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Kids, saving, spending and how an RRSP can help.September 11, 2017 Blog, Education, Life Events, Planning Well
Most people think about spending rather than saving. It is a thought process that we need to change.
Many young Canadians today earn some kind of income, whether it’s from babysitting, working as a lifeguard in a community centre, or delivering papers. Statistics Canada says almost 40 per cent – or more than 822,000 – of Canadians aged 15 to 19 years old are employed.
Regardless of the size of the cheques, it’s important for youth to start saving money.
Canadians tend to overlook RRSPs when thinking about saving for their children. There is a common misconception that you have to be 18 to open an RRSP account.
There is no minimum age for an RRSP account (although there is one exception: brokerage accounts), an RRSP can be set up with a letter of consent from a parent or legal guardian, they will retain signing authority until the holder is 18 years old.
To make contributions to an RRSP account, a person need to have earned income the previous year and filed an income tax return with Canada Revenue Agency. This creates RRSP contribution room, has a certain maximum determined by CRA, for 2017 the maximum is $26,010.
It could be wise to let the contribution room sit unused and to start putting money into an RRSP when incomes rise. The earlier kids learn how to save, the better off they will be in the long run.