You can save money in all sorts of ways. You can put cash in a safe. You can simply mentally categorize a certain amount of money in your checking account as “savings.” But it’s crucial to put savings in an account created specifically for that purpose. It’s safest there, it's a good place for an emergency fund and provides you with the ability to buy something expensive. Plus it’s earning a little interest.
You can open a traditional savings account at your bank. Or you can open cash account which is kind of like a chequeing and savings account combined. Using a cash account means you'll probably end up earning much more interest compared to your regular run of the mill savings account and you can also spend from the account.
How Much Should I Save
You should save as much as you can afford. A good rule of thumb is to save at least 20% of your income. It's important to save what you can for emergencies, major life events and retirement.
That all sounds kind of… boring, right? And, you know what, it is kind of boring. But in personal finance, the boring stuff allows you to do exciting stuff like achieving financial freedom and not having to work any more as Michael Tempelmeyer, Portfolio Manager at Wealthsimple explains.
"Saving money is important. Every time you set money aside you get a bit closer to achieving financial freedom."
What saving a little money and keeping it handy allows you to do in the long term—like have more fun and, you know, provide for your family—isn’t boring at all. Now that you know where to start, here's how to get some money from your pocket into that savings account.
How to Save Money
Now that you know the best way to start saving money — how do you actually go about doing it? There a number of tactics that will help you stop spending and start saving.