How to Start Saving Money When the Habit Never Sticks
Clement Chung
You do not need to prove you can save a thousand dollars this month. You need a number you can keep saving when the month gets inconvenient. That is where I would start. Before we talk about the best investment account, I want to know what happens between payday and the next credit card bill. If your savings transfer keeps coming back into chequing, the amount or the timing needs adjusting. Pick an amount that survives a normal month Look back at your actual spending, including the months you would rather explain away. Pick a transfer that leaves room for essential bills, minimum debt payments and a reasonable amount of spending. High-interest debt or an overdue bill may deserve attention before long-term investing. Here is a hypothetical starting point: $100 every two weeks is $2,600 over 26 transfers, before interest or investment returns. It is a modest amount. It is also a repeatable process you can build on. Choose a destination that fits the purpose. Money you may need soon needs accessibility and stability; a retirement investment has a different job. Increase the amount after you have evidence Run the transfer for a few pay cycles. Did you leave it alone? Did you need to borrow to cover groceries? Did a predictable annual bill knock it over? Use those answers. Increase the amount a little when the system is working, rather than making a dramatic promise after one unusually good month. I care more about whether you feel comfortable repeating the plan than whether the first number sounds impressive. What if I can only save a small amount? Start there, provided it does not interfere with necessities. Keep the amount visible and give it a review date. The first useful result is learning how much your current life can support. For a practical framework, see the Financial Consumer Agency of Canada's emergency-fund guidance. Related reading: How to Coordinate Your Pension, TFSA, RRSP and Corporate Investments.
You do not need to prove you can save a thousand dollars this month. You need a number you can keep saving when the month gets inconvenient. That is where I would start. Before we talk about the best investment account, I want to know what happens between payday and the next credit card bill. If your savings transfer keeps coming back into chequing, the amount or the timing needs adjusting. Pick an amount that survives a normal month Look back at your actual spending, including the months you would rather explain away. Pick a transfer that leaves room for essential bills, minimum debt payments and a reasonable amount of spending. High-interest debt or an overdue bill may deserve attention before long-term investing. Here is a hypothetical starting point: $100 every two weeks is $2,600 over 26 transfers, before interest or investment returns. It is a modest amount. It is also a repeatable process you can build on. Choose a destination that fits the purpose. Money you may need soon needs accessibility and stability; a retirement investment has a different job. Increase the amount after you have evidence Run the transfer for a few pay cycles. Did you leave it alone? Did you need to borrow to cover groceries? Did a predictable annual bill knock it over? Use those answers. Increase the amount a little when the system is working, rather than making a dramatic promise after one unusually good month. I care more about whether you feel comfortable repeating the plan than whether the first number sounds impressive. What if I can only save a small amount? Start there, provided it does not interfere with necessities. Keep the amount visible and give it a review date. The first useful result is learning how much your current life can support. For a practical framework, see the Financial Consumer Agency of Canada's emergency-fund guidance. Related reading: How to Coordinate Your Pension, TFSA, RRSP and Corporate Investments.