What’s in a Plan? Five Things to Consider to Get Your Money Working for You

Preparing for the future is never easy, and the past few years have been particularly challenging for Canadians. Between rising interest rates and increased inflation, many people have put investing on hold as they battle rising bills.

Fortunately, change may be coming. In February, the country’s inflation level dipped below 3% and with it, came hope that the interest rates would also eventually come down. While there’s no crystal ball to tell us exactly if or when the Bank of Canada will cut interest rates, there are some tips that you can implement now to help you plan for the future.

Scrutinize your spending

Now may be an ideal time to review your budget to see if there’s room for trimming expenses. Maybe you’re paying for cloud or streaming services you rarely use or there are other expenditures you no longer find necessary. You may even be able to negotiate more advantageous rates on your home and car insurance. Even small amounts make a difference, especially as those funds compound over time.

Make investing a budget line item

It’s essential to recognize that contributions to your investment accounts are at least as important as the other financial obligations in your life. Just like you would include a mortgage, car payments and restaurant visits in a budget, so too should you add investments made to an Registered Retirement Savings Plan (RRSP), Tax-Free Savings Account (TFSA) or any other type of investment account. It’s simple: if you don’t make investing part of a budget, you may not contribute. Account for it and you’re more likely to save.

Set up pre-authorized contributions

Paying yourself first is a tried-and-true way to prioritize your savings while limiting the amount of money you spend. By setting up automatic contributions with your financial institution, you can divert money from your paycheque into a savings or investment account the moment it arrives – and before you’re tempted to spend it on other things. A big benefit of a pre-authorized contribution is that it helps establish a regular and consistent habit.

Take advantage of workplace matching

Many companies offer retirement savings programs, where they’ll match a percentage of your pay to a workplace retirement fund as long as you put in the same amount. It’s money on the table that not all Canadians are taking advantage of. By joining employer matching and contributing any amount into your retirement, it will put you ahead.

Tighten up your taxes

You may be excited to get a tax refund after contributing to your RRSP, but what if you could invest that money earlier in the year instead of getting a lump sum later on? Many people don’t realize they can adjust how much tax gets taken off each paycheque. By investing earlier, you could potentially get more growth than you would if you waited for the refund. You’ll want to talk to an advisor to ensure you’re properly deploying this strategy.  

The bottom line

As price pressures ease, you may find yourself with a little more money in your bank account. Consider putting those dollars to work in an investment account so you can start growing your savings again. 

Share This Article