It can be very tempting to spend the money you have left over after your pay cycle. However, saving money is crucial for planning for the future. Education, retirement, emergencies, and vacations all require a financial investment. If you’re new to saving and want to set yourself and your family up for success, here are five of the most important forms of saving you should consider:
An Education Savings Plan
Post-secondary education can be expensive, and not everyone can afford to pay tuition costs upfront. That’s why a CST Spark RESP, or another Registered Education Savings Plan, can be so invaluable.
Rather than having to find thousands of dollars to cover education costs for your children, you can open an RESP and start saving from when they are young. As your money builds, you can make investment gains and receive grants. By the time your children are ready to enrol in a learning institute, they can access the funds they need for tuition and related expenses.
A Retirement Fund
Many people receive a pension plan when they’re retired to help them cover the costs of everyday living. However, it doesn’t always cover everyone’s costs, which is why a retirement fund is a crucial form of savings.
Many different retirement savings accounts exist, such as a Registered Retired Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), and Locked-In Retirement Account (LIRA). Research all available options to learn which one is right for you. If you’re currently employed, your employer may recommend a specific type.
Emergency Savings
Emergencies can strike when you least expect them, like a leaking roof after heavy rain that you need to repair or a broken-down car or appliance. Rather than having to take out a personal loan or borrow from loved ones to cover these unexpected costs, it’s helpful to have an emergency savings account you can take money out of. Ideally, you should aim to have three to six months’ worth of expenses in your emergency account, but every little bit of money you save counts.
A Traditional Savings Account
You shouldn’t have to go into debt to buy something nice for yourself, like a new outfit or a piece of jewelry. Instead, if you set up a traditional savings account and deposit money into it regularly, you can use the money you’ve saved. Traditional savings accounts earn a small amount of interest when they aren’t touched, but you can also use them to buy luxury goods without leaving yourself short for everyday expenses.
A High-Yield Savings Account
When you’re saving for something of great value, like a car or a downpayment on a house, don’t underestimate the value of a high-yield savings account. While similar to a traditional savings account, they typically offer higher interest rates to help you reach your savings goals faster. You may also find that withdrawals are penalized, making it easier for you to avoid touching this account and, instead, watch it grow.
Whether you have a lot or a little money left over after paying for everyday essentials, there’s great value in setting up savings accounts for it. Education funds, retirement funds, and everyday savings accounts are just some of the many options for setting yourself up for the future and enjoying the finer things in life.
