Here are some tips and techniques to help you save and invest.
- Do not overextend yourself
Pressured by consumerism and poor buying behaviours, we may want to acquire the latest fashions and other luxury items. We need to discern “needs” from “wants” and make a calculated decision to spend within our means and within our budget.
- Establish a monthly budget and stick to it
Always determine total monthly income and total monthly expenditure. This way you can determine your disposable income, that is, what is left after servicing commitments. This will determine how and what you can save.
- Invest early
The younger you are, the greater your benefit is likely to be. However, it’s never too late to start saving. Even if you have just a few years before retirement, make your savings grow by investing it conservatively. Then enjoy the benefits of a nest egg during your retirement years.
- Invest regularly
Ask your employer to directly deposit your paycheck into your bank account. Invest in a Pay Yourself First Plan. This can be best accomplished by opening an Automatic Savings Plan. Open a Registered Retirement Savings Plan (RRSP) or some other savings plan and set-up an automatic transfer. You determine the amount. With an RRSP in particular, there are tax savings to be achieved, whether you save by regular weekly, bi-weekly or monthly contributions. Then, stay invested and you will see the power of long-term saving.
- Diversify
Do not put all your eggs in one basket. Determine the level of risk you want to incur by diversifying and then spread your risk.
- Down-payment requirements
If thinking about purchases (e.g. a house or land) where a down-payment is needed, try to save at least 10% of your monthly income over time. This eliminates the need to borrow funds elsewhere for this deposit, whilst simultaneously building a good saving habit.
- Emergency fund
If you can, it is advisable to save up three to six months of expenses in your emergency fund, even if it means making some sacrifices. This money will be a cushion in the event of sudden loss of income.
These are just some tips to help you save and invest, but it is by no means an exhaustive list. Consult your financial advisers for more help on good saving and investing habits.
