5 Ways to Start Your Nest Egg
Without Extra Money
Starting to save for retirement can sound like a big undertaking. We all know how important it is to have retirement savings so we can live comfortably when leaving the work force. However, it may feel intimidating to try and start from zero when contributing to your Registered Retirement Savings Plan (RRSP) or Tax Free Savings Account (TFSA). Thankfully, it does not have to be nerve-wracking. We want to share five ways you can start saving for retirement, even if you don’t feel you have any extra money available. These tips can help you get on track and start your habit of saving for retirement.
Automating your savings is a great first step to building a nest egg. When you set up money to be automatically transferred to your RRSP, TFSA or another savings account, you will hardly notice it is gone! You can customize your schedule as you please.
For instance, you could transfer $100 every time you receive a paycheque, or $50 a week. Determine a transfer schedule that will work best for you and put that in place. Even starting with a small amount is a great first step for saving for retirement.
Put your tax refund to good use
Every year, tax season comes around and, if you usually receive a tax refund, you already have a great way to start saving for retirement. A tax refund is the perfect contribution to your RRSP, TFSA or savings account. This is because it is money that you normally would not be receiving from your usual income each month. If you put this money straight into your RRSP, TFSA or savings account, then you won’t even notice it is gone. Keep in mind if you put the money in your RRSP that you will receive an income deduction for that amount in your year of contribution or if within 6o days of a calendar year you can carry-back the income deduction to the prior year. In this case, consider putting any additional tax refund as a result into your RRSP for the next year as well.
This deposit will give you something to build on and, months down the road, you will be glad that you put it away.
A great way to start retirement savings is with cash that you have earned back. This can be cash-back credit cards or cash-back websites. Cash-back credit cards are a great option, if you are diligent about paying off your credit cards each month and only use them for purchases you would be making anyway. These cards can give you points back when you make purchases on them, and you can redeem those points for cash. This money is perfect to go towards starting your nest egg, as you won’t have it factored into your budget. Also, some credit cards may offer sign-up bonuses. These cash bonuses are also a great way to start saving.
There are many different cash-back websites to choose from. These sites can give you money back when you make your usual purchases through them, instead of through the store itself. This requires some research, as you want to be sure that this is a good option for you. Make sure to read the fine print, if you are signing up for cash-back websites.
Live beneath your means
Adjusting your budget can result in money you didn’t know you had. We suggest reviewing your current budget and looking for ways you can cut back, or creating a budget if you don’t have one yet. If you can find a way to save an extra $100-$300 a month, you are on a great path to success. That amount each month can really build up and start a great nest egg for your retirement.
One way to test yourself is to try and live off of your last paycheque as long as you can. Make a plan for the money that you have and create a specific budget to see if you can make it past your next paycheque. It may be tough, but it will show you where you can afford to save more, whether that be cutting back on entertainment costs or eating out. We often don’t realize how much we spend on these each month and also, when cutting back, you can find cheaper or even free alternatives.
Bank opening bonuses and referrals
Bank offers are another great way to kick start your savings. Most banks offer opening bonuses on savings or chequing accounts. If you can find these types of offers and simply put these bonuses straight back into an RRSP, TFSA or savings account, you are moving in the right direction.
Banks also usually offer referral rewards. This could mean that if you refer friends to the bank and they open an account, you receive a cash bonus. We suggest talking to your bank and seeing what they offer. These are easy ways to start saving without making changes to your spending.
You may think that it is impossible to start saving if you don’t have any extra money, but we hope that some of these tips may work for you. Although it seems tough, it is possible to make contributions to your RRSP, TFSA or savings account without having extra income coming in each month by budgeting and planning. Take advantage of helpful offers and challenge yourself with budgeting and increasing your savings.
Why start now? See our blog post: When is the Best Time to Start Saving?
Please reach out if you would like more information on starting your nest egg without any extra money!
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