Over and over again, we keep hearing that Canadians just aren’t saving enough. According to reports, we owe too much, spend too much, and don’t have a saving strategy in place to build a nest egg for retirement and emergencies.

So now that the expensive holiday season is over, what better time than the new year to put saving back on your radar? Presents and gift-giving are behind us, and now is the time to focus on goals of a new car or home, maybe even a vacation to escape the cold, an emergency fund, or retirement savings. Here are tips to take your savings strategy beyond a mere resolution and turn it into an actual game plan in 2020, making your goals a reality. 

Pick a number

Pick a number, but not just any number. Choose an amount of money based on your goals and decide how much you’d like to save this year. As a ballpark, we should all be saving about 10% of our incomes. So, if you bring in $5,000 a month, put at least $500 in savings. When you get a bonus, inheritance, or any extra money, sock away 10% of that too! The same goes for those who don’t have a regular income. Calculate what you’ve made at the end of each month and put at least 10% of that into your savings.

Strike a balance

How much you save is going to fluctuate based on your life. It might be very difficult to save if, let’s say, you have young children, or you’ve just moved into a home that needs renovations. Maybe you are dealing with a lot of debt and need to prioritize paying that down first. However, you can still try to save accordingly, even if it’s less than 10%. Put smaller amounts away, continue to focus on paying down what you owe, and handle your other responsibilities appropriately. The key is setting realistic goals that account for your lifestyle. You’ve got to find a balance between saving, spending, and paying off debt. You’ll want to keep reassessing this balance as circumstances change. For instance, once you pay off your student loan, it’s time to save more. When kids stop needing daycare, adjust again.

Never rely entirely on yourself

There are likely going to be times when you “forget” to transfer money to your savings, whether it’s on-purpose or not. Do yourself a favour by setting up automatic transfers to your savings account on a monthly, or even biweekly basis, helping you keep your savings on track.

Make your money work for you

If you’re only using a regular savings account, chances are that you’re not getting a lot of interest on your money. Or, if you’re stashing your money under your mattress or in piggy banks, you’re obviously earning no interest at all. Look around and get to know more about some of the financial products available to help you invest and save. Don’t be afraid to choose a mix of products from different financial institutions. Do your research and choose products based on what’s going to get you a better return on your investment. Here are a few great places to start:

High-interest savings accounts

Regular savings accounts are not known for high returns, but most financial institutions have other types of accounts that can give you a decent interest rate, in addition to being flexible. In other words, you can take your money out of the account at any time, making these types of accounts great vehicles to save for vacations, renovations, or emergencies. For example, the Laurentian Bank Canada High Interest Savings Account currently offers a 3.30% interest. It has no monthly fee, unlimited monthly transactions, and there is no minimum balanced required.

Tax-free savings accounts

Tax free savings accounts (TFSA) are tax-sheltered, registered accounts that let you save money in a variety of high- and low-risk ways, through a financial institution or investor service.

A TFSA portfolio can be built with a variety of products from savings accounts, to stocks and bonds, and even GICs. In 2020, you can put aside as much as $6,000 in a TFSA, which is the same contribution room as 2019. Whatever interest you make will never be taxed and when you withdraw the money – whether it be now, many years from now, or even in retirement – it won’t be taxed then either.

There’s no penalty for taking money out of a TFSA, so you can use them for short-term savings, like for your next vacation, or as a retirement savings strategy. If you’re new to investing, a TFSA is probably a good place to start. The MotiveTM TFSA Savings Account offers a 2.40% interest rate, anytime withdrawals, and tax-free returns.

RRSPs

Registered retirement savings plans (RRSP) are typically what Canadians without pensions use to save money for retirement. The best thing about an RRSP is that you can get a tax break if you have one. The downside: you will pay tax on the money when you finally take it out. The money is not easily accessible, so it’s not that great if you need the money now or anytime soon, but with the right interest rate, it’s great for long-term investments.

You can also take out up to $35,000 from your RRSP to use towards a down payment on your home, tax-free. The Oaken Financial five-year GIC is available as an RRSP and has a 2.90% interest rate. Although there is a minimum investment of $1,000, Oaken offers some of the highest GIC rates on the market.

Saving more money in 2020 isn’t really about making new year’s resolutions. Whether you choose a high-interest savings account, a TFSA, or an RRSP, make this year more about changing your attitude towards money and making savings a priority.

RATESDOTCA Team

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

Latest life insurance articles

10 Myths About Life Insurance Busted – Some May Surprise You
You may be young with no kids and no mortgage. Life insurance is for someone older, who has dependents right? Wrong. Let’s debunk life insurance myths and learn why everyone needs some form of coverage.
Will a Life Insurance Policy Cover Death Due to COVID-19?
Demand for life insurance may be on the rise during the pandemic as more Canadians consider buying a policy or reviewing ones they already have. If you’re thinking of applying for a policy, here are a few things to keep in mind.
How Does Vaping and e-Cigarettes Affect Life Insurance?
Many insurers may classify vaping in the same way they do smoking. If you smoke or vape, you can still qualify for a life insurance premium, but in all likelihood, you will pay a higher rate than someone who does not.