Saving: Impossible?

Not so much! Try these 5 steps to set (and actually achieve) your saving goals.

What are you saving for? Whether it’s a milestone moment like a dream vacation or a wedding, or something long-term like a downpayment on a home or retirement, setting a goal is one of the best ways to turn your financial dreams into financial realities. It’s easy when you break it down step-by-step.

It might sound simple, but knowing what you want to save money for will help you get there. A helpful acronym to guide you as you list your goals is SMART.

A SMART goal is:

• Specific: Make sure your goal is as detailed as it can be. If you think it might be nice to buy a place someday, find a listing that’s similar to what you’re looking for, then calculate how much you’d need for a downpayment.

• Measurable: Decide what success looks like for you. Define how you’ll measure your progress and reevaluate when necessary.

• Achievable: Get ready to meet the ghosts of savings past, present and future! Take stock of how much you’ve already saved, how much you’re currently making and how much you think you’re going to make. Based on that you’ll be able to determine how much you can realistically save. Not sure what your future savings are going to look like? Keep it real, but dream big – your goals should challenge you to do your best!

• Relevant: The reality is that the money you save will have to come from somewhere. If you’re struggling with the cost of living, ask yourself what changes you can make to reach your goal and tweak your objectives if they’re just not realistic.

• Timed: Determine if you’re working towards a short-term goal (one-to-three years), medium-term goal (three-to-five years) or a long-term goal (more than five years). This will help you decide how you want to invest the money you’re saving.

Every goal can’t be number one. Prioritize your goals based on urgency (what needs to get done the soonest) and importance (what means the most to you). The highest on the list will be both urgent and important. If a goal isn’t urgent or important, ditch it!

Now that you’ve ranked your goals, it’s time to plan how you’ll reach them. A top financial tip? Track your spending by building a budget.

A simple budget will have a column for your monthly income and a column for your monthly living expenses. Subtract your expenses from your income. From the amount of money left over, how much will you need to stash away to reach your goal on your timeline?

If you’re not loving the way that all adds up, try reviewing your expense column to determine where you can cut back. You can also take a look at your income column and consider how you could bump up that side of the budget.

Don’t lock everything away in an investment that you can’t easily access, like a Registered Retirement Savings Plan (RRSP). It’s important to have a cushion to cover emergency expenses, like if your car breaks down or you need to take a leave from work. Since you never know when you’ll need to use your emergency fund, you might want to deposit this money somewhere versatile, like a Tax-Free Savings Account (TFSA), so you’ll have easy access to it.

Aim to save three-to-six months’ worth of your household expenses, such as housing, utilities, transportation, child care and groceries. This will likely take more than a year. When you’re prioritizing your goals, consider building an emergency fund to be one of your short-term goals.

Once you’ve set up your emergency fund, it’s time to tackle your debt. That’s because most debt, including credit cards, lines of credit and student loans, comes with interest rates that add up to a lot of extra charges in the long run.

If you can’t tackle all your debt right away, don’t sweat it. Depending on how much you have, this could be a medium-term goal, as in something that takes more than a year or two to accomplish.

Tip: Not sure where to start? Your first priority should be to make all of your minimum monthly payments. From there, one strategy to pay off your debt is to focus on those with the highest interest rates. That way, the charges that are accumulating the quickest will get under control the fastest!

Once you’ve checked off these five steps, you’ll be set up to succeed when it comes to reaching your financial goals. It’s all about knowing what you want, drawing up a plan and sticking to it! After all, you wouldn’t get in the car without knowing where you’re going. Why would it be any different when it comes to your savings?

^* If Quick Check pre-approves a card, you can be sure we’ll approve your application, except in limited circumstances. Some of the reasons we may not approve your application, among others, include:

a. There’s been a change in your credit file information, personal information or financial status from the time you receive your Quick Check results to the time you apply for one of our credit cards.

b. You’re not at least the age of majority in the province or territory you live in.

c. Your application is flagged for fraud prevention.

d. You have an existing Capital One account.

e. You’ve applied for a Capital One account in the last 30 days or had an account with us that was not in good standing in the last year. In good standing means not past due, over limit, fraudulent, restricted, or part of a consumer credit counselling program or bankruptcy.

In some cases, we may not be able to open an account for you even though your application was approved. This can happen if we’re unable to verify your identity, or you don’t provide the required security funds if you’re approved for a Secured Mastercard®.