Growing your income the efficient way
How building smart savings can help you earn even more
Building a nest egg is more than just putting aside a little money here and there. The key to saving, whether it’s for a major purchase or for retirement, is knowing how much you need and how you’re going to get there, then looking for ways to grow your savings as efficiently as possible. Here’s what to consider: Know what you need to save “Every good financial plan starts with a strong foundation,” says Jason Pereira, a senior financial consultant at Woodgate Financial Inc. and Investment Planning Counsel. “Start by identifying your goals and figure out how you’re going to get there realistically.” Search online tools that take you through various scenarios and calculate if your portfolio will sustain you. Pereira recommends consulting a financial planner. Automate your savings Once you know what you should be saving, make it as effortless as possible. “Have it come directly out of your account and put it away before you do anything else,” recommends Pereira. “Automate the transfer of money so you don’t miss it, and before you know it, you’ll have amassed more than you realize.” Save the windfalls When you get a tax refund or a bonus at work, don’t look at it as a chance to spend. “See it as an opportunity to save,” says Guy Anderson, senior financial consultant at Parkview Financial and Investment Planning Counsel. “Think of it as found money.” Put it immediately into your registered retirement savings plan (RRSP) or tax-free savings account (TFSA) before you’re tempted to shop it away. When you get your annual salary increase, consider adding most of it to your regular contributions. You haven’t had the money before — so you won’t miss it. Think before you swipe It’s easy to overspend when you’re swiping a card, says Anderson. “Even if you’re meeting your savings goals, it’s important to gauge your spending habits.” Think about your daily coffee expenses or the other impulse purchases you make. Pereira recommends sticking a note to your debit or credit card to remind you of your saving goals. “It may be a bit cliché, but it’s an effective cue to remind you to think about extra spending every time you use the card.” Know where your money is going Tracking your spending is easier than ever. There are apps and websites to show your transactions by vendor or category, says Pereira. “You can drill down and see where your money is going on charts and graphs, so you can be proactive.” Look for hidden savings Especially with your banking and utility bills, check for service fees and overages and see how you can bundle or change your plans or accounts for better savings. “Look for better deals on anything that’s routinely coming out of your account,” advises Pereira. Adds Anderson: “Check your bills carefully. It’s easy to let things go by when you’ve set up automatic payments.” Watch your taxes “One of the most overlooked ways to save is keeping a watchful eye on the taxes you’re paying,” says Anderson. “Work with your financial adviser to find the best ways to shelter your money and save for your retirement.”