Road to good financial health: Five helpful strategies for growing your savings
Sound management of your finances can allow you to both achieve your financial goals and build resilience against economic uncertainty. And having a good understanding of strategies that can help you effectively manage your finances is a key component of your financial well-being.
In this blog series, we mark Financial Literacy Month by outlining strategies to help you get started on the road to good financial health. And in our first post, we look at some strategies to help you grow your savings.
The importance of saving actively
Actively saving a portion of your income is a good habit that can keep you on track to meeting your financial goals, as well as give you an emergency fund that can free you from the stress of unexpected expenses. In fact, a study from the Financial Consumer Agency of Canada (FCAC) found that Canadians who actively save “have higher levels of financial well-being than those with the same income who don’t.”
Bear in mind that turning active saving into a habit takes patience and discipline. Fortunately, there are several strategies you can follow to help you grow your savings. Below, we look at five strategies that can help you start.
1. Take some time to understand your finances.
The first step to effective saving is having a good grasp of your income and expenses. Having an overview of your finances will show how much you spend each month compared to your income, allowing you to see where you can reduce costs and how much you can realistically put away as savings.
2. Set a reasonable monthly budget – and stick to it!
When you feel you have a good understanding of your financial situation, you can now set a budget that helps you manage your money. According to FCAC, the key to a smart budget is to identify your needs (things that are necessary, required or essential, such as food, housing and clothing) and wants (things that you’d like, but don’t really need) and plan around them.
One useful online tool to help you plan out a budget that suits your needs is FCAC’s budget planner, which gives you helpful suggestions as you craft your budget and allows you to save it online for future reference. But remember that crafting a budget is only half of the battle – sticking to it is just as important! And remember to update your budget with any changes to your income or expenses.
3. Automate your savings.
Many banks offer services that can automatically transfer a portion of your pay cheque to another account as savings. These services can help make getting into the habit of saving easier by essentially doing it for you, ensuring that the account where you stash your savings is always growing, as well as removing the temptation of spending the amount you should be saving.
4. Trim down recurring expenses for services you don’t use.
Whether it’s a subscription to a video streaming service you hardly watch or a membership to a gym you barely go to, it’s a good idea to look through your monthly transactions and see whether it’s worth continuing a recurring monthly expense for a service you scarcely use. Trimming down on these expenses can help you find extra money that can contribute to your savings – and you likely won’t miss them when they’re gone.
5. Use a credit card that can work for you.
A good cash back credit card can help you get more out of your everyday spending, making your money work harder for you. For instance, the Home Trust Preferred Visa has no annual fee and offers 1% CashBack Rewards on all eligible purchases with no cap, even when shopping online – an amount you can use to grow your savings.
With the right strategies and tools such as the Home Trust Preferred Visa, you’ll be able to grow your savings and get on the road to good financial health. Learn more by visiting hometrust.ca/credit-cards/preferred-visa-card.
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