Your 20s can be an exciting time; filled with opportunities, growth, and the occasional financial misstep. However, when it comes to money, many of us don’t even know where to start. It’s easy to feel overwhelmed by the options, advice, and expectations around saving and investing. The good news? Building financial security doesn’t have to be complicated and can be started slowly. By focusing on a few key steps and taking small, consistent actions, you can set yourself up for long-term success.
Let’s dive into practical ways to grow your money in your youth and create a solid financial foundation with Westoba.
High-Interest Savings Accounts: Make Your Savings Work for You
Not all savings accounts are created equal! High-interest savings accounts (HISAs) allow you to earn more on the money you’re setting aside without lifting a finger. Whether you’re building an emergency fund or saving for short term goals like travel or a new laptop, a HISA ensures your money works harder for you.
Tip: Set up automatic transfers from your chequing account to your HISA on payday. Even starting small- like $25 per paycheck,– can add up quickly!
The Power of Investment Accounts (TFSA and RRSP)
Investing might sound intimidating, but your 20s are the perfect time to start. Why? Not only are you starting to build good saving and investment habits, but you also have time on your side! Compound interest loves time.
- TFSA (Tax-Free Savings Account): A flexible option to grow your money tax-free. You can use it for investments like stocks, bonds, or ETFs, and withdraw funds anytime without penalties.
- RRSP (Registered Retirement Savings Plan): Ideal for long-term retirement savings. Contributions are tax-deductible, meaning that you’ll receive a tax credit now, and defer tax to a time when your income is lower.
Tip: Start small with automated contributions to your TFSA or RRSP and gradually increase them as your income grows. Even $50/month can make a big difference over time!
“Your 20s are the perfect time to start building a strong financial future, and at Westoba, we’re here to guide you every step of the way. From smart savings strategies to investment options like TFSAs and RRSPs, we make it easy to grow your money and achieve your goals.” - Alexandra Doyle, Assistant Branch Manager
The First Home Savings Account (FHSA): A New Investment Opportunity
If you’re thinking of home ownership one day, the FHSA is for you. Canada’s new First Home Savings Account combines the best features of a TFSA and an RRSP, such as tax-deductible contributions, non-taxable qualifying withdrawals, and the opportunity to grow your assets tax free.
You can contribute up to $8,000 annually to a lifetime maximum of $40,000, grow the money tax-free, and use it toward your first home purchase!
Tip: Even if homeownership feels far away, start contributing now. The sooner you begin, the more you’ll save.
Mastering the Art of Saving: Practical Tips and Building Habits
Saving money doesn’t mean missing out on the fun. With a few strategic moves, you can balance still living in the moment and preparing for the future.
- Create a Budget: Track your spending to see where your money is going and find areas to cut back. We have a budgeting workbook here that can help you get started:
- Automate Savings and Investments: Set it and forget it! Automating your savings ensures you’re paying yourself first, and you won’t even notice the money leaving your account.
- Build an Emergency Fund: Aim to save 3-6 months’ worth of expenses in a separate account to cover unexpected costs.
- Avoid Lifestyle Creep: As your income grows, it can be easy to increase your spending at the same rate. Instead, put that extra cash toward savings or investments.
Starting to build wealth in your 20s doesn’t require hitting the jackpot or making drastic lifestyle changes. It’s about starting small, building habits, staying consistent, and taking advantage of the tools available to you! By creating a budget, automating your savings, and making intentional financial decisions, you’re investing in more than just your money – you’re investing in your future. The earlier you start, the more time your money has to grow, setting you up for the life you want.
Just like visiting your doctor or dentist for an annual checkup, your finances deserve the same care and attention. A yearly financial fitness checkup can help ensure you’re on track to reach your goals, identify areas of improvement, and make the most of your money. Don’t wait – book your financial checkup today and let us help you build a brighter financial future.