When you can see your goals laid out in front of you, they become concrete instead of abstract. This is why having a plan in place for your financial future starts with simple visualization — prioritization will easily follow. Luckily, online banking platforms, mobile apps and other fintech tools make getting a snapshot of your savings super simple.
One way to create a financial plan that will see you through the many peaks and valleys of life is to ensure you've got flexibility built in. Here's how to do that using a few straightforward strategies.
Create savings buckets for specific goals
First, it's a good idea to break your goals down into a couple different categories. A short-term goal might be to save for your next vacation or a big purchase like an ergonomic desk chair. A long-term goal could be to save for a house, a wedding or early retirement.
You can create separate savings accounts focused around each of your objectives, and name them to remember why you're saving money. To keep it as simple as possible, you can even set up automatic transfers into these accounts on a regular basis. Since online banking allows you to quickly and easily see your entire financial situation at a glance, it's easy to keep track of all your accounts at once — and your progress.
Bank from anywhere
Monitoring your savings goals on a regular basis can give you the morale boost you need to keep on keeping on. This is where online banking and fintech apps can come in particularly handy. It's easy to check in without ever visiting a physical bank branch. You can bank right from your phone, laptop or tablet from the comfort of your own home, car, or even on your daily walk with digital banking. This type of flexibility not only helps you keep an eye on your growing savings, but it can also ensure you know exactly what's going on with your accounts — including anything fishy such as charges you don't recognize.
Plan for a rainy day
Let's face it — things don't always turn out as planned. If an unforeseen circumstance arises, you'll want to ensure your plan allows for it. For this reason, it's always a good idea to have an emergency fund that can cover 6 months of expenses.
A high-interest savings account is a great place to store your emergency fund, as you can still access the money when you need it. You can usually avoid both monthly fees and transaction fees if you choose an online bank like Simplii. You can easily move money to another account if you need to.
Max out your TFSA
Tax-free savings accounts are another excellent way to save for short-term goals. While they earn interest, you can still access the money whenever you might need it — so you can save without losing access to your funds the way you do with traditional investing options.
You can even use your TFSA to invest in guaranteed investment certificates (GICs), which are still quite flexible but offer an even higher interest rate. The amount you can contribute to your TFSA depends on your age — but be careful not to go over your contribution limit for the year.
Save for the long term
Once you're automatically moving part of your pay cheque into savings accounts, you'll want to focus any remaining money on your long-term goals. This a good time to start thinking about your RRSP. You can put up to 18% of the prior years' earned income into an RRSP account, along with any unused RRSP contributions from previous years — although keep in mind there's a ceiling to how much you can contribute. It's a good idea to find out exactly how much contribution room you have and, if possible, max it out.
With online banking at your fingertips, it's incredibly easy to set up, manage and maintain a flexible financial plan that will take you through just about any life stage — and any savings goal you can dream up.
