Moving out by Gabriel Saldana

I buy my own diamonds and I buy my own rings

By Janice Desautels

To save or not to save – the choice is yours. But when time is on your side, saving for the future can be accomplished easier than you think.
A simple, fast and doable strategy helps form a habit of saving so that the money won’t be missed and a routine can be established.
Pay yourself first
One example of a strategy is to pay yourself first. What this means is that every day you work, put aside the first hour of pay toward your savings strategy. For minimum wage, which is about $10 an hour, saving that first hour (paying yourself first) can amount to $2,400 to $2,600 a year. Could this help you with your goal – be it buying a car, paying for tuition, or moving out on your own?
The routine of paying yourself first can be relatively painless by setting up pre-authorized transfers to a savings vehicle as soon as your paycheque is deposited. As time progresses, your attention goes elsewhere and your spending behaviour will have adjusted to accommodate the difference.
Moving on to more substantial goals requires more planning. In my last column, I spoke about financial literacy being the ability to understand, analyze and use financial information. This understanding is integral to making the right decisions when it comes to saving for a future goal.
Net wealth
To increase our net wealth over time, there are a number of variables that must be considered, like putting money aside and not spending it, and saving consistently even if it’s a small amount at first. This strategy will give you the discipline needed to save more over time.
Another variable is time; the longer you wait to save, the more it will cost to meet your future goals. If you start earlier, your money has more time to compound in growth, and you’ll have less to contribute to reach the goal you’re working toward. That growth will come in some form of a rate of return achieved on that savings, and over time, should increase your net wealth.
The next variable is the rate of inflation. Is the investment in which you’re saving at least providing a rate of return that exceeds inflation? This is key to preserving your net wealth, and will ensure that in the future, your money will have the same purchasing power as it does today.
The last variable that affects your net wealth is taxes. This is often overlooked, but taxes will most likely be the largest bill you pay in your lifetime, so you need to ensure that you only pay what is required.
Since there are many factors that affect our savings success, don’t go it alone. Gather the expertise to help you. Look for a financial services representative that listens to your needs, what your goals are, and then most importantly, helps you understand your options.
Don’t be sold on a one-size-fits-all concept. It should be tailor-made for you so that you understand all the information and see the value in the savings plan. Over time, this will have a very positive impact in reaching your financial goals.
Janice Desautels has been working with families and individuals for the last seven years helping educate in the field of financial literacy. She is a Certified Financial Educator with over 15 years experience in teaching and training adults.

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