Where To Start Saving

After the emotional turmoil that a wedding can create, the financial aspect of wedding planning is probably the most stressful. Thankfully, there is an easy way to start saving for your big day: set up a tax-free high-interest savings account.

Why set one of these up? Well, for one thing, creating a separate “wedding” account makes it easier to track your wedding spending and saving. Using a tax-free, high-interest account will make your money work harder for you (before interest rates dropped dramatically last year, my high-interest account made me hundreds of extra dollars) and provide you with a tax-shelter on the first $5,000 saved. And, using a saving account makes it a bit harder for you to access your money, a feature that any shopaholics/impulse spenders are going to want to take note of.

Shawn and I use an ING account because it’s free, easy-to-use and comes with a number of useful calculator tools. But most major Canadian banks offer some kind of tax-free, high-interest accounts. Just make sure to do your research before you open one up because some accounts require a minimum balance and charge a monthly fee, two features you are going to want to avoid.

One feature however, that you’re going to want is automatic transfers. ING calls this their “Automatic Savings Program” and it lets us move a fixed amount of money from our regular checking account over to our ING account on a regular basis. You can choose weekly, bi-weekly or monthly options and the amount being moved can easily be changed.

Setting this feature up makes saving significantly easier and less painful than manually moving the money over. And, because it’s being moved over into its own account, it’s “out of sight, out of mind”.

So how much should you be regularly be saving? Well, let say you’ve budgeted $25,000 for your wedding, you have a year to save for it and you’re starting with an initial savings of $1,000. You’re going to want to put away $2,000 a month to meet your goal and not go into debt (the interest you earn will give you a $400 safety cushion, based a three percent interest rate).

Yeah, that’s a lot. We’ll talk a bit about how you can reach that number over future entries.