My intention today is not to make you cut out the morning coffee you bought at your favourite retailer, nor to point out that a dollar spent is a dollar less in your pocket. Everyone is aware that saving up can sometimes require making sacrifices. Whether it’s getting rid of a second car, bringing lunch to work on Fridays or opting for items on sale in stores, saving is a well-known theme to the majority of folks.
It’s in this frame of mind that this post will be useful to you: by presenting five strategies to start or consolidate your savings plan.
1. Pay yourself first: The objective is simple save before spending! In other words, whenever you get extra money coming in, nothing beats depositing a certain percentage of it into your savings account. Thus, your plan to put some money aside will be under way. The remaining balance of this cash flow can then be recorded in your budget and put towards different monthly expenses.
2. Repay your credit card debts: In making the effort to pay off your credit card balance more quickly, the interest that you no longer will have to pay to the issuer can be directed towards your personal savings plan.
3. Program a periodic monthly instalment, however minimal, to a TFSA (Tax-Free Savings Account): Just saving a mere $20 per week will yield more than $1,000 at the end of the year in your Tax-Free Savings Account. Contributions to a TFSA are not deductible from income tax, contrary to RRSPs. Any amounts that you contribute and all revenue earned from your TFSA (for example, interest income from investments, dividends and capital gains) are not taxable, even when withdrawn. It’s a great way to grow your money, knowing that your savings efforts will not be affected by any tax bites.
4. Limit bank fees: Certain banks eliminate the monthly fees inherent in any banking package, provided that a minimum balance of $1,000, $2,500 or $5,000 is maintained. If your cash flow permits, freezing a certain amount can help you save an amount that oscillates anywhere between $10 and $20 per month that you could be putting towards your TFSA, for example. Otherwise, knowing your banking needs can save you from having to pay extra fees for using your debit card, making cash advances, etc. In another vein, do you really need to order 250 cheques from your bank? In an era of smart phones, the heyday of Paypal and the multitude of possibilities that wire transfers offer, why pay $40 a year to write checks if you don’t have to?
5. Contribute to an RRSP: The contributions deductible to an RRSP can be used to reduce your tax liability. By minimizing your annual income tax, not only can the amounts thus saved be applied towards your savings, but also towards the pre-payment of your mortgage, the acquittal of a line of credit, etc.
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PRISCILLA BIJU THEN (French-English Translation)
Follow me on Twitter : @PriscillaBiju