There was an interesting guest post on Thicken My Wallet that got me thinking about what is really considered savings. The author was going through a financial dilemma with her husband where he considered savings liquid money that is accessible when needed and she considers it in a different way.
Here’s a snippet:
… I am all for counting RRSPs, RESPs (there was some dissent on that) and the extra mortgage payments as savings – it’s all part of net worth, right? Seems straightforward to me. Tell me how to convince my husband. He refuses to count anything other than cold hard cash sitting safely in a high-interest bank account as savings. I went online and did a comprehensive net worth statement, and showed it to him – he made a pfffft sound which I interpreted as “I am entirely dismissing your attempt to argue a financial point other than my own. Your so-called net worth statement is nothing to me, woman.”
Technically, anything that is put away for yourself is considered savings. This includes RRSP contributions, non-registered account deposits, the equity portion of your mortgage payment and cash deposits into your chequing/savings account. I’m not sure about the RESP contributions as I would like to consider that money given to my child.
Personally though, I’ve realized that we take great comfort in having liquid cash savings around which is pretty obvious to those of you who follow my net worth updates. While I consider RRSP and non registered contributions savings, I tend to not consider mortgage payment equity to be savings as the money is not typically liquid unless you sell. There is a way around this however by getting a home equity line of credit.
So back to the original article, I would have to say that I lean towards the husbands opinion of savings. That is an increasing net worth is not the same as increased savings.
Back to you, what do you consider savings?