Finding it tough to save? Consider paying yourself first. Families often struggle to save as they juggle several financial priorities.
There’s the mortgage. They have the car payments to worry about. Of course they have to put food on the table. And there’s a long list of costs associated with raising children.
Who has money left for retirement, emergencies and saving for their children’s education?
Servus Credit Union financial adviser Kelsey Bennett says it’s a common challenge, one she’s had plenty of experience helping families overcome. People often do have the money to save, she says, it’s just a matter of finding it in their budget. That involves trimming costs and maybe taking a page from a famous personal finance book, The Weatlhy Barber.
In the book, author David Chilton recommends that people “pay themselves first.” The idea is to make saving a priority and money for the future should be automatically deposited a registered retirement savings plan (RRSP), registered education savings plan (RESP) or tax-free savings account (TFSA) every paycheque.
That way you don’t have to hum and haw about whether to save this month or next. The decision has already been made. By setting up a pre-authorized automatic contribution plan, or PAC, money is drawn monthly from your chequing or savings account and deposited into more long-term term investments. The amount is up to you. It can be small at first and over time as your income increases, you can bump up the contribution and expand to saving for many goals:
- a new car
- a big vacation and
- helping the kids pay for university
A good first step is to meet with your financial adviser. Bennett says she often helps Servus members go over their expenses, build a budget and find the money to create a savings plan that addresses all their financial goals.