When you work in the financial industry, you quickly realize that you’re surrounded by brilliant people who have a lot of insight to share about managing finances. We went around to some of our Branch Managers and Assistant Branch Managers and Wealth Advisors to try and understand one big question: how do financial pros save personally?
What habits have they developed, what processes do they automate, what’s their top tip?
In this series, we are pulling the curtain back and sharing with you insights on the various ways our financial experts save.
I always tell people that you need to create a big enough “WHY” in order to stick to a savings plan. Once you have a passion for your WHY, it helps you weather the storms of life as they come up. I started by building an emergency fund. With that in place and knowing my WHY, I then looked at my debts and how quickly I could tackle those.
Once you’re debt-free, your income is your biggest asset when building wealth. Set up an auto transfer to a savings account (Savings, TFSA, RRSP, RESP…) so the money is gone before you can spend it.
If there is any debt, pay the debt first before saving for life’s luxuries like vacations. Once that’s done, the first thing you need to do is plan out the vacation ahead of time. This is key so you know what you need to save and then you can break it down into bite-size pieces. Open a separate savings account for your vacation and set up an auto transfer every payday into that account.
My number one advice is always to give to yourself first. One of my first branch managers, Maureen Godfrey, would say: “Its okay to think about yourself. Saving for you will only benefit you in the end.”
So start saving in small increments so you’re not overwhelmed by how much is coming out, feel you rely on that money and end up withdrawing it. Make saving a habit. I constantly remind myself: “It’s now or never.”
It’s important to stay consistent with a monthly automatic payment of a small amount. If you get a bonus, direct it right away to an RRSP or savings account. I remind myself this is money I would never have gotten in the first place.
I have started to take out small RRSP loans in January or February each year to help save for my retirement. I then fix the investment, so I don’t take it out in need of urgency. This forces me to make the payments and I end up with savings.
In 1993, I got my first award from the credit union, a cash award. After the evening was over, my branch manager, Maureen, took the cash from me and said, “See me in the morning, we will discuss what will be done with the cash.” She was worried I'd use it to pay bills.
I was 19 years old, a newlywed, expecting my first child and hoping to save for a house. Allowing myself to be open to her ideas, I later was able to purchase my first home, my husband and I got life insurance, sponsored three family members from India, had two more children, travelled around the world... I look back often and I am very thankful for her guidance.
To this day, I still look out for the 19 year old members or the younger members with their first job. I ask if they would let me set up a monthly $10.00 to $50.00 automatic from their payroll to a savings account. I then follow up in a year and look at their situation to see if we can increase it.
Some of these young people have come back to me to buy their first home or car. It’s an awesome feeling, knowing I was a part of that planning.
My top savings tip is to automate your savings. Set it and forget it. Make it happen automatically so you don’t have to remember it.
I started saving when I walked into an RBC when I was 7 years old. My parents brought me in with my piggy bank. They taught me at that young age that when I get money, this much goes into your savings, this goes into your spending so I had this amount on the side I could not touch.
Now I save automatically. I have money move automatically so I don’t have to think about it. Saving starts with a budget. I know how much I think my expenses will be on an annual basis. I budget every penny. Rather than having to pay for a large purchase at one time, I break it up and save for it in increments over the year. I have my retirement plan, a family plan and an education plan for my kids. I also have a vacation account and savings for my car. Everybody’s budget is different; for me, having a vehicle that operates is a non-discretionary item, so I prioritize saving for its maintenance.
I’m always surprised how few people take advantage of their work retirement plans. If your employer will match your RRSP contributions, get that maximum match because that’s free money going towards your retirement.
RESPs are also a terrific deal to save for your kids’ education. Nothing is going to match the 20% the government provides. At the same time, you have to be able to enjoy life too. I have four kids so I’m not able to max out their RESPs. They’re going to have to save some of their money or work in the summer to help pay for their education. And that frees us up to go on vacation as a family, make sure we’re driving a functional vehicle, save for the long term and still have a good chunk set aside for their education. Those are the things that are important to us.
My number one saving tip is to save up over time. Instead of using your credit card or line of credit to pay for something instantaneously, save up for that item or trip you want. By the time you've saved enough, you might have had a change in mind or something else has come out that piques your interest instead.
I personally love to travel! I have many destinations I would like to go and see. One of those being Ireland. I’m currently saving every paycheck and I’ve set up an auto-transfer going into my travel slush fund. Setting up an auto-transfer helps take the burden off to remember to save. It’s also how I pay myself first.
If you’re trying to save for a big purchase, it’s so important that you spend less than you make. Make sure you have a monthly budget and you’re sticking to it. Financial discipline is of utmost importance as it requires you to be accountable for your spending.
It’s also important to manage your debts and start to save. I personally have used an extra lump sum like a bonus to pay down my debt and build up my tax-free savings account. I would encourage members to start learning about the great features this account has to offer and would highly recommend them opening one.
Term deposits can also be a great tool if you know how to use them. For example, if you are looking to buy your first home within the next year or two then you might want a cashable option as you don't want to incur fees. However, if you are in your retirement years, a locked-in term might be a better option as those tend to pay higher rates.
When you’re starting to save, manage your expectations. Try being flexible and explore cheaper options. This will help to cut down costs on expenditures such as dining out, entertainment and social events.
There’s no better investment than in yourself.
When it comes to saving, there isn't a one-size fits all plan. You have your hopes and dreams. You have your challenges and obstacles. These are all unique to you. The first step to building a saving habit is to identify what matters to you and then to build a savings plan that helps you reach those goals.
Saving doesn't have to seem like a chore. It can be fun, enjoyable, exciting and it should be rewarding.
Long lasting habits start small. Find a process that works for you — or copy one that we shared — and you'll be saving like a pro in no time.