3.1.9 The rules of saving

There are no fixed rules for saving except this: start as soon as you can. Your savings will grow over time.

• It's usually best to clear up any high-interest debts before starting your savings, because they usually cost more than you can earn with a savings plan. Pay these debts first and then regularly put the money into a savings account. However, if you have longer-term debt at a lower interest rate, like a mortgage, it's good to set aside some money for emergencies while you pay off the debt.
• If you have a choice, put your savings first into a plan that others will add to. For example, governments will add to your savings in a Registered Education Savings Plan (RESP), and some employers will also contribute to an employee's retirement savings plan.
• Also, a savings plan that defers or avoids taxes may be a better way to save than a plan that you pay taxes on. For example, savings in a Tax-Free Savings Account (TFSA) are tax-free, and a Registered Retirement Savings Plan (RRSP) lets you defer income taxes until you take your savings out of the plan. Go to the Income taxes module for more information.

These general guidelines depend on your personal circumstances. A financial adviser can help you decide on the best way to meet your goals.