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Planning for next year

<p>So you’re going to miss the RRSP deadline and you’re feeling down. Don’t be — all is not lost.</p>

Monthly payments force you to save


So you’re going to miss the RRSP deadline and you’re feeling down. Don’t be — all is not lost.





Chris Snyder, chairman of personal financial advisement company ECC Group, says the first thing to remember is that unlike previous generations, today’s RRSP deposit limits carry over indefinitely. Whatever you missed this year will be added to your limit in the following year, though you do miss out on some interest.





“It’s not as big of a deal to miss a year as it used to be. Even if you didn’t make a contribution this year, you can carry it forward to next year, but what you do lose is the compound growth on your money,” Snyder said.





When it comes to payments, monthly instalments are recommended as they force you to make RRSP contributions a key part of your life, making it more likely you’ll remember to pay in. Waiting to make lump-sum payments can backfire if you don’t budget correctly or simply forget. Budgeting money in advance for a single lump sum is an exercise Snyder says not many people have the discipline for.





“Unfortunately, that often becomes tempting because you tend to dip into it, but if you can budget it now and set it aside, that’s a good thing,” he said.





Compounded interest is what really drives your RRSP forward, Snyder says, so getting started as early as possible is paramount.





“The most important thing is to do it. If somebody in their 20s put money aside now then waited 10 years, then put nothing in for another 10 years, in the long run they’d still be ahead of somebody who only started putting away at the age of 30,” he said.





The key to getting motivated to save, Snyder says, is to remember all the tax savings you can gain by putting money into your RRSP. “Whatever you contribute in certain limits is tax deductible. Don’t just think of it as costing you — it’s paying you back in the long term,” he said.


 
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