Wading into the adult pool has been unsettling. I feel as if I've been hit with a hard dose of reality ever since I turned the big 3-0. It's probably all the societal expectations I've subconsciously put upon myself but nevertheless, the anxiety over unmet expectations is there and I am doing my best to accept all the things I cannot change and improve upon the things I can.
Drink more water, sleep earlier, eat more vegetables, stop procrastinating.
I'll get to the point, I promise.
Further to the basics above, I've been trying to teach myself things I should know all about by now, and one of those things is the Tax Free Savings Account, otherwise known as the TFSA. I'm familiar with the fact that it's a bank account in which you can deposit a sum of money for saving or investing, and any income you make from those investments are tax-free. However, what I wasn't familiar with were the rules surrounding the TFSA and so today, I decided to hone in on this via my good friend, Google.
Basically, everyone is allowed to contribute $5,500 a year into this account. The TFSA was established by the government in 2009 and back then, the maximum contribution room was only $5,000. In 2015, it was $10,000. It may change from year to year, and if you log into your CRA account, it will tell you what your contribution room for the year is.
If you don't deposit the full $5,500 in a calendar year, that unused room is carried forward to the next year and it will keep accumulating.
Whatever you withdraw from the account in one year, can only be deposited back in a later year. For example, if you withdraw $1 from your TFSA in 2016, you can then deposit $5501 (your yearly contribution room + $1) in 2017. Whatever you withdraw in one year gets added to your contribution room in the following year.
It's crystal clear to me now and I don't want to forget this again, so I am posting about it and holding myself to it. Hope this is helpful to anyone who's trying to adult like me!