The Best Way to Save: Day-to-Day Savings Accounts or Tax-Free Savings Accounts


Saving is an important part of being financially healthy and stable.  We learn when we are little that putting our change in a piggy bank is a great way to start a rainy day fund.  If you have bigger goals in mind, a piggy bank may not be the answer.  CUA has a number of accounts that may be better suited to what you're trying to accomplish: Day-to-day Savings Accounts and Tax-Free Savings Accounts (TFSA).

Find out which account works best for you and your goals:

  • Day-to-Day savings:  This account is beneficial for managing day-to-day expenses and saving for short term goals, like home or vehicle repairs, unexpected expenses and weekend getaways.  A great way to save with this type of account is by having multiple accounts designated for specific purposes, such as one account for vacation, one for bills, one for house repairs, etc.  By having each account labelled, you may be less likely to borrow from yourself.  In case of an emergency, the funds are easily accessible as there are no (or minimal) costs to access it.
  • Tax-Free Savings Account:  This is a popular option to reach long-term savings goals, like saving for a car, a home, an expensive vacation or retirement.  As the name suggests, when you withdraw funds from a TFSA, it won’t be taxed.  The more you save, the more you earn as the interest earned is non-taxable as well.  There are limits to the amount that you can contribute to a TFSA annually.  This amount is set each year by the Federal Government and can be found here.  You can also sign up for a CRA online account to monitor the amount that you have contributed.  
  • Choosing an account:  One account type isn’t necessarily better than the other, it depends on what you are trying to accomplish.  In fact, a combination of both saving methods is a great option.  In order to make the most of your savings and reach your goals, it's important to make yourself a priority and to pay yourself first.  With either account, you can set up Pre-Authorized Contributions (PAC), ensuring that you make a contribution to your savings account(s) each month.  Even if you start out small by contributing $20 a month, that’s $20 closer to your goals than you were before.
At CUA, we know that a one size fits all approach doesn’t work when it comes to finances. If you would like to discuss your goals and make a plan to reach them, we would be more than happy to assist you.  Give us a call at 902.492.6500.

Cathy

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Savings accounts

Learn more about the different types of savings accounts, their fees and features here.