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7 Common Savings Mistakes and How to Avoid Them
Even people with good intentions make saving mistakes. The good news is that most are easy to fix once you spot them.
1
Saving only what's left over. If you wait until the end of the month, there is rarely anything left. Fix: pay yourself first with an automatic transfer on payday.
2
Having no emergency fund. Without one, a single surprise can push you toward credit card debt. Fix: build a starter fund of $500, then grow it to three to six months of essentials.
3
Keeping all your savings in a low-interest account. Inflation, the rise in prices over time, slowly reduces what your money can buy. If your account pays less than inflation, you lose buying power. Fix: compare high-interest savings accounts, GICs, and TFSA savings options regularly. Check for fees and promotional rates that expire.
4
Ignoring registered accounts. Many people pay tax they could have avoided. Fix: learn how the TFSA, FHSA, and RRSP fit your goals, and use the one that matches your situation.
5
Saving while carrying high-interest debt. Credit card interest of 20% or more can outpace anything you earn on savings. Fix: keep a small emergency fund, then pay down high-interest debt aggressively while still saving a little.
6
Going over contribution limits. Excess contributions to a TFSA, FHSA, or RRSP can trigger penalties. Fix: check your room in CRA My Account and keep your own records.
7
Having no specific goal. "I should save more" is vague and easy to ignore. Fix: set clear goals with an amount and a date, such as "$3,000 for a car repair fund by December."
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