Saved!

Since I'm not contributing to a retirement or pension plan through work, nor do I have any RRSPs yet, I save $300 a month for savings: $200 for emergencies and $100 for other. Emergencies are just that, hopefully I'll never have to use it, but things come up, in a big way, and if you're prepared somewhat financially, it won't rock your budget boat. Other includes everything else, usually fun voluntary things. I don't have any room in my budget for airfare, vacations, Christmas presents etc. so I need to have this extra cash in hand and that's what the other savings account is for.

Right now (after the tax refund comes in) my savings look like this:
Semi-serious: $565.47
Serious: $1630.98

Come October, I'll be making a fair amount less because I'll FINALLY have benefits (get ready teeth!) and so I'll lose my pay in lieu of benefits AND begin contributing 7% of my pay to a pension plan and 1.5 % to a mandatory savings plan my workplace matches. It's a good deal but will be an adjustment to lose the extra money so in the mean time I'm keeping the same monthly budget I will need then as far as discretionary expenses (so it's not a shock when I have $300 less a paycheque) and I'm making my own savings plan. By October I'll have $2700 in serious savings and around $1300 in semi-serious. Pretty darn good if you ask me.

If this hasn't been clear, I think having savings and some money on hand in case of emergencies is extremely important.

If you're in debt, do what you can. I've decided on paying a slightly lower amount each month on my line of credit in order to have more money to put into savings. Otherwise I would be savings free and giving away all my money and in case of emergency I would be stuck and emergencies happen! I did the calculations and by paying off my line of credit in 5 years ($650/m) instead of 4 ($800/m) I will be paying about $800 more in interest but would have also saved $9000 over that period. If you aren't sure how to proceed at least save some money for emergencies, $100-200 per month. You will appreciate it when your car breaks down, your kid needs braces, or you have to fly home for some emergency.

If you're debt free I would aim to be saving up to 30% of your income to savings:

10% to a retirement plan that you never ever touch (except if you're using it for a down payment on a mortgage, where the government give you a break on the withdrawal)
10% to a easily accessible high-interest savings account for emergencies (home repair, job loss)
10% for semi-serious savings in a high-interest savings account (vacation, new computer)

Once you have 3-6 months of your regular income saved for emergencies, you can keep on saving or invest that 10% for retirement or other long-term savings goals. You should keep in mind that your emergency money for 3-6 months will need to be added to as your wages and responsibilities increase, so it would need to be evaluated over time to ensure you have enough piled away.

Like your chequing accounts, all savings accounts are not created equal, so shop around! I started a few Jumpstart High Interest Savings accounts at Vancity (a credit union) a few years ago and they've been great to keeping my money close, but far away enough from my regular account that I didn't dip in without forethought. At 3% at the time, their interest rate was the best deal around, but now they've moved down to 1.75% in light of the economy. Find a deal that suits you. You should be able to save with little or no fees (especially if you do the bulk of your work on the internet), since they make money of your savings, so read the fine print.

Get saving! Not in the mattress or the piggy bank but that's not a bad start.

Do you have any tips for saving money?

The Taxman Cometh

Well I made it to the end of March relatively well with limited overages. One thing I have to say is that when last Saturday rolled around I official began April budget-wise, and now, one weekend and 2 surprise house guests later I'm already down about $100 in borrowing from April's money. Bad Jen! Bad.

I will never, ever stay within budget if I begin the month in a handicap, so I'm using the lovely tax refund I will receive to beef up my emergency savings and a small amount of it will go to even out April's budget and perhaps buy me some badly needed work shoes, my $20 Payless flats have been rocking some massive holes for a few months now. I think it's time.

I sent my taxes in via Netfile last Friday so I should be getting my return soon. I'm getting about $2400 back this year which is awesome. I had planned to pay off most of my outstanding OSAP loan from University, but since my job future is questionable (whose isn't?), I thought that making some savings should be a priority. So I'm sending $1000 to my super serious savings account and $500 to my semi-serious account since it was recently depleted when I jumped on airfare for two upcoming trips (May and October, what can I say, I'm a planner).

The other $900 will go towards doing something I've meant to do for months. My bank account is a no fee account if I have a balance of over $1000 in my account. Because this has never been consistently the case, I also have overdraft protection. The regular account fee is about $4 and overdraft is $3. If I just keep $1000 in my account and get rid of my overdraft (having created my own cushion) I will save $7 a month or $84 a year, or $840 in 10 years. Small peanuts? I think not.

I would encourage people to see how much you can save with reading the fine print on your bank statements or your banking website. I've given up using my debit card for everyday purchases so I have the lowest cost account possible (which gives me 10 free transactions) and now it will be free. Some companies like PC Financial and different credit unions offer free accounts with no minimum. I'm in the interest of keeping a great relationship with TD Canada Trust for now since I've been there for 14 years, but look at your options.

As far as your tax return, don't delay! You pay something like a 5% penalty if you submit it after April 30st, so get on it.

I make doing my taxes a delight every year by taking extra money off each of my paycheques ($40/pp) so I don't have to pay anything at the end of the year, even if I do a bit of freelance work on the side. It guarantees that for now, while I'm mortgage and investment free, I'll get back at least $1000 a year. It's only so much higher this year because didn't work full time the whole year and I still have some school and tuition credits from last year since I was finishing up my degree. Yay money back! I'm pleased I'm spending it wisely too, it's not getting my OSAP paid off, but I sure have some good piece of mind.