As February rolls around, many Canadians aren’t just shivering from the cold—they’re also feeling the pressure of the upcoming RRSP (Registered Retirement Savings Plan) contribution deadline. With the February 29 cutoff looming, Canadians are scrambling to maximize their contributions, which can both boost retirement savings and lead to a healthier tax refund.
However, saving a large chunk of money for your RRSP right after the holiday season can feel daunting. “Coming up with a significant amount of cash can be difficult, especially so soon after the holidays,” says Aurele Courelles, a financial planning expert with Investors Group. But don’t worry—Courelles offers several simple strategies to help you stay on top of your RRSP contributions year-round.
1. Set Up a Pre-Authorized Contribution (PAC) Program
Rather than rushing to save last-minute, you can avoid the financial crunch by setting up a pre-authorized contribution (PAC) program. This allows you to make automatic, regular contributions to your RRSP throughout the year. By saving consistently, you’ll “get the money working for you earlier,” says Courelles.
Think of a PAC as a way to enforce financial discipline, helping you build a bigger nest egg by the time you retire. It’s like paying yourself first, and it takes the stress out of saving when the RRSP deadline approaches.
2. Make Saving a Priority
With daily expenses like clothing, entertainment, mortgage payments, and even college tuition competing for your money, it can be tough to prioritize saving. However, doing so can significantly improve your long-term financial security.
Courelles recommends starting with a budget. A well-thought-out budget helps you track your expenses and identify where you may be overspending. Any money you free up could go toward your RRSP.
If you’ve already set up a PAC, you’ve already taken a huge step in making saving a priority. “With a PAC, you’re paying yourself first,” says Courelles. “The remaining income can then be used to cover your lifestyle expenses, including paying off consumer debt.”
3. Manage Your Credit Card Usage
Credit card spending might seem harmless, especially for smaller purchases, but it can chip away at your ability to save for retirement. Even if you have a grace period before interest kicks in, those purchases are still money that could have been invested.
“Having discipline with your credit card spending, along with managing other debts, will ensure you’re able to invest in your retirement savings,” says Courelles. Keeping a tight rein on credit card use can free up more funds for your RRSP.
4. Avoid Interest Charges
One of the biggest drains on your RRSP savings is high-interest debt from unpaid credit card balances. “Not sticking to a budget or spending beyond your means diverts your focus away from saving as a priority,” says Courelles. Carrying a balance on your credit card means you’re paying high interest charges, which leaves you with less money to contribute to your retirement goals.
By staying on top of your budget and paying off credit card balances in full each month, you can ensure that more of your money goes toward building a solid financial future, rather than paying down debt.
With these tips from Aurele Courelles, you can stay ahead of the game and be better prepared for the RRSP season—whether it’s months away or just around the corner. By automating contributions, prioritizing saving, controlling credit card use, and avoiding interest charges, you’ll be on the right path to a comfortable retirement.
