Before moving on to become a Credit Risk Manager with First West Credit Union (Island Savings' parent company), Kyle Douglas was the branch manager at our Westshore Branch. We caught up with Kyle to find out how he personally saves to reach his financial goals.
What is your number one savings tip?
Pay yourself first. Just like you have rent or mandatory bills, set goals and set up those savings buckets as mandatory payments. Just as your loan or rent payment comes out on your payday, so should your savings.
What are some of the goals you're saving for now and how are you saving towards those?
Each year, I set some goals and set up different accounts with automatic deposits on my paydays. For example, this year I am saving up for a trip to Bali so I have set a budget and have that amount being transferred to a savings labelled ‘Travel’ every two weeks on my payday.
What are some of the processes you’ve automated?
Besides setting up the reoccurring transfers for my savings, I have also looked at any bills that are imperative or easy to forget and have set them up pre-authorized.
I have automatic transfers for the following:
- Emergency fund
- Kids accounts
- US Savings
In regards to automating, I tend not to set up a lot of pre-authorized debits due to some of the restrictions on dates from some companies. I always try to align my payments with my pay schedule so if there is a bill payment that I can’t do bi-weekly, I will self-save and pay regularly instead of their pre-authorized debits on dates that don’t align. On top of that, if all possible, I try to find alternatives to writing cheques to shy away from those one offs that you have not left enough money in your account for.
I always check my account on a pay day and the day after all the automatic transfers. I set my goals and budget once per year and regularly review it to make sure on the surface I set a realistic budget and goals. If I have not set a realistic budget, I will take the time to review my actual spending in more detail.
Further Reading: RESP Grants Guide
What have you done or what would you do if you had a large chunk of cash, either from selling a home or getting an estate, an unexpected tax refund or a bonus?
Here are a few thoughts to address each situation:
- Getting a bonus: I have never budgeted on getting a bonus. Any bonus I receive goes into my RRSP and I have typically benefitted from a larger income tax refund. That refund I then consider my bonus and that goes into my vacation or fun money.
- Selling a home: rule number one is that selling and buying homes costs you money so try to pick a home that is meant for a longer term. Second is that if you do sell a home, try to resist the temptation to take proceeds from it to buy furniture, go on a vacation, etc. as this will cost you over the long term in paying down your home.
- If you happen to get a larger amount of money from a refund or estate, I would recommend sitting down with someone to discuss your goals. You need to be clear on what is most important, paying down debt or savings. Of course you always need a balance of living life and saving for the future so that is always up to you to decide how that looks. Have some resources in case of an emergency, save for your vacations, start whatever you can as early as you can for you retirement (even $25 per paycheque), have insurance and start it early (when it’s cheaper). Other than that, you need to decide how serious you are about your retirement plan.
Further reading: Benefits Of Your RRSP
Right now I do not have much for term deposits in my savings. I have more aggressive savings in my long-term retirement savings (ie: mutual funds, stocks). That being said, if don’t want to start off your savings in mutual funds, there are some great options from the winwin term to start your long-term savings. Also, if you have money sitting in a TFSA that won’t be used for 2-3 years, a term deposit is most likely the best choice for that investment.
Further reading: Complete Guide To Your TFSA
How did you first start saving?
I got my first job in a credit union when I was 20. My first manager taught me to pay yourself first so I started with a small deposit to my RRSP each paycheque and not budgeting for my bonus but putting that directly into my RRSP as well.
Is there a habit that you changed that transformed the way you started saving?
If you have never tried the cash diet for a month, do it. Take one month where you strictly budget out your mandatory costs and then put the rest aside to only use cash or your debit card. This will show you one of two things: either you have set a realistic budget that you can stick to or where you might be spending too much money (Starbucks, eating out, etc.).
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