions. Certain accounts may have fees for each transaction and you could be acquiring extra fees without realizing it. Be sure to check the details of your card (credit card limit, transaction fees, etc.) and plan accordingly. Monitoring your transactions can also help prevent fraud as you can report any transactions that were not made by you. Keeping a close eye will help keep your finances safe.
Make a plan before grocery shopping
Planning your meals before you go grocery shopping can help you avoid purchasing unnecessary groceries. Food costs are drastically rising so shopping with a purpose will ensure you are only getting the essentials. Try to avoid food waste by using whatever you have in the fridge before you go shopping. Cooking in bulk and freezing the leftovers is also a good way to save money on groceries and save you time on food prep.
Get advice
Try to learn as much about finances as possible. There are many external resources that can help you. Also make sure you ask for advice when you need it. Just because you are moving out on your own does not mean you can not ask for help. Chances are you are not a financial expert, so connect to people who are. At YNCU we have many experts who are happy to help!
For all your general financial inquiries and how you can plan out your financial goals, come talk with someone at your YNCU branch!
Don’t forget to follow us on Facebook, Instagram, Twitter or LinkedIn for more honest money talk tips!
by yncuniversity | Nov 14, 2022 | Financial Literacy
THINGS TO KNOW BEFORE ENTERING THE HOUSING MARKET
Monday, November 14, 2022
At YNCU, we know entering the housing market is a daunting task. School does not prepare you for the financial risk you take when purchasing a home for the first time. We want to share with you some tips to help you enter the housing market, responsibly.
Do your homework
Before you do anything that involves a large portion of your finances it is important that you do the proper research. With high prices, rising mortgage rates, and low inventory, following trends in the housing market is extremely important. Learning the language related to real estate can be extremely helpful, including terms like “earnest money” which is the deposit you put down on the property you’d like to buy. The funds of this deposit go toward your down payment. Another need-to-know term is “appraisal contingency” which is a provision in your contract that allows you to back out if the appraisal price comes in lower than the sale price.
Learn about down payments A down payment is the amount of money you put toward purchasing your home. If your down payment is less than 20% of the price of your home, you must purchase mortgage loan insurance. The minimum down payment for a home is typically 5%. If you have poor credit you may be required to pay a larger down payment. It is essential to be aware of what the down payment is for the home you are about to purchase and if you are able to pay for it.
Check your debt and credit
Mortgage lenders will look at your debt and how much income you are making. If you have high debt and relatively low income, it is unlikely that you will receive a loan. This is important information to know before you begin searching for a mortgage loan. Any extra cash you have should be used toward paying off your debt before you can start looking for a house.
Another thing to look at is your credit score. Your credit will be a factor in determining what type of loan you will get. It will have an effect on the interest rates and possibly how much you will need for a down payment. Make sure you are working toward building good credit before you start looking for loans.
Know the extra costs
A lot of people enter the housing market without realizing all the extra costs aside from your mortgage and down payment. There are expenses such as closing costs, lawyers’ fees and changing the locks. There are also extra costs like hiring a home inspector, setting up utilities and buying insurance.
Talk to an expert!
Buying a home can be an overwhelming process, especially if it is your first time. Make sure you talk to your financial advisor to know what your options are and how to best prepare for entering the housing market. It is also important to ensure you have the financial ability to sustain owning a home. YNCU can help you to figure out the best options for your financial situation.
For all your general financial inquiries and how you can plan out your financial goals, come talk with someone at your YNCU branch!
Don’t forget to follow us on Facebook, Instagram, Twitter or LinkedIn for more honest money talk tips!
by yncuniversity | Oct 14, 2022 | Saving
BE READY FOR THE UNEXPECTED WITH YNCU’S EMERGENCY SAVINGS ACCOUNT
Friday, October 14, 2022
At YNCU, we understand how unpredictable life can be and we want to help set you up for financial success. Oftentimes, when planning finances, people only think of their savings, retirement, and managing their debt. People often forget to plan for emergencies. Emergencies can happen at any time (take the pandemic for example) and you never know when unexpected costs will arise.
An emergency fund is what we at YNCU refer to as the money you set aside to prepare for unexpected expenses, like urgent vehicle maintenance, job loss, veterinarian visits, and health problems that result in missed work. You will more than likely be met with a situation where you need money fast, or experience a drop in income at some point in your lifetime. These surprises usually don’t give you enough time to adjust your budget.
It is important not to confuse unexpected expenses with occasional expenses such as school supplies, winter tires or holiday expenses. Occasional expenses should already be planned for in your budget.
Make sure you are setting aside a reasonable amount each month for your emergency fund. Although it’s important to save gradually and plan ahead, it’s not helpful to break your budget to do so. By putting aside a little every few weeks, you will have enough to cover those unexpected situations. Also remember to take advantage of every chance that can help you add to your emergency fund. Deposit any additional amount into your savings whenever you can. The general rule of thumb is to save 3-6 months’ salary for your emergency fund, but do what works for you and your budget.
YNCU is now offering an Emergency Savings Account that offers a higher rate than our traditional savings accounts, has no minimum balance requirements, and no monthly fees. We recommend setting up recurring contributions to be auto deposited into your emergency savings every pay period. This product was created because YNCU listened to the needs of our members to help them stay on track for their financial goals even when something unpredictable occurs. This emergency savings account makes it possible to:
- Handle an unexpected expense without going into debt
- Avoid high-cost loans (like payday loans or credit card cash advances)
- Avoid incurring costly credit card interest rates
- Have financial control and peace of mind
Learn more about the Emergency Savings Plan here!
For all your general financial inquiries and how you can plan out your financial goals, come talk with someone at your YNCU branch!
