How To Save Money And What To Do With It Once You’ve Started Saving


It’s hard to think about saving when you’re just starting to earn money.

But, things start to creep up on you faster than you can imagine: marriage, kids, home and even retirement. Yes, retirement!

Why should you think about these things now when you’re in your 20s? Because now is actually the best time.

“With a limited income and living expenses, your disposable income may not amount to much. To top it all off, temptation mocks you from every street corner: from bar openings to day-after brunches.” —Alyssa Richard, founder,

Would you rather save a little now or pay a higher mortgage when you’ve got kids and bills to pay? Or, do you want to have to put off retiring because you have to take out a second mortgage to put these kids through university?

Unfortunately, the chain of possibilities is interconnected but can be lessened by saving early on.

Still, for a young professional in the city, saving can be tough. With a limited income and living expenses, your disposable income may not amount to much. To top it all off, temptation mocks you from every street corner: from bar openings to day-after brunches.

Regardless, now is the best time to put money aside for the future, as you aren’t burdened with major financial responsibilities.

To start, some money-savers:

Credit cards

Pay off your credit card in full each month. Make this non-negotiable. Not only will this help your credit score (which, contrary to popular belief, is impacted by your balance-to-limit ratio) but you will save considerably on interest. If you have trouble controlling your spending, opt for a lower limit on your credit card.

Bills, bills, bills

Take a look at your current bills and find ways to slash them down.

  • Telecommunications: Is a land line necessary if you have a cell phone? Consider cancelling your land line and sifting through cellular packages for the one that fits your usage. In terms of Internet, low-cost providers are popping up, such as Teksavvy, which offer flat rates on a no-contract basis. Finally, with a young professional lifestyle, do you really need that premium cable package? We think not.
  • Rent: It is recommended that no more than 40% of your annual income goes towards housing costs. Look for shared accommodation with friends or consider moving outside the downtown core.
  • Utilities: Did you know that some utilities companies have reduced rates during off-peak hours? This is definitely worth investigating.


Krystal Yee, personal finance blogger over at Give Me Back My Five Bucks, suggests buying produce at local markets like Toronto’s Chinatown. Cooking for oneself more often than eating out is also a must, and may require you to cook in bulk for the week ahead if need be.

Once you’ve started saving, here’s what you can do with the money:

The first, and likely largest, financial investment you will make is on your first home. So, it’s a good idea to start planning as soon as possible.

Start an RRSP (Registered Retirement Savings Plan)

As a first-time home buyer, you can withdraw up to $25,000 for a down payment, tax-free. You get to deduct any RRSP contributions from your annual tax return, and you can use those tax savings to make even more contributions!

Invest in GICs (Guaranteed Certified Investments)

This is a slow-growing option, but you are guaranteed a specified return on the investment.

Contribute to a high-interest savings account

These funds only take a couple of days to transfer back to your chequing account in case of an emergency. It also prevents impulse buying as there is no debit card associated with the account.

Deposit funds into your TFSA (Tax Free Savings Account)

You can invest up to $5,000 a year and not pay taxes on income earned, nor do you have to repay the investment if funds are withdrawn, as is the case with the RRSP Home Buyers’ Plan.

One of the biggest budget blowers for a young professional is dining (or drinking!) out and meeting up with friends. This particular social activity can be difficult to navigate. More established friends and colleagues can find it difficult to relate to the young (struggling-to-pay-loans-while- save-AND-eat)-professional.

Just know your own limits, and be firm and honest with yourself. It’s fine to splurge once in a while, but ensure that you make up for it in other ways. Keep making regular contributions to your savings, no matter how small the amount may be possible at first. You will be happy you did later on!

When the time comes to start shopping for a mortgage, check out for first-time home buyer tips and comparisons on the best mortgage rates.

Photo credit: Plate of money by Gavin Schaefer on Flickr
About the author

Alyssa Richard is the founder of, a website that compares the best mortgage rates in Canada. In her 20s, Alyssa is a driven young entrepreneur with a wide range of interests spanning from technology trends to kitesurfing. Her experiences in the financial services industry and now running a start-up in the mortgage space have provided her the opportunity to give personal finance advice on platforms like TalentEgg.