Saving money just got a lot easier! With newly launched TFSA programs, saving and withdrawing money is fast, reliable, and completely tax-free. Whether you’re saving for a big purchase or just putting money away for a rainy day, Canada’s TFSA system lets you save a substantial amount of money every year without penalties. Started in 2009, TFSAs are the perfect option for singles, families, or those saving for retirement.
As a long-term investment, TFSAs are great for ensuring your money is YOURS! Don’t settle for other savings accounts that can be taxed and you must pay interest on throughout the course of your account. TFSAs are completely tax-free, and everything you place in is yours to keep. With a 1.05% interest rate, you can indefinitely make money on your investment for as long as you keep your account. Saving money through a TFSA doesn’t affect any income-tested benefits for children or the elderly!
If you have a large amount of debt or credit card interest, making sure you rid yourself of any overhang before opening a TFSA is very important. Once debt-free, any money you put in will pay you back in time. Unlike other savings accounts and checking accounts you may have, a TFSA is one-step removed. This makes it much easier to save money and make you less likely to withdraw money for frivolous or unnecessary purchases. Having this requirement is especially good for people who are using their TFSA as an emergency fund.
How can a TFSA make saving money faster?
Once you decide a TFSA is right for you, setting up an automatic payment plan can help you manage your account easier. You’ll know exactly how much is going in without having to spend too much time transferring the money yourself. It is important to make sure you don’t exceed the annual contribution cap. Starting in 2015, the cap for all TFSAs was increased to $10,000 annually. And, with new Kickstarter Programs sprouting up, you can now save in 2015 for contributions for 2016! This gives you a jump start on your savings.
If you can’t pay the full amount annually, don’t worry. There’s no penalty for saving less. In fact, any room you have left over is transferred to the next year! But be wary, and over contributions will be taxed at 1%. Being mindful of your contributions guarantees you’ll always remain tax-free on any growth or withdraw on your TFSA!Tweet