Saving money is a simple concept, it really comes down to spending less than you make, but without a budget most people are destined to fail in their savings goals.

Step One: Budgeting

Do you absolutely need to make a budget? No. You can technically just say you will save X amount per month, put the money aside then make the rest fit. We strongly recommend a budget however. Until you understand where your money goes, you will never have an accurate feel for your finances.

Download our Sample Budget spreadsheet and fill it in to see where your money goes. Most people know how much they make, but they have no idea how much they spend. You may be surprised where some of your money goes.

Saving Money

Is there nothing left at the end of the month? Do you find saving money to be nearly impossible. Well before you put money into savings, perhaps you need to work on spending less. If you are serious about putting money aside there are literally dozens of ways the average Canadian can save money each and every month.

We have a more detailed article here that covers Tips for Saving Money in greater detail

Savings Goals

So now that you know how much you can put aside every month, the question to ask yourself is why are you saving?

Chances are you will have multiple savings goals. Examples would be a new car, new roof, retirement. For each of these goals to need to set a time frame and set money aside on a regular basis to reach those goals.

Savings Accounts

Right now interest are low. You won't get much leaving your money in a classic bank savings account. What so the best way to maximize your savings? Well that depends on what the savings are for.

We recommend everyone has as a minimum, an emergency savings account for the unexpected emergencies or loss of income, a savings account for known purchases and a retirement fund.

Types Savings Accounts

With interest rates at record lows you need to look at ways to maximize any interest you can make off your savings. There are a variety of savings vehicles available to you:

• Traditional Bank Accounts: Your chequing account probably little or no interest and even a so-called savings account only offers a bit more. Its worth shopping around, many banks offer so called High Interest Savings account that offer somewhat higher rates. Also many banks offer higher interest rates to new clients for introductory offers. I am always amazed more people don't take Tangerine up on their special offers. At worst you get a good rate and a free $50 and they routinely have better deals.
• GICs

The improtant thing is to match each goal with the proper account so that the funds are available when you need them, stashing emergency funds in an RRSP would be a very costly mistake.

Long Term Savings

Invest them