Having a savings plan
By Jane Rooney, Canada’s Financial Literacy Leader
November 21, 2016
Canadians aren’t saving enough.
That’s unfortunate because having money put aside for a “rainy day” fund, a child’s education or retirement can make the difference between feeling stressed and being in control of your financial situation.
And saving can help you avoid unwanted debt when you have unexpected expenses, such as a car repair or leaking roof.
We know money is the biggest cause of stress.
So I encourage everyone to have a savings plan. It will keep you on track and help you plan for the future.
Everyone has their own way – little things they can do. One of my saving methods, for example, is buying work clothes that are wash and wear – I travel a lot and can just throw them in the suitcase. I save a lot on dry cleaning! For others, it might be bringing lunch and coffee from home or riding their bike to work, saving a lot on parking and gas.
Set savings goals
Whether you are saving for a new appliance, for your own or your child’s post-secondary education, to pay down debt or a vacation, setting a goal and working towards it is a good recipe for success. Ready to set savings goals? Use our savings action plan to set them and get started.
A good place to start is putting aside some of your income into savings. Some experts suggest 10% but setting aside even a little bit goes a long way. Open a savings account or a tax free savings account.
Some banks offer low-cost or no-cost accounts to young people, students, seniors receiving Guaranteed Income Supplement, newcomers, beneficiaries of the Registered Disability Savings Plan and low-income Canadians. If you have children, start saving early for their education with a Registered Education Savings Plan (RESP) and take advantage of government contributions. Also, a Registered Retirement Savings Plan (RRSP) is a good way to save money and provides tax benefits.
Transfer money to a savings account automatically every paycheque and watch your savings grow. By learning to save – and making it easy by automating transfers – you will be more likely to avoid unwanted debt. Building a savings account will also prepare you for the changing demands in your life and helps you prepare for unexpected expenses.
Why is saving for retirement so important?
Some of you will be in the sandwich generation, raising children and caring for parents. I’m one of those people!
Regardless of your stage in life, saving for your senior years is important. We have a greater responsibility to fund our own retirement. Start saving early to make sure you have the retirement lifestyle you want. And help your parents if they need some saving tips.
Being a saver is one of the best money habits you can develop. Life is full of many twists and turns. Having savings will shelter you from financial ups and downs and help prepare you whatever comes your way as you approach your senior years.
Need more convincing? The average Canadian today can expect to live until 86. That means if you retire at 65, you could be relying on savings for 21 years, or longer. That’s a long time!
What should I do right now?
The best thing you can do right now is prepare a savings plan. You are never too young or too old.
And the best place to start is with a budget. If you don’t have one, do that first, then develop a savings plan. A budget calculator can help you keep track of where your money is coming from and where it is going, and what you need to save. Go to our Canadian Financial Literacy Database. It’s a one stop place where you can learn how save wisely.
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