RRSP season is nothing to sneeze at

Enough about flu season – it’s time to stop sniffling and start seriously thinking about RRSP season. The deadline date for making contributions to the Registered Retirement Savings Plan for the 2012 taxation year is just around the corner on March 1. An RRSP is a plan that helps you save for retirement while offering you some other great tax benefits. For instance, deductible RRSP contributions can reduce the amount you owe on your income tax or even give you a bigger refund (depending on your income). And, as long as the funds remain in the plan they are exempt from tax as it grows. You don’t have to make one annual lump sum to contribute to an RRSP either. RRSPs can be made easier to carry through monthly payments that suit your budget needs. However, if you are considering making a lump sum contribution before the March 1 deadline but don’t have the on-hand cash, another option is to talk to your financial advisor about an RRSP loan. There is a maximum amount you can contribute to an RRSP based on your income and how much you previously contributed. You can contribute 18 per cent of your previous year’s income, up to a maximum of $23,820 in 2013. But keep in mind, if you didn’t contribute the maximum in previous years your deduction limit will be higher. Also, if you contribute to a workplace pension plan your deduction limit will be lower.You can set up a RRSP through your financial institution such as a bank, credit union, trust company or insurance company. You may also want to consider setting up a spousal or common-law partner RRSP. The bonus to this plan is that if the higher-income spouse or common-law partner contributes to the RRSP for the lower- income spouse/common-law partner then the contributor gets the short-term benefit of the tax deduction while the spouse or common-law partner receives the income and reports it on his or her income tax return. While we’re on the topic of income tax, the deadline for personal income tax is April 30, 2013 while those who are self-employed have until June 15 unless there is a balance owed and then the deadline is April 30, 2013. As with everything in life, make sure you do your research and find out more about Registered Retirement Savings Plans and the benefits. Click on the Canada Revenue Agency link for some helpful information on RRSPs. Will you be considering contributing to an RRSP this

Are extended warranties ever worth the money?

You buy some high-end television or smartphone after mulling it over for weeks, and then you have about 15 seconds to consider buying what amounts to an overpriced insurance policy on it. When prompted, do you usually sign up for an extended warranty? Many do, of course, even though consumer experts have long recommended against buying extended warranties, a high-margin profit centre for retailers. Most products don't break down within the warranty period and even when they do, repair fees generally end up costing the same as money you shelled out, they maintain. As well, sales staff regularly mislead customers when they sell extended warranties, according to a recent BBC report. And, if these folks are to be believed, the same thing happens on this side of the ocean. Truth is, buying a warranty his isn't really a financial decision at all -- it's about regret, which is a very uncomfortable feeling that we all try to avoid, says Dan Ariely, author of Predictably Irrational. And because we want to prevent that feeling, we're all too willing to do something that's actually not that financially wise. Most of us simply want to know that we won't have to worry about this down the road.  And as a consequence, we often pay too much money for that solace, he maintains. If you're the type that might sleep easier thanks to the additional peace of mind an extended warranty might offer, go right ahead. But at least understand why, he suggests. Do you generally buy extended warranties? Using what criteria? How have things worked

How are you going to save in 2013?

If you’re like me it isn’t always easy trying to save money. It seems whenever I put a little money away into a savings account or a secret stash at home some unexpected expense always seems to arise. Car repairs, home repairs and uncovered medical expenses can pop up at any time. Begrudgingly, I am forced to dig into what little savings I have or choose to add onto my already pumped up credit cards. But I am optimistic. According to a new report from BMO Bank of Montreal, Canadians are planning to save on average about $9,859 this year. That’s an increase of $600 over the previous year. And how do they intend to save? Well, the majority are using a Registered Retirement Savings Plan (RRSP), 63 per cent; chequing account, 57 per cent; Tax Free Savings Account (TFSA), 49 per cent; high-interest savings account, 29 per cent; and Guaranteed Investment Certificates (GICs), 25 per cent. Ernie Johannson, Senior Vice President, Personal Banking, BMO, says it’s encouraging to see Canadians increasing their savings this year. While it's important to pay down debt - particularly high-interest debt - it's essential that households build themselves a financial cushion as well, whether it be for retirement or other goals. And just what are Canadians saving for? Well, the report, conducted by Pollara, indicates the majority are saving for vacations and for purchasing luxury items, entertainment and hobbies. Retirement and emergency savings tied for second spot. Other top things Canadians are saving for include home renovations (29 per cent); new vehicle (20 per cent); education (19 per cent); and a new home (15 per cent). The report also found that men plan on saving a little bit more than their counterparts by hoping to stash away $11,631 compared to the ladies with $8,091. And by province it appears that Albertans plan on saving the most with $18,035; followed by British Columbia, $11,109; Ontario, $10,465; Manitoba and Saskatchewan, $9702; Atlantic provinces, $6,698; and Quebec, $5,477. It’s always nice to be able to put a little away for a rainy day however, the study found that only half of Canadians polled feel they are saving enough to meet their goals. Some of the barriers to increased savings include high expenses (71 per cent); low income (65 per cent); and debt repayment (52 per cent). Now I can relate to that! Check out the full report here.Will you be saving money this

Adult children give parents’ money handling high marks: report

While adult children say they recognize the need to discuss inheritance and retirement planning issues, roughly half of them don’t feel they’ve done a very good job talking with their parents about these issues, according to a intra-generational study by Fidelity Investments. But they do have a much more favorable view of their parents' handling of money than what parents think of their children’s financial acumen, according to a follow-up study. Nearly half of adult children surveyed by Fidelity (47%) feel their parents actually haven't made any mistakes financially. Only one-quarter (24%) of adult children feel their folks didn't save for retirement soon enough and even fewer (22%) say mom and dad saved money in the wrong type of accounts. Parents, on the other hand, were more than happy to point out the errors their children had made, including racking up credit card debt (42%), followed by not saving for retirement early enough (38%) and not building a large enough emergency fund (36%). The parents surveyed -- to qualify for the study, they had to be at least 55 years of age, have children over 30 years of age, and have at least $100,000 in investable assets -- listed saving for retirement (38%) or for a grandchild’s education (28%) as their top priorities. What's more, nearly a third (30%) say they have no financial issues. Does this sound like your family? Do you think your parents have looked after things appropriately? Would they say the same about

Managing finances before and through a divorce

Divorce is always devastating. But for some couples, parting with their other half is easy compared to dividing income and assets fairly. While some partners may have unrealistic expectations or simply aren't emotionally ready to settle up, others are dishonest and deliberately try to hide or deplete their assets. Either way, the financial negotiations of divorce will be the largest financial transaction most individuals will ever participate in, says Justin A. Reckers, a financial planner who works with couples that have or are contemplating a split. Most every divorcing person will prefer things, at least the financial side, to remain the same post-divorce as they were during their marriage. In reality, the pay cheque doesn't go as far when supporting two completely separate households, so everyone loses financially in divorce, he points out. If you think your relationship might be on shaky ground, here are a few things he suggests you think about long before you knock on his door. * Couples may have previously decided one of the parents should stay home to raise the kids at the expense of career development. The end results in divorce are child support, spousal support, and retraining to enter the workforce outside the home. * Couples often make a joint decision not to purchase long-term care insurance because they plan to care for each other in the event they need it. When they divorce, the caregiver is lost. * A couple may choose not to set aside funds for college education because they can afford to pay the expenses from cash flow when both are working. But with two separate households college becomes a low priority when even saving for retirement seems no longer possible. * Partners may choose not to save aggressively for retirement because one expects a large inheritance to take care of things. In most circumstances an inheritance received after a divorce will only benefit one of the parties. * A couple may decide to reinvest all of the profits from their small business back into growth instead of paying down a mortgage or saving for retirement. When it comes time for divorce, it is often not possible to turn that business into cash because a sale is not advisable. Sound familiar? Knowing what you know now would you do anything