Let’s say you have done the hard work and figured out how to save that little extra every month. Now you may be wondering what I do with this extra cash. There are some saving strategies that may help you get started, depending on your saving goals.
Saving for Emergencies
Creating an emergency fund may be the most important financial step towards financial freedom. Setup a savings account that is only to be used in emergencies such as job loss and every month set aside a certain amount for the emergency fund. An emergency fund can provide a buffer if you are between jobs or have an unexpected bill.
Saving for Retirement
Retirement may seem a long way down the road but the right time to start saving for retirement is now. This will ensure you have enough saved up when the day does come. There are various products in the market for those wishing to save up for retirement, go through the options thoroughly and decide on the best option for you. One of the best ways to start saving for retirement is through an RSP (Retirement Savings Plan).
An automatic saving plan will allow you to automatically transfer a certain amount or percentage of your paycheck to a savings account each month. By doing this you ensure a certain amount is saved every month and you can build your budget around that.
Saving for Education
If you have children saving a little every month towards your child’s education may be the best investment. This fund will provide much-needed cash when your child leaves high school and starts college. It can also go towards your own further education if you plan on going back to college. The best part is that government will pitch in towards your child’s education through RESP (Registered Education Savings Plan). You should consider researching saving strategies for education.
Saving doesn’t have to mean a saving’s account. You have saving options such as a savings account, money market funds, guaranteed investment certificates, Canada Savings Bonds, and Mutual Funds. Which options you go for depends on each individual situation. Which option you choose will depend on a number of factors such as: how soon you may need your money or how much you have available to save.
Many people think of tax returns as free cash that is suddenly available to spend as they please. Try to use restraint if you receive a tax return. Consider using the tax returns for paying off a debt. Reducing debt payment may mean you are making lower interest payments which in turn leads to having more to save for retirement or education.
These saving strategies are by no means exhaustive. However, these saving strategies will at least get you started thinking of how you may want to start saving.