Where to put your extra savings
Let’s say you earn $3,000 a month and spend $2,500. Great! You are living within your means. But saving is only half the battle. Now you must decide how to allocate your extra $500. Should you pay down your debt or invest and watch your money grow? Should you max out your Tax Free Savings Account or contribute to your RRSP? Knowing the proper way to allocate your money can prevent a lot of costly mistakes.
Back when I was saving up for a car I guess you could say I had a lot of driving ambition. But sometimes there are more immediate and pressing concerns to address before spending money on wants and non-essentials. Below is a chart that shows where to put your savings in descending order starting from most important priority. It’s not perfect but it’s a relevant starting point for most people. 🙂