If you want to start saving, one of the best places to start is to determine what your savings goal is. You can do this by using our savings calculator.
How to Use The Savings Calculator
To start, you will need to input the amount of your current savings into the calculator.
Then, decide how many years you plan to save for. You can choose from 1 year to 100 years. After that, input the rate of return for your investment or savings account. For example, if this plan is based on your savings account with a 4.50% interest rate, enter that into the “rate of return” section. You can then choose how much and how often you want to add new money to your investment.
You can add money weekly, bi-weekly, monthly, quarterly, or even once a year. The amount of money you put in is also up to you. Finally, choose whether your interest compounds daily, monthly, quarterly, or yearly.
In the end, the calculator will show you your total savings for the number of years you entered. The graph at the bottom of the calculator will also show you the amount of money you will have each year. And not to forget to mention, you can also calculate your life insurance or your home budget, among other things.
Ways to Meet Your Savings Goals
High-interest Savings Account (HISA)
A HISA is a great way to save money. As it sounds, a HISA is a type of account that has a higher interest rate than typical accounts. Typically 20% to 25% more. To offset the cost of these accounts, banks may charge higher fees or have tougher requirements. You may be required to maintain a minimum balance or pay to transfer funds, for example.
Tax-Free Savings Account (TFSA)
A TFSA is one of the newest types of savings accounts, as the program only began in Canada in 2009. It is meant to help Canadians who are over 18 set aside funds that will not be charged tax. The funds that are deposited into the TFSA are non-tax deductible as no tax will be charged on it, even when it is withdrawn.
You can only deposit a certain amount into your TFSA every year. This is called your contribution room. Everyone’s contribution room is different as it accumulates every year. If you exceed your contribution limit, you will have to pay a 1% per month penalty tax.
Guaranteed Investment Certificate (GIC)
A guaranteed investment certificate is a type of investment that Canadian banks and trust companies offer. It guarantees specific rates of return for a fixed amount of time. GICs are insured by the government, making them a safe and reliable investment. As it is a guaranteed investment, Canadians tend to purchase GICs for long-term retirement savings.
Since it is a low-risk investment, the rate of return tends to be lower than other investments, such as mutual funds or stocks. That being said, it is good to purchase a GIC in addition to other, higher-risk investments.
Registered Retirement Savings Plan (RRSP)
If you have started your retirement planning, you may be considering an RRSP. An RRSP is a type of account established with the Canadian government. You and/or your spouse can contribute to your RRSP, and it won’t be charged any tax until you decide to withdraw it. When you withdraw the funds, it will be charged the marginal rate at the time of withdrawal.
Contributions to your RRSP can be deducted from your taxes, which will help reduce the tax you pay. Like with your TFSA, there are contribution limits to an RRSP.
The Bottom Line
When you are young, the need to save does not seem important. Credit cards exist, so why save? As you get older, however, you will realize that you may have to rely on your savings one day. It’s never too early to start, and a good way to do so is with our Savings Calculator.
Savings that you already have can be inputted into the calculator. Then, you simply need to include all of the necessary information into the calculator to create a personalized savings plan. The calculator will help you by showing you how much you need to save each week, month, or year, to reach your goals. Moreover, online calculators can help you deal with personal debt and also tell you your net worth.
The Canadian government does its best to also help citizens to save for their future. They offer TFSAs and RRSPs to ensure you are saving as much as you can without worrying about tax. Banks offer HISAs and GICs for those looking to make low-risk investments.
Ultimately, there’s plenty of ways to save for your future; you just have to find the method that works best for you. As a first step, try our free calculator. The calculator will help you determine just how much you could be earning in 5, 10, or even 50 years!