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How to Save for Special Occasions

It might be the holidays. It might be a birthday. It might even be an anniversary. Whatever it is that you are looking forward to, it will come at a cost. And you might not be entirely ready to shoulder that financial burden. You could borrow the money you need to pay for your special occasion with a payday loan or cash advance, but those may be resources best left for the unexpected expense.

So, what can you do to prepare for a big upcoming purchase? Start saving by budget planning! It’s easier than you think; all it takes is a little help, a little education, and a bit more perseverance. Check out how you can get financially ready to pay for your upcoming special occasion!

 

Step 1: Set a Goal

The first step in saving is setting a goal, including a specific date you need to have the money saved by and a specific amount. By using a savings worksheet like the Financial Goal Calculator, you can see the process broken down to manageable weekly or monthly contributions.

Without the savings goal in mind, there are two common problems that pop up. One, you may end up overspending your budget on the actual occasion. Having a number in mind helps you limit what you are willing to spend and avoid scrambling to cover additional costs as the date approaches. Two, a savings goal helps you stick to a consistent savings process that better ensures success. If you go at it without a plan, you end up putting money away here or there and the result will usually leave you without enough cash for your purchase.

 

Step 2: Budget Planning

Once you set your financial goal, you can then turn to budget planning to help you meet your goal. This is a lengthier process but once completed, can actually help you in many other areas of your financial life. In theory, budget planning works like this:

  • You add up all of your different sources of income that bring in money. Focus on the amounts after taxes are taken out, also called your net income
  • You determine all of your different expenses each month, like rent or mortgage that cost you money
  • You review your spending habits to figure out what other general charges you make each month, like eating out, entertainment or utility expenses
  • You deduct your expenses from your net income, leaving you with what’s left

There are dozens of budget planning worksheets online, like this budget planning calculator, that can help you get started, but it’s best to do it when you have a few hours to sit down. Make sure to pull up your online banking account or request paper statements from your bank going back at least 3 months.

There are two tough aspects to budget planning. First, you need to be honest about your spending habits. No one is judging you but yourself, so try to put that aside to get a true picture of your financial health. Two, you’ll probably realize pretty quickly that you spend money in ways that could be avoided. This is where the next step comes in: getting your spending in check.

 

Step 3: Get Your Spending in Check

Included in budget planning is taking a hard look at your spending habits. And if you think that your spending can’t be reigned in, consider this: in a poll completed by CIBC, researchers found that 82 percent of Canadians say they could cut back each month by an average of $360 before “feeling the pinch.” For most of us, we have the ability to save - we just aren’t the best at it. So, how do you figure out if you are overspending? There are many signs, including:

  • You don’t know how much you spend each month
  • You don’t perform any budget planning
  • You hide purchases or downplay costs
  • You can’t pay off your credit card balance each month
  • You pay your bills late

These are just a few of the signs of overspending. Learn more about these and other signs, as well as ways to get out of the overspending cycle, in our article, 9 Signs You Are Overspending Your Budget.

 

Step 4: Put Your Money to Work

Who says you have to put the money in a bank account to sit and collect dust? A great way to help you reach your savings goal faster is to make your money work for you! There are a few ways you can go about this, depending on how long you have until you need to use the funds.

Get a Tax-Free Savings Account (TFSA). Simply put, a TFSA is a general-purpose savings account that allows you to make contributions that can grow, without being taxed on those earnings. This means any money in that account that makes money is tax-free. And, you can contribute thousands of dollars to this account or even different forms of investment, such as stocks, bonds, and mutual funds. Even better? You can withdraw it and use it anytime, still tax-free.  There can be strict rules about contributing to your TFSA so be sure to do your research before going this route.

Consider a High-Interest Savings Account. Just like their name, high-interest savings accounts pay a higher rate of interest compared to others. If you have at least 6 months lead time to your big occasion or expense, a high-interest account could net you a little extra cash to add to your savings; check with your financial institution for the best rates you can get. While that’s not a ton of money, consider this perk: Most accounts of this type have very few transactions allowed, meaning you won’t be able to easily withdraw money. This will help you avoid the temptation of dipping into your savings before the big day.

 

Step 5: Put Away The Extra Money

On average, around 62 percent of Canadians in the CIBC survey said they receive “extra money” each year, typically around $2,280. That comes from sources such as employer bonuses, commissions, tax refunds, cash for those special occasions, and other nondescript places.

When it comes to that extra cash, we’re more likely to spend it on catching up on our debts or use it for pleasure or enjoyment. When you’re saving up for something important, consider putting away any extra money to pad your savings account. It could go a long way in lowering your monthly savings requirements in order to meet your goal.

 

Step 6: Earn More Money

While most Canadians say they could cut back to save each month, there are about 46% of us who believe we don’t earn enough income to save. If you fall into that category, it’s time to get creative.

There are so many ways you can spend a little extra time each week creating new income to go towards your savings goal. In fact, we wrote an entire article about Quick Ways to Come Up With Cash; check it out to find creative ideas for socking away more savings to reach your goal.

Of course, even the best-laid savings plans can become derailed. Unexpected expenses happen all the time and can leave us right back where we were in the beginning - without enough money to pay for the upcoming special occasion. In moments like these, we at 310-LOAN are happy to help with a short-term loan up to $1,500 for returning customers, and up to $600 for new customers. Upon approval, you could even have the cash in your account in as little as 30 minutes. So keep saving, and let 310-LOAN give you a helping hand when you need it!

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