Budgeting 101: What to Do With The Money You Are Saving

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BUDGETING 101 : WHAT TO DO WITH THE MONEY YOU ARE SAVING

So far, I have shown you

  1. Why you need a budget,
  2. How to start  one
  3. How to cut some average monthly expenses.

This week, I will show you things to do with the money you are saving in order to make saving it worth your effort.

Investments.

Let’s start with investments. Investments are not just playing the stock exchange or investing in special bank saving programs.

The first thing you should invest in is yourself. This means deciding on something you want and putting a little away each time you get paid. This should be something that you didn’t think you could every afford, something that makes you happy.

One way you can do this that might make it easier is to have your employer help you. Do you get direct deposit of your paychecks? Did you know you can ask your employer to put a portion of your paycheck in a separate account most times without a fee?

Save 6 months Worth of expenses

It is very important to try to save 6 months worth of living expenses if you can. This can be done over a period of time of course and anyone who is finding they have money to save should consider this. It doesn’t have to include extras like cable TV or anything, but at the very minimum, it should cover rent or mortgage, food, and fuel. The reason being is, you need to be able to recover if you are laid off or a natural disaster happens.

Invest in your future

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Investing in your future does not mean running out and buying a business, but at the very least, you should be putting money away in a place that helps build interest such as a GIC. A GIC is a Guaranteed Investment Certificate and allows you to earn money on what you invest without risk because you can always get back what you invested.

Another option is a TFSA (Tax-Free Savings Account). This allows you to save up to $5,000 a year that is not taxed like other funds. This would be a great way to save for retirement.

Whatever you decide to do, don’t just do one kind of savings. In order to create a more secure financial future for yourself, it is important to spread your savings in a few places so you still have backup.

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