I’m Starting a New Job
You’ve landed that job you worked so hard for. Now that you’re working towards a career, you should be thinking of planning for your future. This should include long-term savings, managing your debt, and budgeting your new income and day-to-day expenses. Here you will find some useful resources to help you get started with planning your exciting future!
I need to save
High Interest Savings Account
The savings account designed for long term savings. This account is service-charge free providing you manage your money online or through telephone banking. A convenient way to save while earning more with a premium rate of interest!
Need help being consistent with your savings? Set up a recurring automatic transfer to your savings account for the day that your payroll is deposited.
Tax-Free Savings Account (TFSA)
The TFSA is a flexible registered plan that allows you to save for short or long term goals. Introduced in 2009, TFSA’s offer a unique way of savings up to a specified amount each year determined by the Government of Canada. These accounts are tax sheltered, have a competitive interest rate, and allow you to withdraw your money at any time without penalty.
- earnings are tax sheltered
- contributions are not tax deductible
- withdrawal of contribution is not taxable
- unused contribution room will accumulate each year (ie. if you don’t contribute the maximum each year, unused contribution room will always carry forward to the following year)
- withdrawal of contribution increases the contribution room for future years (ie. if you withdraw $500 from your TFSA this year, you have an extra $500 in contribution room the following year)
- 2009–2012: $5,000.00
- 2013–2014: $5,500.00
- 2015: $10,000.00
- 2016–2018: $5,500.00
- 2019–2022: $6,000.00
- 2023: $6,500
We recommend tracking your contribution room each year with your notice of assessment from the CRA.
Contributions over the Limit
At any time in the year, if you contribute more than your allowable TFSA contribution room, you will be considered to be over-contributing to your TFSA and you will be subject to a tax equal to 1% of the highest excess TFSA amount in the month, for each month you are in an excess contribution position.
If you know you will not need immediate access to your funds, you can also take advantage of our TFSA GICs with flexible term options of 1 to 5 years. With this product your funds remain tax sheltered while you earn a premium rate of interest. Note that funds invested in TFSA GICs cannot be withdrawn before the maturity date. Check out the current TFSA Rates
Registered Retirement Savings Account (RRSP)
It may seem early, but now is the perfect time to start long term savings. An RRSP is a government approved plan through which you save money for your retirement. Contributions made to an RRSP, within limits, are tax deductible and the income you earn is tax sheltered. Momentum offers three different types of registered retirement savings plans depending on your investment goals.
Savings Account RRSPs
- variable rate of interest
- immediate access
- no minimum deposit amount required
- contributions can be made through recurring transfers or payroll deductions
Fixed Term RRSPs
- Guaranteed principle and interest
- 1-5 year terms
Registered Step-up GIC
- Guaranteed principle and interest
- 5 year term with annual rate increases to protect you from inflation
Anyone with “earned income” subject to Canadian taxation may contribute to an RRSP. You can also make part of all of any contribution to a plan in your spouse’s or common-law partner’s name. You, as the contributor, are still entitled to the tax deduction.
Effect on Income Tax
After your RRSP contribution has been processed by the credit union, you will receive an official receipt. This must be filed with your tax return for that year.
Your Notice of Assessment from CRA, received after filing your return, will state your RRSP deduction limit (the maximum amount that you are allowed to invest into an RRSP) for the following year. Check out the current RRSP Rates
I need to budget
Having a budget to follow on a monthly or weekly basis is vital to ensuring you aren’t living beyond your means and that you’re taking the proper steps to invest for your future.
Check out the Government of Canada’s handy Budget Calculator
Here are few ideas to help with your Budgeting:
Set yourself clear goals
Having an idea of the direction you’re going is an important part of the budgeting process (buy a car, pay off debt, buy a house, etc.)
Pay yourself first
Always set some money aside for yourself to spend on whatever interests you. Although it’s great to pay down debt and save, you still need to make sure you have money to do the things you love.
Try to set some money aside for savings each pay. We recommend a recurring transfer to a savings account so that your funds will transfer automatically each pay day. Recurring transfers help you commit to your savings and give you the flexibility to change your amount at any time.
Participate in work pension or RRSP plans
If your new employer offers an optional retirement plan, make sure you sign up. This is a benefit you should take advantage of as young as possible so you can make the most out of your savings over a longer period of time.
Start small, think big
Commit to your savings by starting with a small amount like $25 or $50 per pay or pick a percentage of your total take home pay like 5% or 10% to stick to. If you can do more, even better! You will be surprised at how quickly these small amounts will add up. Then review your savings or RRSP contributions every year and see if you have room in your budget to increase them.
Manage your debt
Whether it’s a credit card, personal, or student loan, make sure you are on time with your payments. If you can afford to make extra payments without leaving yourself short, go for it! The quicker you can get rid of your debt, the more money you will be able to put into your savings. Remember to always start with the debts that have the highest interest rates.
Avoid carrying credit card balances
If possible, consider a line of credit in place of a high interest credit card. If you choose to have one, pay off the balance each month so you can avoid unnecessary charges.