Where the money went in 2010: Part 4 – Savings

When 2010 started, saving money was not on my radar. I had one mission – retire my line of credit/consumer debt. Early in the year, I struggled with whether or not to put all my eggs in my debt basket, or to put the odd bit into longer term savings.

The recommendation for savings is approximately 10% for long term savings.

In 2010, I primarily focused on savings for post-secondary education for my two girls. Eventually, as a secondary goal, I realized I needed to re-start contributions to my RRSP, even if they were woefully inadequate. The girls are heading off to school either in 2011 or 2012 or both. My retirement is a bit of a longer way off, however, will be much costlier.

In 2010, my total contribution toward long-term savings was $6,700, or 7%.

Each daughter received $3,000 and I managed to tuck away $700 to my RRSP.

Here’s a bigger picture, however:

My RSP: My contributions this year were a modest $700. I know that’s not nearly enough. However, my RSP portfolio from December 2009 to December 2010 has increased $11,500, or about 15%. That’s a MUCH better story to tell. I had made some changes to the portfolio early in the year, and apparently those were good decisions. I really don’t pretend to know much about investing, if anything at all. I’d like to say I want to learn more, but somehow it doesn’t seem all that exciting. I better get excited soon, because those investments will keep me off the streets in my old age. There’s many times I think I’d like to buy stock in something, and frankly, I just don’t know how.

The youngest’s RESP: Last December, the balance was $9,900. My contributions this year were $3000. The Canadian Government, through their Education Savings Grant, pitched in another $550. The money, which is in a very conservative, very safe money market, gained about $40. She now has just over $13,500. With tuition quoted at about $6,000 per year, and another parent to pitch in, I’d say we’re just about there with her post-secondary savings. Amazing. Actually didn’t think I could pull it off! Just about time too, she’s in Grade 12!

The eldest’s TFSA: Although the eldest has completed college (and I’ll be able to say officially it’s paid for once my line of credit is really at zero), she’s looking at another 5 years of post-secondary (Nursing + 1 year specialization as Diabetic Educator). Again, with a $6K per year price tag, she’s looking at $30,000. Since her Dad and I already paid for one education, we want to help out on her goals, but will need her to have a more significant financial responsibility too. She’s too old to have an RESP, so her TFSA is her post-secondary savings. With her new, full-time job, she can go after this reasonably aggressively. My contributions were $3,000, and she has pitched in another couple of thousand. I’ve suggested to her that she needs to have $12K saved for September 2011. In my mind, there’s no reason she can’t accomplish that.

For 2011, my goals are to start getting more serious about savings. My debt will be gone, and I’ll be better poised to focus more aggressively on my own long-term security. For the girls, my commitment to them will remain the same – $3,000 each.  For myself, however, I aim to contribute $3600 to my TFSA and another $3600 to my RRSP. I also want to pack away an extra $1,000 toward my mortgage debt. Yesterday, I sent twelve post-dated cheques in the mail to my bank branch, incase I changed my mind and thought it was too aggressive. While that $1,000 isn’t really long term savings, per se, it will save me a bundle of interest in the long term.

If I achieve all that, I will more than double my savings commitment for 2010. Frankly, I’m excited about working on saving money and earning interest, rather than paying off what I’ve already spent, and paying interest.

Tomorrow: Part 5 – Debt Repayment

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4 responses to this post.

  1. You are doing a fantastic job putting the money away in RESPs. Am so proud of you for all you accomplished this year!

    Reply

  2. I’m not sure of your tax bracket, contribution room and all that, but wouldn’t putting the money into RRSP’s vs. paying off the mortgage or TFSA’s be a better tax move?
    I second Jolie, fantastic job!

    Reply

    • Jacq, I appreciate you weighing in on that. I was actually wondering if it made ANY sense at all to put money in a TFSA or to whack a bit more against the mortgage. I pondered your comment for a day or so. As I’ve asked myself what my motivation is, I think it’s fair to say it’s still a bit of old-fashioned fear. Money in my TFSA is more liquid, as you know. If something happens that I need to get at a few grand – there it is. Still, if I’m a better budgeter in 2011 than I was last year, I should make certain that I tuck away some “what the heck was that – money” and not cheat myself out of the tax advantages and obvious other benefits of investing in my longer term future.

      You’ve encouraged me to return to the 2011 budget and just play a bit. I appreciate your keen eye and solid advice!

      Reply

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