Significant milestones often represent more than just financial goals—they're major life transitions. Whether your dream is homeownership, a comfortable retirement, saving for your children's education or a bucket-list vacation, success depends on financial readiness and emotional preparation.
As your saving journey begins, it’s essential to distinguish between saving and investing. Saving involves setting aside money in a secure and accessible manner for short-term needs such as emergency funds, upcoming expenses or short-term goals. Investing involves accepting a degree of risk in order to grow your wealth in a more meaningful way over the long-term. It involves purchasing assets like stocks and bonds which have historically increased in value over time but come with periods of ups and downs. For this reason, investing is best for long-term goals that allow time to recover from potential market downturns.
Understanding this distinction will help empower you to make strategic financial decisions that can create both short-term stability while building long-term wealth.
Evaluate your current financial picture as part of your savings plan around significant life goals. Review your income (including variable business revenue for entrepreneurs), expenses, savings, debts, and investments. Create realistic projections for how your savings goals will affect your finances. This assessment helps determine whether your plans align with your lifestyle expectations and financial capabilities.
Establish an emergency fund covering 3-6 months of personal living expenses before tackling larger goals. Business owners should consider extending this to 6-12 months to account for revenue fluctuations, seasonal changes and inflation. This safety net ensures that unexpected events or delays won't derail your progress. Once that is secured, create dedicated savings "buckets" using accounts tailored to your specific life objectives.
Consider paying down high-interest debt before focusing on savings and investing and track expenses meticulously, especially if managing both personal and business finances. Consider using AI-powered financial tools and budgeting apps like YNAB or PocketGuard to categorize expenses and maintain separate personal and business budgets automatically.
Automating your personal savings with pre-authorized contributions (PACs) is a great way to ensure consistent progress. These automatic transfers can be set-up to coincide with revenue deposits or regular pay periods. This "pay yourself first" approach removes emotion from the equation, helping you maintain consistent savings habits even during uncertain times.
For retirement planning, the Registered Retirement Savings Plan (RRSP) offers powerful tax advantages. If you’re a small business owner who receives an income from their business (not exclusively dividends), you can open an RRSP. Contribution limits will rise to $32,240 in 2025, up from $31,560. For individuals and entrepreneurs, it provides valuable tax benefits during high-income years. If you are married or have a common-law partner, consider opening a spousal RRSP in addition to your individual account.
The tax-sheltered Tax-Free Savings Account (TFSA) can hold savings, investments, or both. The TFSA limit will increase to $7,000 in 2025 from $6,500, offering additional flexibility for savings.
Guaranteed investment products such as High-Interest Savings Accounts (HISAs) and Guaranteed Investment Certificates (GICs) offer secure growth without market risk for shorter-term goals and transition periods. While a HISA offers a more attractive interest rate than other savings accounts and can be withdrawn at any time, the interest rate can fluctuate. A GIC offers a guaranteed interest rate over a specified period of time or term, but often cannot be redeemed until the term is over. Depending on your goals and needs and preference for either a guaranteed interest rate or accessibility to your funds, either of these products may be suitable for shorter term strategies.
While there is much you can do to reach your savings goals, complex transitions—especially those involving entrepreneurship—often benefit from professional guidance. A financial advisor can help optimize your strategy, ensuring the appropriate use of available tax shelters and financial savings options to help you achieve your short-, medium-, and long-term personal goals.
The key to successful savings is starting early, being consistent, and remaining flexible. Talk to an ATB Advisor today about which savings strategies can help you achieve your life goals.