TFSA (Tax Free Savings Account) is a way for people to set aside money (the Savings in TFSA) tax-fee throughout their lifetime. The Tax-Free part means that any earned interest or growth on the funds inside the TFSA is Tax-Free. As for the Account part, well, there are many types of accounts that you can utilize for this, including but not limited to, savings accounts and investments.

On January 1, 2025, those who are eligible will have a lifetime TFSA contribution limit of $102,000. This means that if you were 18 years old or older in 2009 when the program started, you can have contributed up to $102,000 in your TFSA. You can even have multiple accounts that are designated as a TFSA account, as long as you do not go over the lifetime contribution limit.

IMPORTANT INFO: You must keep records about your TFSA transactions to make sure that your contributions do not go over your TFSA contribution room. If you do, you will pay penalties for over-contributing.

Any person who is a resident of Canada with a valid Social Insurance Number and is 18 years of age or older can open a TFSA.

Annual TFSA Contribution Limit

To open a TFSA, you must do both of the following:

1. Contact your financial institution, credit union, or insurance company (issuer).
2. Provide the issuer with your SIN and date of birth so the issuer can register your qualifying arrangement as a TFSA. Your issuer could ask for supporting documents.

Why is this important?

Having a TFSA is an important tool to help you save money for the future. It can be used to house your Emergency Fund, or as part of a strategy to save for a home downpayment – you can even use this money as part of your retirement plan. The great thing about having one is you get to decide when and how you use this money, with a tax-free growth benefit.

For those #WealthyCuzzins who are using the Grow Your Savings Tracker to track their savings to reach the annual contribution limit of $7,000 for their TFSA, each of the 100 spaces would be $70 saved. I know this may be difficult for most people given the current economy. There is an entire year (minus a few days) that we can try our best to reach this goal. Challenge yourself Cuzzin!