It can be easy to feel worried and stressed about saving - especially if you didn’t start until later in life. But, no matter what anyone tells you, it’s never too late to begin saving.
Don’t be paralyzed by regrets or what-ifs. Here’s how to get started in four simple steps.
1. Know how much you’re spending
To start saving, you need to figure out exactly how much you’re spending, and on what. Make a list of all your expenses, including:
- Rent or mortgage payments
- Utility bills, like water, electricity, and heating
- Gas and/or public transportation
- Credit card bills and other debt payments
- Child care costs
- Communication (phone, internet, cable, etc.)
- Entertainment (streaming subscriptions, ordering takeout, books, etc.)
Once you know where your money is going, it’s easier to make a budget and decide how to cut back. Get started with our budget calculator.
2. Connect with an advisor
An advisor’s expertise is priceless (well, at Meridian it’s free). Talking to an advisor about your priorities, dreams, and future hopes, helps them build a plan that goes beyond your budget and finances. Together, you can map out how you’re going to save and stay on track so that you get everything you want.
3. Choose investments that fit your plan
Discuss investment options with your advisor. Some investments can seem risky and intimidating, but an expert can lay out all your options and recommend the path that’s right for you. It’s all about identifying your risk tolerance and resilience to volatility.
Compare potential investments with our savings growth calculator.
4. Make saving automatic
Once you’ve got your budget and you’ve decided on the right investment plan, figure out how much you can afford to put aside each month to grow your savings. Then, set up pre-authorized contributions. That way, a set amount of money is automatically transferred to your savings on a weekly, bi-weekly, or monthly basis.
This way, you save without thinking about it and benefit from compound interest.
Here’s an example of how much your savings could grow with automatic contributions over 20 years.
As you can see, making automatic monthly RRSP contributions of $1,000 at a 5% rate of return and investing your $1,500 annual tax refund in a TFSA could result in $254,472 in savings over the next 20 years.
A version of this article was originally published on December 8, 2020
Learn more about saving money
What is a pre-authorized contribution plan?