Why is it so hard to save?

There are many different tips and tricks that experts suggest to help people save their money for a rainy day, perhaps you’ve heard them before:

1. Put aside 10% of every pay check into a savings account, use automatic withdrawal to make it easier
2. Every time you get a windfall or a tax-return, put 50% of it away into your savings
3. Brown bag your lunch and save the money you’d spend out in a savings account
4. Quit a bad habit – for instance smoking, lottery tickets or bingo, and then put all the money you save into your savings
5. Keep your change in a jar – it all adds up, every year make a deposit into your savings account
6. Make sure you have a high interest savings account to get a good return on your savings
7. Stop paying your bills by mail, and create an online account with your bank and pay your bills online – if you pay only 10 bills a month, and stamps are 52¢ each, then you would save $62.40 a year
8. Buy food in bulk
9. Make a reasonable budget and stick to it!
10. Stop using credit and pay down your debt – paying interest is a waste of money!
11. Whatever you spend on hobbies and entertainment, put the same amount into your savings
12. Go Green to save money on your energy bills
13. Take public transport, walk or ride a bike to save money on gas – eliminate your car altogether if you don’t need it!
14. On the same note, don’t pay cash for toll highways – you’ll save money if you buy the electronic passes
15. Buy your cable, phone and internet from the same provider to “bundle”
16. Even better than tip “15”, cancel your cable, get a VOIP phone and use the internet to watch you favorite TV shows. This will save you a “bundle”!
17. Cancel your cell phone or get a pay as you go phone and only spend what you can afford.

The list goes on… Today I want to discuss even savvier ways to save your money. Depending on what country you live in, the Government has created different types of investments and tax shelters for your to put your money into. Do your research and learn about them. In Canada, my country of residence, there are registered retirement savings plans (RRSPs), registered education savings plans (RESPs) and now tax-free savings accounts (TFSAs). In all of these accounts, the banks will register you plans/accounts with the government, and allow you to invest your money for the purpose of retirement, education and savings, respectively. The money you invest will be tax sheltered up to a certain dollar value every year, and this is good news for you. One of the reasons that it is hard for people to save and invest and still get ahead is because for every dollar people make on their investment from interest and capital gains, they are taxed. But if you get creative and put your money into tax-sheltered investment plans, you can save ALL your money and have money set aside for all of the important stages a goals in you life, including providing for you children’s education, for your own retirement and saving for your other goals and dreams. In Canada, you will be taxed when you withdraw from you RRSP, but not from the new TFSAs, and they will not be available until 2009, which is another important detail to note. Also, the government can help contribute to a RESP. There are many different types of RRSPs, RESPs and TFSAs available. Before you get a tax-sheltered investment make sure you do your research and that you get all of the facts.