6 Step Guide to Jumpstarting Your Savings
Statistics have shown that millennials in general are delaying typical life milestones (marriage, kids, buying home, etc) longer than any previous generation. While there are many factors contributing to this (too much education, not enough jops, more freedom for movement, and a globalized world to name a few), there is one fundamental misconception holding us back. We think that by accepting these societal pressures as ‘the norm’ and actually pursuing them, we are accepting a life of mediocrity and giving up our freedom. While I recognize and can relate to the fear that this may cause – How will I find money to travel? Will I still find time to do activity xyz? What if I miss out on what my friends are doing? – I have come to terms with the fact that pretending my future can wait another day is really just ignorant.
Accepting the importance of financially planning for the rest of your life isn’t the same as accepting a life of mediocrity, rather it is showing responsibility and a desire to take control of your own future. You can still do the fun things you had planned now, while allowing yourself the assurance that you won’t be stuck at a 9 – 5 until your grave trying to continue to afford those fun things later. We are a generation that seeks immediate gratification for everything we do. At the end of the day, long term financial planning isn’t in our peak interests because the satisfaction of it isn’t instant, (in fact it’s about forty years off). By making it a priority and incorporating it into your day-to-day expenses, you can effortlessly contribute to your own financially stable future.
1. Do your research.
Before you even consider starting to save, know what your options are when it comes to the different types of savings accounts and what the purpose of each generally is. Registered vs. Non-Registered? High Risk vs. Low Risk? It can all be overwhelming, but by knowing and comparing your different options you can better understand which account is most appropriate for your savings goals.
2. Meet with a financial advisor – for free.
Once you’ve familiarized yourself (or not, that’s okay too) visit your local bank branch to arrange for an appointment with a financial advisor. Banks will set you up a meeting with a financial advisor, all you have to do is ask! If you are feeling overwhelmed by all of the information, they can guide you further in understanding what type of savings account is most appropriate for your goals and can present you with a variety of options.
3. Know your goals and establish your priorities.
Determine what it is you want to save for. Are you saving only for retirement? Do you have other goals? I currently have two savings accounts – an RRSP for retirement, and a TFSA for a house – right now my priority is getting a house so I allocate higher contributions to my TFSA right now than I do my RRSP.
4. Determine what is realistic.
My current savings plan for buying a house is pretty aggressive (~20% of my income). This obviously is a) not realistic for everyone and b) only allows me to contribute a small portion of my income to my RRSP at the moment. By establishing goals and priorities you can determine not only where you want to put your money, but also how much is financially feasible.
5. Set up automatic payments and account for them as any other bill.
Choose how frequently you would like to contribute – weekly, biweekly, monthly – and have the contributions set up to automatically withdrawal from your account on these set dates/times. This will teach you to account for your savings as a regular bill payment making you much less likely to forget or skip out. By setting up your savings plan as an automatic withdrawal from your bank account you will be able to avoid any excuses as to why you just can’t quite save that extra cash this month. After all, if it’s no longer in your day-to-day bank account, you can no longer touch it!
6. Set It – Forget It – Watch Your Money Grow.
This step is easy. There is no greater satisfaction than gradually seeing your savings increase, and the accumulated interest is a pretty nice touch too.
Have patience. Remain Persistent. Prosperity will follow.