Sitting on some savings?

How to get that money working for you.

If you’re one of the fortunate people who have continued earning a regular income throughout the pandemic, you might be surprised at how much money you’ve saved over the past year or so. With fewer places to go amid waves of widespread shutdowns and stay-at-home orders, Canadians have had fewer opportunities to open their wallets, allowing savings to accumulate to near astonishing levels. 

A report released by Statistics Canada says household savings hit an all-time high of 28 per cent in the second quarter of 2020. In contrast, prior to the pandemic, Canadians typically saved only two to three per cent of their annual disposable income.[1] The Bank of Canada reported that the average family’s savings peaked at nearly $8,000 in mid-2020. By the end of the year, Canadians managed to save an average of $5,800 each, amounting to roughly $180 billion in total.[2] If you are among those who saved more than they could spend, the question becomes: What should you do with those savings? 

Weigh your options 

Asking your advisor about what to do with any unexpected savings is a good place to start. You could also ask to review your current financial position to see where your extra money could be directed to have the greatest impact. This is especially important if you have financial obligations that need attention, including outstanding debt or vulnerable or downgraded investments. Resist the temptation to splurge on a big-ticket item at the expense of keeping your financial goals on track. 

Regardless of the amount of money you’ve saved, here’s a few possibilities for what to do with it:

Keep saving. There are many different options when it comes to saving money for a variety of purposes. If you find yourself flush with cash, why not explore the various savings vehicles that can keep your money safe while it earns even more, including:


  • high-interest savings accounts
  • savings bonds
  • Tax-Free Savings Accounts (TFSAs) 
  • guaranteed investment certificates (GICs)
  • investment savings accounts (ISAs)
  • Registered Retirement Savings Plans (RRSPs)
  • Registered Education Savings Plans (RESPs) 


Talk to your advisor and take some time to read the fine print to see whether a particular type of account aligns with your needs and goals. 

When considering savings vehicles, beware of the perils of inflation. Rising inflation will undercut your savings by making it more expensive to buy the things you normally buy. Many experts agree that Canadians can expect a higher rate of inflation through 2021 and beyond.[3] The rising cost of everyday items, such as groceries and gas, may mean you need more savings to make up the shortfall that will result from higher prices. 

Eliminate debt. For many Canadians, eliminating debt has been a financial priority over the past year. The biggest debt for many is their mortgage – and low mortgage and interest rates have offered an opportunity to gain significant ground on balances owed on homes, lines of credit, loans and credit cards alike. 

If tackling your current debt load is a constant challenge, negotiating a lower interest rate and a more flexible payment schedule with your lender, or perhaps arranging a debt consolidation plan that allows you to pay off your debt faster, could be a more manageable approach. Your advisor can explain the advantages of various credit and loan options that suit your circumstances. 

Apply for more credit. An infamous financial industry saying is “The best time to apply for credit is before you need it.” This is essentially true. Asking for an increase on your credit card or line of credit will prompt financial institutions to review some vital figures, such as your current income and credit score. If the state of your finances is in good order and you have a history of making timely payments on previous and existing debts, your chances of being granted a higher credit limit will improve. 

Invest. Having some extra money set aside could serve as the perfect opportunity to revisit, and perhaps rebalance, your current investment portfolio. It may also be the time to consider an exciting venture into something new. Either way, begin the process by contacting your advisor to talk about how your future financial goals align with today’s markets – and what to expect as the economy continues to gain strength after a year of uncertainty. The advantage of an advisor’s insights is that they aren’t limited only to your investments, but can help ensure that your debt management, insurance, tax and estate planning needs are being looked after, which can take some of the worry away from the sometimes cloudy and confusing world of financial planning. 

Prepare an emergency fund. If the global pandemic taught us anything, it’s that emergencies can and do happen, and maintaining an emergency fund is a practical way to enhance your financial preparedness for such an event. The goal is to set aside enough funds to help you avoid tapping into long-term investments or accessing credit, which could end up costing you much more in the long run. Consider what you can reliably afford and perhaps set up regular contributions that can be increased over time. Opening a new bank account specifically for emergencies and arranging automatic transfers will help grow the fund without constantly reminding yourself that you may one day be forced to use it. If an emergency does come along, you’ll be glad you took precautions. 

Purchase insurance. The insurance industry has a pertinent phrase of its own: “It’s better to apply for insurance when you’re healthy.” Though life insurance purchases have risen during the pandemic, Canadians should also be looking closely at other types of coverage. For example, living benefits insurance includes disability, critical illness and long-term care coverage in case you become sick, can’t work and need financial support to cover costs. Pandemics don’t happen every day, but plenty of other scenarios can emerge and put you in a vulnerable position. Living benefits insurance is of particular importance for the vast number of Canadians who do freelance, contract or “gig” work without the protection of company benefits. 

Philanthropy and donations. Unfortunately, not everyone has been able to increase their savings since the pandemic began. Through no fault of their own, many people have experienced unemployment, bankruptcy, food insecurity and ballooning debt. This may well be the perfect time to share some of your own wealth or to develop a more complete personal philanthropic plan. Speaking with your advisor can give you some insight on effective ways to contribute to charitable organizations and perhaps create a path for ongoing donations in areas that are important to you. 

Spend wisely. As restrictions on activity and travel begin to loosen, people will predictably want to return to living a more exciting and familiar lifestyle. But don’t let your saving habits fall by the wayside as demands on your money increase. Be prepared to get back into another good habit: sticking to a budget for everyday expenses – and perhaps for resuming some personal pleasures, such as vacations, once the economy fully reopens. Consumer spending is a key driver of the economy, from which everyone benefits, so if you have your sights set on helping to get things back to normal, consider warming up your wallet. 

Seek advice

While there are plenty of options to help you make the most of your excess savings, talking them over with your advisor is a proactive way to improve your overall financial situation. With some money in hand and some new savings goals defined, you can strike a comfortable balance between spending and saving. Perhaps a catch-all approach that dedicates a portion of your savings to each of the options outlined above would be suitable. You can continue spending some discretionary cash, while the majority of it is earning interest and dividends, reducing any balances owing and bringing some much-needed relief to others in need amid the most serious crisis of our time.