HOW TO SAVE
During your lifetime, you will need to set some money aside to do many things. This is what saving is all about -- keeping some money for a purpose.
This purpose could be a new computer, or a nice anime collection you have been eyeing.
But it could also be for something big, like a mortgage or retirement.
This purpose could be a new computer, or a nice anime collection you have been eyeing.
But it could also be for something big, like a mortgage or retirement.
Savings Account
A savings account is a pocket of money with benefits. The bank guarantees that whatever money is in your savings account will grow a little every month!
But how much will it grow by? Very little. In fact, a usual growth rate for a savings account is usually around 0.75% per year.
If you consider that inflation last year was 2.3% a year, you see how your savings would actually be losing to inflation, which is why a regular savings account is usually good for smaller things (like new shoes or a new phone), but when thinking of a home or retirement, you may want to look at a high-interest savings account, or other special account your bank may offer.
Don't think of savings as investments -- again, they don't grow enough to be an investment, but they are much better than checking accounts for keeping money safe.
But how much will it grow by? Very little. In fact, a usual growth rate for a savings account is usually around 0.75% per year.
If you consider that inflation last year was 2.3% a year, you see how your savings would actually be losing to inflation, which is why a regular savings account is usually good for smaller things (like new shoes or a new phone), but when thinking of a home or retirement, you may want to look at a high-interest savings account, or other special account your bank may offer.
Don't think of savings as investments -- again, they don't grow enough to be an investment, but they are much better than checking accounts for keeping money safe.
Saving for an item
Often, you will need to save money to buy something bigger; something you would not be able to afford just with one paycheque’s leftover amount.
Saving first and planning your expenses is always better than just putting things on your credit card! This is where budgeting really shines: when you plan to save money for things you need or want, but that are not necessary every month. Tires or a new TV are a good example.
Saving first and planning your expenses is always better than just putting things on your credit card! This is where budgeting really shines: when you plan to save money for things you need or want, but that are not necessary every month. Tires or a new TV are a good example.
Saving for a Down Payment
Things that require a down payment, such as a house or a car, can be quite expensive. If this is your goal, then you need to save money for a long time, usually years.
This requires patience, and a dedicated account for this money. Usually people put these savings in a high interest account, which you will not touch for a long time.
To remind yourselves of what is a down payment, go back to the section “Buying a house!”
How much does your down payment have to be?
You will need to save a certain amount every month for your down payment.
Make sure to leave some money leftover for emergencies!
This requires patience, and a dedicated account for this money. Usually people put these savings in a high interest account, which you will not touch for a long time.
To remind yourselves of what is a down payment, go back to the section “Buying a house!”
How much does your down payment have to be?
You will need to save a certain amount every month for your down payment.
Make sure to leave some money leftover for emergencies!
Saving for Retirement
Retirement? How silly to think of this now, right?
WRONG! The most successful people, who feel less pressure during retirement, started saving for retirement right when they started making money!
It doesn't have to be a lot; the government even has a special account for you to save into, called RRSP, which allows you to deposit 18% of your income for the year into it. It does have a $35,000 limit, so if you make too much money, you still can only deposit up to $35,000.
If you start young, aim for saving 10% for retirement; if you start in your 30s, make it 10 to 15%. Starting in your 40s, you should be saving more -- around 25% of your salary. There are many ways of saving besides RRSP, such as tax-free savings accounts, high-interest savings accounts, or just regular savings accounts!
WRONG! The most successful people, who feel less pressure during retirement, started saving for retirement right when they started making money!
It doesn't have to be a lot; the government even has a special account for you to save into, called RRSP, which allows you to deposit 18% of your income for the year into it. It does have a $35,000 limit, so if you make too much money, you still can only deposit up to $35,000.
If you start young, aim for saving 10% for retirement; if you start in your 30s, make it 10 to 15%. Starting in your 40s, you should be saving more -- around 25% of your salary. There are many ways of saving besides RRSP, such as tax-free savings accounts, high-interest savings accounts, or just regular savings accounts!
