Putting All Your Eggs in One Nest…

Putting All Your Eggs in One Nest…

I used to be clueless about finances. I didn’t know what to do with my money when I started my professional career. And I mean “saving-wise,” because, trust me, by the time this money was my bank account, most of it was already gone by the next 3 days. So I knew how to WASTE my money, I didn’t know how to SAVE money.

money tips beginner saving investing
Ever heard of diversification?

Then tax season came along… I’d hear all these horror stories about nurses owing the government thousands of $$$. I didn’t want to be one of them. So I followed popular advice: to put my savings into what we, Canadians, call a RRSP (Registered Retirement Savings Plan), as a way to decrease my “income tax bracket” to pay less tax. In french we call it “REER” (Régime enregistré d’ épargne-retraite). In the USA, the equivalent would be the 401(k). Both of these accounts will allow you to defer the tax you would have to pay on the money you put into that account (but you WILL pay the tax of it one day, most likely when you retire). You can also use the money you put in a RRSP or a 401(k) to invest, or as a down payment for your 1st house (but, simply put, you’ll have 15 years to put that money back in the RRSP account).

The RRSP is not exactly the same as the 401(k) account. For example, if you withdraw money from your RRSP, you’ll pay the “usual” tax on it. With some 401(k)s, you may have some penalties for early withdrawal + your taxes to pay. There are other differences, and I’d suggest you look them up, if you haven’t already…

So, for 2 years straight, I would religiously put all my savings into my RRSP account. It would accumulate, as I would try to put in my max contribution every year, to avoid paying revenue taxes.

Even though I started somewhere, it wasn’t necessarily the best strategy for savings. When a big emergency came up, I had no cash to help. I was screwed because my RRSP money was in an ivory tower: you know you have cash, but you’re not allowed to touch it. So the RRSP is a good strategy for the “if I see it, I spend it” people like me. But it cannot be your ONLY saving strategy.

I later discovered, watching TV shows like “Money Moron” by Gail Vaz-Oxlade, that everyone, EVERYONE, needs an emergency fund. And that’s where we should all start when it comes to savings.

A typical emergency fund has a worth of at least 6-months expenses. Its aim is to cover your expenses, should you loose your job, become sick, or should any other emergency situation pops up in your life (medical, dental, family problems). This way, you won’t get penalized because you had to dig in your registered savings.

Starting my emergency fund, I realized that neither college nor university prepared me to handle my finances. And I became more hungry about knowing what to do with my money. A good friend of mine encouraged me to read the book Rich Dad Poor Dad by Robert Kiyosaki. It was an eye opener for me. I’ll speak about it in one of my next blog.

But what about you. Do you save money? What’s your strategy?

Are you the spending type or the saving type?

Any tips for us?

 

RN Didi

http://healthfornurses.siterubix.com/should-i-start-investing

 

 

2 thoughts on “Putting All Your Eggs in One Nest…

  1. As a fellow Canadian, I so agree on the taxes we get taxed on our income. Considering the expenses are so high, it’s hard to save for an emergency. But what you have put here is so true.

    I have heard about Rich Dad Poor Dad, and have always wanted to attend one of his seminars. Will have a look at the book to get started.

    1. Hey Jagi,

      The expenses are, indeed, very high. But there are always ways to cut…and sometimes, that hurt. We don’t like it when things we enjoy are taken away from us. Like the cable, or eating out everyday, or that Starbuck coffee every morning. But oftentimes, these small changes can make a difference. Starting your emergency fund may mean putting 20$ per pay in a savings account. It builds up… So it’s not totally out of reach, it’s just a matter of making some sacrifices that, in the end, will pay off!

      Rich Dad Poor Dad has been the eye opener for me… it made me realize I had a toxic relationship with money. It also helped me see money as a means to an end and not the end itself. I recommend it to anyone who’s willing to invest in their financial life!

      If you want more info on how to budget, feel free to read this article!

      Thanks for visiting and feel free to come back fore more tips and tools!

      RN Didi

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