How to Set Up a TFSA as a Student
Adam Griffiths - January 29th, 2022
Most students struggle to save money. With tuition, books, and living costs, building savings can feel like a huge challenge. A Tax-Free Savings Account (TFSA) can help. Here’s our guide on how to set up a TFSA as a student.
What is a TFSA
Before we get into how to set up a TFSA as a student, it’s first important to get clear on what a TFSA really is. Don’t let the name mislead you—a TFSA is not really a traditional savings account. It’s a registered investment or savings account that allows for tax-free gains.
Instead of a piggy bank, think of a TFSA as a basket. You can pick what to put in that basket from a variety of financial instruments. This includes not just cash savings, but also stocks, bonds, real estate, and more.
The amount of money that can be contributed to a TFSA is limited each year. A TFSA can be used for any savings goal and withdrawals can be made free of tax.
Instead, think of a tax-free savings account (TFSA) as a basket.
Why Set Up a TFSA?
There are a few key benefits to learning how to set up a TFSA as a student.
TFSAs are designed to help Canadians save money easier. They can be a great way to create an emergency fund or save up for big goals like a trip, a car, or a house.
They work simply—you open a TFSA, deposit money, and hopefully watch your money grow. It’s called “tax-free” because you don’t have to pay taxes when you withdraw the funds within it. This means more money for you!
There are limits to the benefits of TFSAs however. You can only deposit a certain amount of funds. If you go over this limit, you’ll have to pay a penalty which can add up quickly depending on how much money is in your account. To avoid these consequences, simply make sure you’re aware of the annual limits and stay within them!
How to Set Up a TFSA as a Student
Any Canadian who is 18 years of age or older with a valid social insurance number (SIN) can open a TFSA. You can create a TFSA with a financial institution, credit union or insurance company.
At GrantMe, we’ve partnered with Wealthsimple to help you set up a TFSA as a student!
Wealthsimple provides a personalized investment profile with low fees, expert advice, and high security to allow anyone to invest like a pro. Plus, you can get a $50 bonus when you open and fund your first Wealthsimple Invest account through our partnership!
Learn more about Wealthsimple and set up a TFSA here!
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