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Strategizing my taxes

Inspired by recent posts by Saver Queen and Fabulously Broke in the City, I spent a few hours the other day contemplating moving some or all of my Emergency Fund (EF) into my RRSP account. Canadians have until March 2nd to contribute to an RRSP and use it towards our 2008 tax return.

I logged into and played around with some of the numbers. I found that I can add only $500 more to my RRSP without making an over-contribution. That $500 will also give me an extra $40 in my refund.

It hardly seems worth it for the $40, but it might be worth it for my future. $500 compounded with the almost $5000 I currently have invested might make a difference to my retirement (FB - I need one of your fancy equations to figure it out :)). Transferring $500 from my EF still leaves me with $500 for emergencies, and I will be able to bring it back up to $1000 when I get my refund in April.

Any thoughts on this? Comments and suggestions are always very much appreciated :)



  1. To me, $40 is $40. :) I don't say no to money coming back, it's like earning $540 :)

    30 years
    Compounding Yearly
    = $5,031.33


  2. I disagree. I would be weary of having only $500 in my EF. My car just needed repairs, costing $1000. So many things can happen that require emergency funds. Especially in these uncertain times, I would want at least $1000 in my EF, if not more. If you don't have the cash, you know you're going to rely on your credit cards. I understand the urge to save as much as possible, but $500 won't make a big difference. I'd say keep it in a high interest savings account.


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