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Whatever you’re saving for, two things are for sure:
The goal you’re saving for is important to you.
Saving up for it isn’t as easy as you’d like it to be.
The good news is, there are ways to make saving your money easier, so you can reach your goal faster. Here are our top 10 savings tips to help you get what you want sooner.
Pay yourself first.
When you get money — whether it’s through allowance, odd jobs, a regular job or gifts for special occasions — set aside as much as you can before you do anything else with it. You might want to come up with a standard percentage for every time you get paid — say 50%. In that case, if you get $10 for cutting your neighbour’s lawn, put $5 aside right away and then make plans with the other $5.
Ask yourself why.
It’s easy to spend money. And brands, stores, celebrities and your friends will only make it more tempting to spend what you have. Before you do, just ask yourself why you’re spending on the item in front of you. Do you really need it, or is it just easy, convenient, and trendy to buy it?
If there is something you really want, shop around before you buy. You might find that the same pair of boots or video game is considerably cheaper somewhere else. Or maybe it’s about to go on sale. Do some research to try to get the lowest price possible.
Watch out for trends.
Did you buy a fidget spinner last year? How about wedge sneakers, anything neon or a “sophisticated” colouring book? The hottest trends can really suck you in, but they can fade out just as fast as they got here. Try to resist spending money on something that probably won’t be around too long.
Pay attention to where your money goes.
Do you automatically buy a $3 iced mocha on the way home from school with your friends? Does another $2 go toward snacks at school, without even thinking about it? When your spending goes on autopilot, your money can go fast — without giving you any fulfillment whatsoever.
Add up the little things.
So about that $3 mocha and $2 energy bar … That’s $5 per day. If you spend that every day of the year, you’re spending $1,825 without blinking an eye. Even the small purchases that seem inconsequential at the time can add up to a lot. That $1,825 could probably go to better use than snacks and coffee, right?
Prioritize your expenses.
Saving up for a goal doesn’t mean you can’t spend on other things. But take a moment to think about what’s more important to you. If you love buying the latest music and games, maybe you can cut out another expense — such as the bus ride to school, or buying your lunch.
Set up a budget.
Creating a budget is a great way to keep track of all your income and expenses, and prioritize what matters most to you. In your budget, you can separate what expenses are “must haves” and what are “nice to haves.” Take a look at our budgeting article for more tips on how to set one up.
Separate yourself from your money.
Even if you have the best saving intentions, sometimes it’s just too tempting to dip into that stash and spend it on something more immediate. So one great way to keep your goal in sight is to block easy access to those savings. Think about opening an account specifically for saving that you can’t access through your debit card.
Watch it grow.
Accounts designed specifically for saving (called Savings Accounts, as it turns out), will pay you interest on the money you have in there. Interest is like thank you money that the bank will pay you for keeping your money with them. You’ll earn interest on the money you deposit, and then you’ll earn interest on top of that interest as long as you don’t touch it. This snowball effect is called compounding and helps your money grow faster.
Saving money might not seem easy at first, but building good habits early will pay off in the long run. As your savings goals get bigger (a car, travel, tuition), you will be in a much better spot to sock away some cash once you start to earn more. And just wait — as you start to see those dollars add up in your account, you’ll likely get hooked on saving and make it a regular part of life.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.