Increasing Your Savings
Perhaps you are thinking about taking an epic trip around the world, or starting a business, or making some other major purpose. Maybe you just want to start putting some money away for a rainy day. Whatever the goal, increasing your savings is never a bad idea.
Unfortunately, for too many people, saving is an idea that is associated with deprivation and pain, but it doesn’t have to be that way. We can attest that having some savings actually reduces stress! By making some small changes today, you can amplify your savings and start seeing results in as little as a few months. What follows are a few of our top suggestions for increasing your savings.
1. Pay yourself first! This one is personal finance 101, and many of you have likely heard it before and are rolling your eyes. Ok, but are you doing it yourself? It’s super simple, and extremely effective. No matter your savings goal, start a regular contribution from your bank account to your savings account for as little as $1 (although we’d recommend aiming a bit higher). If you time the withdrawal with your pay cheques, then you will very quickly adapt to not having that money. A few months later when you check the balance of your savings account, you will get a nice surprise!
2. Open a High Interest Savings Account. Most people like to have all of their bank accounts in one location, and that convenience is definitely worth something. However, for your savings, we recommend opening an account with a separate, often online bank. The reason is the interest rates are often much greater (can be over 2% in some cases vs. 0.5% or less), and by having your account somewhere else, you will be far less tempted to raid it early, since you won’t see it every time you login to your online banking.
3. Save that windfall. This may not be a step you can take immediately, but next time you receive a bonus, raise, or other sort of cash windfall, save the majority of it. Yes, you can savour the moment and treat yourself to something nice to enjoy it, but avoid the lifestyle inflating urge to splurge. Our rule is that you spend 10% of the windfall on an amazing experience and 90% goes towards your savings goals.
Often to increase your savings rate, it just takes a few small changes like those above, and before you know it, you will be used to the new normal.
If you’d like some additional support with making a change, please setup an initial connection meeting with us and learn more about how Finovo can help you get better control of your finances.