Save for a vacation, buying a car, home renovations, or a down payment on a home with a tax-free savings account.
Tax Free Savings Accounts (TFSAs) were introduced in 2009. They are essentially an umbrella that you can put over a savings account, GIC or mutual funds where any interest you earn (or for the more sophisticated investor capital gains ,or dividends) are tax free. Since 2009, every Canadian over the age of 18 has been given room to contribute to a TFSA with a cumulative total so far (in 2015)of $36500.00 contribution room.
Many financial institutions offer High Interest Savings Accounts in a TFSA, which is a nice option because they allow your money to remain liquid and available, while also earning a high rate of interest. There is some paperwork involved in opening a TFSA, and this product needs to be reviewed with your Financial Advisor to ensure it is a good match for you, but there are not many people who can find a drawback for investing in a TFSA.
So why am I telling you about TFSAs? I know how hard it is to save when you are managing family finances, and it is hard to find extra money to set aside, but I like to use a TFSA for short to medium term savings. Some examples could be: saving for a vacation or buying a car, or home renovations, or a down payment on a home. I would use a TFSA for these types of savings goals, simply because there are often great rates to be found on these types of accounts, and usually with minimal restrictions.
Perhaps good rates can be that extra incentive to try to set aside that little extra each pay cheque?