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Five simple ways to boost your savings

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Sometimes, the hardest thing about saving money is just getting started. This step-by-step guide by bettermoneyguide on how to save money can help you develop a simple and realistic plan to save for goals, big or small.

1. Record your expenses: The first step to saving money is to figure out how much you spend. Keep track of all your expenses — that means every coffee, household item and cash tip. Once you have your data, organise the numbers by categories, such as gas, groceries and mortgage, and total each amount. Consider using your credit card or bank statements to help you with this.

2. Make a budget: Once you have an idea of what you spend in a month, you can begin to organise your recorded expenses into a workable budget. Your budget should outline how your expenses measure up to your income — so you can plan your spending and limit overspending. In addition to your monthly expenses, be sure to factor in expenses that occur regularly but not every month, such as car maintenance. You can compare your budget to those of people like you.

 

3. Plan on saving money: Now that you have made a budget, create a savings category within it. Try to save 10 to 15 per cent of your income. If your expenses are so high that you cannot save that much, it might be time to cut back. To do so, identify non-essential expenses that you can spend less on, such as entertainment and dining out, and find ways to save on your fixed monthly expenses.

4. Decide on your priorities: After your expenses and income, your goals are likely to have the biggest impact on how you allocate your savings. Be sure to remember long-term goals. It is important that planning for retirement does not take a back seat to shorter-term needs. Learn how to prioritise your savings goals so you have a clear idea of where to start saving. For example, if you know you are going to need to replace your car in the near future, you could start putting money away for one now.

 

5. Pick the right tools: If you are saving for short-term goals, consider using these insured deposit accounts:

  • Savings account
  • Certificate of deposit, which locks in your money for a fixed period of time at a rate that is typically higher than savings accounts

For long-term goals consider:

  • Deposit-insured individual retirement accounts, which are tax-efficient savings accounts
  • Securities, such as stocks or mutual funds. These investment products are available through investment accounts with a broker-dealer. Remember that securities are not insured by the deposit commission, are not deposits or other obligations of a bank and are not guaranteed by a bank. They are subject to investment risks, including the possible loss of your principal.

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