Saving strategies
Whenever a new year comes around, many people make resolutions, and oftentimes these resolutions involve their finances. Setting new goals may be a great way to kick off the New Year, but all too often people don’t stick to their plans and usually revert back to their old ways within a few months.
To help you achieve your money objectives for 2021, here’s an updated checklist of ways you can boost your savings. While many of the tasks on this list are easy to do, they’ll pay off big in the long run. Keep in mind also, that it may be unrealistic to complete everything listed here right away, but the sooner you get to them, the more beneficial it is to you.
Reduce your debt
Suppose you have a significant amount of high-interest consumer debt such as credit cards or auto payments. In that case, you should make paying down your balance a priority. Consider getting a consolidation loan with a low-interest rate so you can use it to pay off your existing balance right away. You’ll still owe the same amount, but at least now you’ll be paying less interest.
To tackle your outstanding balance, you’re going to need to divert extra funds directly to your debt. It’ll take some sacrifice, but once that debt is paid off, it’ll feel like a burden has been lifted.
Look at your monthly bills
The start of the year is an excellent time to go over your recurring expenses and see if there’s anywhere you can cut. Do you still need all those streaming services, or can you get away with just one? How about your internet and wireless plans? Are there cheaper plans available even if that means going to another carrier?
Even if you can afford all these things, it doesn’t make sense to pay more than you have to. Any money you save can be used on other priorities you may have including debt repayment.
Map out your major expenses
Even the most frugal people have significant expenses that come up every year. This typically includes such things as your home/auto insurance, vacations, property taxes, home renovations, etc., and by mapping them out, you’ll know exactly when they’re coming and can better prepare for them.
Listing all your major expenses can assist you in making smarter money decisions. It’s a lot easier to pass on eating out or buying a new gadget when you know you have a big purchase looming on the horizon.
Choose the savings account that matches your priorities
There are two types of accounts that you should be familiar with: Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA). With RRSPs, you get a tax break on your contributions, but any funds withdrawn in retirement are fully taxable. TFSAs don’t provide a tax credit, but all capital gains made while funds are invested in the TFSA are tax-free when withdrawn.
Consider other accounts
If you’re fortunate enough to have both your RRSP and TFSA already maxed out, you could consider other account options. If you’re a parent, you’re eligible to open a Registered Education Savings Plan (RESP) for your kids. This is a very effective way to help save for your children’s education since the government will give you a 20% match (up to $500 a year) thanks to the Canada Education Savings Grant (CESG).
Write your will
No one ever wants to think about their eventual passing but having your affairs in order is something that needs to be done as soon as possible. You may not realize that writing a will takes less than 30 minutes and you can even use an online service such as LegalWills to complete a basic family will.
Online will services walk you through the process to have all your final wishes in writing. Best of all, the cost is significantly lower than going to a lawyer, and any updates are free. Once your will is done, you just need to print it out and have witnesses sign it. In case you’re wondering, yes, online wills are legal.
Final thoughts
Remember, no one expects you to take care of all of the above as soon as January rolls around. It’s merely a list of things that need to be done throughout the year. Figure out which tasks are a priority for you and work on them one at a time.