Want an Instant Raise?

Who doesn’t want a raise? It could be a lot easier than you think! Many companies offer employer matched savings plans. This is essentially ‘bonus’ money as a result of you saving some of your pay cheque. Two commonly offered matching plans are RRSP contribution matching and stock purchase plans.

For the RRSP a common policy is that for every x% of salary contributed to your RRSP your employer will match it (to a certain percent or dollar maximum). So if you make $75,000 a year and contribute 3% of it to your RRSP you will have saved $2,250 annually. If your employer matches that your total savings will be $4,500. This is essentially an extra $2,250 for when you retire!

Three things to do now to take advantage of these benefits!

  1. Find out if your company has an employee saving matching plan. Try asking your manager, HR, or payroll.
  2. Find out how to enrol. This is usually some paperwork and setting up an account at a preferred brokerage.
  3. Enrol in everything your company offers – why chose between stocks or RRSP? Contribute to both if you can for double the savings.

Still not convinced?
When an employer evaluates how much they pay employees they often use the term total rewards. That is much higher than your salary alone. It includes all of your benefits:
– Salary
– Bonus
– Commission
– Health and dental benefits
– Insurance
– Retirement plan
– Stock purchase plans
– And much more

If the company considers all of these your total rewards it is important you do to. Not making use of these is leaving money on the table. Would you walk away from 3% of your salary?

If you are worried you don’t have that much money to save there are a few things to consider. First, carefully consider if you could change your habits to be able to save a little more each paycheque. If that isn’t possible, second, find out if there is a vesting time on the amount you saved or the company matched. In many cases you can take your contributions out immediately and the company’s shortly after. This means the money isn’t free it takes a couple minutes of your time to move it around – likely a good investment of your time.

Additional resources
– RRSP overview and answers to common questions here
– RRSP contributions max here

Save Smartly!

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