My name is Vanessa Bowen. I'm a money and mindset transformation coach and the founder of Mint Worthy. So I like to have savings goals for pretty much everything that I want to save for. What happens most of the time, people fall into a trap and they just save, which is great. At least you have the habit, but then they just have an account with a bunch of money in it and they don't know what they're doing with it. So I always like to say first, create your savings goals, know what it is that you're saving for.
So if you're saving for a vacation, then you have a dedicated vacation fund. If you're saving for a down payment for a house, you have a dedicated account for that. Same thing for gifts, have a dedicated account for all those things. So that way, you know what you're actually putting your money towards. And then when it comes to OK, I'm going to dip into my savings, well, you know what each of those categories are for, so it's OK if you have to go buy a gift.
It's OK to dip into your savings because you have that money set aside. The only account where I say you have to make sure you don't always touch it will be your emergency fund. That is where you want to have discernment as to whether you're pulling money out of it because you should only be pulling it out because it's an emergency, not because it's Amazon Prime Day or whatever's going on and you want to go shopping. I always say that your emergency fund should be in a separate dedicated account, so it should not be saved where you're saving for that down payment or that vacation because when you have all your money together, you run the risk of seeing this sexy balance and then pull from that balance and then an emergency hits and you have no money left.
For me, what I believe is that an emergency fund is actually the key to reducing the spiral of debt. Why so many people are constantly in debt, constantly in debt is because they have no cash available to pay for the things that they need or to pay for an emergency. So if you have an emergency fund, you reduce that need to pull in your credit card or your line of credit when something comes up. Leverage a TFSA for your emergency fund.
You don't want to pay a lot of taxes, right? So leverage your TFSA because the growth on that money is tax free. And of course, you want that money to grow because it will be a significant balance over time. Thanks for watching and be sure to check out other videos on Compass. [LAUGHS] PRODUCER: [INAUDIBLE]
