Tag Archives: Registered Educational Savings Plan

Sept 11: Best from the blogosphere

As the leaves change colours and we gear up for the busy fall and winter season, it’s time to check in on what some of our favourite personal finance writers have been discussing this summer.

With the announcement that CIBC has gobbled up PC Financial which will be rebranded as CIBC Simplii Financial on November 1st, Stephen Weyman says on Howtosavemoney.ca that it will be banking as usual in the short term but you can expect CIBC to sneak in a few fees here and there to make sure they’re profitable and try to cut costs where they can.

On Boomer & Echo, Marie Engen offers 25 money saving tips. A couple of my favourites are:

  • Turn off the “heat dry” on your dishwasher. Open the door when the cycle is done and let the dishes air dry.
  • Learn some sewing basics so you can make minor repairs and alterations to your clothing – hem your pants and skirts, sew on a button, sew up a torn seam, put in a new zipper.
  • Buy some time. Set aside the purchase you are considering for a few hours (or a day or two) before you decide whether to buy it. Often you may decide you can easily live without it.

Bridget Casey (Money After Graduation) has recently welcomed a new daughter and she is already thinking about saving for her college education. She writes about the importance of setting up your child’s Registered Educational Savings Plan as a trust so it will be covered by the Canada Deposit Insurance Corporation in the event of financial institution failure up to $100,000 per account.

Retire Happy’s Jim Yih writes a thoughtful piece on Minimizing Your Old Age Security Clawback. The maximum monthly OAS benefit in 2017 is $578.53 ($6,942.36 annually). If you earn between $74,788 and $121,070/year the OAS benefit will be clawed back. He explains that with pension splitting, spouses can give up to 50% of their pension income to their spouse for tax splitting purposes. This is a very effective way to reduce income if you are close to the OAS clawback threshold.

When Sean Cooper, author of Burn Your Mortgage paid off his mortgage, he promised himself he’d stop putting off travel. His first major trip was to San Francisco this summer. Nevertheless, he still travelled frugally booking his $700 roundtrip flight through PC Travel. He also got from the airport to downtown on Bay area rapid transit for less than $10. In San Diego, he opted for a four-bed mixed dorm room at USA Hostels for less than $60 a night as opposed to $200/night in a hotel.


Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Written by Sheryl Smolkin
Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.

Feb 20: Best from the blogosphere

By Sheryl Smolkin

Get out the popcorn! It’s time for our selection of monthly personal finance videos.

First of all, if you don’t have a company pension plan for your employees, you need to know about the SPP business plan. Find out why the Sutherland Chiropractic Clinic set up SPP for their employees.

Globe and Mail personal finance columnist shares some great ideas for protecting yourself from online scammers.

In Save Your #@%* Money with these RRSP, TFSA, and RESP recipes Melissa Leong brings you an amusing look at the ingredients it takes to successfully save in these registered vehicles.

Preet Bannerjee explains how disability insurance works and why it is so important in this Money School blog.

And finally, if you have made financial mistakes along the way, it doesn’t mean you have irreparably ruined your financial future. Blogger Bridget Casey (Money After Graduation) makes a case for forgiving yourself for financial regrets.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Aug 8: Best from the Blogosphere

By Sheryl Smolkin

And just like that, it’s August! The days are getting shorter and families are starting to think about getting the kids back to school and getting serious about the upcoming round of fall activities.

Those of you sending your kids off to college or university will be interested in The Business of University Fees by Big Cajun Man aka Alan Whitton on the Canadian Personal Finance blog. Did you know if your child is still in school he/she is probably still covered under your group medical plan at work and most universities will allow you to opt out of the university’s plan?

If you have received your first child benefit cheques and haven’t already spent them on back-to-school supplies, here are 3 Great Ways to Use Your Canada Child Benefit Payment  by Craig Sebastiano on RateHub. RESP contributions, TFSA deposits or charitable donations, anyone?

And talking about TFSAs, take a look at Robb Engen’s TFSA Dilemma and Solution on Boomer & Echo. Like many of us Robb has a ton of TFSA contribution room ($50,500) He plans to turn his $825 monthly car payment – which ends in October – into future TFSA contributions, starting in January 2017. That’s $10,000 per year to stash in his TFSA, which at that rate would catch-up all of his unused room by 2027.

Have you reviewed your life insurance lately? Are you and your partner adequately covered so if one of you dies, the other can continue to pay the family bills? Bridget Eastgaard from Money after Graduation says Cash-Value Life Insurance Is For Suckers, Buy Term Instead.

And finally, Should you work part-time in retirement? by Jonathan Chevreau on moneysense.ca includes an analysis commissioned by Larry Berman, host of BNN’s Berman Call and Chief Investment Officer of ETF Capital Management. It illustrates the powerful impact of earning just $1,000 in part-time income each month between the age of 65 and 75; or in the case of couples $2,000 a month between them.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Aug 17: Best from the blogosphere

By Sheryl Smolkin

You’ve been diligently socking away money in a Registered Educational Savings Plan (RESP) since your child was a toddler and in a few short weeks she starts university. Getting at the money can be a little more complicated than simply taking out money from your savings account. To help you through the process, this week we feature articles and blogs exploring all things relating to RESP withdrawals.

Mike Holman on Money Smarts discusses RESP withdrawal Rules and Strategies for 2015. He says there is one withdrawal rule to get out of the way – you are only allowed to take out $5,000 of accumulated income in the first 13 weeks. After 13 weeks, you can withdraw as much accumulated income (including educational assistance payments) as you wish.  However, there are no limits to withdrawals from the contribution portion as long as your child is attending school.

Bankrate.com blogger Jasmine Miller also writes about How to cash out your RESP. Because the government stipulates that financial institutions must follow “due diligence” to ensure RESP funds are being used for a child’s education your bank may want to see a copy of your child’s acceptance letter before releasing funds or they may take you at your word. Therefore she says it’s a good idea to keep all documentation and receipts.

The Investing for Me blog Withdrawals from RESPs notes that RESP withdrawals can generally be made to cover tuition, room and board, school supplies, computers and transportation as these are all eligible educational expenses under the Human Resources and Skills Development Canada (HRSDC) criteria. However, guidelines for withdrawals from a Group RESP account are governed by the plan’s contract or prospectus and group plans may have more restrictions than family or individual plans.

But what if your child doesn’t continue her education? Get Smarter About Money explains that if your child doesn’t continue her education after high school, there may be financial costs and tax consequences. But you have these four available options:

  1. Keep the RESP open – your child may decide to continue her studies later,
  2. Transfer the money to another beneficiary,
  3. Transfer the money to your RRSP,
  4. Close the RESP.

In Need to use an RESP this fall? Back to school starts now, Rob Carrick covers some of the same territory as the blogs noted above. However, he says one more consideration in filling out the RESP withdrawal form is where you want the money to go. You can have it sent to your chequing account, or your child’s account. He has the money from his son’s RESP paid into his and his wife’s joint account, and then he pays tuition and residence bills via Interac online.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

May 25: Best from the blogosphere

By Sheryl Smolkin

Due to the holiday Monday (yeah!) and other days away from my desk for random reasons, this issue of Best from the Blogosphere is being written super early. So, on no particular theme we present some great content from the last several weeks.

The Apple watch has received a bad tap from many reviewers, but Retired Syd reports on Retirement: A Full-Time Job that the device works for her. She likes being able to do all sorts of things without digging in her purse for her iPhone like paying for coffee; listening to music; getting directions from Siri; dictating error-free texts; and just lifting her arm to display her boarding pass.

In a guest post on the Financial Independence Hub, Michael Drak writes about one thing he wishes his father had taught him. While he learned about the need for working hard, saving and eliminating debt as quickly as possible, his Dad didn’t teach him about the important concept of Findependence (financial independence) and how it could positively impact his life once it was achieved.

Freedom Thirty-Five is authored by a nameless late-twenties male living in Metro Vancouver. He recently wrote about succumbing to lifestyle inflation. It seems he’s ahead of schedule by one year to reach financial freedom by his 35th birthday. So he has decided to succumb to lifestyle inflation and increase his food expenses from $100 to $150/month; eating out from $25 to $50/month and phone and entertainment from $75 to $100/month. Could you get by on these modest amounts?

Boomer & Echo blogger Marie Engen says unless there is room for occasionally splurging in your budget, becoming too frugal can ultimately undermine your budgeting efforts. Don’t banish nice things from your life. Occasional guilt-free splurges can help you stay on budget if they don’t detract from your other goals. When you don’t feel deprived you will likely find it a lot easier to stick to the plan.

And finally, on Brighter Life, I wrote a piece about Five smart ways to use your tax refund. You can start an emergency fund; top up your RRSP; pay down credit card debt; pay down your mortgage; or, open a Registered Educational Savings Plan for your child.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

Apr 27: Best from the blogosphere

By Sheryl Smolkin

If you haven’t filed your income tax return yet it’s really getting down to the wire. Whether you take advantage of them this year or next, here are some tax tips that could put more money in your pocket,

Are you entitled to a tax refund for your medical expenses? by Brenda Spiering on Brighter Life draws on her experience following her son’s accident when she learned that the part of his dental bills not covered by her health insurance at work could be claimed as a tax credit along with a portion of her health insurance premiums.

Tax accountant Evelyn Jacks addresses The Mad Dash to April 30th in Your Money. Your Life. She says once you have filed your taxes, the most important question is how you will spend your tax return. Some options are: pay down debt; save in a TFSA; use RRSP room; invest in an RESP; or invest in a Registered Disability Savings Plan.

Hey last-minute tax filers: Don’t make these common, costly mistakes says Stephen Karmazyn in the Financial Post. For example, only eight percent of taxpayers are planning to claim the Canada Employment Amount (which is a credit for work-related expenses such as home computers, uniforms, supplies) even though anyone with a T4 income can make a claim.

In a timeless blog on Retire Happy, Jim Yih offers RRSP and Tax Planning Tips. He recommends that only one spouse claim charitable deductions. That’s because the credit for charitable donations is a two-tiered federal credit of 16% on the first $200 and 29% on the balance (plus provincial credits). Spouses are allowed to claim the other’s donations and to carry forward donations for up to five years. By carrying forward donations and then having them all claimed by one spouse, the first $200 threshold with the lower credit is only applied once.

And in a Global news video Smart Cookies: Last Minute Tax Tips, Kate Dunsworth shares last minute reminders for people who have been procrastinating with their taxes. She says if you are expecting a refund and you are not planning to file on time because you don’t owe anything, you are basically giving the government a tax free loan. And if you owe money, you will be penalized for every single day you file late. Also, repeat late offenders will be penalized up to double.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

 

Jan 19: Best from the blogosphere

By Sheryl Smolkin

If you max out your SPP contributions each year, you know your money is invested in an easy to understand balanced fund. However, when you top up your savings with contributions to either workplace retirement savings plans or your personal RRSP, it is often challenging to figure out how to invest your money.

On Tangerine Bank’s blog Forward Thinking, Preet Bannerjee suggests Parking your RRSP contributions to beat the deadline. The money just sits there, “parked” inside an RRSP as a low-risk investment until you’re ready to figure it out. Some people may not realize that investments inside an RRSP can be changed later.

In My 2014 (and final) Portfolio Rate of Return Boomer & Echo’s Robb Engen admits his dividend stocks did not match average market returns last year so he finally bit the bullet and sold “his babies,” replacing them with an easy two-fund solution.

With another take on passive investing, Holy Potato released his “Canonical Portfolio,” a simple recipe of four funds or ETFs for your portfolio. He presents a portfolio of four funds (bonds plus three equity classes) with a simple rule-of-thumb to determine the main split.

Sarah Milton specifically addresses the investment dilemma facing people saving in group retirement plans on Retire Happy. She presents 3 Investment options for passive group investors including guaranteed investments, asset allocation funds and target date funds.

And finally, Gail Vaz-Oxlade’s post How Do You Stack Up? refers readers to a tool on the Royal Bank website that measures how you stack up against your region and Canada in general when it comes to your income and net worth. Although it’s nice to get a benchmark of how you’re doing, she says that comparing your results to someone else’s means nothing if you aren’t dealing with similar circumstances.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

BOOK REVIEW: 397 ways to save money

By Sheryl Smolkin

Earlier this year we interviewed Kerry K. Taylor aka Squawkfox as part of our Personal Finance Bloggers series. Although Squawkfox has been blogging infrequently over the last few months, her blog continues to be a hilarious and invaluable resource for money saving tips.

So when I was looking for books with great cost containment ideas to review for savewithspp.com readers I was delighted to come across Kerry’s book “397 ways to save money” published in 2009. As I flipped through the book, it became apparent that the vast majority of her suggestions have stood the test of time.

This 275 page book is divided up into four parts with several chapters in each part:

  • Big Decisions: (renting, home ownership, financial choices, shopping)
  • Home Management: (home maintenance, energy, cleaning)
  • Room by Room: (kitchen, living room dining room, kids room, garage etc.)
  • More ways to save: (vacation, pets, cheap family dinners, monthly maintenance checklists)

Here are 10 of my favourite tips in the book:

  1. Change your ATM habits: Use only your bank’s ATM machines to make withdrawals. Know how many free ATM withdrawals you can make each month from your account. Some banks offer free accounts including ATM withdrawals for seniors.
  2. Don’t insure your kids: The purpose of life insurance is to serve as income replacement for the insured’s dependants. Pass on agents who try to sell you on the investment aspects of a cash value policy. Instead, save for your child in a registered educational savings plan (RESP).
  3. Barter to save money: Generally bartering is the trading of goods and services without the use of money. Check out the website U-exchange.com to find like-minded people to swap services such as website building for a haircut.
  4. Pass on extended warranties: Don’t buy extended warranties on inexpensive product like cameras and kitchen appliances. The only time a warranty makes sense is if a repair will devastate your budget.
  5. Don’t pay for shipping: Look for a free shipping option when you order from an online store. Many online retailers offer free shipping when you buy up to a specified dollar amount in merchandise.
  6. Turn off all electronic devices: Turning off your unused electronic devices like gaming consoles and computers is an easy way to save electricity. By turning on your computer only when needed for three hours each day rather than running it continuously can save you $75/year.
  7. Watch the price scanner: Mistakes on electronic price scans are common at the grocery store. Watch as your items are scanned at the checkout and you could save many dollars per month and even score free food. The Retail Council of Canada has a Code of Practice and a list of participating stores you can read here.
  8. Open the dishwasher to air dry dishes: Skip your dishwasher’s heat dry cycle by opening the dishwasher door to air dry dishes after the final rinse. I do this frequently because the full cycle is ridiculously long. Its mice to know it also saves me money.
  9. Skip the sofa bed: A sofa that can be used as a bed may seem like a good idea if you have frequent guests, but they can be much more expensive that a regular couch. They take a lot of room you may not have to open and even top of the line models may be uncomfortable. A blow up bed is easy to inflate and move and a queen size costs around $100.
  10. Buy clothing at the end of the season: Winter in Canada is interminable and most things are on sale by December 26th at the latest. If you can make it through the fall with last year’s wardrobe you can refurbish it with quality items at half the cost or less late in the year.

I really like the Hardware Store Shopping List for all of the do-it-yourself energy-saving projects so you save money on gas. However, by the time you fill your cart with items like caulking, weather stripping, attic insulation, low flow showerheads, programmable thermostats, dimmer switches for lights and compact fluorescent light bulbs to replace incandescent, you will definitely have a big upfront bill.

This is a great book to read once, go back to and help you set achievable goals for saving money. You can browse several chapters here and order the book online from Amazon or Indigo for about $11.00.

Kerry K. Taylor