Most people think they have a good excuse for not saving money. Regardless of how much or how little you make, saving on a regular basis makes good sense.
Spending everything you make doesn’t maximize your purchasing power. Instead, it wastes your funds, often on things you don’t need. Your money will serve you better if you save–or even invest–a portion of it.
If you’re using any of these seven common excuses, it’s time for a change in your financial goals.
- “I don’t make enough to save any.” It doesn’t take a lot to invest in your own financial well-being. Most retirement accounts, such as RRSPs or TFSAs, allow flexibility in contributions.
- “I’ve got time. I’ll start saving next month.” We’re all guilty of procrastination at some point in our lives. If you’re waiting for “the right time” to start saving or investing, you could be waiting awhile. We tend to overlook those “right time” moments. Putting money away one of the best GIC accounts will pay off down the road.
- “I don’t know anything about personal finance.” Ignorance may be bliss but, in the case of savings and investing, it can be quite costly. Educating yourself about money management, saving and investment strategies is easy. All it takes is a commitment to see it through.
- “Y.O.L.O.” The “you only live once” justification for indulging yourself in spending sprees is never a good way to go. Rein in the impulse buying and spending now; you’ll thank yourself later.
- “I need to pay off my debts first.” This is a noble idea but not necessary. If you’re waiting to be debt free before saving, you may find yourself looking at retirement with no substantial savings. It isn’t necessary to pay off all non-mortgage debt before growing your savings.
- “I’m too busy to worry about saving.” The simple truth is this: the longer you wait, the harder it will be to meet your financial goals. The pay-off for saving doesn’t come from the amount of money in your account. It comes from the interest, dividends and capital gains your money earns for you. Consider a high-interest savings account to get your money earning for you.
- “It’s too late for me to start saving.” There’s no time like the present. If you’re late getting started on saving, you’ll have a smaller nest egg when you retire. But every little bit you contribute still counts. Something is always better than nothing.
Savings Goals Vary
According to a survey by RBC in January 2019, Quebec residents have the lowest retirement savings goals in Canada. They are not any more confident that they’ll reach their goals than any other Canadians. Most have good intentions.
Canadians will need ten times their annual salary in savings and investments in order to retire comfortably. In Quebec, the savings amount in order to be financially comfortable in your later years is $427,000. In British Columbia, by contrast, the amount most say they need is $1.07 million in their nest eggs.
Those surveyed in Ontario believe a savings and investment nest egg of $872,000 is what they’ll need to be financially prepared for the future. The national average for Canada is $787,000.
Of course, what you plan to do in your later years makes a huge difference in the amount you’ll need. If your plan is to live quietly in an apartment in Montreal, you may not need as much. If, however, you’re thinking about travelling the world or living in luxury, you’ll need to adjust your saving and investment plan now to accommodate those dreams.
A good way to reach your goal is simple: save or invest a specific amount of money each month. Leave it alone and let it grow. Leverage a rate comparison site like RateSupermarket.ca to find the savings accounts that will give you the best rates. You’ll be happy you did.