By Jamie Beaumont
There’s nothing like the contented feeling of being financially stable. Paying off your bills on time, being debt-free (or being on your way there), and having the ability to occasionally treat yourself can do wonders for your mental health.
Like we mentioned in our article on Achieving Financial Serenity, shifting your mindset from spending money to saving money can be a challenge, but it’s well worth it. Reports suggest that money is the top cause of stress for most Ameof us, so to prevent future anxiety, get started on building your savings fund right away. Here are some tips to help boost your savings:
1. Have Clear Savings Goals
Before you get started, a guide to effective saving techniques involves defining clear goals. Ask yourself, what are you really saving for and why are any sacrifices you need to make worth it? A survey by TD Bank Love & Money found that 42 percent of respondents were either saving up for an emergency fund or “just because,” followed by 37 percent for travelling. If you lack the motivation to save up, naming each savings account depending on the purpose you’re saving up for will help you stay on track. After this, they suggest thinking about whether that impulsive purchase is really worth it in the long run. One great way to do this is to calculate how many hours of work it would take to pay for that clothing item, meal, or a night out with friends. This will help you re-evaluate your spending decisions.
2. Create a Budget (and Stick to It)
Even if you know what you want and how to get there, you need to execute a game plan to achieve this. In the realm of savings, this means making a budget to cater to your needs, and strictly adhering to it. USA Today suggests saving the desired amount per month, by “treating savings as an essential bill, just like your rent, and then figure out how much you have left for other things.” If you’re not meeting your target, try seeing where you can cut expenses such as using a more fuel-efficient car or searching for a side hustle to bring in additional income.
3. Invest in Certificates of Deposit (CD) / Guaranteed Investment Certificates (GIC)
CDs and GICs, also known as time deposits, are agreements that you make with a bank to deposit money for a fixed period of time. In return, you are paid a percentage of interest on this amount by the bank. They are usually a lot less volatile than bonds or stocks, and generally offer higher interest rates than your savings and chequing accounts. Because of this, you may also want to consider building a CD/GIC ladder. A guide to building a CD ladder explains that this involves spreading your savings across multiple certificates, so that part of your money becomes accessible each time one of your accounts matures. This way, you also have greater liquidity, as your savings won’t all be in one place.
4. Set up Direct Deposit to Your Savings Account
One of the most difficult things to do when it comes to saving is making it a habit. If you’re not sure where to start, building up your emergency fund is a good way to go. This helps prevent you from going into debt in the event that you lose your job and income, have to deal with an unexpected medical bill, or home repairs. A run-down to multiplying your savings recommends having at least six months’ worth of expenses set aside for worst-case scenarios. To do this, start small and set up a direct deposit transfer from your paycheck that goes into a dedicated savings account. If you’re not sure how to do this, they recommend asking someone from the human resource department to help you out.
If you’re still unsure how to meet your savings goals, consider seeking the services of a financial planner to assess your situation.