bekolay.org

Giving money advice is tricky business. Everyone's financial situation is different, so in general, there is no universally good advice. This post does not aim to give any advice. I aim only to look deeper into an issue I encountered recently.

The question I was faced with was, essentially, should I open an RRSP if I'm saving for a house?

I am in a fairly stable financial situation; I have no debts, and while my income is not worth bragging about on the internet, I have enough that I can put a chunk away into savings. A book that I half-read at one point espoused the idea that putting 10% of your income in savings is basically all you need to do to solve most of your financial problems.

While I'm not one to say if this is a good or a bad idea, I've always been annoyed by how that simple advice quickly becomes more complex once you realize that "saving" is not a passive process: saving is something you have to do. The amount of effort ranges from opening up a savings account to spending most of your day watching the stock ticker (and your life) roll by.

I've always heard the advice that you should start an RRSP as soon as you can, so when I went to open up a savings account it seemed natural to also open up an RRSP. The person at PC Financial asked me a question that I had honestly never really thought about.

She said that opening the RRSP would be a good idea as, later on, I could use the money in the RRSP as a down payment through the Federal Home Buyers' Plan. Well, she didn't really say that, she said something like that, and then later I googled it (see a verbose explanation or a bureaucratic one).

When I talked to grandfather (a certified accountant who has always graciously done my taxes) about it, he noted that I don't pay enough taxes to make an RRSP worthwhile, and that it would be more beneficial to me to keep my savings more liquid.

Some websites also say that, even if I did open an RRSP, I shouldn't use the Home Buyers' Plan.

So should I open an RRSP? I did, but I haven't contributed to it. And I don't plan to for the time being. Most of my money is in a savings account, so as long as it's making some amount of interest, that's good enough for me.

If there's one thing I've learned in the little time I've taken to research the subject and write up this entry, it's that there are so many programs and rules and stipulations that there is no such thing as an objectively optimal financial decision. In that sort of environment, I'm much happier spending my free time reading webcomics and playing dumb (but brilliant) games. That's what I'd suggest you to do as well.

Unless you're in debt.