Family life

3 ways to save your money

Here's how to be your own financial adviser in three easy steps

By Dan Bortolotti
3 ways to save your money

When my daughter was born in 1994, I knew little about money. But I had a vague idea that we should put aside something every month for Jaimie’s education — and it worked. When she starts university next September, the savings mean she won’t have to worry about student loans.

Today, as a financial journalist and blogger (, I know a lot more about investing, but I still talk about the importance of that lesson. Whether you’re building an emergency fund or socking away money for retirement or your child’s post-secondary schooling, your plan can be simple and imperfect, as long as you have one.

Rainy day fund

What you need: Instead of reaching for your credit card, you’ll be able to reach into this savings account when the roof leaks or your car needs new brakes. It should be 100 percent safe and pay a decent interest rate, while still allowing you to access your money anytime you need.
How to do it: You can’t go wrong with a high-interest savings account through an online bank such as ING Direct or Ally. Because they have few bricks-and-mortar locations, their overhead is low — and they pay you more interest on your deposits. Set up an automatic contribution plan that takes money from your chequing account every payday.

Retirement nest egg

What you need: Admittedly, it’s tough to get excited about saving for a time in your life that’s decades away — especially when you have so many young-family expenses on your plate as it is. But putting away even a little will help your future and your present, since contributing to an RRSP helps reduce your income tax bill. You need a long-term investment fund that will grow your money, is easy to manage and doesn’t charge high fees.
How to do it: Start by opening an RRSP account with your bank’s online brokerage, which will allow you to buy mutual funds without an adviser. Then choose a single, low-cost balanced mutual fund, which holds a mix of stocks and bonds — everything you need to save for your golden years, in one place.
Look for a fund with reasonable fees — the management expense ratio, or MER, should be one percent or less (it’ll be stated on the prospectus, or fund description). Two excellent choices are the Mawer Canadian Balanced Retirement Savings Fund ( and the Phillips Hager & North Balanced Fund ( As long as you add a little money every month, you may not need to do anything else to prep for retirement.

Child's education fund

What you need: An investment fund that gets more conservative as your child gets closer to high school grad.
How to do it:  A Registered Education Savings Plan (RESP) is the best way to save for post-secondary school. If you haven’t yet, get a Social Insurance Number for your child — you need one to open an RESP account (find out which institutions offer RESPs at Then you can collect the federal government’s 20 to 40 percent grant on contributions.
RBC Target Education Funds are a great choice for people who don’t want to make complicated investing decisions. If your child is three now, he’ll be starting university around 2025, so you can simply select the RBC Target 2025 Education Fund. Right now, this fund is about 60 percent stocks and 40 percent bonds, which is slightly riskier, but also has more potential to grow the money you contribute each month. Every few years it will get a little more conservative, to protect what you’ve saved. (Go to and click on Saving for My Child’s Education.)

This article was originally published on Sep 28, 2011

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