Out of Sight - Out of Mind: How to Save for a House Down Payment

My spouse and I have been Tangerine Bank (formally ING Direct) customers since early 2001 when they first came out in Canada and often recommend one of their automatic savings tools without any hesitation as a truly great financial management tool. This is especially true noTangerine - INGw that I am a mortgage broker helping people get into homes. It helps you save your money and earn interest considerably higher than the average of the major banks.

What we like most about the  Tangerine savings accounts is that they are a great way to create a forced savings plan. It is “set and forget”, meaning you set it up over the Internet, first to link it your primary banking account (say BMO chequing, for example), then make a standing order for it to “take” a specific amount of money every month on a specific day from the primary bank account.  We like to set up the auto debit to coincide with payday! That way, we never even see the money, so we are not tempted to spend it.  Meanwhile, we are building savings as fast as we desire to meet our savings goals. You can modify the savings plan at any time and move money back and forth with your primary bank account easily via the Internet when the time comes to access it. Note, it takes a day or two to move funds, so that prevents you from raiding the account while standing at your regular bank's ATM. Further, because your down payment savings are in a different institution, it is "out of sight - out of mind!" All in all, this is really a great financial management tool.

Another great feature is that, since there are no fees or minimum required balances, we can have as many accounts as we want to manage. Over the years, we have used one for a rain-day fund (financial planners say you should have 3 months living expenses set aside), another for annual regular and unplanned expenses (car insurance, house insurance, maintenance and repair stash, etc.), once for a vacation, and we even have one for gift giving (Christmas, birthdays, etc.). The uses are varied and it is the “set and forget” that we like the most. We also feel great, knowing that we have achieved a certain level of financial discipline and stability, which we know is a good thing.

If you are having difficulty setting money aside for down payment, I highly recommend you take a look at their account options: https://www.tangerine.ca/en/products/saving/savings-accounts/ and reach out if you want some encouragement! - Cheers

 

What do you think of this idea? Would it help you save more?

Topics: Down Payment, Tips