You might have seen me working at my computer more than usual in the last little while. You might also have heard me saying some of those words I tell you not to use. These two things are connected.
It’s because this is the time of year that’s known as “RRSP Season”. Our Government has some strange rules about money and what you can (or should) do with it. One of them is that if you deposit your money in a “Registered Retirement Savings Plan”, you get a break on the taxes you have to pay every year. You get a couple of months after the end of the year to make your deposit, so here we are, a few days before the deadline. I’m trying to figure out how much money to put in, and which ways to invest it so that it grows faster. But, like a lot of people, I’m not much of an expert on this stuff, so it can be frustrating.
(By the way, I should mention that you still have to pay taxes on that money, just not until later when you take it out of the bank again, usually after you’re retired and don’t work anymore. It’s kind of like the school bully saying “I’m not going to take your lunch money now, but I will be taking it from you one day in Grade 12.”)
I can hear your eyes glazing over as you read this. “Savings accounts and taxes are grownup stuff,” you say. “If it was important for kids I’d be learning it in school.” Don’t get me started. I think you should be taught about it, but it seems there’s no time, what with the Science and Social Studies and your 60 minutes of daily physical activity and everything else. Let me tell you why it’s important.
You know that allowance you get? It’s a few dollars every week that we give you for two reasons. One, it gives you some freedom to spend money on whatever you want, which is fun for you and which stops you and me from getting into arguments when we go to the mall. The second reason is to help you learn what to do when you want something and don’t have enough money to pay for it. Not having enough is usually what we’re arguing over at the mall anyway – I’m just passing the whole issue off to you.
I know you like comic books and candy, but if you buy that stuff all the time you’ll never have enough to get that NHL video game you want “so badly”. You have to save some of your cash every week, and build up those savings until you have the right amount. That takes a long time, and it’s hard to want to save money when your brother is reading Batman and chewing gum.
Well, it’s the same thing for grownups, except we have to prepare for the time in our lives when we don’t go to work anymore. Once we’re retired, the money for our comic books and candy and video games (and other less important stuff like food and shelter) is going to have to come from somewhere.
The problem is, because most of us weren’t taught about money growing up, we’re not so good at saving either. And, because the Government wants us to help ourselves before asking them, they use things like RRSPs and tax breaks to encourage us to save. It seems like an okay idea, even if it feels like the school bully is dragging us to the bank by our ears.
There’s a wise old saying that goes something like this: “If you always spend one dollar less than you earn, you’ll always be rich.” Well, one day you’ll need to know where that one dollar is going to come from. And that’s why you should learn to save.