Do you sometimes feel like saving is a game of snakes and ladders? Do you always seem to end up back at square one? You're not alone. Saving money can be a real challenge!
Over the past 40 years, the household savings rate has dropped dramatically in Quebec. In 1981, most people were able to save nearly 17% of their income. By 2017, this percentage had dropped to just 5.5%, after hitting a record low of 2.2% in 1999. This means that someone who earns $40,000 a year can afford to set aside just $2,000 in savings. That's not nearly enough to build up your nest egg and buy a cottage!
But no matter what, your future is sure to be brighter when you've got a comfortable financial cushion. Here are five obstacles to saving money along with a few strategies to achieve your goals and steadily work toward your dream retirement.
Have you ever noticed that life never fails to send you a curve ball whenever the balance in your savings account starts to look healthy? You've been picturing yourself on a beach eating guacamole, when suddenly you have to spend all your money on a depressingly practical expense.
Maybe your annual cleaning at the dentist turns into a root canal, or a bill you forgot to pay makes an unwelcome reappearance. Then there's unexpected roof repairs, carpenter ant infestations, and government notices reminding you that you forgot a payment in 2015 and are now being charged interest.
But that's just the way it goes, isn't it?
Here's a useful tip to help you keep saving: Never empty out your savings completely. Keep a small amount in your account—even if it's just $20. It's all about baby steps, as they say.
Struggling financially is never fun (and we're not just talking about
that sinking feeling you get before checking your account
Debt can prevent you from reaching your financial goals. With rising interest rates, it's hard to know if it's better to pay down debt or invest.
The lucky ones learned to manage their credit before getting into trouble.
For everyone else, financial advisors can help. They have a wide array of strategies to help clients achieve their goals, even when finding extra money to save seems impossible. These professionals know how to get the most out of different financial situations. When you want to learn how to run faster, you hire a coach. When you want to learn how to save, call a financial advisor!
And if you've been living like each day is your last and money grows on trees, it's time for a reality check. When there's nothing left, there's nothing left. Period. This is probably one of the first things your financial advisor will tell you.
So you've tried everything and still haven't managed to save even
$500. Have you decided you just don't have what it takes? Are you
thinking, "What's the point? I've never made a budget
in my life. I don't understand anything about my finances."
Good news: it isn't just you! Researchers have studied the human genome and have yet to find the saver gene. It doesn't exist.
Saving is a matter of habit and priorities. Sometimes, it can seem like saving small amounts isn't worthwhile, and it's better to wait for a windfall (like a big tax return) to kick-start your saving. This is completely false.
Who said that? Everything is a matter of attitude, and attitudes can change. For example, think of a fun name for your savings account (like "California" or "Six months off" or "A house in the country") to boost your motivation. Achieving your life goals is a lot more important than spending all your money in the present.
You may still withdraw funds from your savings account, but you'll probably think twice before doing so. The money in your "Dream cottage" account is likely better off where it is, rather than spent on a new pair of $200 sneakers.
In the end, saving is like any other aspect of life. "Nothing changes if nothing changes," as some grandfathers would say. It all starts with a change of attitude, then it's a matter of perseverance.
Have you changed your attitude, but you still don't trust yourself to save regularly? You're right not to! So many of us think this way that banks have come up with a solution to overcome our collective inability to set aside $2 a day for our golden years: systematic savings.
As if by magic (or almost, after a few clicks of the mouse), an amount is automatically deposited into your account at the frequency you choose—and you won't have to lift a finger. Just sit back and watch your savings grow. It's that easy!
David Bach is one of America's most trusted financial experts and the author of The Latte Factor: Why You Don't Have to Be Rich to Live Rich. He argues that just saving what you spend on your daily latte could make you rich. That's about $5 a day. It's worth thinking about.
Using the office coffee machine and bringing your lunch to work may be realistic strategies to discuss with your financial advisor. After all, a few dollars eventually add up to make millions!
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