A special savings account where your money grows tax-free and you can take it out anytime without paying taxes. Think of it like a magic piggy bank where whatever you earn inside stays yours completely. Available to Canadians 18 and older with an annual contribution limit ($7,000 in 2025).

A retirement savings account where you get a tax refund when you contribute, but you pay tax when you withdraw in retirement. Your money grows tax-free inside the account until you take it out. The government is basically giving you a discount now if you promise to save for later.

A new account (launched in 2023) that combines the best features of TFSA and RRSP for first-time home buyers. You get a tax refund when you contribute AND you can withdraw tax-free for your first home. Maximum $40,000 lifetime contribution, $8,000 per year. Unlike RRSP, you must contribute by December 31. There is no 60-day grace period.

A savings plan for your child's education where the government adds free money on top of your contributions. Contribute up to $2,500 per year and get $500 free from the government (a 20% match). Lifetime maximum of $50,000 per child.

What your RRSP becomes when you turn 71. Instead of saving, you start taking money out regularly. The government requires you to withdraw a minimum amount each year and pay tax on it.

A locked account that holds pension money when you leave a job. You cannot touch the money until retirement because it is locked in to ensure you have retirement income. Similar to an RRSP but with stricter withdrawal rules.

What your LIRA becomes when you start taking retirement income. Similar to an RRIF but with both minimum and maximum withdrawal limits. RRIF only has minimums. The maximum limit ensures your money lasts longer.

An investment account registered with the Canadian government that gets special tax benefits. Examples include TFSA, RRSP, FHSA, and RESP. The money inside grows tax-free or tax-deferred, and the government limits how much you can contribute each year to ensure fairness.

The tax rate you pay on your last dollar of income. If your marginal rate is 30%, every extra dollar you earn means you keep 70 cents and pay 30 cents in tax. This is different from your average tax rate because Canada uses tax brackets where you pay different rates on different portions of your income.

The actual money that lands in your bank account after all deductions (taxes, CPP, EI) are taken from your gross salary. Also called net pay. This is what you actually have to spend.

Your total income before any taxes or deductions are taken off. It's the number on your job offer or T4 slip.

A mandatory Canadian government retirement plan. Both you and your employer contribute from your paycheque. When you retire (earliest age 60), you receive monthly payments for life. The more you contribute and the longer you wait to start collecting (up to age 70), the bigger your payments will be.

Money deducted from your paycheque that provides income if you lose your job, take parental leave, or need to care for a sick family member. Think of it like job loss insurance that everyone pays into.

If you have a workplace pension, this number reduces your RRSP contribution room. It's found on your T4 slip (Box 52). The idea is that you're already saving for retirement through your pension, so you get less RRSP room.

A workplace pension where your employer promises you a specific monthly payment in retirement, usually based on your salary and years of service. For example: 2% times your years worked times your final salary. The employer takes all the investment risk. Often called the gold standard of pensions.

A workplace pension where you and your employer contribute a set percentage of your salary, but your retirement income depends on how well the investments perform. You take the investment risk. Similar to an RRSP managed by your employer. You get whatever the account is worth when you retire.

An RRSP set up through your employer where contributions come directly from your paycheque. Your employer may match contributions (free money). Unlike some pensions, this is your account and you keep it if you change jobs.

Income ranges with different tax rates. Canada uses progressive brackets where you pay more tax as you earn more, but only on the portion of income within each bracket. Making more money never results in less take-home pay.

An amount you can subtract from your income before calculating taxes. RRSP contributions, childcare costs, and union dues are deductions. They reduce how much income you pay tax on.

An amount directly subtracted from the tax you owe. Better than a deduction because it reduces your tax bill dollar for dollar. Canadian examples include basic personal amount, Canada employment amount, and medical expenses.

A document the Canada Revenue Agency (CRA) sends after you file your taxes. Shows your refund or balance owing, RRSP contribution room for next year, and other important information. Keep it safe because you will need it for mortgage applications and other financial matters.

Income tax you pay to your province in addition to federal tax. Each province has different rates and brackets. Combined federal + provincial tax determines your actual tax rate.

Getting paid every two weeks, which equals 26 paycheques per year. Not the same as semi-monthly (24 paycheques). Two months per year you will receive three paycheques instead of two.

Getting paid twice per month, usually on the 15th and last day, which equals exactly 24 paycheques per year. Each paycheque is the same amount.

The cost of borrowing money, shown as a percentage per year. If you borrow $100 at 10% interest, you'll owe $110 after one year. Lower is better when borrowing, higher is better when saving.

The smallest amount you must pay on a debt each month to avoid penalties. Paying only the minimum means you'll be in debt for years and pay tons of extra interest. Always try to pay more.

Taking out one new loan to pay off multiple smaller debts. The goal is to simplify payments (one instead of many) and ideally get a lower interest rate. Imagine trading five messy piles for one organized stack.

A debt payoff strategy where you tackle your smallest debt first, then roll that payment into the next smallest. It builds motivation through quick wins. You might pay slightly more interest than avalanche method, but many people stick with it better.

A debt payoff strategy where you attack the highest interest rate debt first. This saves you the most money in interest over time. Mathematically optimal but can feel slow if your highest rate debt is also your biggest.

A card that lets you borrow money for purchases with very high interest rates (often 20% or more). If you pay the full balance each month, no interest is charged. If you carry a balance, the interest charges add up fast. Best used only if you can pay it off in full.

Debt with interest rates typically above 8-10%, like credit cards (20%+), payday loans, or some personal loans. This type of debt grows fast and should be your first priority to pay off because it costs you the most money.

Canadian government loans for education with lower interest rates than most debt (currently prime rate). You receive a 15% non-refundable tax credit on the interest you pay, making the effective cost even lower. If struggling with payments, look into RAP (Repayment Assistance Plan).

A government program for Canadians struggling to repay their student loans. Can reduce or pause your payments based on income. Prevents default and protects your credit score. Available for both federal and some provincial student loans.

A flexible loan where you can borrow up to a set limit, pay it back, and borrow again. Interest rates are usually lower than credit cards (often 6-10%). You only pay interest on what you actually borrow.

Everything you own (assets) minus everything you owe (debts). The clearest picture of your financial health. A positive net worth means you own more than you owe. Having negative net worth when starting out is normal.

Things you own that have value: cash, investments, your home, your car. Basically, stuff you could sell for money if needed.

Money you owe to others: credit card debt, student loans, car loans, mortgage. The opposite of assets.

Money set aside specifically for unexpected emergencies like job loss, car repairs, or medical bills. Experts recommend 3-6 months of essential expenses. Keep it in a high-interest savings account where you can access it quickly.

Money or investments you can quickly turn into cash without losing value. Examples: cash, savings accounts, money market funds. Your house is NOT liquid because it takes months to sell.

Tax-free monthly payment from the Canadian government to help families with the cost of raising children under 18. The amount depends on your income and number of children. Paid automatically on the 20th of each month if you file your taxes.

Tax-free quarterly payment from the Canadian government to help low and modest income individuals and families offset the sales tax they pay. Paid automatically four times per year (January, April, July, October) if you file your taxes.

Monthly payment from the Canadian government to Canadians age 65 and older, regardless of work history. Unlike CPP, you do not need to have worked to receive it. The amount depends on how long you have lived in Canada. High income seniors may have to pay some back.

Additional monthly benefit from the Canadian government for low income seniors already receiving OAS. You must apply for it because it is not automatic. Helps ensure seniors have a minimum income level.

Free money the Canadian government adds to your RESP contributions. They match 20% of your contributions up to $500 per year. Contribute $2,500 and receive $500 free. Maximum lifetime grant is $7,200 per child.

When your investment earnings start earning their own earnings. Like a snowball rolling downhill and getting bigger. For example, you invest $100 and earn $10, so now you have $110. Next year you earn interest on $110, not just $100. Over time this effect is powerful.

The maximum amount you are allowed to contribute to tax-advantaged accounts like TFSA, RRSP, or FHSA in a given year. This limit increases each year and unused room carries forward. Exception: FHSA only carries forward one year.

The annual fee charged by mutual funds or ETFs to manage your investments. A 2% MER means you pay $200 per year for every $10,000 invested. Lower fees mean more money stays in your pocket. Aim for under 1%, ideally under 0.5%.

How much your investment grows or shrinks in a year, shown as a percentage. A 7% return means your $1,000 grew to $1,070. Past returns don't guarantee future results.

A savings account that pays higher interest than regular savings accounts (often 3% to 5%). Your money is safe and accessible anytime. Good for emergency funds and short-term savings. Interest rates change over time.

You lock your money away for a set period (for example, one to five years) and receive a guaranteed interest rate. Your principal is 100% safe. The catch is you cannot access the money until the term ends without paying penalties. Good for risk-free returns.

A regular investment account with no tax benefits. You can invest as much as you want with no contribution limits, but you pay tax on all the interest, dividends, and capital gains each year. Good for investing money beyond your registered account limits.

A loan to buy a house where the house itself is the collateral. You typically pay it back over 25 years with interest. If you stop paying, the bank can take the house.

The portion of your mortgage payment that actually pays down the loan amount (not interest). Early in your mortgage, most of your payment goes to interest. Later on, more goes to principal. Paying down principal builds equity in your home.

The portion of your home that you actually own. Calculated as home value minus what you still owe on the mortgage. If your house is worth $500,000 and you owe $300,000, you have $200,000 in equity.

A ratio Canadian banks use to qualify you for a mortgage. Your housing costs (mortgage, property tax, heating) divided by your gross income. Banks want this under 32%. If you make $6,000 per month gross and housing costs are $1,800, your GDS is 30% and you would likely qualify.

Similar to GDS but includes all your debt payments (housing plus car loans plus credit cards plus student loans) divided by gross income. Canadian banks want this under 44% for mortgage approval. Shows how much of your income goes to debt.

The money you pay upfront when buying a house before the mortgage. In Canada, the minimum is 5% for houses under $500,000, but putting 20% down means you avoid mortgage insurance fees and get better rates.

A Canadian program that lets first-time home buyers withdraw up to $35,000 from their RRSP tax-free for a down payment. You must pay it back over 15 years or it gets added to your taxable income. Both partners can use it for a combined $70,000.

Similar to HBP but for education. Withdraw up to $10,000 per year ($20,000 total) from your RRSP tax-free to pay for full-time education or training for you or your spouse. You must repay it over 10 years.

Annual tax you pay to your city or municipality based on your home's value. Used to fund local services like roads, schools, and garbage collection. Typically 0.5% to 2% of your home's value per year, paid monthly or yearly.

The total length of time it takes to pay off your mortgage completely. In Canada, the standard amortization is 25 years, though you can choose up to 30 years. A longer amortization means lower monthly payments but more total interest paid over the life of the loan.

The length of your current mortgage contract - typically 1 to 5 years in Canada. At the end of each term, you renew at whatever interest rates are available. This is different from the amortization period. Most Canadians renew 4-6 times before paying off their mortgage.

Mandatory insurance required by Canadian law when your down payment is less than 20% of the home price. Provided by CMHC, Sagen, or Canada Guaranty. The premium is 2.8%–4% of the mortgage amount and is added to your mortgage. Protects the lender, not you, if you default.

A Canadian rule requiring you to qualify for a mortgage at a higher rate than you will actually pay - either 5.25% or your contract rate plus 2%, whichever is higher. This ensures you can still afford payments if rates rise. Applies to all federally regulated lenders regardless of your down payment size.

A fixed rate mortgage locks in your interest rate for the entire term, giving you predictable payments. A variable rate mortgage moves with the Bank of Canada's prime rate - your payments may fluctuate. Fixed is safer in rising rate environments; variable can save money when rates fall.

The right to pay extra on your mortgage principal without penalty, up to a specified annual limit (commonly 10%–20% of the original balance per year). Using your prepayment privileges reduces your balance faster, shortens your amortization, and saves thousands in interest.

A penalty charged by lenders when you break a fixed-rate mortgage before the term ends. It is calculated as the difference between your original rate and the current rate for the remaining term, multiplied by your outstanding balance and time remaining. Can be tens of thousands of dollars - always calculate before breaking your mortgage.

Costs that stay the same each month like rent, mortgage, car payment, insurance, and phone bill. These are predictable and usually cannot be avoided.

Costs that change month to month like groceries, gas, entertainment, and dining out. You have more control over these expenses.

Money coming in (income) minus money going out (expenses). Positive cash flow means you're earning more than you spend. Negative cash flow means you're spending more than you earn - not sustainable long-term.

Financial actions that increase your net worth over time like saving in TFSA or RRSP, paying down mortgage principal, building emergency funds, and investing. These activities make you wealthier in the long run.

Financial actions that decrease your wealth like high interest debt payments, car loans or leases (vehicles lose value), and excessive spending on depreciating assets. These drain money that could be building wealth instead.

A number (often out of 10) that summarizes your overall financial situation by looking at savings rate, debt levels, housing costs, and cash flow. Not an official metric, just a quick way to see how you are doing at a glance.

A simple budgeting guideline where you spend 50% of income on needs (housing, food, bills), 30% on wants (fun stuff), and save 20%. Just a starting point. Adjust based on your situation and goals.

A movement focused on saving aggressively to retire decades before the traditional age 65. The goal is to save 25-30 times your annual expenses so your investments can cover your living costs forever.

The total amount of money you need invested to retire and live off your investments. Common formula is annual expenses multiplied by 25. If you spend $40,000 per year, your FIRE number is $1,000,000.

A guideline that says you can safely withdraw 4% of your investment portfolio each year in retirement without running out of money. For example, $1,000,000 times 4% equals $40,000 per year to live on.

When you have saved enough that if you stop contributing, your investments will grow to fully fund your retirement by age 65. You still work to cover living expenses, but you are coasting because no more retirement savings are needed.

How prepared you are for retirement, typically measured by comparing what you have saved to age-based benchmarks like having one times your salary saved by age 35, three times by age 45, and so on. Shows if you are on track to retire comfortably.