Before you can consider saving, you have to set aside some money. It’s basic mathematics coupled with self-discipline. Once you start to accumulate some money, you’ll need to decide what to do with the funds. Your goals, risk tolerance and your time horizon will help to determine the right strategy for you.
Here are some simple steps to help you build your savings.
1) Figuring out how much you can afford to save
You can start by setting a specific savings target and make that a priority before looking at other needs or wants. Some people start by taking a hard look at their spending patterns to see where they can cut spending. You can use a cash-flow worksheet to help you structure your cash inflows and cash outflows.
It’s important to establish a suitable and reasonable target that allows you to cover your planned expenses without going into debt. If you have outstanding credit card debt, it makes sense to tackle that first before building up savings.
2) Automatic savings
This is a great strategy. Once you’ve decided the amount you are going to save, set up a plan to automatically deposit those savings into an account, RRSP, TFSA or your employer-sponsored program.
Depending on your employer, they might offer group savings plans where they match a certain portion of each employee’s contributions. Some employers offer automatic savings via payroll deduction
Since these are automatic, it’s easier for you coupled with the employer’s matching contribution. Look into what your employer offers and make sure to take advantage of it.
3) Start as soon as you can
There are no boundaries here. Start as early as you. Let your money work for you because the earlier you start to save, the harder your money works for you due to the magic compound interest.