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​Savings are Best When They’re Earning

​Most people believe they should be saving money, but may not know how to make that money earn more money.  A piggy bank may be a fine way of saving when you’re a kid but it contains only what you put into it.  There are a number of very simple ways to save money and grow those savings at the same time.

The Tax Free Savings Account

A Tax Free Savings Account (TFSA) grows your money in two ways.  First, you earn interest on any money you put into your TFSA just like a regular savings account. However, a TFSA also saves you money come tax time because all of the money you put into your TFSA is tax-free.  Normally, you have to pay tax on the interest you earn on your savings and investments but with a TFSA, everything you put into the account remains tax-free.  This means that a TFSA lets you grow your money by keeping more of it.  The TFSA is a tax shelter that everyone can use and it can shelter more than just cash.  You can put government bonds and term deposits/GICs or even stocks into a TFSA and protect them all from tax.  You can take money out of your TFSA at any time and not be taxed on that money and then replace those funds and avoid the tax again. 

Save money, earn money, avoid tax, It’s a win, win, win.

Term Deposits:  Set ‘Em and Forget ‘Em

For many people the biggest challenge to saving money is the discipline to do so.  We know we should be growing our savings but life, and unexpected costs, can get in the way.  A term deposit is a great way to save because you invest your money once and then don’t have to do anything more for the duration of the term.  Your money earns high interest that is guaranteed and you can literally forget about it until the term comes due.  When your term deposit does mature, you can reinvest the money and actually earn interest on the interest you just earned.  Term deposits can range from one to five years in duration but the longer you leave your money invested the more you make in interest.  In fact, YCU is currently offering an Escalator Term Deposit that pays an increasing amount of interest each year over five years.  Non-Redeemable term deposits are those that lock your money in for the term so they are an enforced form of saving and earning and ensure that your savings will remain intact.

Just do it

To borrow from Nike, the key to saving money is to Just Do It.  You have to make a start and the best start is to place some money in a vehicle that will grow your savings while protecting it from temptation.  Both TFSAs and Term Deposits offer high returns and a variety of benefits but they are not the only way to save.  It has been said that the most important financial decision someone can make is to begin saving as early as possible.  If starting is proving difficult for you then start by having a conversation with a financial advisor at YCU.  It does not matter how much you have to start your savings or if you have anything at all.  It is starting a process for saving that is most important.

​​Become a Financial Genius with Brilliant Advice from Your Credit Union.  For more information on the benefits of banking with a credit union call:     1-800-379-7757