Savings Plans: No One Plans to Fail, They Just Fail to Plan

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We posted this article last year and feel that this topic is definitely worth revisiting

 

Do you ever feel financially stressed? You’re certainly not alone.

According to the Conference Board of Canada, 25% of the national workforce is financially distressed, and more than two thirds say they are not in control of their finances. So what can you do about this? The answer is simple: SAVE. However, putting this into action is sometimes easier said than done.

 

In order to make saving a habit there are steps that can be adopted to help you recognize that you do have control over saving and spending.

 

how to save moneyOne of the first and most important steps in setting up a savings plan is to MAKE A BUDGET. It is difficult to save money if you don’t know where you are spending it. First and foremost you should list your monthly expenses that you must pay regularly: shelter, food, transportation costs, insurance, payment of debts, to name a few. Second, make a list of things you spend money on that are discretionary. These include restaurants, movies, fun purchases, travel, memberships, and more. For these expenses consider setting a limit and once that limit is reached stop spending on these items for the month.

 

After you have created your budget don’t forget to include savings in the mix. Set goals. What are you saving for? How will you meet these goals? Here are a few ideas and strategies:

Open a tax-free savings account.

This allows any resident of Canada over the age of 18 to put up to $5500 per year into a tax-free savings account ($5000 yearly from 2009 -2012, $5500 beginning 2013). Contributions and monies earned through investments of those contributions can be withdrawn at any time completely tax free and with no withholding tax.

Take advantage of any employer-sponsored savings opportunities.

Many organizations allow you to contribute to RRSPs or purchase Canada Savings Bonds through payroll deductions and may also have a matching program. When your employer matches your contribution this is FREE MONEY and it would be unwise not to take advantage of the program.

 

Start saving small amounts.

The first word is the most important. START. The sooner you begin the sooner your money can begin to work for you and the sooner saving will become a habit.

 

Pay yourself first.

This goes back to the budget. Make sure you have included your savings as part of the budget. Be disciplined and set a schedule. Automatic payment plans are great for this. Paying on a regular monthly payment plan is much easier than trying to come up with a lump sum of cash once a year.

 

Work with a financial advisor.

Everyone’s plans are different and you should work with someone who knows about various plans and strategies.

 

Review and re-evaluate your savings plan regularly.

Make sure you are on track.

 

Include an emergency fund in your savings.

You should have three to six months of living expenses set aside for those times where finances can be affected by employment changes or health changes. Having cash reserves can provide you with peace of mind and help reduce financial stress.

 

How to make a savings planIf you have any questions or want to get started on your plan today do not hesitate to contact our Certified Financial Planner at O’Reilly Insurance, Jennifer Dick B.Sc.N., CFP, CHS.

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