GoBankingRates

Savings resolutions for 2022

January 13, 2022

The start of a new year often has us thinking of things we “resolve” to do – changes we want to make – in 2022.

Save with SPP had a look around the “information highway” to see what people are resolving to do on the all-important savings front.

From The Guardian , ideas include getting debt-free, starting a rainy day fund, and to “have a goal” for savings. The newspaper notes that debt is a real barrier to savings.

“There is no point trying to save if you are burdened by costly debts,” The Guardian reports. While savings accounts in the U.K. pay only about 0.2 per cent interest, the article continues, credit card, store card or overdraft debts may be “in excess of 20 per cent.”

Writing for the GoBankingRates blog via Yahoo!, John Csiszar suggests resolutions should include “bumping up your retirement plan contributions by one per cent,” reviewing your spending from 2021, and that you “don’t buy anything until you get rid of something else.”

Increasing your contributions to a retirement account (here in Canada, this might refer to a Registered Retirement Savings Plan (RRSP), or your Saskatchewan Pension Plan account) by one per cent is, Csiszar writes, an achievable goal. If you earn $50,000 a year, and are contributing five per cent to a retirement plan, he writes, bumping that up by one per cent will boost your retirement savings by $41.67 per month.

Back in the U.K., The Express recommends dropping costly habits, “start counting the pennies” (or nickels here in Canada), and following the 50/30/20 rule.

“Allocate 50 per cent for essentials, such as rent, mortgage and bills, 30 per cent for `wants’ such as hobbies, shopping or subscriptions, and 20 per cent for paying off debt or building up savings,” the article suggests.

Finally, MSN Money adds a few more – review your retirement plan contributions (to ensure you are contributing as much as you can), contribute to both “traditional” retirement savings accounts (here in Canada, an RRSP or SPP) as well as tax-free savings vehicles (for Canadians, the Tax-Free Savings Account) and increase any automatic savings you have going.

These are all great strategies. Another one to add is to live within your means. Don’t spend even a nickel more than you earn, because that overspending can snowball on you. Pay the bills, then pay yourself (and your future self), and spend what’s left over. As the bills go down, you’ll have more to save.

And the SPP allows you to make contributions the easy way – automatically. You can set up a pre-authorized payment plan with SPP and have your contributions withdrawn painlessly every payday. It’s easier to spread your contributions out throughout the year in bite-sized pieces than to try and come up with one big payment at the deadline. And the good folks at SPP will invest your contributions steadily and professionally, turning them into future retirement income. It’s win win!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.


Jan 10: BEST FROM THE BLOGOSPHERE

January 10, 2022

New year, new plan to fix your finances?

Writing for the GoBankingRates blog via Yahoo! Finance, Jennifer Taylor suggests that the start of 2022 is a great time to review your personal finances.

“The new year is here and you’re ready to make serious changes to your financial situation,” she writes. “Whether you’re buried in credit card debt, haven’t started saving for retirement or don’t currently have an emergency fund, you’re committed to turning things around in 2022,” the article continues.

She raises an interesting idea, courtesy of Ryan Klippel of Optas Capital – that your budget for this year should be focused on whether or not “you were cash flow positive or negative last year.”

If you were cash flow positive – meaning you had money left over after meeting all your obligations – “great, now set a savings goal for 2022” for the extra money, the article suggests.

If, on the other hand, you were cash flow negative – meaning you have more obligations than money – “spend the time to determine what expenses were luxuries versus necessities, and trim accordingly,” the article notes.

For those of us with debts to address, states Klippel in the article, “sometimes setting smaller goals to start is better than overly ambitious ones. For example, it is much more realistic and digestible to eliminate credit card debt for one card than five.”

The rest of the article offers tips on how to turn your personal financial ship of state around.

  • Save more money: Even if you could save just 10 per cent of your salary per month – leaving you 90 per cent to spend – you’d have a full year’s salary in the bank after 10 years, the article suggests.
  • Retirement savings: Pay your future self first, the article suggests, and make retirement savings a priority, even over saving for kids’ education. Often, people want to do more things in retirement than they have done in their working lives, so more retirement income is positive, the article adds.
  • Don’t let money control your life: It’s easy to get into the cycle of living paycheque to paycheque, but the article advises that “gratification comes when you take control of your life and the power you get when you wake up and realize you have money in the bank.”

Other great ideas suggested in the article include building up your emergency fund, changing your spending habits (via reflecting on how you spend and having a plan to change your ways), and paying your credit card in full each month.

This last one is particularly good advice. There are a lot of us who can’t pay off credit card balances. That basically means we are “buying” things that we won’t pay for in full for years, all while getting charged double digit interest. Often, one ends up in a “pay the bank first” scenario, due to rising minimum payments on credit card balances. Turning this around so that you pay the thing off in full will mean you can bid a fond farewell to all that compounding interest – and create a new pool of cash that you can put away for your future retirement years.

As we start a new year, your financial planning should for sure focus on retirement savings. The Saskatchewan Pension Plan equips you with a do-it-yourself, end to end retirement system that takes your contributions, invests them, and turns that nest egg into future retirement income. You can even get a lifetime pension through SPP’s family of annuity options. Find out how SPP can help you pre-build a secure retirement!

Written by Martin Biefer

Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.