Watching an investment or savings account swell makes for one heck of an emotional high. But witnessing your money sink or get wiped out can also send you on a harrowing roller-coaster ride.
Toronto financial expert Lee Anne Davies, for one, says even with the current economic tribulations, building a comfortable nest egg can ease some of the pressure.
"It's easy for some of my clients to have reasons not to save," says Ms. Davies, head of retirement strategies at Royal Bank of Canada. "It's really about paying yourself first."
To kick-start saving, Ms. Davies suggests focusing on priorities, "which takes away the emotion that a rough economy can bring," and then developing a "savings habit. As little as $25 a month can help, that's where you get the compound growth."
Compounding is all about the snowballing effect. For example, put just $25 into a savings account or investment and it earns interest. In the second year, you get interest on that original $25 and on the interest you earned the first year, and so on.
RBC gives this hypothetical scenario of twins Catherine and Peter, using an annual compound interest rate of six per cent: Catherine contributes $1,800 a year over nine years to her Registered Retirement Savings Plan, beginning in her 20s. By age 65, she has contributed $16,200, but has $141,493 in her portfolio.
Peter starts saving in his mid-30s, contributing $1,800 a year over 29 years. By age 65, he has put in $52,200 to have $140,505 in his portfolio.
Saving can start at any age. Here's how some money-savvy Canadians do it.
Phillip Poss, 22, student, London, Ont.
University student Phillip Poss says a healthy lifestyle makes for a healthy savings attitude - and pumped-up savings accounts.
Mr. Poss, a 22-year-old in the kinesiology program at the University of Western Ontario, started saving three years ago. He now socks away $50 to $75 a month in an ING account, and contributes to a special travel fund with his girlfriend, mostly birthday and holiday money and whenever he has a few extra bucks.
What? No starving student syndrome?
"I have found ways to save a bit more each month by finding less expensive ways to do routine things," says Mr. Poss, who works part-time as a subcontractor and does his own home renovation and other work throughout the school year.
"I always buy groceries and prepare home meals instead of eating out at fast-food places or restaurants, because it saves me over $15 a week. ... I try to get to places on my own by either leaving half an hour early and walking, or I hop on my bike. Not only do I get to save $50 to $75 month, I also become more active and healthy."
What got Mr. Poss into the savings habit? "I understand what I can save now will result in a lot less stress for money when I am older."
A little "self-spoiling" helps, he says, adding that he and his girlfriend saved enough to go to Las Vegas last year.
Elaine Soulliere, 37, nurse, Windsor, Ont.
Cardiac-care nurse Elaine Soulliere has at least 14 reasons for taking stock of her money and socking it away. Fifteen if you count her young daughter, Peyton.
As the youngest of 14 children of Lebanese immigrant parents who worked several jobs just to get by, Ms. Soulliere wants the future secure for herself and her three-year-old. "I started saving at 18 for my education and if I ever wanted a house," says Ms. Soulliere, a 37-year-old single mother born in Windsor, Ont., where she works full time at Hôtel-Dieu Grace Hospital and part time for an oral surgeon.
While a student working at a fast-food eatery, she started out by saving $50 every two weeks, and increased that to $100. After graduating at age 24, she took out a life insurance savings account, with money automatically withdrawn from her bank.
From feeding a high-interest bank account for holiday gift-buying, to contributing to her daughter's Registered Education Savings Plan and her Registered Retirement Savings Plan, Ms. Soulliere finds automatic withdrawals work savings magic.
"I put $100 a paycheque into [the gift account] so that by Christmas, I don't say, 'Shoot, I have to buy gifts and where am I going to get the money?' ''
Thomas Nolte, 47, businessman, Bedford, N.S.
In the eyes of Nova Scotia businessman Thomas Nolte, it takes a community to raise the savings stake.
Mr. Nolte, his wife Gillian and their two young children left Germany three years ago to settle in the Halifax area. Today, the couple owns three Curves women's fitness franchises. But Mr. Nolte is perhaps most proud of his feverish work to help create Buy Local, Save Local - a loyalty program that gives consumers discounts for shopping at about 60 local businesses.
With the economic downturn of the past year and a half, Mr. Nolte witnessed first-hand the strain on the economy and consumers in the Halifax Regional Municipality. To give back to the community, he created the loyalty program. For $20 a year, consumers present a special card to businesses that have signed on to the program, and they get discounts and special offers that can save hundreds of dollars a year.
For his part, Mr. Nolte says he's no longer a high-risk investor, after making a lot of money years ago speculating on the stock market and then losing it quickly, "all because I didn't want to admit defeat and go down. That's when I got educated about risk management. ... You really need to separate your emotions from your money."
Today, Mr. Nolte has shares only in his fitness businesses and a mortgage on the family home. He and his wife own two used cars, although they carpool as much as possible. They also save by sharing babysitting with other families, sticking with whatever is on their grocery list, using coupons, and trying to eat and drink coffee at home.
"If you want to save money, it really comes down to making a lifestyle choice," he stresses.
Wendy Morton, 69, insurance investigator, poet, Otter Point, B.C.
Wendy Morton is a master of powerful prose, a gift that has made her one of Canada's most endearing poets.
But the long-time resident of Otter Point, near Victoria, is also well-versed on matters of the pocketbook.
Long before Ms. Morton put pen to paper for her 2001 breakout book Private Eye - so named because of her long career as an insurance investigator - the writer learned about the wickedness of waste. Born in the Depression era, her resourceful ways have bettered the planet, the people around her and her bottom line.
"I'm in no ways a conservative person, but I'm a very conservative, cautious investor - I'm mortgage free, and most of my money is in places backed by something real, like real estate, or guaranteed," says Ms. Morton, 69.
"I have saved carefully over the years after finding out about this great thing called compounding interest," she adds, noting that she put money left to her as an inheritance into a GIC at a credit union.
Ms. Morton has been an insurance investigator of claimants' bodily injuries for 27 years, and still works part time while getting her government pension. .
On the 3.65-hectare property she owns with her long-time partner, she cultivates a year-round veggie garden from which she culls ingredients for soup and other homemade meals. She also shops at thrift stores, and takes advantage of discounts and special sales.
Ms. Morton resists impulse buying, isn't one to get into the latest gadgets, and discusses major purchases with her partner. She only buys things she has the cash to pay for, and when she does use her credit card, she pays it by the due date to avoid interest fees.
Her prime advice for anyone looking to save is to ask, "In this time of scary climate change staring us in the face, how resourceful can we be with our money?"