How to save for the future

As teenagers, we often overlooked the significance of money and rarely considered the need to save. Our parents may have given us money, or perhaps we worked our first job, and instead of saving what we earned, we spent it all. This may be because no one explained how important it was to save for the future.

After high school graduation, many students are faced with the realization that they need a lot more money than they have.

An article by Embark states, “Based on data from Statistics Canada, the average cost of a four-year university degree starting in 2022 is $96,004 for students in residence, or $48,074 for students living at home.” That lump sum can be a daunting reality check. 

While not everyone may want to go to university or college, life, in general, is quite costly. Rent, food and other necessities cost a substantial amount. According to data from YCharts, “Canada’s inflation rate [as of May 31, 2023] is at 3.36 per cent, compared to 4.41 per cent [the previous] month and 7.73 per cent last year. This is higher than the long-term average of 3.15 per cent.”

While that may seem scary, there are several tips and tricks anyone can utilize to start saving money from a young age. Hopefully, incorporating these tips will help make your adult life less stressful.

Save!

Although it may seem obvious, the best way to start is by saving in the first place! Saving doesn’t have to mean putting aside a massive amount for each deposit. Even if you set aside $20 each payday, or when you receive money as a gift, it will build up in the long run.

But where should I save my money?

An easy way to save money is by setting up a bank account. Or, more specifically, a Tax-Free Savings Account (TFSA). In Canada, anyone can do this once they turn 18. The money you set aside in a TFSA will grow without a tax penalty. Plus, you are capable of withdrawing any amount of money at any time.

Cut back

Another great way to save more money is by cutting back on expenses. Often, people unknowingly spend money on indulgences versus necessities. These expenses build up over time. A good example of this is fast food or coffee. Although seemingly low-cost items on a day-to-day basis, the regularity of these expenditures can quickly add up.

Kimberly Barresi, a mortgage agent at Mortgage Brokers Ottawa, says a good way to avoid overspending is to carry cash.

“Don’t spend what you don’t have,” says Barresi. “Nowadays, everyone is so used to just tapping for everything, and a lot of people don’t realize how much they spent until they’re over the limit. Cash makes you think and value your money more since you can physically see how much you have left.”

Analyze your financial situation

It is also important to analyze your financial situation and set financial goals.

Patrick Lindsay, a financial advisor at Leonard Group Financial in Ottawa, Ont., says setting reasonable goals is the key to saving.

“All my successful clients have them,” says Lindsay. “Making a plan and investing your money properly will allow you to achieve those goals with no problems.”

Lindsay also emphasizes that it’s okay to set the bar high and not fall short. The most important ways to save money for the future are setting funds aside whenever possible and starting early. Even if someone only does that, they will have a much better chance at paying for their future than if they do nothing.

Saving money can be a difficult task, but hopefully, these tips and tricks can alleviate some of that stress!