It’s an age-old question – is it better to focus on paying off your debt, or should you make saving money for the future a higher priority?

Save with SPP took a look around the blogosphere to see how the experts are weighing in on this topic.

At Forbes magazine, writer John Egan calls saving versus paying down debt “a balancing act that many of us face.”

His article suggests that the answer to that question “depends, in part, on whether you’ve already got enough money stashed for emergency savings, and how much high-interest debt you’re carrying.” For some, the answer may be a “balanced approach” where you are doing both things – saving and paying down – at the same time, he continues.

His article quotes Kansas City-based certified financial planner Dan Mathews as saying that you also have to look at the “opportunity cost” in this situation.

Huh?

“If you’re likely to earn six per cent in annual returns from retirement savings, but you’ve amassed credit card debt with an APR (annual percentage rate) of around 18 per cent, your best bet likely will be to first clear out the debt. Why? Because paying 18 per cent credit card interest will more than cancel out the six per cent you’ll earn from your savings,” the article explains.

The article suggests that you set up an emergency fund – enough to pay for six months of living costs – first. Then, when taking on debt, the article recommends that you “first pay attention to high-cost debt without any collateral, such as high-interest credit cards or a high-interest personal loan.”

If any of your debts are overdue, they should have super-priority, the article adds.

For saving, the article suggests that you focus your efforts on tax-efficient savings. Here in Canada, that would be contributing to a registered retirement savings plan or registered pension plan, or a Tax Free Savings Account. The point Forbes makes is that these accounts, in addition to offering you investment returns, will also offer you tax savings.

At Sun Life Canada, the authors suggest that if your debts are so bad that you can’t make the payments, a debt consolidation loan may be a first step.

But when tackling debt, the article suggests, there are some strategies to consider.

“It’s best if you pay off debt with the highest interest first,” the article advises. This, the article continues, usually means credit cards, and if you ignore them, “it will end up costing you dearly in interest.”

“Let’s say you make only the minimum payment (3.5 per cent) on a $5,000 credit card debt. You would end up paying $3,992.03 in interest over 187 months, or 15.6 years,” the article warns.

Sun Life also makes the same point about focusing your savings plan on tax-deferred or tax-free vehicles, like RRSPs and TFSAs.

The article gives the example of Chantal Pelletier, who has a mortgage she began four years ago at a rate of four per cent. The article suggests that investments in her RRSP and TFSA are a better choice than focusing on paying off the mortgage.

“Her investment earnings are also tax sheltered. And they would grow through the magic of compound interest, which is interest you earn on interest. In Chantal’s case, she’s better off saving for retirement, using registered investments. That’s a better strategy for her situation than paying off her mortgage faster,” the article concludes.

The folks at Nerdwallet see a hybrid approach as the best bet.

“Paying off debt can feel like it has to be your only priority,” their article begins. “But you should do some saving while you’re paying down debt. Even a small cushion of emergency savings can keep you from going deeper into debt when an unexpected expense pops up. And you don’t want to miss out on free money from an employer match on retirement savings if it’s available.”

That’s a good point – if your employer has a retirement program of some kind, be sure to take part, because you’ll get a tax deduction for contributions and as well, there may be an employer match to increase your savings rate.

The article suggests a “50/30/20” budget approach – this means half of your money goes on “needs, 30 per cent on wants, and 20 per cent on savings and debt paydowns beyond minimums.”

Your savings should operate under a “pay yourself first” method, where money earmarked for savings is “directly deposited… into a savings account.” This is better, the article continues, than hoping you’ll have something left over after the end of the month to put into savings.

The message thread that is clear from reading all these articles is that you need to be on top of both your debts and your savings assets. All three articles recommend a budget that sets out how much you want to save but also how much extra you want to pay on your debts. No matter how you target debt – smallest balance first, or highest interest rate first – the idea is that when one debt is paid off, the money you were paying for it should be applied to the next high-priority category.

Another point that you pick up from reading these articles is that you should always direct something – even a small amount – towards long-term saving. You can, the articles all say, ratchet that amount up when debts begin to clear up.

The Saskatchewan Pension Plan offers you a lot of much-needed flexibility on your savings efforts. Unlike other pension plans, SPP allows you to decide how much you want to contribute. You can increase or decrease your savings rate as you see fit. SPP will do the hard work of investing your savings via a professionally managed, low-cost pooled fund. And at retirement, your options include getting a set monthly annuity payment for life, or the more flexible Variable Benefit, where you decide how much you want to take out (or leave in).

Check out SPP today!

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A new year – 2025 – is upon us. Traditionally, it’s a time for making resolutions – maybe to hit the gym more often, to finally quit smoking, and so on.

Save with SPP, often with money on the mind, took a look around to see what sort of resolutions people are considering making when it comes to saving money.

The folks at the GoBankingRates blog have a few ideas; the first is to bump up your retirement savings by one per cent.

“One simple way to improve your long-term finances with minimal effort is to bump up your retirement plan contributions in small increments,” the blog explains. Let’s say you are earning $50,000 and contributing five per cent towards a retirement savings account. In Canada, that could be a registered retirement savings plan (RRSP), Tax Free Savings Account (TFSA), a Saskatchewan Pension Plan (SPP account) or any other savings vehicle where you control how much goes in.

Bumping that up by just one per cent means “you’ll be kicking in an extra $41.67 per month,” the blog explains. “That’s a money-saving resolution you could easily keep,” the blog continues.

Other ideas in this article include starting an emergency fund and the golden rule of “eat all the food in your house” to avoid food waste.

“Having an emergency fund is essential for keeping yourself out of debt when you face unexpected expenses,” the blog advises. Start small – maybe put away $100 a month. “Within a year, you’ll have $1,200…. enough to cover most short-term emergencies you’ll face.”

“If you want to save money… simply check your refrigerator every day for what you have and what might be going bad soon and eat that instead of picking up something new from the grocery store or a restaurant,” the blog advises. This “eat all the food in your house” rule is one our mother used to swear by; we would “use up” the food in the fridge before going out to buy more groceries, avoiding waste.

The Positively Frugal blog over in the UK offers up a few more ideas.

Getting out of debt is the blog’s number one resolution.

“Without a doubt, one of the absolute best financial goals to make this year is to get rid of your debt once and for all! I am a huge proponent of being debt free — not only is it good for your finances, but it’s good for your psyche,” the blog tells us.

“This year, challenge yourself to lose the burden of some of your debt. If you want to take it up a notch and brave the task of setting one of the best long-term financial goals, set a resolution to become completely debt free,” the blog advises.

Other suggestions – in the New Year, start paying off your credit cards in full each month (if you haven’t already begun doing this). “The amount you will save in interest and fees can add up to a nice little pile of cash, which can be used to kick start a savings account,” the blog suggests.

Another money-saving resolution offered up by the blog is to try and eat out less.

“If there is one area where most people can shape up their finances, it’s on the amount they spend eating out,” the blog notes. “You don’t have to completely eliminate eating out, but you can make a money resolution this year to spend less on the meals you eat at restaurants,” the blog adds.

Finally, the gang at Nerdwallet provide us with a few retirement-related savings resolutions.

First, the blog recommends, you should set a “goal retirement age.”

Figuring out when you want to retire will help you to estimate how much money you’ll need to have saved up by the time that day rolls around,” the blog tells us.

“Let’s say you’re 30 years old now and you want to retire by age 65. That gives you 35 years in which to save. So how much money will you need to retire at age 65,” the blog continues.

“A common rule of thumb is to aim to save at least 70 per cent of your annual pre-retirement income. Then, multiply this number by 25. Why? Because another rule of thumb says it’s a good idea to plan for 25 years of life after retirement — perhaps more if you retire early. Finally, you’ll want to subtract any pension income you plan to receive,” the blog states.

The blog also suggests that you automate your retirement savings.

“Once your (retirement saving) plan’s in place and accounts picked out, your next step should be to automate contributions. This ‘set it and forget it’ way to save ensures you’re constantly putting money towards your retirement plan with no little effort required on your part. It’s perfect for those who might be forgetful or be tempted to spend extra funds if they’re not allocated immediately,” the blog advises.

“Automating contributions to your retirement accounts should be easy, with financial institutions allowing you to set it up online. You can choose how much you want to contribute and at what frequency,” the blog adds.

Final word from Nerdwallet is to get started – today!

“It’s never too early to start thinking about retirement. The sooner you start, the more time you’ll have to save, and maximize those savings through registered plans, investments and tax-free accounts,” the blog concludes.

One savings tip we will add is one learned from one of the books reviewed for writing this blog. Let’s say you look at your existing budget, and find there is no room to save anything. The book suggested taking one per cent of your take-home pay off the top and putting it into savings, then managing the bills. Once you’ve managed that for a while, bump it up to two per cent, and so on. This one worked for us back when we were still grappling with a mortgage and debt.

The Saskatchewan Pension Plan is a defined contribution pension plan open to any Canadian with available RRSP room. Like an RRSP, your contributions to SPP are tax-deductible. SPP takes your savings and invests them in a low-cost, professionally managed pooled fund. At retirement, SPP members can choose among such options as a monthly lifetime annuity payment or the more flexible Variable Benefit.

Check out SPP today!

Join the Wealthcare Revolution – follow SPP on Facebook!

You have been planning a wedding for months. The venue has been booked, invitations sent and the flowers selected. Then an immediate family member becomes very ill and the event has to be postponed. Or the banquet hall goes belly up and a hefty deposit is lost. These unfortunate events happen rarely, but when they do the extra expense can put a strain on an already tight budget.

According to an unscientific survey by Weddingbells magazine, there were 162,056 weddings across Canada in 2014, each with an average price tag of $31,685. Furthermore, a survey conducted in the same year by a Bank of Montreal subsidiary suggested that people in Saskatchewan and Manitoba planned to spend, on average, $27,200 on a future wedding. That figure was the highest in the country.

You insure your car, your home, your life and your health. But you may not be aware that you can also insure your wedding. Coverage may range from a wedding guest’s slip and fall to stolen wedding gifts to extreme weather on the day of the event that causes 50% of the guests to be unable to attend the wedding or reception. But there is a specific exclusion if a bride or groom gets cold feet and does not show at the last minute.

Pal Insurance Brokers Canada Ltd. is one company that offers Weddinguard insurance online. This insurance provides financial protection against many of those things that can go wrong with your wedding plans, subject to policy wording. You are eligible if you are getting married within 1 year and the reception date is at least three days in the future. You can see a pdf of the full policy and what it does and does not cover here.

You can get an online quote here. While researching this article I completed the online questionnaire for the four different levels of coverage and got the following pricing information, including up to $1 million of liability coverage.

Weddinguard Insurance

Potential reimbursement up to stated amount + premiums
	Silver package	Gold Package	Diamond Package	Platinum Package
Cancellation expenses	$4,000	$10,000	$30,000	$50,000
Honeymoon cancellation	$2,000	$2,500	$5,000	$5,000
Loss of Deposit	$2,000	$3,000	$5,000	$6,000
Wedding photos and video	$2,500	$5,000	$7,000	$7,500
Loss or damage to bridal attire	$2,500	$2,500	$5,000	$7,000
Wedding presents	$5,000	$5,000	$7,000	$8,000
Rings	$1,000	$1,500	$3,000	$5,000
Cake and flowers	$2,000	$2,500	$5,000	$6,000
Wedding stationery	$1,000	$1,500	$3,000	$4,000
Rented property	$1,000	$10,000	$15,000	$20,000
PREMIUM	$250	$400	$650	$950

For destination weddings, PAL says underwriters must manually review the request for coverage which can take three or four days. There is also a special exclusion for Florida, Georgia and Caribbean weddings due to hurricane force winds in August, September and October.

Matt Taylor, general manager for PAL Insurance company recently told The Canadian Press that PAL sells between 1,500 to 2,000 wedding policies each year. Front Row Insurance also offers wedding insurance with policies starting at $105 and up to $5,000,000 in General Liability Coverage to cover damage to the wedding venue and injury to third parties.

Lacie Glover who blogs at  nerdwallet offers the following tips for buying the right policy for your wedding:

• Look over your existing homeowners and renters insurance policies — or those of any relatives hosting or paying for the wedding — to see whether existing liability insurance will cover you.
• Check the deductible, which is the amount deducted from a claims check. If one vendor doesn’t show up, and the deductible is higher than the deposit for that vendor, you’ll swallow the cost for that lost deposit.
• Look at coverage limits. For cancellation coverage, you’ll want the limit to be close to your wedding budget, including the honeymoon.

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Written by Sheryl Smolkin
	Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.