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Saving Money

Besides spending your money responsibly, saving money is one of the most important ways of living a financially responsible life. Why bother? Because we all have, and will have, future expenses and goals—some of which we may not be able to predict. By saving money now, we are less likely to have to go into debt to cover those future expenses. It’s about being ready for what comes your way.

Do you have goals worth saving for? For many families in New Brunswick, goals worth saving for include vacations, education (for yourself or your children), retirement, a new car, or a new home. Also consider that an unexpected future event—like home repairs or car repairs—may strike at any time. Having funds saved up can take the sting out of financial emergencies and help you avoid resorting to expensive forms of credit to cover these emergency expenses.


How to save

Above all, you need to acknowledge the importance of regularly putting a portion of your income aside, and then stick to it.

  • Create and follow a budget. By understanding how much money is coming in and going out, you can make sure you have money every month “left over”—money you can save.
  • Pay yourself first. Consider your savings an investment in your own future, and be committed to putting that money aside every month. A typical savings goal is 10 to 12 per cent of your net income. Automate these savings by asking your employer to send a certain amount of pay into a separate savings account, or set up a recurring transfer through your online bank account.
  • Choose the savings tools that match your goals. Depending on what you’re saving for, there are different ways to save. For example, Registered Education Savings Plans (RESP) for education costs, Registered Retirement Savings Plans (RRSP) for retirement, and Tax Free Savings Accounts (TFSA). Work with your financial advisor to determine which is the right tool, or tools, for you.
  • Be prepared. A simple savings account that’s connected to your chequing account is an easy way to maintain an emergency fund. When your house needs a new roof, you’ll have the money to cover it, rather than going into debt.
  • Set clear financial goals for yourself, following the SMART method.
    • S – are my goals Specific?
    • M – are my goals Measurable?
    • A – are my goals Attainable?
    • R – are my goals Realistic?
    • T – is it possible to reach my goals within a certain Timeline?

Avoid “buyer's remorse”

It’s that dreaded feeling of regret after making a purchase. The feeling could hit immediately, or it could happen after you have the item home. Regardless, your savings and budgeting plans can be derailed if you find yourself spending on items you regret. You can help yourself avoid buyer’s remorse by ensuring you do your homework before you buy. Ask yourself:

  • Do I need this or do I want this?
  • What purpose will this have in my life?
  • What value is this purchase bringing to my life?
  • Does the item meet my needs and goals?
  • Am I rushing into a purchase because I feel I need to “keep up with the Joneses”?
  • Can I honestly afford this?

Registered Retirement Savings Plan (RRSP)

RRSPs can help you save for retirement by deferring income tax and allowing your retirement savings to grow tax-free. There are limits for how much you can contribute to an RRSP each year, but you can put more money into your RRSP as your income grows.

While your contributions remain in your RRSP, you won’t pay tax on that income. If you withdraw money from your RRSP before you retire, you will have to pay tax on the amount withdrawn, with some exceptions.

For more details about RRSPs and how you can use RRSPs to help fund your education or buy your first home visit Canada Revenue Agency’s website.

Registered Education Savings Plan (RESP)

RESPs can help you (or your child) save for post-secondary education. Savings can grow tax-free until the beneficiary enrols at an educational institute. In addition to the interest you earn on your investment, you can also receive yearly contributions from the Canada Education Savings Grant and you may be eligible for the Canada Learning Bond.

Visit Canada Revenue Agency’s website for more details about RESPs and other Canada Education Savings programs.

Tax Free Savings Account (TFSA)

TFSAs help you earn tax-free investment income. Any amount contributed, as well as any income earned in the account, is generally tax-free, even when it is withdrawn. TFSAs offer a wide range of investment options, such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds. Unused TFSA contribution room is carried forward and accumulates in future years. Visit the Canada Revenue Agency website for more information on the Tax Free Savings Account, or ask your financial adviser.