Saving for big purchases requires planning and commitment. But achieving a big goal, like saving for an international trip, your wedding, a down payment on a home or funding for your new business, can be incredibly rewarding and even life-changing. It might seem like Mount Everest at first, but with a solid plan you’ll reach your savings summit one step at a time.
Know your target
As you start working towards your savings goal, figure out exactly what you’re trying to achieve. Being specific about your goal helps you to stay focused and determine the best way forward. Understanding why you want to achieve this goal will also help you stay motivated, even if it requires making some sacrifices.
Get real about your budget
You’ll need to understand your budget and cash flow to meet your savings goal each month. Your cash flow is how much money you have coming in each month compared to your expenses. This will help you make decisions about where to spend and save. For an at-a-glance picture of where your money is going each month, check out our budget calculator.
If you’re not currently saving enough to reach your goals, there are some options that could help you get there:
Put your savings on autopilot
Once you’ve figured out how much you need to save each month, set up automatic transfers to a savings account each payday. This is a great way to pay yourself first before you’re tempted to spend the money on other purchases that don’t align with your plan. Plus, it takes the manual labour out of saving.
Setting up a separate savings account for a big purchase will help you know exactly how much you’ve saved. Depending on your timeline, you can grow your money while saving with a registered savings vehicle like a TFSA.
Reviewing your progress regularly will help you stay focused and motivated. Your advisor can also help you stay on track and adjust your plan if you need to.