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Ask the experts

Ask the Experts – January 2020

A lot of people don’t like to talk about money. Some people are afraid of saying something wrong or not knowing an answer, so they say nothing instead. Other people believe that money is a private matter that you should only discuss with very close members of your family. To others, it just seems rude to talk about money and finances.

While a lot of people don’t discuss money, we feel it’s important. When you talk about money, budgets, and finances, you learn new strategies and discover tips that can help improve your financial situation. That’s why, each month, our financial experts answer some of the money questions we receive.

If you have a question for our team, ask us online on Facebook, Twitter or through our website.

The questions here have been condensed or rewritten for clarity and simplicity.

I find it difficult to save money. What tips can I follow?

Saving money is important, but it’s also not easy. The first step is to look at your budget. You should have a category in your budget for savings. Treat this just like any other expense and know that you have to “pay” a certain amount into the savings category each month.

Automating this process can be incredibly useful. Most financial institutions will let you set up automatic transfers into a different account. If you set it up so that a portion of your paycheque is immediately transferred to a separate account, you soon won’t even miss the money. It will simply grow over time.

If you’re finding it difficult to find enough money in your budget to put aside for savings, you’ll need to make cuts to some of your expenses. Your variable expenses are a good place to start. These are costs that you have some control over, like groceries, entertainment, clothing, etc. Look at how much you spend on these purchases each month and then see if you can reduce this amount. Whatever money you’re able to cut from these categories can be applied to your savings.

How much money should I have in my chequing account and where should I put the rest?

Managing your money is important. You want to make sure that you have enough in your standard chequing account to pay for all your bills and afford monthly expenses. Many banks also charge a monthly fee on chequing accounts, but they will often waive this fee if you keep a certain amount in the account. Figure out what this amount is and try to keep at least that much in your chequing account. Paying $10-15 in banks fees each month doesn’t seem like a lot, but over a year that $15 a month adds up to $180. You’d rather have $180 in your account than give it to the bank, right?

It’s generally a good idea to keep only the minimum required in your chequing account. Once you figure out how much you’ll need to pay your monthly expenses and how much you’ll need to avoid paying fees, it’s a good idea to put the rest of your money somewhere else. Chequing accounts don’t earn very much interest, so you can make your money work harder by storing it elsewhere.

As for where you keep the rest of your money, that will depend on your situation, your goals, and your risk tolerance. Investing your money gives you a greater ability to earn interest, but it’s also riskier. Speak to your bank or a financial advisor for specific tips that apply to your situation.

When it comes to your emergency fund, it’s important that this fund is accessible when you need it and that it’s not in a risky investment where you could potentially lose it. You’ll need this money if an unexpected expense comes up. However, it could be a good idea to store your emergency fund in a different account (or even in a different bank entirely) to make it harder to dip into for non-emergency purposes.

This is another reason why it’s a good idea to only keep the minimum in your chequing account and the rest somewhere else. Most people are tempted to overspend when they have money in their main account, but if they keep it elsewhere, they’re often more conservative with spending since they don’t want to have to dip into another account.