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Canada’s Peter Pig’s Money Counter

NEW Canada’s Peter Pig’s Money Counter
Learning about money is fun with Peter Pig. Kids can practice identifying, counting and saving money while learning fun facts about Canadian currency with this interactive educational game.
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Early savings reap long-term payoff

Early savings reap long-term payoff

By Carla Hindman, Director of Financial Education, Visa Canada

I found it hard to make my paycheque stretch in my early twenties. Saving didn't seem feasible – there were just too many expenses. And, like many, during my early workforce years I neglected to have a portion of my paycheque automatically put into a retirement account.

It's ironic that when you're young and struggling you can make the biggest impact on your financial future. Now, quite a few years later, my RRSP is getting into decent shape and I'm already thinking about the next hurdle – saving for my son's university education.

Here are a few ideas to help get you or your children on the right track:

The power of compounding. At 22, you're twice as far from age 65 as from birth, so it's hard to think seriously about retirement. But compound earnings – where interest earned on your savings in turn generates more earnings – can snowball over time. Here's an example:

Say you're 22, earn $30,000 a year and put aside 6 percent of your pay ($150 a month) until age 65. At a 5 percent average annual rate of return, your $77,400 investment will grow to about $263,000 by then. But if you don't begin saving until 32 and set aside the same monthly amount, you'll only accumulate $147,000 by 65 – a huge difference. By increasing the percentage of pay you save and factoring in annual raises, your savings will skyrocket even further.

Be tax smart. If you don't put money into an RRSP, you're missing a great savings opportunity. RRSP contributions are pre-tax dollars, meaning the contribution lowers your taxable income and thus, your taxes. You aren't taxed until withdrawal at retirement, when your taxable income and tax rate may be much lower.

Many companies match a portion of your contributions as an incentive to save – commonly 50 percent of your first 3 percent of pay saved, or better. That's like getting a 50 percent rate of return. If your company offers any sort of matching program, be sure to contribute enough to take full advantage of the match; otherwise, you're wasting a sizeable benefit. Practical Money Skills Canada, a free personal financial management site sponsored by Visa Canada, has information about RRSP savings programs and other employer-provided benefits ( As always, consult a financial professional regarding your personal situation.

Trouble saving? Start small. Put leftover change in a jar each night and skip a few lattes. Every few weeks, deposit the money in a high-yield, money market savings account. You'll be surprised how quickly it accumulates. Whenever you get a raise or bonus, bank at least part – or better yet, increase your RRSP contribution.

To give your children a leg up for university savings, you can open a Registered Education Savings Plan (RESP) and suggest that relatives contribute to it instead of buying gifts. Your kids won't miss a few extra toys and the money grows tax-free until it's withdrawn for qualified educational expenses, such as tuition, books, room and board. As an added bonus, the federal government will provide a grant of 20 per cent of the first $2,500 in annual contributions made to an RESP – up to $500 per year.

Saving is never easy, but if you establish good habits early on, you'll find the long-term rewards are too good to pass up.

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.

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