3 ways to kill your savings plan

These savings killers are all to common, yet easily avoided with a little effort. Are they lurking in your financial life?



Online only.



People are always wishing they could save, or save more.

Despite nifty strategies like pay-yourself-first plans and rounding-up debit transactions, our savings often languish. If you want to keep your savings where they need to stay to grow – as opposed to watching them dribble away – make sure you’re not making these three mistakes:

1. Failing to plan for inevitable expenses
If you have a furry friend and you don’t have pet care in your budget, you’ll dip into your savings to cover things you should be planning for like vet bills. Sure, you don’t want to think about your Snookums getting sick, but without a plan for pet care, you’ll be forced to tap what should be untouchable money simply to stay even. Ditto things like school supplies, camp fees and sports costs for the kids.

Just as you would for insurance, taxes and gifts, estimate an amount you’re likely to spend in a year add 10% and then divide your total by 12. That’ll give you the amount you need to allocate in your budget each month. Move the money to a savings account automatically, and then move it back to your chequing account when you have to use it.

2. Not having an emergency fund
Needing new tires is not an emergency; you had to know you’d need new tires eventually, so that’s an inevitable expense. An emergency is a loss of income due to something like illness, layoff, or death in the family. Stash the equivalent of six months’ worth of essential expenses for an emergency. Without an emergency fund, you’ll blow through your savings; you may even have to liquidate investments at a most inopportune time.

3. Living above your means
If you’re saving $200 a month, and racking up $250 in consumer debt (credit card balances not paid off in full, line of credit balances that keep creeping up) you’re playing a shell game with yourself, but you’re not saving. To save, you have to take money out of your cash flow – read: don’t spend it on anything – and put it to work for the future.

If you’re serious about saving, you’ll build a plan that takes these killers into account so you don’t just end up spinning your wheels.

3 comments on “3 ways to kill your savings plan

  1. Before you even consider worrying about your savings, it is probably a good idea to focus on your debt. If you can manage to pay your debt down, you'll end up saving more since debt is expensive to carry. Once that's out of the way you will be able to focus mainly on your savings and not have to stress out about paying back creditors.


  2. I don't think it should be an "either/or" thing…you should be saving something WHILE you're paying down debt. Yes, it's hard. Yes, it may seem like it's going to take longer. But look at it this way: if you have NO savings and you're trying to pay off your credit cards, what happens if you have car trouble not covered by insurance? Well, unless it's small enough you can just take it out of your "Other" budget category (what would that cover? you need your wipers replaced??) you're likely just going to put it back on your credit card. Suddenly you've lost ground AND you're paying interest on it! That makes you worse off than if you HAD been putting a small amount away every month. I'd rather have the cash in a savings account and earning a modest amount of interest until I need it. And trust me, you will. Murphy's Law WILL strike. The way this month went for us, it's a good thing I follow my own advice!

    Absolutely you should kick your savings up a few notches after you're done paying down debt. But I would never tell someone to not save ANYTHING while they're paying their debt off.


  3. These three tips are awesome. We usually commit such mistakes and hopes that it was not a mistake and repeats everytime. Now I will not repeat that.Thanks for such post.


Leave a comment

Your email address will not be published. Required fields are marked *