Where to Park Your Money

Maybe you’re saving up for something you’ve wanted to buy or do for a long time, or maybe you just want to have some money set aside for a rainy day. Whatever your needs, it’s important to get an idea of some of the best places to park your money.

Here are just a few tried and tested places to park your money,

A Savings Account

A savings account allows you to earn a bit of money while retaining quick access to your funds. If any kind of emergency or accident occurs this money will be there ready for you to use.

A special kind of savings account, a tax-free savings account (TFSA), gives you this benefit without being taxed on your account’s earnings. Like RRSPs (discussed below), TFSAs give you the option to buy other investments including stocks and bonds, the returns on which will also be tax free in most circumstances.

A Guaranteed Investment Certificate (GIC)

A GIC gives you the option to park your money at a higher rate of interest and comes in several varieties. The most important distinction is between redeemable and non-redeemable GICs.

Like a savings account, a redeemable GIC lets you withdraw your money at any time but provides you with a lower rate of interest.

On the other hand, non-redeemable GICs generally require you to agree not to access your funds until the end of the agreement, which can be anywhere from from 1 month to 10 years depending on your preferences and the rate you secure.

A Home Down Payment

Saving for a home down payment is a life milestone for many, but you have options as to where you park your money while you are saving.

A home ownership goal of three years or less is a short-term investment and keeping your money safe and accessible is important. Place the money in a high-yielding savings account, or if you can afford to risk, invest it as well.

If you plan to own a home within three to five years, you have more time and more room to take a few risks. Park your money in short-term but high-quality investments.

A plan that is more than five years gives you more flexibility in where to park your cash. You can risk on investing in stocks or other forms of bonds and funds that provide you with broad market diversification.

A Retirement Account (RRSP)

It never hurts to set aside some money for retirement. In some cases your employer may even be willing to match your contributions so that your savings grow even faster.

The general rule of thumb is that you deduct your age from 100. If you are 30, keep your portfolio in stocks. If you are 70, stay at 30% in stocks. If you live longer, you will need the growth that stocks bring to enable you to live comfortably.

Here we’ve outlined just a few of the options available to help you make the most of your money. But remember, always consult with a financial planner before making an investment decision. Financial planners are specially trained to help you make the right decision for your specific circumstances.

Saving Towards Retirement

Some people believe that saving for their retirement is easier when they are at the cusp of their golden years. They believe that it will be a long time until they get old. However, what most people do not realize is that saving now may mean the difference between comfortably enjoying their senior years and working past 65.

Building your retirement plan starts sooner than most people think; for some it starts as they reach 30 years old or as soon as they join the workforce. Whatever your plan is, it is best to start early.

Lifestyle Changes

Lifestyle changes such as focusing on the essentials will enable you to build a comfortable retirement fund after you retire.

Staying healthy will prevent you from getting sick or hospitalized. Avoiding fatty and sugary food will shield you from potentially life-threatening diseases such as heart problems, cancer and diabetes. You do not have to remove food that contains fat and sugar from your diet; you just have to limit the portions once you reach a certain age.

A clean bill of health each year makes you a low risk prospect, if you plan to get life insurance.

Saving for your retirement fund does not have to be torture; have fun by going out a few times, eating at a nice restaurant or going on trips. However, you must always keep an eye on your budget to increase your nest egg while you are still young.

Saving Vs. Paying Off Debt

It is tempting to pay off debt such as car loans, credit card bills and the mortgage instead of setting money aside for your retirement fund. You have to carefully review the costs associated with your debt as well as the potential returns generated from investing your savings.  Work with a financial planner to make sure your always maximising your dollar.

Set money aside for your retirement fund, if you are ahead of schedule in paying your mortgage. Choose to save money for your retirement, if you can afford to pay the minimum on your outstanding debts.

Investments

Having a savings account is only one source of funds for your retirement plan. A diverse portfolio will increase your fund faster, growing into a comfortable nest egg once you are ready to retire. Take advantage of government support, bonds, stocks or other forms of investments to build your retirement fund.

A comfortable retirement will rely on your ability to start saving early. Thinking that it is a long time from now will make it difficult to grow your retirement fund to a comfortable amount.

Saving for a Big Purchase Versus Taking Out a Loan

Are you considering taking out a loan versus saving for a big purchase? Before you make a decision, weigh the pros and cons of both sides to reveal the ideal option. Both have advantages and disadvantages over time, and the decision you make will have a significant impact on your long term financial situation.

Saving for a Major Purchase

A big purchase like a car or house takes careful consideration, as both may saddle you with debt for the next five or more years. However, these purchases are the two most common made by individuals or families once they begin to gain financial security.

A mortgage is usually necessary when you purchase a house. This may tie you up long-term, as it normally takes more than a decade to pay off the debt, and that time frame means you are taking a chunk of your income to pay for it.

You have an option for a fixed or variable term loan when you apply for a loan. Fixed term is ideal for prospective homeowners who plan to live in the house they buy for years. The interest rates and monthly dues remain relatively the same when you choose this option.

The variable term has a changing interest or monthly dues and is ideal for prospective buyers who are unsure of living in the area within the next few years.

Purchasing a car is not as difficult as buying a home, but it is one of the most common big purchases that people make. In most cases, you need a loan to buy a vehicle, unless you can pay with cash with your savings.

Using a majority of your savings for a big purchase is not a good idea, unless you have sources of income that enable you to recuperate the money in a short amount of time.

Taking Out a Loan

A loan requires monthly payments that carry varying interest rates, depending on what you purchase. However, loans are ideal for making big purchases such as the above-mentioned items.

You will need a steady source of income, a good credit score and a hefty savings account to get a mortgage or car loan. These show a creditor that you know how to manage your finances.

Saving for a big purchase and taking out a loan are interconnected in certain ways, especially if you plan to purchase a house or commercial property. Some big purchases like travel or buying furniture to fill your home may take a chunk of your budget if you rely on just your savings. There are other options available to you such as short-term or payday loans.

The key to making that big decision is to study your finances and determine, if you can afford to make the big purchase within your timeframe using just your savings, or if you need a loan to get it sooner.

Save Money by Making Your Home Energy Efficient

Are you looking for ways to reduce your expenses and increase your savings? Start at home by making a few improvements that make it more energy efficient and eco-friendly.

Natural Light

You don’t need several lights at home when you can take advantage of natural light. Install bigger windows and carefully place them in areas that shed light into a room that you use the most. Place them overhead for maximum efficiency, especially in kitchens and living rooms.

Natural light also gives your home a fresh and natural look. Highlight different parts of your house or pieces of furniture to spruce up your home’s interior. Using natural light reduces your monthly energy expenses.

Home Insulation

Proper insulation reduces your energy bill, as it keeps cold or warm air circulating when it is to cold or to hot. You won’t have to use the air conditioning or furnace too much when the weather changes every season.

Seal holes or potential drafts from windows or walls as these alloaw cold air to enter your home. Most leaks are in windows, doors, basements or attics. Make sure to seal the ducts as they carry cold or hot air to different parts of your house.

Choose Energy Efficient Appliances

Some appliances have energy efficient features that enable you to reduce your energy expenses. Certain kettles, irons, entertainment systems and other items consume less energy and automatically shut down when not in use.

Programmable Thermostat

A programmable thermostat may seem like a pricey addition to your home, but this device saves you more money over time. You get to set the temperature you want in certain rooms or your entire house whether it is summer or winter. Connect the thermostat with the heating and cooling system to set the temperature at a level you want to consume less energy.

Renewable Energy

Installing solar panels can help reduce your reliance on fossil fuels, and in many cases can power your entire home. The cost of purchasing or installing solar panels may be expensive at first, but it will reduce your overall energy costs over time.

Get an Audit

An energy audit executed by a professional enables you to find areas that need proper insulation or the reason your home consumes too much energy.

These improvements make your home energy efficient; these changes also enable you to reduce energy expenses and focus on other things that increase your savings.

Saving for School

Sending children to school is one of the biggest expenses every parent encounters. Because it is of great importance, many people are eager to find ways to prepare and save for their children’s educational needs. Even independent youngsters who take care of their own school fees need all the help they can get.

There are small but sure ways on how you can save a fraction of the amount you usually set aside for the next school year opening. Here are a few tips that can help you out in saving for your children’s school fees:

1. Know in advance how much you will have to spend and divide it by 12.

This way you can set aside small amounts of cash per month, and the weight of the expenses won’t be as big as it would if you had to take it off all at once. Imagine what little things you can sacrifice to save small amounts of money every month. You will have a lot saved already before the starting day.

2. Register your children early.

And no, this isn’t just about saving time and avoiding the stress of having packs of people around when you enroll them. This tip can actually save you money. Some schools give a small percentage discount to those who register early. If the school you’re planning to enroll your child to is one of them, then this is an obvious move for you to take.

3. Always be on the lookout for “Back-to-School” sales around your town.

You can save a lot when everything is on sale. They might not take 50% off those items but eventually the savings will stack up and you will start noticing. You can also check for vouchers and coupons that give you freebies or bundle discounts.

4. Secondhand books are a good money saver.

Just make sure they are still in very good condition. Also check if the books are of the same edition that the school requires. On another note, you can also hold a garage sale where you can sell your child’s previous books.

5. Packed lunches save you a lot compared to store bought lunches.

Not only talking about savings, there is another benefit in giving your children packed lunches for school. Through this you can make sure your child eats healthy and nutritious meals.

These are just small things any parent can do. These tips will help you prepare for your children's future. However, there will be situations when you are strapped for cash when school opening starts. If you ever are in this tight spot and have nowhere to go, GoDay offers payday loans to assist you with financial needs such as this.