How To Start Saving At Any Age – A Step-by-Step Guide

If you’re not a Redditor, you really ought to be. This site has information on just about anything you can imagine, and thanks to their simple voting system, the cream of the crop rises to the top. The Personal Finance subreddit is an invaluable resource for everyone who’s ever gotten a paycheck. There is a simple step by step guide there for managing your finances, and it’s got everything you need to start saving like a boss. The only problem is, it’s geared towards Americans. So, we here at Refresh Financial thought we would rewrite it for the benefit of Canadians. Here it is, with no further delay, the Canadian version of the Personal Finance Step-By-Step guide to managing your money and saving at any age:

Step 1: Budget

Just as the list on the Personal Finance subreddit says, budgeting is key to financial security. You have to be on top of where your money is going and where it’s coming from. You need to be looking at your money on a regular basis, and being fully aware of your money situation at all times. The best tool to do this for Canadians, is the Mint app. It works with all of Canada’s major financial institutions and will do half your budgeting work for you.

Step 2: Reduce your spending

Seeing your spending spread out in front of you on an app like Mint, will really highlight where you can make some changes. Identify the areas where you spend too much and reduce your spending in those categories to a more reasonable level.

Step 3: Set realistic goals

Based on what you now know about your budget, set some goals that you know you can attain with self-discipline. Do you want to travel? Perhaps you want to buy a home? Set your goals, and map out what it will take to achieve them.

Step 4: Save a few months of expenses

It’s always good to have a few months worth of expenses set aside in case of emergency. That way, if anyone loses their job, or a natural disaster hits or something equally as unpleasant, you’re going to come out of it relatively unscathed. As the Personal Finance subreddit guide says, 3-6 months worth of expenses is a good place to reach with your emergency fund.

Step 5: Does your employer offer an employer pension plan?

In Canada, some employers offer an employer pension plan. This is outside of any RRSP you might have. If you have access to an employer pension plan, your employer could be making contributions into a retirement savings fund for you. Look into it and make sure you’re getting all the contributions you’re entitled to.

Step 6: Get rid of high-interest debts

High-interest debts could cost you more interest than the principle itself, plus it can tack years onto your efforts to repay the debt. Pay back the highest interest debts you have first, while still making your minimum payments on all your other debts. Getting those high-interest debts out of the way could end up saving you thousands of dollars in the long run.

Step 7: Put money away for retirement

Take full advantage of your RRSPs - contribute the maximum amount you’re allowed to each year. Diversify your savings efforts as well. Whether you’re just tucking money away in a savings account, or you’re looking to invest and make your money grow, it doesn’t matter, as long as you’re saving as much as you can.

Obviously, all of these steps require discipline. They all require sacrifice, too. But if you want to experience ultimate financial security in the future, these steps will get you there.

What is your strategy for money management and savings? Let us know in the comments!