Would you like to save $10,000?
How about over $60,000?
This doesn't have to be a daydream: for young parents, these massive savings are achievable as long as you have the right knowledge!
A note before continuing: If you have large amount of debt, managing your debt will always come first. Luckily, your income tax refund can help move you into debt-free living - book a chat with us here to see your options.
Assuming you hold very little debt, however, and that your expenses are modest, this is how you can rapidly grow your money in just a few years! For parents with less than $200,000 in income and children under the age of 18, your key is the Canada Child Benefit (CCB).
Let’s look at this example scenario in detail:
:: Your family’s income is $75,000
:: Income taxes paid are $15,070
:: You have 2 children, ages 8 and 11
This calculates your annual CCB at $7,803.96, and your monthly amount will be $633.86. That is pure government benefit!
Now, let's take a rounded $7,800 and move it into an RRSP for you.
:: your RRSP contribution room based on your income is $13,500
:: savings placed in your RRSP is $7,800
:: tax refund based on the RRSP deposit is $2,313
Wow - that means $10,000 in savings right there!
Imagine what this will look like in a few years. And look at what you could eventually do with all of this money!
- You could purchase a family home and access the funds through the Home Buyers Plan - shifting the deposits to your partner gives you the ability to access up to $70,000 towards that home
- After servicing any existing debt, you could use the tax refund to save for your children's education
- You could contribute the combined savings of $10,000 to your RRSP
Here’s some quick math to show you the possibilities:
:: Deposit $7,800 until your eldest turns 18
:: Extend the 7-years of deposits = $54,600
:: Investment gains at a level 5% annually (to keep it simple)
That is $66,683 in your RRSP!
Finally, let's turn that around and save both the CCB and the tax refund:
:: Deposit $10,000 until your eldest turns 18
:: Extend the 7-years of deposits = $70,000
:: We'll assume investment gains at a level 5% annually, to keep it simple
Astounding numbers! $85,491 in your RRSP!
All you’re doing here is keeping your CCB - which is money that you were receiving for free from the government in the first place. In total, that's $85,491 in just 7 years. You still have a younger child who will take another 3 years to reach 18, and although your CCB will drop, you can continue making deposits into the RRSP.
The concept is simple, and I would love to speak on this with you. Click here to book your timeslot - I am excited to see how much money you can save!