Getting Serious About Savings in 2014

Piggy Bank

With Christmas literally just days away, and the holiday season taking most bloggers and readers away from their computers, I decided this would be the best week to talk about some of the goals I’ve been plotting for 2014. After this week, I only have two more posts planned for the rest of the year, so now seems like the best time to tell you just how different my budget is going to look come January.

On Wednesday, I’ll share some of the new categories you’ll see next month, which forced me (for good reason) to reorganize my overall budget. Today, however, I want to share the savings goals I’m making for myself. Similar to when I was paying down my debt, I’m going to strip anything that’s unnecessary out of my budgets next year. My goals are ambitious, but I need to get serious about saving money in 2014. Here are my plans:

Emergency Fund (TFSA)
Save: $642/month = $7,704/year

A few weeks ago, I had a great chat with Gail about where I should be investing my savings. We both agreed that my Emergency Fund should be in my TFSA, which is where it’s always been, so I’m going to continue with that next year. I’m currently using ING DIRECT Canada’s TFSA, which is earning 1.40%. My goal is to have a $10,000 Emergency Fund at the end of 2014.

By the end of this year, I’ll have $2,300 saved, meaning I’ll need to save $7,700 next year to reach my goal. If you divide that by 12 months, you can see I’ll need to save $642 (rounded up) each month to make it happen. In the spring, I plan on putting my tax return (hopefully $1,000 or more) into my Emergency Fund, and then I’ll recalculate how much I need to save each month going forward.

Retirement (RRSP)
Save: $417/month = $5,004/year

The second thing Gail and I talked about was the TFSA vs. RRSP argument. Her advice: because I make more than $40,000/year but do not have a company pension plan, I should save for retirement in my RRSP (which I currently do). If I did have a company pension plan, it would make more sense for me to max out my TFSA each year and then invest in my RRSP, but that’s not the case.

One other thing I’ve been doing some reading up on is mutual funds. Yes, I invest in them. But this month I made the switch to ING DIRECT’s Streetwise Balanced Growth Portfolio, because Rob Carrick told me to. Actually, it was because I had a couple chats with friends, researched the fees (1.07%) and asset allocation, and it quickly became a portfolio I felt comfortable investing it.

Next year, I want to contribute $5,000 to my RRSP. If you divide that by 12 months, you can see I’ll need to save $417 (rounded up) to make it happen. Since I’ve been contributing $330/month for the last four months already, I feel comfortable increasing my monthly contribution to this amount. And I can’t wait until my Emergency Fund is at $10,000, so I can contribute even more!

Budget: $75/month = $900/year

This last goal has nothing to do with saving money for myself, but giving more to others. I typically donate between $300-400/year to various causes – usually ones my friends are fundraising for – but in 2014 I want to start making a monthly donation to at least three Canadian charities.

First, as a long-time volunteer dog walker, I know how much love and care is given to the animals at the Victoria BC SPCA. And even though I don’t live there anymore, I want to continue to support the work they do. So, I’ll be donating $25/month to the Victoria BC SPCA in 2014.

Second, Indigo’s Love of Reading Foundation has always been a cause after my own heart. What I really want to do is give books to Moody Elementary, in Port Moody, but I can’t do that until September 2014. In the meantime, I’ll be donating $25/month to the Love of Reading Foundation.

Finally, this year, I’ve been touched by a handful of stories about how the BC Children’s Hospital has helped my friends’ children – even saved their lives. And I know my college roommate has had multiple heart surgeries there, since she was just 2 years old. So, I’ll also be donating $25/month to the BCCH in 2014.

I’ll continue to donate money to any causes my friends are fundraising for. And I’m still always on the hunt for this non-profit that probably only exists in my dreams… you know, one that promotes financial literacy for kids/teens? If I ever find it, it can have all my money. Just take it!

In total, it looks like I’m planning on setting aside $13,608 next year; that’s nearly a third of my net income. Sounds a little scary, but I’ve lived on two-thirds of my income before and I can do it again.

Have you started to map out any savings goals for next year?

EXTRA: If anyone uses my Orange Key (38888248S1) to open an account with ING DIRECT Canada this month, we’ll each get a $50 bonus, and I’ll donate mine to one of the three charities listed above. Email me and you can choose!

Flickr: bradipo