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Three things we can all do to boost our savings: Motley Fool

If you’re just getting on the Retirement Savings train – or if you’re packing up your desk for the last time and getting ready for the main event of retirement – the Motley Fool Canada offers three tips on how you can improve your retirement savings.

According to an article posted on Yahoo! Finance Canada, the tips are billed as something “every single Canadian can do to help prepare themselves for a smarter, happier, and richer life in retirement.”

The writers at Motley Fool point out a fact that many of us tend to ignore – “the only way to consistently save money is by spending less, on average, compared to what you earn.” So if you are, for instance, earning $2,500 a month but spending (thanks to credit cards or lines of credit) $3,000 a month, you are in trouble.

The article says that the best way to ensure you are running your ship of state in the black is by preparing a budget, and sticking to it. The budget should not only include your usual repeat monthly items like rent, light, heat, gas, and other bills, but should factor in money for your vacation and other one-time events, the article says.

With budget in hand, the article recommends, you can follow savings tip number one – to “set aside at least 10 per cent to pay yourself at the end of every month or after each paycheque.”

By paying yourself first, you will grow your savings quickly and efficiently, the Motley Fool observes.

The second tip on offer is to “use Canada’s tax-incentivized savings programs to your benefit,” the article states.

The article cites the availability of the RRSP program, pointing out that contributions to such programs are tax-deductible. As well, money within an RRSP grows tax-free until that future time when you crack into it for retirement.

The article also notes the existence of TFSAs. While you don’t get a tax break on money you put into these savings vehicles, there’s no tax on investment returns and growth, “including capital gains and dividend or interest income,” the writers note.

The last tip from the Motley Fool Canada is a good one for those of us who invest in stocks.

“By investing in the stocks of high-quality businesses in which you possess a firm understanding — those run by experienced and competent management teams that companies that consistently pay their shareholders a regular monthly or quarterly dividend — investors can go a long way toward avoiding the mistakes that so often challenge those just starting out,” the article states.

Recapping the article, it’s important to include a strong commitment to savings in your budget, to take advantage of tax-sheltered savings programs, and to keep quality in mind when investing for the long term.

A nice addition to your retirement toolkit would be a Saskatchewan Pension Plan account. The contributions you make are, just like RRSP contributions, tax-deductible. You can “pay yourself first” by setting up automatic contributions that go from your account directly to SPP. And the money you earmark for savings is invested at a low fee by a highly competent plan with a strong track record of growth. Win-win-win.

Written by Martin Biefer
	Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing, classic rock, and darts. You can follow him on Twitter – his handle is @AveryKerr22