New Years resolutions often involve finances and money in some form or another. For me, this year was no different. I wanted to improve our family’s financial situation by revisiting my personal budgeting skills and our overall financial plan.
In order to reinforce this goal, I decided to look into some additional strategies that can help me budget more efficiently and save more successfully this year. My husband and I already try to keep good records of our spending from month to month, and here are some other areas that I think will help increase our chances of saving even more each month and each year.
What are my new 2014 financial strategies?
I did some research on some financial strategies to help improve my ability to save some additional money each month. Here are some ways to help contribute to our household income each year.
1) Automatic Transfer
I decided to look into switching/adding another saving account. There are options such as Tax Free Savings Account (TFSA) and High Interest Savings Accounts that can help accumulate some money each month. The automatic feature is great because it allows for a determined set of income in your chequing account, for example to be automatically transferred into the savings account, without you having to lift a finger or remember to complete a separate transaction each time.
What I learned about a Tax Free Savings Account ….
The benefit of a TFSA is that you have the ability to put as much as $5,000 into this account each year. You do not have to worry about paying any tax on the amount of interest you accumulate on the money you have saved. Additionally, when you withdraw the funds, you avoid paying taxes on the amount altogether. This could be great for our retirement plans too…
What I learned about High Interest Savings Account …
With a high interest savings account, you will be able to earn a larger volume of interest than you will with other types of savings accounts. Typically, the interest increases on these accounts when your bank’s interest experiences an increase. While, there may be some added restrictions on these accounts, they can be another valuable option to save the extra money you require.
What I figure is even if I have at least $25 transferred each month, this can add up to a nice chunk of change over time. If down the road we require some funds to pay for extra expenses, whether unexpected or if even if we are saving for a trip or a new television, for example, I feel confident that we will be able to save some extra money.
2) Save Despite Debt
I use to think that if I already had debt, I wouldn’t be able to put aside any money to save because every dollar I made was already spoken for. However, this does not have to be the case. In fact, many financial advisors actually suggest that even if you have some debt accumulated, you should still try and save some each month, to the best of your ability. This makes sense and also ties in with the automatic savings account strategy, because I figure that even if I re-direct a little portion of income each month, and my husband does the same – we can certainly end up with some extra money over time.
3) RRSP (Registered Retirement Savings Plan)
I admit, looking ahead to retirement is not something I have been very active about up until now. However, I recently became more aware of the benefit of making consistent RRSP contributions. Adding funds into an RRSP each month, can also help save money for our future, our children’s future and our retirement fund. This type of account keeps the income protected from any tax deductions until you decide to withdraw the money and this is a great feature to keep the funds secure. I also learned that many employers will match the amount of your contribution, and this can definitely be an effective way to put even more money aside for the future.
While looking into this method, I also realized how important it is to start as soon as possible. I have decided to look into this in more detail and determine if this is an option that would work well with our long term financial goals.
4) Cutting Back on Certain Luxury Items
Lastly, I think another spending niche that shouldn’t be underestimated is the precise amount of money that we spend each month on various items and services that can be consider luxuries versus necessities. For example, we enjoy eating out and having food delivered a couple times a week. Making meals and even meal plans ahead of time, I think will help me when I am doing the grocery shopping.
I also plan on re-examining our cable, internet, and phone bills to see if there are any areas where we can save on. Perhaps re-negotiating these services will work out in our favour, I figure it is worth a try. Both these areas are ones that I think we can cut back on to even save a little bit extra money each month. There are likely other areas to consider cutting back on and great options for saving additional income and I think by identifying these, our wallets will thank us for it.
While many of these strategies I have heard of before, I never actually put them into action. However, now that I have taken a closer look at these possibilities, I am confident that they can help us work towards our savings goals. Even though some may not seem like they will make a drastic change in our income levels, it is important to remind myself, that even a little can add up over time. Overall, our plans to budget and saving for rainy day will help us out I’m sure in more ways than one, including having a greater piece of mind for the future.
