Mitchell Romano is the Assistant Branch Manager of Envision Financial's Tsawwassen branch. We caught up with Mitch to find out some of his financial goals and how he personally saves up for them. Here's what he answered.
What is your number one savings tip?
Automate, automate, automate! The first step is to set up automatic transfers to go into your savings. Here are a few examples of what the transfers I've automated for myself.
I like to have all my automatic transfers and bills go out the day before payroll. That way, I know exactly how much money I have left over once payroll comes in at midnight on Friday.
Having multiple savings accounts and term deposits for specific reasons is a great way to organize your future purchases. For example, you can have a separate savings account for vacation, property taxes, vehicle, etc.
People often forget to save for a rainy day or emergency. I recommend having 3-6 months expenses as an emergency back-up. This could be in the form of a line of credit as well.
How did you start saving?
First, I looked up a good budget calculator online and found out exactly how much I was able to save on a bi-weekly basis in order to achieve my financial goals.
I reviewed each goal and determined the best place to allocate those funds. For example: I’m saving for a house. I put 50% of that money into my RRSP and 50% into my TFSA. As it’s my first home purchase, I can take advantage of the First Time Home Buyers program where I can withdraw money from my RRSP tax-free and pay it back over the next 15 years. I still get the advantage of the deductions in my taxes from RRSP contributions. The rest goes into my TFSA which grows completely tax-free.
I also use term deposits. Term deposits are an excellent supplement to your savings plan. They have a higher interest rate than savings accounts so you are able to reach your financial goals faster. For example, I have my emergency fund in a cashable term deposit.
Is there a habit that you changed that transformed the way you started saving?
Every little bit counts! I set up BIGChange on my Envision Financial chequing account, so every time I spend money on my debit card, it rounds it up to the nearest dollar and puts that extra bit of money into my savings account. It’s amazing how quickly it grows.
What are some of the goals you're saving for now and how are you saving towards those?
Like I said, I’m currently saving to purchase a home. The first thing I did was calculated how much of a down payment I'll need (I'm going for 20% of the house price). Next, I figured out what my time frame is: in my case 5 years. Then, I broke it down into how much I needed to save every year, then further into months. I have my savings coming out on a bi-weekly payment to match my payroll.
Is there advice someone gave you about saving that has stayed with you all your life?
My parents always told me to be realistic with my finances. Life is about balance. You need to enjoy yourself, but having a plan is essential for a financially secure future. Sometimes you will dip into your savings, but make sure you replenish those savings as soon as you can.
What are your financial goals? Whatever you're saving for, whether it's long-term or short-term we can help you put together and plan so you can reach them. Get in touch with us and book a free Financial Snapshot to get started.