Best way to start saving?

[Canadave]

So here's the deal. I'm currently a student, going into my fifth year of a four-year undergraduate degree (yes, I know... I treat dropping classes like a sport) and have the debt load that you would expect to go along with that. Actually, I think I'm a little below average, I owe around $15K while the average graduate in Ontario has something like $30K of debt, so woo for that, I guess?

Anyway, I have a decent income, all things considered. Right now, I'm employed full-time over the summer, and once school starts again I'll be going back to my job as an editor at our campus newspaper. Basically, if it wasn't for that pesky tuition every few months, I'd be in the black, if not exactly rolling in money.

Thing is, though, I'm getting tired of watching my bank account flirt with $0 on a monthly basis, and I want to be able to say I have some money saved, somewhere. After food, rent, etc. I think I should be able to put a little bit away from my paycheques, but I really have no idea how to go about doing this? Are mutual funds a bad idea right now with the current economy? What about a tax-free savings account? Would that make sense for someone in in my position?

I'd appreciate any tips the massed intelligence () of the TrekBBS can offer.

 

[the 4th hanson bro]

The first thing to do is figure out exactly where your money is going. A spending log can facilitate this. Every time you spend money, even for a soda and snack, write it down. At the end of the day/week/month, total it up. That's the money that's falling out of your pocket, so to speak.

Decide where you can cut expenses and start saving to a savings account, preferably one you can't get to with your ATM card. If you can set up an automatic deposit into savings, so much the better.

Begin by saving into savings first to accumulate cash. The rate isn't the best but you'll get into the habit of saving.

Every six months, increase the amount you are saving by 10%. You'll be surprised how much you've accumulated.

Good luck

 

[Warp Coil]

The first thing you need to do is figure out how much money you earn every month and how much your expenses are. Any money left over after expenses is up for grabs, and you need to pay careful attention to where it's going. You must keep track of each purchase you make, no matter how small it is - $1 here, $5 there.... they may seem small and insignificant but over time you'd be surprised at how much it really is.

Once you figure out where your money is going, you should be able to start cutting back on certain unnecessary expenses. I'd also recommend putting a set amount of money into savings each time you get paid.

 

[TheBrew]

All of my "change" from debit card purchases goes into my savings account. It adds up quickly sometimes.

 

[K'Ehleyr]

Totally agree with the above posters ~ especially Bro's 'money into a savings account that you can't get to at an ATM' because temptation calls at night
I'd be really strict with yourself and pay bills then leave a minimal amount for food, drinks etc. and put the rest away. Leave an emergency £20 a week for when you are fed up with 'being good'.
There are loads of tips for being frugal and everybody does it now ~ flashing your cash is no longer cool.
I admire your planning and your understanding of your responsibility of debt. You have the total right mind set to come out on top.
If you don't trust yourself saving, set up a savings account with your parents or a.n.other as a co-name then you can't get to it on a whim. I've done this with work when they've 'squirreled' money away for me and it does add up
The best thing is forgetting about it and then realising how much you've saved. An absolutely great experience

 

[tomalak301]

Best way to save is to not spend, obviously.

Seriously, I would suggest cutting back expenditures, and then doing what else has been suggested. Because of this recession, I've had to change some habits (Such as not using the dryer and hanging wet clothes outside) and it's been ok. Also, setting up a savings account (different than a checking account) is a great idea.

 

[Holdfast]

Everyone spends on shit they don't really need and didn't really want to buy.

Figure out what your particular shit smells of, and stop stepping in it.

 

[DonIago]

Stop spending so much time on here and go get a second job, you slacker!

I kid. Everyone else pretty much has this one covered. And if they don't these days there's about a gajillion websites with helpful ideas.

 

[Emher]

Don't spend it all? Sorry not very good at this kind of advice, just started put away some a few years ago when I was waving up to my US trip. That went pretty quick since I don't have a lot of costs, and I've just kept doing that when I can afford it.

 

[Canadave]

Stop spending so much time on here and go get a second job, you slacker!

I tried working full-time and part-time together one summer. It was hell, and seeing as I'm taking an evening class right now, I'm going to avoid that option for the sake of sanity.

Thanks for the advice, everyone! I've started tracking my expenses, and I'll take the next week or two to figure out how much I'm spending on various things. Then I think I may set up an account with ING (since they have high-interest savings with no fees) once I have an idea of what expenses I can cut down on.

 

[Kirby]

^^ Just make sure that ING doesn't give you a debit card for that account. Make it a difficult as possible to get the money out, like having to go down there in person and request the money. I set up a special savings account once and ended up impulse spending the whole damn thing because I had that debit card.

 

[Mr. B]

Opening a separate savings account helps somewhat unless you're immune to the psychological barrier it creates.

 

[SeerSGB]

Here's what we're doing:

-- We called all our bills, locked the accounts and negotiated lower payments.
-- Cut back on things like 'net and cell phones plans
-- Take the monthly savings and put it straight in the bank.

 

[Canadave]

^^ Just make sure that ING doesn't give you a debit card for that account. Make it a difficult as possible to get the money out, like having to go down there in person and request the money. I set up a special savings account once and ended up impulse spending the whole damn thing because I had that debit card.

I'm going to make sure of that, yeah. I won't carry any cards on me that will let me get at my second savings account.

 

[Non Sync]

I don't know if Canada has something similar to an IRA (Individual Retirement Account), but I would recommend contributing to that.

In the US, those accounts limit access to funds until you hit retirement age.

Check if your employer offers some type of retirement plan. In the US, contributions to those accounts are pre-tax so the net result isn't as bad.

If you have direct deposit, see about having a small amount deposited directly into your savings account. That way you don't have to worry as much about being tempted.

 

[eastman23]

I think a TFSA is never a bad idea (says the guy who hasn't opened one yet ). At least that way you're not getting taxed on any interest you make on the money you deposit. It may be better to have that option open for accounts other than your usual savings one though (like mutual funds, even stocks). But you have can many TFSA accounts open as long as the grand total doesn't exceed the $5000 limit per year.

An RRSP could help too, though mostly to get the tax credit at the end of the year.

Setting a small amount aside in each direct deposit is a good idea too. I have that set up so that a fixed amount from every paycheque is deposited into an account at a local credit union. It doesn't seem like much every time payday rolls around, but it adds up. Figure out how much you can comfortably live without every two weeks (or month, or whatever) and automatically put that somewhere else. As others have said, if you can limit access to the account by not getting an ATM card, then do it.

 

[Canadave]

I think a TFSA is never a bad idea (says the guy who hasn't opened one yet ). At least that way you're not getting taxed on any interest you make on the money you deposit. It may be better to have that option open for accounts other than your usual savings one though (like mutual funds, even stocks). But you have can many TFSA accounts open as long as the grand total doesn't exceed the $5000 limit per year.

Yeah, that was basically my thinking. When I do open my second account, it will likely be a TFSA, especially because I don't forsee going over that $5,000 limit any time in the near future.

 

[flandry84]

Where I work we have a savings scheme,not a credit union(though there is one also),but a scheme where a certain amount of your weekly wage is deducted at source and paid out at christmas.
True,there is no interest paid out,but if it were up to yourself to physically put aside the 20-40 Euro per week,odds are that you would quickly fall out of the habit.Plus there is little temptation to raid these savings.

 

[Vendikarr]

The best savings rule I ever heard was from my grandfather.

Pay yourself first. Each time you get paid, take 10% of your after tax amount, and put it in savings. With no exceptions. Then figure out your bills and expenses. You learn pretty quickly how to get by on what you have left.

The money you save goes into a regular savings account until you have a large enough amount to invest in Certificates of Deposit or Money Market funds.

 

[trekkiedane]

From personal experience:

Don't EVER use plastic (cut up all your cards) only use cash and never go to the bank (for cash) more than once a week.