What Does Your Savings Account Look Like?

Do you know what your savings account looks like? There are those times – the months we overspend and end up getting payday loans to get us through until the next paycheck and not saving. According to CIBC’s 2017 survey results, 85 percent of Canadian’s agree that they should be saving more money than what they currently are. In fact, 79 percent of respondents aged 35 to 54 said they worry about not having enough funds to retire when they want to.

So what does this mean for expenses only continue to grow? How do you start to save?

Consumer spending isn’t going to end, especially with low-interest rates here in Canada. And this is one of the main reasons savings are not being made a priority. But as BNN also reported, sixty-five percent of those surveyed said they lack a detailed or regular savings plan; twenty-six percent of those people “don’t really save” or “never save” at all. And all of this is despite eighty-two percent of respondents’ claimed they could “cut back” each month by an average $360 “before feeling the pinch.” Everyone also has their own savings strategies that work best for their lifestyle and expenses. And this survey result tells that story as only thirty-eight percent, save varying amounts each month depending on what’s left over after spending and expenses.

Do you fall into these statistics or do you know what your savings account looks like? We break down the best tips for having a savings account and how beneficial having savings can really be for your financial future.

Open a Savings Account

The first step when it comes to saving is an easy one. It is to open a savings account and go from there. When you’re putting all your money into one account, it can be easy to spend it on whatever, whenever. And if your “savings” are sitting in that same account, it’s hard to know what you are saving, versus what you are spending. That’s why it’s important to keep your savings separate. There are different types of accounts out there that you can open to help you save money. Tax-free savings accounts (TFSA) is a way for people to set money aside tax-free throughout your life. Meaning that contributions to this account are not deductible and any amount contributed, as well as income earned in the account (like from investments for example), is generally tax-free. Registered retirement savings plans(RRSP) are great for saving for retirement or bigger purchases in your life like a house since taking money in and out of this account isn’t always the easiest. Contributions to these accounts can also be claimed on your income tax and can help reduce the amount of tax you owe during tax season!

If you’re also one of those people that by the time your paycheck comes you feel like it has already been spent, one of the best ways to force yourself to save is the direct deposit approach? Direct deposits and automatic payments shouldn’t have to just be for bills, why can’t it be for adding to your savings account every paycheck? When setting up these automatic transfers it gets rid of the hassle of having to put money away and constantly checking up on your accounts. And before you know it, you will be saving without having to “try” and save.

Budget For Saving

Once you’ve set up your savings account the next step is to create a savings plan is to know how much you have coming in and how much you have going out on a weekly, monthly and annual basis. Refer to past budgets or spending journals to take a look at where you were saving before and add in any new expenses that may have popped up. Once you know what you’re spending and where you’re spending it, you can move to the next step in building your budget. Never set up a budget before? Not to worry, everyone’s financial priorities are different, no budget is ever the same and it is never too early or too late to take control of your finances. When it comes to your budget, doing regular updates is what can help you see where your money is going and if you can cut back your spending in the future. So when updating your budget, start small and you will be surprised and how quickly a little bit each paycheck can make a difference in your savings. It is very common for people to have to tweak their budgets numerous times a year due to life changes. That’s why when looking at where you can save, you can see where your money is going to be able to readjust it to still save money all while paying for all of life’s moments.

Emergency Fund

A lot of people think that because they have savings, they will be financially okay in an emergency. But do you have a specific set of funds dedicated to an emergency fund for when you really need it? Any form of savings are helpful, but in the case of a financial emergency, you should always be prepared. It is when these financial strains happen that people turn to GoDay. So in the case of a financial emergency and people do not have the savings or emergency fund available, GoDay can get you the cash you need. The only time to use your emergency fund (which is why it should be different than a regular savings account) is when you need to prepare for the financially unexpected. Emergency funds are most commonly used in cases when you need a lot of extra cash on top of your current expenses causing them to double or more.

What Are You Saving For?

You don’t always have to be saving for something specific to have the motivation to start putting money away, but having a financial goal can also be very motivating.  When you start saving even if you have nothing specific to save for, it makes those life events easier to pay for since you already have savings put away and takes away the financial stress of it all. Soon enough you’ll start to feel financially comfortable which can then lead to making smart financial decisions and figuring out what the next steps with your money should be. And while something big life moments you can start saving and prepare for, there are events that you can’t always predict happening. That’s why regular savings tips will help prepare you for any occasion and save whether it is planned or not.  It doesn’t have to be a significant amount, but challenge yourself to put away a certain amount each month for a rainy day and you will thank yourself in the future.

What does your savings account look like? Let us know your savings tips in the comment section below.

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