Putting your money in a savings account is just one way to save and grow your wealth—it’s not the only method. From my personal experience, having multiple savings sources can significantly increase your savings. In other words, don’t put all your eggs in one basket. Explore alternative ways to save money. Here are some options, many of which I’ve personally tried:
- High Interest Savings Account: Whether you choose Tangerine, Ally, EQBank or your preferred online bank, a high-interest savings account is essential for anyone looking to boost their savings. While interest rates may go up and down, it is a safe vehicle to keep your money if you are new to the world of finances and are not ready for investing. Beyond earning interest, this account keeps your money out of easy reach, helping you avoid impulsive spending.
- Piggy Bank: It might sound old-fashioned, but a piggy bank can be a practical tool for saving. While your savings account handles larger amounts, use a piggy bank for loose change and small bills. This method reinforces the habit of saving consistently.
- Automatic Payroll Deduction: This is one of my favorite and simplest saving methods. With automatic payroll deduction, the money is transferred directly from your paycheck into your savings account, often without you even noticing it. This “out of sight, out of mind” approach helps you save effortlessly.
- RRSP , TFSA, 401(K), Roth IRA and more : For Canadians, opening an RRSP, TFSA, or a combination of both is highly recommended to complement your existing savings account. For Americans, the equivalent would be using a combination of a 401(k), Roth IRA, and potentially other retirement accounts. Utilizing automatic payroll deductions to contribute to these accounts can significantly enhance your retirement savings and provide valuable tax benefits. Additionally, many employers offer matching programs, which essentially means free money—so it’s crucial to take full advantage of these opportunities.
- Emergency Fund: While not a specific account type, building and maintaining an emergency fund is crucial. It should ideally cover 3-6 months of living expenses and be kept in a liquid, easily accessible account such as a high-interest savings account or money market account. Why is this important? Beyond the obvious reasons, it serves as a safeguard, protecting your primary savings from being depleted.
While more advanced strategies like investing in stocks or currencies are available, they’re beyond the scope of this article. For starters, the above is recommended as a starting point and then incorporating investments as you grow more comfortable with your finances.
Having multiple savings channels not only increases your financial security but also creates a sense of financial abundance, which can motivate you to save even more.