Homemakers.com, Jessica Padykula
A moment of near (or total) panic at the thought of barely making mortgage payments, adding to another over-taxed credit card: It’s easy to feel powerless about personal money matters.
But you can get richer sooner if you use some common sense and follow some simple steps to saving, spending wisely and investing as much as you can — even if it’s only a small amount.
Cynthia Kett, a chartered accountant (CA) and certified financial planner (CFP) with advice-only firm Stewart & Kett Financial Advisors Inc. in Toronto shares ideas on how make your money tree grow.
The key to building financial wealth is to invest, but you can’t invest until you accumulate some investment capital, says Kett.
That means in order to build up investment money, you must find a way to spend less than you earn and invest. If you put $100 a month into your RRSP (or TFSA) account and you were able to earn a 5.5% rate of return (on a balanced portfolio of 50 per cent fixed income and 50 per cent equity securities), that $100 a month would be worth about $64,200 in 25 years, explains Kett.
2. Sock away some savings
Every dollar counts. Remember piggy banks? After months and months of saving dimes and quarters as a child, that new toy was finally within reach — and all it took was a little diligence and a lot of patience. The same rule applies now.
If you want your bank account to grow, you need to feed it. If you can manage to put away $100 from every pay check ($200 a month if you get paid every two weeks), that amounts to $2,400 a year. Keep going at that rate and, in 10 years, you’ll have saved $24,000! If $100 from every pay check is too much for you to take on, start smaller and see if you can edge up the amount every several months, or even every year.