Let’s face it saving money itself is fairly easy to do, the problem is what am I going to do with those savings? You can pay down debts, invest in your kid’s future, save for retirement, save for buying/starting a small business, save for a second property or save to buy something you REALLY want (car, trip, shoes, TV, computer…).
So how do you balance all those issues or juggle those priorities? You have to have a plan and then stick to it. Here’s how I do it.
1) Pay off all non mortgage debts – Debt is just a dead weight you have to carry around so the sooner you get rid of it the easy things become for the rest of your savings.
2) Save for a rainy day – Once you are out of debt having a small amount of savings for when things go wrong is typically a good idea. Start small like $1000 and then play around to find the amount that works for you. (I personally don’t do this, but I run my finances with a large amount of spare cash).
3) Save for retirement – You know the best thing you can do for your kids beyond loving them is making sure you are not a dead weight to them when you are older. So save the base amount for your regular retirement first.
4) Save for the kid’s future – Now you can save something for those RESP accounts. It doesn’t have to be a huge amount, but try to save at least $2000/year to get the maximum education savings grant from the federal government.
5) Save for yourself – Now this doesn’t have to be the last thing you save for. It depends on what you are saving for and how good you have been about everything else. I tend to treat myself once in a while if nothing else to keep the rest of my saving in perspective. I would also classify my early retirement savings as saving for myself since it is more of a personal goal than a socially responsible thing to do for my kid.
So what would your savings order be? If you feel like sharing leave a comment.