When you think of your financial future, are you filled with dread? Or are you comforted knowing you’ve done what you can to save money?
All too often, I hear from people in a state of panic when they’re faced with the thought of meeting their financial needs in the future.
Just take a look at some of these facts from Statistics Canada:
“Average net saving for all Canadian households was $852 in 2018, while the highest income quintile (the top 20% income earners in Canada) saved $41,393 per household. Conversely, households in the lowest income quintile had net dissaving of $27,935, as on average they consumed more than their annual income and either had to incur debt or draw down previous savings to finance their consumption.”
Wherever you fall within the range of incurring debt to putting away thousands of dollars a year, you understand how important it is to save money for your future. But if you’re not saving as much as you want to—or even at all—what can you do?
How to save money for your future
Here are some of my favourite pieces of advice on how to save money for your future:
- Establish a budget.
- Start with small goals.
- Save with a purpose.
- Make it automatic.
- Work with a professional.
Let’s explore each of these tips to help you put this advice into action.
Establish a budget
If you don’t know exactly what you have, what you’re spending, and what you owe, it’s easy for spending and costs to get out of control.
On the first of a new month, start collecting every receipt and tracking all of your spending that way, or use your online banking account to organize spending into categories.
At the end of that month, create a spreadsheet showing what you’ve earned, and what you’ve spent. Take a close look at what you’ve spent so you know exactly where your money is going each month.
This is a very effective and easy way to get a better look at your finances as they stand now. It can also be a very humbling experience when you realize you’re spending $200 a month at your favourite coffee shop!
Start with small goals
Once you’ve been able to have a look at where your money is going each month, you’ll have a better idea of where you can save. But this can feel overwhelming if you set goals that are too big to reach.
Let’s say, for example, you make this goal: “In five years, I want to have $12,000 saved.” This might be too big and overwhelming. Try setting smaller, more attainable goals to start with instead. Maybe committing to putting away $100 per month for one year to start is more reasonable for you.
Naturally, you’re more likely to achieve these smaller goals than ones that are difficult or impossible to reach!
Save with a purpose.
To save money is one thing, but to save money with a purpose is a whole different ball game.
When you have a specific goal and purpose for the money you’re saving, it will make it a lot harder for you to dig into your savings for something that seems relatively frivolous.
Maybe you have a savings account specifically for your child’s college education. With this specific purpose for the money, drawing from it to buy a trendy bag will be a lot less likely. But if the money is just sitting there as “savings” with no real purpose defined, it’s easier to spend it rather than save it.
Many Canadians also have philanthropic goals with their savings in mind, or perhaps they’re committed to leaving behind a generous amount for their loved ones.
This is one reason it’s important to establish your will before you die. Here are four important realities about dying without a will.
The point is, save with a purpose and you’re more likely to actually save!
Make it automatic
Automated transactions can be an incredibly useful tool for saving money.
For starters, you can set up your bills on autopay. This will help prevent late charges or interest fees if you miss a payment because you forgot to transfer the money on your own.
Another way to use automated banking features to help you save is by setting up an automatic deposit into your savings account each month. When this money is moving without you having to actually see it move, it might make it easier for you because you’re less likely to feel like you’re “losing” money.
Speak to your bank about setting up these payments to take some of the guesswork out of the way for you!
Work with a professional
When you want to get serious about saving for your future or the future of your children and loved ones, working with a professional is recommended. A certified financial planner can help you see where you can save and where your money is going now. They can also help you determine how much you SHOULD be saving and how much money you need.
But don’t just hire any financial planner—here are 6 questions to ask to help you choose the right one.
A certified financial planner can also help you get on the same page as your partner or spouse about saving and your financial future. If you’re interested in this topic, you’ll also want to have a look at my financial planning course, For Love and Money.
With these clear goals in mind, saving money for your future (or for any other purpose you’ve decided on!) becomes much more realistic—and that means we’re much more likely to do it!
If you’d like to get in touch and discuss financial planning for your future, don’t hesitate to contact me today!
Did you find this article useful? Here are three more you might also enjoy:
Have you thought about what you want your legacy to be?
Who do you want to benefit from your money when you are no longer here?
Estate planning with your loved ones
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