I sat down to begin planning my strategy for achieving my two financial goals this year, creating a buffer ( three months living expenses) and saving for an extra mortgage payment ( $1560 ) and I realized something rather shocking. I’d never really done this before. I guess I could say that I have saved for vacations but it was more a last minute dash affair than a planned and executed one. I was blessed enough to be gifted the downpayment I made on my first home and I was also blessed to have recouped that downpayment and then some on every house after that so I didn’t even have to put much planning and effort into that. And I’m not alone.
According to a TD Canada Trust Report issued last spring, 54 percent of Canadians were struggling to save and 38 percent of us didn’t have any savings at all. However, the report did note that 30% of Canadians did have atleast four months or more of living expenses in their emergency funds and the key to their success seemed to be an automatic savings plan.
These days there is some unique options out there when choosing an automatic savings set up. TD actually offers a program called Simply Save in which you can desinate a certain amount of your income to be transferred to your savings account on every debit transaction. So when you buy your next Starbucks or this weeks groceries, you will automatically contribute to your savings.
While a cool idea, most experts recommend the ol’ tried and true method of “pay yourself first” with 10% of the top of each paycheck automatically being transferred to your savings account. I like this idea for building my rainy day fund and I’ll be setting up an automatic debit for my paydays this week.
Great, so that’s my buffer fund plan started, now for the extra mortgage payment!
Read Part Two of this blog here.