Ways to Make the Most of your Pandemic Savings

By Randall Orser | Budget

In the past year many of us have travelled less, commuted less and spent less on entertainment (and Starbucks!) and for those of us who are working at home and still earning the same salary we might  be finding that we have more money to save.  According to Statistics Canada Canadians saved 12.7% of their net income in the fourth quarter of 2020 which is up from only 2% in 2019. Canadians are also becoming more cautious with their money, a study from Scotiabank shows that 58% of those who responded to their survey were putting extra money away and 38% were contributing to investments. This is seen by experts as a dramatic shift in savings.  

For those people who are lucky enough to be in this position experts advise taking advantage of this opportunity to create a financial plan that includes paying down debt. 

  1. Credit Card Debt rose steeply in Canada during 2020 though it it mostly returned to normal by the end of the year payments made did not increase.  Experts recommend paying credit card debt off first.  The best thing you can do for yourself is to pay off debt especially any with a double digit interest rate.
  2. Create an Emergency Fund it will help to cushion the effects that the pandemic may have on you.  It is recommended to keep enough money in your emergency fund to cover three to six months of expenses should you lose your job.  This emergency fund should be set up so that you have easy access to your money should you need it.  Contributing to a RRSP or TFSA are places where you can create an emergency fund and invest your savings tax free.  
  3. If you are able to top up your RRSP contributions this is a no-brainer especially if you are in a higher tax bracket.  Your notice of assessment will tell you what your contribution limit is.  It could be also an opportunity for you to save the down payment on your first home by contributing to a TFSA. 

If you are not sure which is the best way for you to make the most of your savings you should contact a financial advisor who will be able to help you.

From an article by Michelle Singerman

Follow

About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.