If you are trying to get together your first down payment for your home in Canada, there are a number of steps you can take; that will specifically allow you to realize this goal, and increase your chances of success. In this article, we are looking at why opening a dedicated savings account can help you to actualize your goal of saving towards your first down payment.  We outline specifically the benefits and options which are available to you, to help you fully understand the importance of this action.

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But I already have a savings account, why should I get another one?

Having a dedicated savings account purely for your down payment is the best way to keep track of your savings and keep to focussed on the goal!  If you get a pay rise, bonus, a rebate, or some extra cash – placing it into this account will help you to reach your goal quicker.  It is also recommended to open this account with the same institution you have your other accounts with, this will make it much easier to move money from your main account into your savings account.

A Single Place of Residence for Your Down Payment Savings

On average, it can take a family more than ten years to save up for their down payment.  For most people, there are plenty of things that can be done to help you get to this goal quicker.  Having a single account will ensure that you have absolutely no reason whatsoever to dip into these funds, for any reason.  It can allow you to ring fence entirely these savings and keep them safe from any temptations which may arise.

Set Your Savings Target and Stick to It

It is easy, and commonplace for people to have multiple savings goals, but to cluster this money together in just one savings account.  If you are set-up to save in this way, you can quite quickly forget what amount was saved, for what goal, without realizing it, you are taking money from one pot, and placing it towards another goal, or to pay for something else.  Targeted savings allows you to split money towards different goals, and to do this in a logical, and straightforward way, meaning that your money I separate, with most savings accounts today, you can even give each one, its name to help to identify and relate it to the goal in question.

Get Your Priorities Straight!

So you want that car, you are saving for a holiday, and of course, the all-important down payment for your first home in Canada.  Which of these goals currently gets your first focus, which is your priority.  Sure, you could probably save for your car a little bit quicker than your down payment, but is that a “nice to have”, or a “need to have?”.  It is too easy to mix-up your priorities and get distracted.  The money you are paying right now for rent is dead money, and sure, a car will also have sale value, but more often than not this value is reduced as you use the car, and it ages.   That said, if you want a little holiday and can quickly channel some funds to your holiday fund for 3-6 months, this will give you the much-needed break you want, and not overly affect your savings priorities. Having a dedicated savings account will give you visibility and the means in which to easily do this.

Budget with Ease

The final point is regarding budgeting.  Having a dedicated savings account is integral, if you want to budget your money in, and money out with ease.  Lumping together different goals, which take different lengths of time, for various purposes will often confuse matters and, with regards to budgeting, can make it a lot harder to be organized with your savings and with your spending.  Having a single account for your savings goals, help you to budget with ease.

This is the second in a series of articles which are dedicated to helping you put in place seven steps for success when it comes to helping you to save up for your first down payment for your house in Canada.

Opening a dedicated savings account is perhaps one of the most important, and easiest things you can do.  It doesn’t take long; it can often be done online, if you take the advice of opening your account with your existing banking institution, it should be a straightforward, hassle-free and reasonably quick process.

So what are you waiting for?  Most banks do not set any lower limit for opening an account and often they are free to set-up.  Get yourself a dedicated pot for your down payment savings to go into today.  You will be surprised how quickly it all adds up!