Hi All, In today’s episode, I am going to discuss “Saving for Canadian Millennial Professionals”.
My top 3 tips for Saving as a Canadian Millennial Professional are:
1. Set aside 10% for Saving
How do we set aside enough for saving? We make sure that when our paycheque comes in we have 10% or less of our money automatically deposited to a savings account of our choice.
Preferrably, a Tax-Free Savings Account or Registered Retirement Savings Plan. These particular accounts will help your $$$ grow tax free either in the short term or the long term depending on your financial goals.
My personal recommendation on what account to use? Utilize the Tax Free Savings Account the most. This account you don’t get penalized for taking your money out when you need it, and it can grow tax-free while you have $$$ within the account.
Things to save for in your TFSA:
College Tuition
Buying Second Hand Vehicle
Vacation
Pet
The above are just a few examples of things people save for in a TFSA. The reason I don’t recommend an RRSP right away is you get penalized in the short-term to take the money out.
An RRSP is still a great vehicle to save your money and grow it tax-free, its just not a wise choice in the short-term. RRSP’s are meant for long term saving for things like:
Retirement
Down Payment on a House or Condo
RRSP’s are beneficial for long term saving and also help you save on your taxes at the end of each year. By contributing to your RRSP, you can deduct a percentage from your income taxes each year.
Once you contribute some funds to the RRSP before the end of the tax year, you can get this money back from the goverment to help you continue to save even more.
2. Don’t Just Save
Don’t just save for the sake of saving. Saving is meant for you to either invest your money or spend it. Just saving money will not do anything.
Save for something specific within 5-10 years like some of the examples mentioned above.
We are in a low interest rate market in Canada and have been for many years now. People don’t make any interest just having money in their savings account.
It’s what you have within your savings account that helps you make interest and truly grow your savings at a steady pace.
Some investments to have within your savings account: Index Fund-Investing in a portfolio of stocks that tracks an index like the S&P 500, Dow Jones, or NASDAQ and is passively managed to help you save on fees Stocks-Investing in different stocks within your TFSA, RRSP, or Investment Savings Account Mututal Fund-Pool of Investors $ put towards a certain type type of fund with several different types of stocks within them
3. Open a No Fee Bank Account
The final ingredient for your saving money is opening a no fee bank account.
No Fee Bank Accounts are becoming very common now adays. By saving on banking fees, you will be able to put more of this money to saving for the things that you want.
Some people pay up to $150 a year in banking fees and that is crazy! That money is better in your pocket than the banks.
The key with saving is minimizing your fees and expenses overall. Having a bank that charges you no fees or little fees will help you with your finances in the long run.
