Whether you are planning for school, your first home, travel, or for retirement it is never too early to start saving for your future. Building strong financial saving and investing habits now will help you to achieve your future goals and build security.   

Why Save?  

Saving is all about taking a goal-oriented financial perspective, rather than focusing on short-term wants. Whether you are saving for a home, a dream trip, retirement, or your child’s future education, knowing your “why” will motivate you to stay consistent and committed to reaching your goals.  

When setting your personal financial goals, begin by thinking long term. Ask yourself: What do I want my financial life to look like in 10, 20, or 30 years? Determining your key long term financial goals will help you prioritize your short-term financial goals. Short term goals are usually achievable within five years or less.    

How much money should I save?  

The 50 – 30 – 20 rule is a good starting point to help balance spending and saving. This rule says to spend 50% of your income on needs, 30% on savings and or paying off debt, and 20% on wants. Aim to spend no more than half of your monthly income on your essential needs such as rent, mortgage or car payments, food, etcetera. Use 30% to pay off debt and put towards savings, and the remaining 20% to do things you love whether it’s finally getting those shoes, the gadget you’ve been eyeing, or investing in your favorite hobbies. It is okay to spend a little on you and your interests.  

Ways to Build Strong Financial Habits. 

• Create a budget – Build your expenses, debt payments, and savings into a monthly budget and stick to it. Track your expenses so you know what you actually spend, not just what you think you spend. A few easy options to do this are using a spreadsheet, an app, or even a notebook.  Use the Budget Planner to create a customized budget in 3 simple steps.

• Save more than you spend - This sounds obvious, but it can be difficult to do in practice. Overspending contributes to your debt, which can slow down your ability to save money.  

• Pay your savings account first – Treat your savings like a monthly bill. When you get paid, set aside the amount you have allocated to savings right away. You can even set up an auto-deposit on payday so that your allotted savings automatically goes into your savings account.  

• Build an emergency fund – A best practice for an emergency fund is to have three months of your basic living expenses covered. If you don’t have an emergency fund, you can begin building towards it as part of your savings plan.   

• Pay off High Interest Debt – You do not have to be debt-free to have a financial healthy life, but you do need to manage it. When looking at paying off debt, pay off your highest interest debt first.  

Moving from Saving to Investing 

After you have a good handle on savings, it is time to begin to think about investing. Investing is a way to grow your money and “put it to work” so that it can earn a return. There are many ways to invest your money, with different risk levels and potential returns.  

Registered vs. Non-Registered Investments 

Registered savings are savings plans that are registered with the Canada Revenue Agency (CRA). These include RRSPs, TFSAs, RESPs, RDSPs, and FHSAs. Non-registered investments such as mutual funds, stocks, and term deposits do not have a contribution limit and allow for more flexibility, but they do not offer a tax benefit like Registered Savings Plans do.  

We would love to chat with you about what investment and savings types will work best for your life and goals. Book an appointment to talk with one of our Financial Service Officers by texting 1-855-728-2211 or calling your nearest branch.