Claim your share of family freebies
Raising kids costs money — big money. Yet many parents aren’t collecting the government benefits and tax credits due to them.
To pocket some extra cash with minimal effort, make sure you’re signed up for these programs:
Canada Child Tax Benefit Higher-income families might assume that they don’t qualify for this monthly stipend. But you have to earn a lot ($107,000 with two kids and a stay-at-home spouse) before the benefit is clawed back, or taken away, entirely. Plus, it’s tax-free! Simply fill out and submit the online application form at servicecanada.gc.ca; under Programs and Services for You, click on Canada Child Tax Benefit (CCTB). You’ll need a Social Insurance Number for each of your children.
Universal Child Care Benefit If you have two kids under six, the UCCB is worth $2,400 a year to your family — regardless of what you earn. Yes, it’s taxable, but you still come out ahead. If you already receive the Canada Child Tax Benefit, you’re automatically enrolled; otherwise, you must apply (see above for how-tos).
Children’s Fitness Tax Credit You can reduce your tax bill by up to $500 per child under age 16 if they’re enrolled in qualifying fitness or sports programs, such as hockey, soccer, gymnastics and even dance (go to the Canada Revenue Agency website for more info). Expect to get $75 back for every $500 you spend on your children’s programs.
Child Disability Tax Credit This is a monthly supplement to the CCTB for parents of children under 18 who have a disability. If you are the parent of a child with a severe and prolonged mental or physical impairment, and your family already qualifies for the CCTB, you should also receive the Child Disability Benefit of up to $2,455 a year, tax-free. To qualify, your kids must be under 18 and have a Disability Tax Credit Certificate. For more info, go to the Canada Revenue Agency website and search for Form T2201.
Eliminate your budget busters?
Feel you’re always low on cash? These small everyday changes will help you hang on to more money for spending and saving:
Become a draft dodger You can slash home heating and cooling costs by up to 20 percent just by plugging up leaks around windows, doors, baseboards and attic hatches, according to Natural Resources Canada. The materials you’ll need (caulk and weatherstripping) are inexpensive, and if you currently spend $2,000 a year on heating and cooling, you might save as much as $400!
Play it cool Use a programmable thermostat to lower your home’s nighttime temperature by even one degree Celsius and you’ll knock 2% off your household heating bill. Pile on an extra blanket or snuggle into some flannel jammies, and you won’t even notice the difference while you sleep.
Year-round, try switching three loads of laundry a week to cold water, and you’ll save $27 a year, according to BC Hydro. Hang laundry to dry on a clothesline or indoor drying racks, and you’ll pocket another $70 a year (assuming you dry 20 loads a month).
Stock a fast-lane kitchen Always keep rice, canned tuna, pasta, quick-cooking lentils and tinned beans, soup, spaghetti sauce and tomatoes on hand so you can whip up a cheap, nutritious meal in minutes instead of turning to takeout. (Need some inspiration? Search for quick recipes that use the ingredients you already have in your pantry at Todaysparent.com/recipefile).
Go for faux Generic or store brands sell for approximately 25% less than heavily advertised name brands. So if your kids are cuckoo for Cocoa Puffs, buy the knockoff and pour it into the name-brand box or a plastic storage container. They get what they want (sort of) and you save a few loonies.
Get paid for purchases No-cost loyalty programs at supermarkets and drugstores can take a nice chunk out of your everyday expenses. Take advantage of extra-points days by stocking up on diapers and other pricey essentials.
Shop on the edge The outside aisles of the grocery store are usually home to the essentials (fresh produce, meat, seafood, bread and dairy), while the more expensive ready-made meals and packaged foods are located in the inner aisles. Stick to the perimeter of the supermarket and you’ll shrink your grocery bill.
Swap toys Instead of hitting the toy store to quell kids’ boredom, try trading with friends; they’ll get maximum variety at minimal cost. Another option: Ask your local library or community centre if there’s a toy library in your area. You’ll pay a nominal fee to “check out” toys for a period of time.
Slash your banking fees
These changes can save you hundreds of dollars a year in bank account and credit card fees:
Try to maintain minimum balances Let’s assume that if you keep at least $1,000 in your account, the bank will waive your usual $6.50 monthly service fee. Make sure your balance doesn’t dip below $1,000 for a full year and you’ll save $78.
Consider cash back If you’re desperate for cash and your own bank doesn’t have an ATM nearby, save non-customer fees by using your debit card for a needed purchase and asking the store cashier to give you cash back.
Go virtual Because online banks have lower overhead costs, ING Direct, Coast Capital Savings and President’s Choice Financial charge no fees and frequently pay higher interest rates on your deposits.
Make budgeting a family affair
Friday night pizza is an institution for Scott Hannah’s teens (Connor, 15, and Pearce, 14) and their friends. But with university looming, Hannah, a professional credit counsellor, struck a deal with the boys. “You make the pizza,” he told them, “and I’ll take the money we save and put it into your RESP.” Now the family buys prepared crusts and all the toppings, and the boys assemble it all. The savings — about $10 a week — add up to $520 a year. “Budgeting is about setting priorities,” Hannah believes. “It’s good to start young.”
It’s never too early to shop for the holidays
Christmas, birthdays, vacations, back-to-school clothes, insurance payments and other seasonal expenses can torpedo your savings. So plan ahead for them, advises credit counsellor Scott Hannah. Calculate how much cash you’ll need for all your seasonal purchases, then divide the total by 12, and deposit that amount each month into a separate, no-fee banking account so you aren’t tempted to spend it ahead of time.
3 tips for managing debt
Do you feel like credit card and loan payments are taking over your life? Here’s how to get your debt under control so you’re able to not only cover minimum payments, but also pay off what you owe:
1. Get a LOC on it We know — you had to buy baby furniture and fix the roof, and now you’ve got credit card bills up the yingyang. Credit-card money is the most expensive kind you can get. If your balances are high, you may find that you’re using all your available cash just to cover the minimum payments, and that’s a bad trap to fall into; soon you’re paying interest on top of interest and watching your balances grow instead of shrink. The solution? Talk to your bank about setting up a low-interest line of credit (LOC) or debt-consolidation loan, advises Rock Lefebvre, vice-president with the Certified General Accountants Association of Canada. If you have $5,000 in debt, and are able to drop your interest rate from 19% to 6% by transferring what you owe to a line of credit, you’ll save $650 a year in interest payments alone.
The next step: Focus on paying off the new loan and avoid the credit cards until you do. Don’t trust yourself not to rack up more debt? Cancel the cards, keeping just one, for emergency purposes, in a can of ice in the freezer. The effort required to thaw it will ensure you don’t use it mindlessly.
2. Choose a better credit card Compare rates on scads of Canadian credit cards with the online selector tool at fcac-acfc.gc.ca. Then switch cards to cut down on fees and interest costs or get a package of no-fee perks that your current card doesn’t offer.
If you’re among those wise souls who faithfully pay their credit card purchases in full each and every month, choose a cash-back card. The rebate you earn, usually 0.5% of purchases, will slash your monthly payment once a year.
Or sign up for a loyalty card: It will earn you bonus points to offset the cost of groceries, home renovation items or drugstore purchases at your favourite chain. Think about how and where you shop when choosing the no-fee card that will deliver the biggest benefit to you.
3. Target debts one at a time Perhaps you don’t own a house or car to serve as collateral for a low-interest loan, or you’re simply too far in the red to qualify for a low interest rate. BC credit counsellor Scott Hannah says that your best strategy is to make at least minimum payments on all of your debts, but pay a little extra every month on the credit card with the highest interest rate. When that’s paid off, close the account. Then reallocate your extra cash (including the money you’re now saving on interest) to the card with the next highest rate, and so on, until you’re completely debt-free.
Max out your savings
Even if you can only afford to set aside a few dollars every month, you can still build a tidy nest egg. Use these tips to help speed up your progress:
Make savings automatic Ask your employer or the bank to automatically whisk a set amount of money per paycheque into an RRSP, Tax-Free Savings Account (TFSA) or a regular high-interest savings account. If you worry about running out of money between paydays, start small and gradually ramp up the amount you allocate to savings. Consider that $50 every two weeks will grow to $35,597.84 over 20 years, assuming you earn 3% annually on your investment. Not including interest, the total would be $26,000.
Put your eggs in different baskets Want to save some cash for a kitchen reno or family vacation? Open a separate account you earmark for that goal and you’ll be “a lot less likely to spend that money on trinkets,” says Rock Lefebvre of the Certified General Accountants Association of Canada.
Every family should also have an emergency fund, and a TFSA is a great place to put it, says Gail Beeby, a personal finance speaker and the author of No Hype: The Straight Goods on Investing Your Money. Unlike in a registered account, such as an RRSP or RESP, you can withdraw money anytime without paying tax on it, although some banks charge withdrawal fees. The only catch is you must wait until the following year to replace it (go to tfsa.gc.ca for more info). Set your sights on building enough of a stash to cover three to six months of essential expenses (food, mortgage and other debt, utilities).
Get the best interest rate Could your money be growing faster? Shop around to find a higher rate of interest at fcac-acfc.gc.ca. Visit redflagdeals.com to compare rates on various savings products from GICs to TFSAs.
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