Archive for the ‘Saving’ Category.

Our new and more effective approach to saving for 2017

Our family saving approach has been pretty effective, but we though it can get better, especially if we want to save to buy a new bigger house in the future. Seeing where house prices are heading, it will take a full and committed effort from both of us to save a good chunk for a down payment.

So we came up with a new approach. Instead of saving a set amount from every paycheck, we have agreed instead on how much we want to save for all of 2017 and then deciding how much each one of us (myself and my wife) will save per paycheck to get to that amount. In other words, we reversed the equation!

We agreed that $15,000 is the amount we need to save for all of 2017. We then divided that by 2 and then divided by 26 (bi-weekly) . That means each one of us will need to set aside $288 from every paycheck. Of course, this will be easier when we automate our ‘pay yourself first’ which we already do, but just have to increase the amount. Assuming all goes well, by the end of 2017, we will have a cool $15,000 saved with no much extra effort on our part.

So what is the main difference between this and the way we used to do things in the past? Well, the main difference is that we are agreeing on how much we want to save ahead of time. Before, the agreement was on how much each one will set aside from their paycheck towards savings (around $250) . Obviously, both work, but with the new 2017 method, we can save exactly $2K more which is not insignificant!

In addition to payroll saving deductions, we are free to save towards our goal of $15k using other sources (income tax return, second job etc.) – the point is, as long as we get to the goal, it doesn’t matter where the money come from (through legal means of course!).  This will also mean that some adjustments will have to be made to our budget, but these will be small ones that shouldn’t affect how we spend or pay for things etc.

In future years, and assuming we have the same jobs, and with some salary increases, we can agree on bigger saving targets (i.e $17k, $20k etc.)


If anyone there is already applying this method, please share in the comments below how it has worked for you?


The one letter that confuses so many about TFSA and how to use them properly.

Do you know what TFSA stands for? ‘Tax Free Saving Account’ you say? you got it!

But do you know what that means exactly? well most people think they know, when in fact they don’t.

TFSAs are not only for saving but investing and trading as well

TFSAs are not only for saving but investing and trading as well

Why? the simple inclusion of the letter ‘S’ or the word ‘Savings’ throws people off. People assume and treat TFSAs as a saving account and nothing else. The fact of the matter is, a TFSA can be used in a number of ways to generate, save or invest your money.  For example, any of the following would be technically correct:

TFTA: Tax Free Trading Account

TFIA: Tax Free Investment Account

TFSA: Tax Free Saving Account

TFGA: Tax Free Growth Account

TFA: Tax Free Account

As you can see, you can do all of the above with a TFSA account, be it to grow, save, invest, trade or simply use it as a bank account to deposit and spend your money though this wouldn’t be the best way to use it! The only limitation of a TFSA is that it has an annual limit (for this year it is back to $5,500, after rising to $10,000 for 2015) as well as the fact that any money you gain within a TFSA is not taxable. Of course, there is more things to know about TFSAs, but that is beyond the scope or purpose of this article. The point is, the words ‘Tax Free’ is all that matters in a TFSA. Which is why the word ‘Saving’ in TFSA confuses a lot of people. They think TFSAs are for saving only. While they can certainly be used for that, it is one of number of things we can use TFSAs for.


Trading and Investing

So many people are not aware of this but you can use a TFSA account to trade and invest in stocks, bonds, ETFs etc. In fact, it is one great way to generate money and not have to give anything back to the government in the form of taxes. Let me explain with an example. Let us assume you are a couple and together, through 2016, have a combined lifetime contribution room of $93,000. Let us further assume that you have accumulated $90,000 in TFSA. You can basically use that $90K to trade and invest and not have to pay tax on the money generated from stock appreciation or any capital gains.  Let me use another more specific example. Let us say you use your $90K to buy 3 different stocks, which yield an average of 4.5% in dividends. For the entire year, you will get well over $4,000 in dividend income alone. Thanks to this being done within a TFSA, you won’t have to pay any taxes on this $4,000 that you earned in dividends. If this was a regular account, you would have to pay taxes on this $4,000 in dividends.

The other problem people have, once they are aware of the fact you can use it for trading and investing, is how to do that? Most discount brokers and trading firms allow you to open a TFSA account and trade within it. For example, with RBC Direct Investing-the platform I use-when you open an account, you will have the choice of opening a regular account, TFSA, RRSP etc. In fact, I don’t know why anyone would not use a TFSA account to trade and invest, assuming you have the room to contribute. Using a TFSA for saving purposes should be secondary, unless you don’t like to take any risks and don’t know anything about investing and trading.

So go ahead and make use of your TFSA if you never had before. It will not only save you in taxes, it will allow you to make money.

Can you use your TFSA account to make extra monthly income?

TFSA (short for Tax Free Saving Account) was introduced in Canada in 2009, allowing each individual (18 years of age or older) to save up to $5,500 per year and earn interest on their money, without having to pay any taxes on the earned interest.

TFSA can be a great source of a secondary income.

TFSA can be a great source of a secondary income.

As of 2013, the maximum annual amount has been bumped to $5,500. So in theory, if you were to max out your limit every year, you would now have $31,000 in a TFSA account and not be paying any taxes on any earned interest. As a couple, that is up to $62,000.

With saving interest rates sitting around 1.5 to 2%, you could make up to $1240 in interest annually and not pay any taxes.  That is not a terrible amount after all, considering that we are at historical lows when it comes to interest rates. Imagine how much more can be earned when interest rates inevitably start to climb back up.  But even at these historical low rates, a couple can expect upward of $100 per month in income from tax-free interest on their savings. That is enough to pay for a bill or two.

But it gets better. Despite all the confusion surrounding TFSA, it is not strictly a savings account. It can be used for a variety of other investing purposes. For example, just like an RRSP, you can use your TFSA to buy GICs, mutual funds, stocks, bonds etc. And whatever you earn from these investments, will be tax-free. As long as you stay within your annual limit.

Assuming TFSA are here to stay and their annual limit increases to account for inflation, you could be looking at a more potential income in the future from these tax-free accounts.  For example, in 10 years, TFSAs will have been around for 15 years.  For a couple, that could mean some $160,000 in a saving account, generating tax free interest income. Assuming an interest rate of 5% , this could mean some $8,000 in extra income every year, from interest alone, or some $650 or more per month. That is a significant amount as a second source of income.

And if you account for compounding interest and other money gained from investments made within your TFSA, you could be looking at a lot more cash flow from your TFSA, without having to pay a single penny in taxes on them.

Lesson to take away from all of this? Make use of your TFSA. Even if you can’t max it out, this is the beauty of it: you can always catch up later. Your contribution room never goes away. You can always add to it later. Just remember to be careful and not over-contribute or lose track of how much room you have left.

This article will not go into all the technical details of TFSAs and how they work. For more information on that, you can read this TFSA FAQ page on

Paying for my 2014 Vegas vacation with my 2013 piggy bank savings


Using a piggy bank and with little to no effort, we saved enough money to help pay for a summer vacation in Vegas.

2013 is now behind us. Time to focus on 2014. Financially speaking, one of the basic and first things you should do is have a piggy bank. This is in addition to your regular bank saving account.

You don’t take piggy banks seriously or think they are only for kids? think again!

Personally, piggy banks have been a great source of saving. They have helped me save and pay for some big purchases in the last few years, including major dental bills, vacations, car down payments, pay down debt and more.

My latest piggy bank was born on January 1, 2013 and was retired on new year’s eve (Dec 31, 2013) Me and the wife put our spare change as well as some bills there, on a daily and weekly basis. We made it a habit to always put something, regardless of how small. The point was to be consistent with it. We also made sure that this was our second saving source and not the major one. It is a supplement to our major bank savings.

When it was all said and done, our 2013 piggy bank had enough money to pay almost 70% of the total for our summer 2014 Vegas vacation. How nice and simple is that! We saved for a great vacation (flight and hotel accommodation) with almost no effort. We didn’t have to shed any sweat to save this piggy bank money.

For 2014, we have already started our new piggy bank. It is clearly labeled ‘2014 savings’ and will most likely be used to book another vacation in 2015.  Easy and effortless way to save for a vacation or major purchase.

One of the five principles of good finance and budgeting that we preach about here on is how ‘every bit helps’ and a piggy bank may sound like small effort but with enough time, you can save enough money to go a long way.

Go to your local Dollar Store and pick a piggy bank right away and get started while it is still early in the year.

How roaming the streets of Athens in my teen years taught me valuable entrepreneurial and financial lessons

One of my fascinations since childhood has always been radios. Specifically AM and SW radio.  Having just arrived in Athens,

Collecting calling cards in my teen years helped me buy my SONY SW Radio

Greece in the mid 90s and in my early teens, I was without a radio. I needed one badly. But I was only 14 and with no job, and wasn’t about to ask my family for money to buy something as inessential as a radio. Well at least not important to them. So I took it upon myself to save money and buy one of my favorite radios: a SONY SW Receiver. But at the time, this cost close to $100, a fortune back then. I was still too young and a year away from finding my first job in Athens. So I had to come up with a new way to get the money.

At the time, and prior to the introduction of cellphones in Greece and Europe in general, calling cards were very popular, even for local calls. You would get a calling card with a certain amount of money and that enabled you to use it for a certain amount of time. Very convenient and affordable for most people. Beside their convenience, these cards had a another appeal to them: each had a theme or image of a certain city, place, team, person etc. Needless to say, there was a whole market of collectors, ready to buy and sell these phone cards (after their minutes had been used of course)

At first, I started seeing them in phone booths, left behind once people were finished using them. A few of the people who used them would end up collecting them but the majority would leave them behind. This is where I saw an opportunity I could capitalize on: collect enough of those calling cards and sell them for a profit to be able to buy a radio.

It took me a few months and at the end of it, I found more calling cards than I had imagined I would. It felt like a treasure hunt. When I went to the collector’s corner in downtown Athens, I had more than a few collectors gathering around me, trying to give me the best value for my cards, seeing that I had a lot and of different varieties. I managed to get the best deal which was more than enough to buy my radio and even had some money left to save for other things.

This is one of the best life experiences I have ever had. It taught me to rely on myself and work hard for what I want. It taught me that there is a way to do things if I try hard enough. After all, I managed to save money without having a job or getting money from anyone. All I needed was the right idea, some walking and free time, all of which I had back then.

ING makes saving money cool and interesting

I have been using ING bank to save money since 2008 and it is one of the biggest reasons to which I attribute my increasing interest (pun intended) in saving money.

There are a lot of places you can go to open a saving account but ING is different. Different for three reasons: higher interest rates, ease of use and last but not least, their success in making saving money a cool thing. And this last point is what I would like to focus on here.

We all know that saving money is and never was a fun or cool thing to do. It is all about shopping and spending money to buy anything and everything we desire and want. With ING saving has suddenly become cool, while spending money, not so much. This re-engineering and re-branding of the way we think about money has helped ING become synonymous with saving money and investing for the future.

As part of their effort to make saving cool and fun, they have taken full advantage of the explosive popularity of social media. This has helped it get to even more people, especially young people, and turn them into savers as well.  Their website is also ease to use and have taken the complexity out of transferring money from your regular bank. The site has lots of tools to help you with your saving. For example, you can set an automated schedule to transfer money from your bank to your ING saving account.

If you are having trouble saving money and have been a chronic shopaholic, give ING a try. It may mean the difference between renting for life or having your own house in a few years.

p.s: Full disclosure: the author of this blog, as has already been mentioned, is an ING user. If you would like to open a new account, we would appreciate you mentioning us as a referrer and we will both get a bonus referral fee of $25!  Just mention our referral code “17109393S1”

How To Create the Right Emergency Fund

How To Create the Right Emergency Fund

By: guest author ‘Alicia Sanders

Unfortunately, we live in complicated financial times when lots of consumers complain that they don’t have an opportunity for

An emergency fund is for everyone and not only the poor

saving money because their budget is really tough. Many Canadian consumers don’t have any savings and that’s why when an unexpected financial problem arises they need to borrow cash to fix it. We plan our expenses and try to foresee different situations, but life is unpredictable and anything can happen. And that’s why it’s so important to protect yourself from unpleasant surprises and create an emergency fund. These savings will be your helping hand in case of financial emergency and there will be no need to apply to people you know or different lending institutions and ask for financial help. Creation of an emergency fund is a first step on your way to a personal financial independence and it’s very important to make this step wisely.

Define How Much You Need To Save

Do you know what can be called a perfect emergency fund? It’s in case your savings are enough to cover your expenses during 3 months. Make some math and count how much money you need to cover your monthly expenses including regular bills, mortgage or rent payments, food, health insurance and other personal expenses. Then multiply this sum for three and that will be a minimum for your emergency fund. Estimate your financial situation and risks of losing a job or other possible troubles and try to define how much you need to feel more comfortable. In case you have enough then you feel calm and can sleep well at night because you’re confident in your ability to fix possible financial problems.

Choose The Right Place For Your Money

It’s completely up to you where to put your savings. But of course, it’s better to put money in a place where it can make some interest so it will bring you an additional profit. You can open a savings account in a bank and it will make your savings work for you. But on the other hand, today’s economic situation is highly unstable and you never know if you can trust to one of another financial institution. So you should choose a place where your money will be absolutely safe. It will be better if this place won’t be easily available for you because there’s a risk that you will try to use some cash until there will appear an important reason for that.

Access Your Savings Only in Emergency

The main goal of the emergency fund is to protect your well-being in completely unexpected situations. Nowadays it’s popular to apply for unsecured loans from places like or other lending companies in case there’s a need for fast financial assistance, but if you have savings you can easily avoid borrowing and making financial commitments. Remember that and don’t touch your savings unless there’s a real emergency. Also it’s important to understand that emergency isn’t just another casual problem which may arise any day. That’s why it’s important to cherish your efforts and not forget about your real goals.

It is January 1st, 2012: Get started with Saving NOW!

Happy New Year!

Having cleared that out of the way and all the celebrations that come with a new year, let us get down to business. Yes, right here and now, on January 1st. We don’t have much time to waste. Not even having an extra day from this being a leap year is an excuse to waste any time getting serious.

So what am I calling for you to do? to start saving. Yes, start right now. It doesn’t matter if you are already saving, you can still do more to make this an even more serious plan. Being January 1st, you have a huge advantage. You are basically starting from zero and not missing on any day. In about one year from now, and as this year will be coming to an end-assuming the world doesn’t end on Dec 21, damned be the Mayans for their ambiguous calendar!-you will look back and be so thankful that you started saving from day 1.

Ok, so if you already are saving, go ahead and deposit something into your account today. I don’t care how much, as long as you deposit something. Minimum of 5 to 10 dollars. This is necessary as it signals to your brain that you intend to keep doing this for this year and on a consistent basis.

And if you are not a saver yet, get started now. Call your bank and schedule an appointment to open a saving account. If you prefer, and I highly recommend it, you may want to open a high-interest savings account with ING (you can get a referral bonus if you mention that you were referred by us: Ref# 17109393S1) , Ally or other online banks. Look in your wallet and see if you have any excess money and set it aside to be deposited into your new saving account.

And finally, for both those who are already saving or not, I recommend having a good old-fashion piggy bank where you will throw in all your coins-big or small-as well as some occasional small bills. Although your main saving account will be your one and primary saving source, this one will simply supplement it for an extra future income. The idea behind a piggy bank is that it will force you to save small change that you would otherwise end up spending on things you probably don’t need. It will also keep you more focused and committed to saving money.

If you have been following the news lately, you will have noticed that 2012 will be a tough year for economies worldwide, with no exception. It is the year of the unknown, one that is hard to predict. All of which means that you have to keep a tighter grip on your wallet and hard-earned money,  and to save rather than spend them.

And hey, it is not too late to have resolution for 2012: to save money and be serious about it through Dec 31st!

Want to make that big purchase so bad? Then start planning last year!

Like  everyone else, I occasionally see something I really like and want to get it that moment. Problem is, it may not be anything I can easily afford. It could be something big, say a nice car, a new electronic gadget, computer etc.

Call it ‘instant gratification on steroids!’

Unless I have a lot of money saved, and I can spare some of it for this big purchase, I won’t be able to afford it.

Which is why you should always start saving early, so that you are able to afford things you want with ease. Remember, or if you haven’t already read it, one of our ‘5 Principles of successful budgeting and finances’ is to be patient and have discipline. In this case, if you start early enough, your patience will pay off at the end by being able to afford that big purchase.

I can’t stress enough how how important it is to start early and give yourself a good head start. The earlier you start the more ready you will be to make these big purchases. Moreover, by allowing yourself enough time to save for big things, you will not only be able to afford them, you will have spare money leftover for other purchases or emergencies.  And last but not least, by starting early, your stretching your timeline which allows you save comfortably without making big sacrifices, compared to having a shorter timeline.

When it comes to incorporating it into your budget, saving for big purchases should have its own allocation and not to be mixed with all your general saving. Otherwise, what are you saving for: a rainy day, a big purchase or both? so it is important to separate the two saving goals.

If you didn’t start saving for a big future purchase yesterday, last month or last year, no problem. You can start today, and by this time next year, today will have been long in the past and enough time for you to have saved your money.

But saving doesn’t and shouldn’t stop. The idea is to keep saving, all the time, because your needs and wants will always be there. In a few years, you will want to replace your car. In a year from now, you may want to buy a new version of your favorite smart phone. And in a few months from now, you may want to take a vacation to a hot destination.  The list doesn’t end and therefore our saving should always be active!

Failure to save for big purchases in advance-months or even years in advance- will mean you will either have to resort to using credit cards and other financial means where you will have to pay it back with interest, or not be able to afford your purchase at all.

Tip: you can either create a new item in your budget for these big future purchases or just include it as a sub category in your existing ‘savings’ allocation.

Don’t be Stupid and Pay the Full Price!

Inflation? what inflation?

It is mind-boggling that I still see people paying the full price on things like electronics, cars, clothing, books and lots more. And in some cases, not only do people pay full price, they pay premium. These people could have easily saved lots of money if they took the effort and looked around.  With so much competition from businesses for your money these days-with the exceptions of things like gas, electricity-you shouldn’t pay full price for anything!

These days, you can find savings and discounts everywhere you look. Whether it is electronics, books, clothing, food, savings are everywhere.  The first and best place to find them is online. Let us go through some of the channels where you can find savings and discounts on the items you are thinking of buying:

Weekly flyers: where I live, we get a bag full of flyers for more than 10 different stores, every Thursday evening.   I and my family make full use of these flyers. On average they save us $25-100 every week in grocery and other shopping. These flyers include food, electronics, hardware, auto parts and other general purpose stores.   If you get these flyers where you live, make full use of them and go through them. Chances are, you may find something you like, want or need on sale. Not checking these flyers before going grocery shopping is like blind shopping.  If these flyers are not delivered to you, no worries, you can simply find them all on .

-Group Buying websites: websites like Groupon, DealFind, Canadian  TeamBuy and others, have made it easy for people to find a different deal on a different item everyday.  These companies look for businesses such as restaurants or beauty salons that are willing to give special deals and discounts to consumers. The group buying websites then feature one of these special offers from different companies on their website everyday.  Most of them make it easy and email you the offer as it opens.  Sign up with one of these sites and try them out for a few weeks. You may get offers that are of special interest to you and end up saving you lots of money.

Online auction and merchant sites: whether it is Ebay, Kijiji, Craigslist, or others, the competition for your money is massive and that can only mean more savings for you.  Using these websites, you can find new or used items, with the latter saving you lots of money, sometimes more than half of what you would pay for a brand new version of the same item. Other websites like Amazon have pioneered the selling of books and electronics at very affordable prices, usually a lot less than what you would pay for at regular stores.

Sign up for special store email offers: if you have a favorite store or brand, head up to their website and sign up for their special offers mailing list.  If you are not in a rush to buy a certain item from your favorite store, simply wait for the right time and offer before making your purchase.  Two summers ago, I was searching for a certain part for my car, but there was no urgency to get it right away. Being a recipient of special discounts from a local auto parts store, I finally got an email where the product I was looking for was discounted by about 40%, and that is when I made my purchase and saved a lot!

Twitter and Social Networking: Twitter is all the rage now, and it is a great place to find discounts on literally thousands of items.  Simply search for the product you are interested in, and chance are, you will find lots of results.  Twitter is quiet effective given its use of real time results, so the discounts and offers you find, are as up-to-date as possible. For more information about using Twitter to save money, visit our article here.

Special Community Forums: these days, it is all about the power of community and people coming together and sharing what special deals and offers they have come across.  In Canada, is a perfect example.  As you visit these websites more and more, you will find new discounts and offers on things that you may have never been aware of. You are taking advantage of the collective leveraging of a big community’s coming together and sharing money saving ideas.

Haggle and Shop Around: yes, you have heard this before. But there is a slight difference in what we mean. Let me explain.  We are still in tough economic times and are not out of the woods yet. This means companies are desperate to keep business going, by selling as much as they can. This often means lowering their prices to keep demand high. This all works in your favor. Look at prices for electronics, cars, books and clothing around you. Most of it have gone down in the last two years. Of course, it is not just the economy, other things like the high Canadian dollar is another factor working in Canadians’ favor.  The point is, businesses are still looking to keep afloat and survive the downturn, and they will do anything to sell products and services.  And as mentioned earlier, the competition from different sources is stronger than ever before.

More options means more savings: the availability of more than one place to buy what you want means more competition for your money. A perfect example is ‘travel packages’ You have at least 10 discount travel websites to choose from, not to mention all the other ‘last minute deals’ sites. With more options available to travelers than ever before, I don’t know why would anyone pay the full price or go with the first package they find.

The days of buying something from the first look are long gone. People should take full advantage of all the tools and channels outlined above to find special discounts and savings on the products they are thinking of buying. Doing your research will put lots of money back into your pocket.