Conquer your conflict with spending vs. saving

Superman’s weakness was kryptonite, the Wicked Witch’s was water. We all have one. I was talking to a friend’s daughter the other day who, despite a limited income, was very excited about the new spring wardrobe she was about to purchase. Saving didn’t seem to be a priority.

A recent report released by TD Canada Trust found more than half of Canadians find it a real struggle or impossible to save and 38% admit they have no savings, mainly because they are working to pay off debt, cover basic living expenses or spending beyond their means. Twelve percent of them attribute it to shopping beyond their means – and that statistic rises to 19% for those under 35.

Does this sound familiar? If so, here is my advice:

Set achievable but substantial goals

Aim to set aside 10% of your pre-tax income each month for emergencies, retirement and other savings. If you’re finding it hard to save then work up to it, but don’t make the mistake of not saving at all just because you can’t reach that goal right away. Whatever you have left after you pay your bills and save for the future is for discretionary spending.

Automate your savings

I often hear people say they don’t earn enough money to save, but you would be amazed at how much easier it is using an automatic savings program. Speak to your bank about setting up a pre-authorized transfer to a TFSA or high interest savings account every payday. With automatic savings programs any lack of willpower gets removed from the equation.

Pay your bills online

Pay bills online and set up automatic payments from your everyday bank account to ensure you’re never late. If you’re strapped for cash one month, then at least pay the minimum required. If you’re finding yourself in over your head and unable to make your bill payments each month, then talk to your bank about possible ways to consolidate your debt.

It may be tempting to just spend and tune out all the talk about saving, but don’t do it. A solid financial future is one of the most important gifts you can give yourself or your family. If you have an idea for a future column, please write to me at c.russell@td.com.

 

Carrie Russell works for TD Canada Trust and has over 20 years experience in financial services.