Are you scrambling for money to contribute to your RRSP before the deadline? You’re in good company: according to a survey by BMO, 60 percent of Canadians are worried because they don’t know where they’re going to find the money for their RRSPs before March 1st. Money contributed by that date can reduce your tax bill by up to 40 percent — for many of us that can mean a nice fat cheque from the government (read this article on the ins and outs of RRSPs and tax). But don’t panic if you’re not sure where you’re going to find your RRSP contribution this year. Here are four tips on where to get your RRSP contribution, last minute:
1. Borrow it
RRSP loans let you borrow the money to invest in your RRSP. Once the money’s in, use your tax return to pay down the loan and get rid of the balance within the year through monthly payments. Of course, that’s the plan. To make it actually work, you have to be disciplined and pay it off. Pay interest on that loan for longer than a year and it will eat into your returns.
2. Dig it up
It might not be in the couch cushions, but you might (just might!) have money parked in a savings account or in an investment you’ve been planning to cash in (a low earning GIC or a stock perhaps?). Put that money to work in your RRSP instead and use the money you get back to bump up your savings account again.
3. Cut expenses
Got an expense looming that you can put off? Whether it’s a weekend getaway or a new car, try postponing that expenditure for a month or two and put the money into your RRSP. Use your tax refund to help fund your splurge later — and rest easy knowing your retirement savings are growing.
4. Get on top of it next year
Trying to scrounge up money before the March 1st deadline is stressful, especially after the financial toll the Christmas holidays can take on a person’s January and February budget. Instead, set up automatic monthly payments to your RRSP, even if it’s only $50 or $100 a month, you’ll be that much further ahead next year.