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How to save for a big purchase

A step-by-step guide to saving up for big expenses like a home, car, wedding, school and more.

With the cost of living rising sharply over the past year, around 40% of Canadians report spending less on travel and big-ticket items. But if you dream of owning a home someday or need to buy a new car soon, starting to save now can help you reach your goals. Here’s how to save for a big purchase.

How to save for a big purchase

Whether you’re saving for a home, car, wedding, school or another big expense, here are 5 steps you can take to save the funds you need.

Determine what you can afford

Research the market to find the item you want. If the price seems out of reach, look at variations that can cut down the cost. If you want to buy a car, look at used models on sites like AutoTrader or Canada Drives. If you’re paying for a wedding, consider a destination wedding with fewer guests or a less expensive off-season wedding.

Get a realistic view of your finances including recurring expenses and one-off costs you expect to shoulder in the future. Line this up with your income to figure out what you can realistically afford to save each month. Consider any existing savings you have as well as investments and other sources of side income.

Set a goal

Based on what you can afford to save each month, pick a deadline by which you want to have saved the amount you need. Consider the timeline for your expenses. When will you need to make a down payment? If installment payments are due, when do these need to be made?

Make a budget

Create a spreadsheet to map out where your money will go including all the costs you expect to pay. If you don’t know where to start, try the zero-based budgeting method in which you put every dollar of your income toward a specific expense or savings goal until there’s nothing left over.

Don’t forget to account for less obvious expenses like car maintenance, property taxes, ancillary wedding expenses (invitations, hotel accommodations, service charges and tips) etc.

To use the zero-based budgeting method, start by adding up your mandatory monthly expenses and subtracting this amount from your monthly income. Then take anything leftover and put it toward fun expenses or savings. If you need help, check out our guide on budgeting for beginners.

Cut back where you can

Trim down your expenses and free up more for savings by limiting eating out, vacations and buying new toys. When shopping around, ask for discounts and negotiate with sellers. Stay local to avoid travel costs.

Pay off debt

You’d be surprised how much disposable income you can free up when you’re no longer making debt repayments. The benefit of paying off debt is twofold: Less debt means more money for savings, and your debt-to-income (DTI) ratio will go down.

Your debt-to-income ratio represents the proportion of your income going to debt repayment and is a sign to lenders of how much you can afford to borrow. This is crucial if you plan to take out a loan to finance your purchase or get a mortgage. Aim of for a DTI ratio of 36% or lower.

Contribute regularly to a savings account

A good way to grow your money with little effort is to make regular contributions to a high-interest savings account. Look for an account with a high interest rate, low fees and a minimum deposit you can meet. If you’re making a big purchase with a partner, consider opening a joint savings account, so you can save and earn interest together.

Take advantage of automatic deposits, roundups and any other features that automate your contributions to snowball your saving efforts even more. Treating your contributions like a mandatory expense will help make saving a habit.

Compare savings accounts

1 - 5 of 5
Name Product Promo Rate Regular Interest Rate Monthly Account Fee Transaction Fee e-Transfer Fee Offer
EQ Bank Savings Plus Account
EQ Bank Savings Plus Account
Simplii High Interest Savings Account
Simplii High Interest Savings Account
5.25% until April 30
Neo Money Account
Neo Money Account
Open an account and get a $5 bonus.
Use promo code FINDERCODE and get a $20 cash bonus when you make your first purchase within 30 days.
Scotiabank MomentumPLUS Savings Account
Scotiabank MomentumPLUS Savings Account
4.60% for 5 months

Compare up to 4 providers

Types of accounts to save

Depending on your goals, there are different types of accounts you can use to grow your money

Regular savings accounts

Savings accounts usually offer low balance requirements, low monthly fees and interest ranging from 0.10% to over 2.00% APY. Traditional savings accounts offered by established banks may give you more ways to access your money, but savings accounts from online banks often come with the highest interest rates.

Interest-bearing chequing accounts

Some chequing accounts actually let you earn interest on your balance, although the amount is usually smaller than what you could earn with a savings account. Unlike a savings account, you can withdraw from a chequing account more frequently without paying a fee. You can also link your chequing account to a debit card, making it easy to access your funds if you unexpectedly need to.

Guaranteed Investment Certificates (GICs)

Once you have $500 or more saved, consider a GIC to lock away your money for a fixed term while it earns interest. Depending on the amount and term length, you could earn anywhere from 1-4% APY. However, you usually can’t add money to your GIC during the term, and you’ll pay a penalty to withdraw funds before the maturity date.

Registered Retirement Savings Plan (RRSP)

A RRSP is a long-term investment account designed to save for the future — in this case, old age. Money in RRSPs grows tax free and contributions are tax deductible. You’re taxed on withdrawals.

If you withdraw money before 71 years old, you’ll be heavily taxed. But there are 2 exceptions to this: The Lifelong Learning Plan and the Home Buyers’ Plan.

Registered Education Savings Plans (RESPs)

A RESP is a long-term investment account that lets people save for a child’s education. Contributions are not tax deductible. Money deposited into an RESP grows in several ways:

  • Funds are put towards either fixed investments (short-term bonds, GICs and investment savings account) or equity investments (stocks and mutual funds). Interest earned on these investments is not taxed.
  • Through the Canada Education Savings Grant (CESG), the federal government matches annual RESP contributions by 20% if the the future students receiving the funds are 17 or younger. The CESG applies on the first $2,500 of annual contributions (or $5,000, if unused contribution room from previous years is carried forward) up to a lifetime limit of $7,200.
  • Through the Canada Learning Bond (CLB) program, children from low-income families will get up to $2,000 in RESP contributions from the federal government. This is not a matching program; no personal contributions are necessary to get the CLB.

RESPs aren’t just for tuition. Funds can be used for housing, books, laptops, transportation, meal plans and more. You can open more than one RESP account for a child, but he or she can only receive up to $50,000 from all RESPs combined.

How to save money for a house

First-time home buyers are eligible for special mortgage rates and tax breaks.

New buyers can often borrow up to 90.00% or 95.00% of a home’s value, which means you might only need a 5.00% – 10.00% down payment. But if you borrow more than 80% of a home’s value, you might need private mortgage insurance, which provides the lender protection should you default on your mortgage. Insurance premiums typically range from 0.60% to 4.50% of your mortgage.

The government has programs and tax breaks in place to make it easier to own a home.

First-Time Home Buyer Incentive

If you’re a first-time buyer with a qualified annual income of $120,000 or less, you may be eligible for the First-Time Home Buyer Incentive offered by the government. The incentive is worth 5.00-10.00% of a newly built home or 5.00% of an existing home or mobile home – this can help lower the amount you need to borrow.

Home Buyers’ Plan (HBP)

Under the Home Buyer’s Plan, first-time home buyers can withdraw up to $35,000 ($70,000 for couples) from their RRSPs to cover the down payment on a home. The withdrawals are tax free as long as the money is repaid within 15 years, and you can pay the loan back at any time with no penalties.

First-Time Home Buyers (FTHB) tax credit

Claim up to $5,000 in tax credits on costs associated with purchasing your first home. Associated costs might include land transfer tax, legal fees or disbursements.

GST/HST New Housing Rebate

You can qualify for a rebate to recover part of your GST or HST payments that you paid on the purchase price, on the cost of renovating or adding additions or on converting a non-residential property into a house.

How much do I need to save for a house?

According to the Canadian Real Estate Association, the average house price as of November 2022 was $632,802. But the price varies widely across Canada.

As of December 2022, the average price of a home in the Greater Toronto Area in Ontario was $1,051,216, but the average price of a home in Nova Scotia was just $362,966.

The biggest upfront cost of a home is the down payment, the amount of which depends on the house price:

  • For homes that cost $500,000 or less, the minimum down payment is 5.00%.
  • For homes that cost between $500,000 and $999,999.99, the down payment is 5.00% on the first $500,000 and 10.00% on the rest.
  • For homes that cost more than $1 million, the down payment must be 20.00%.

For perspective, a 5% down payment on a $635,000 home is $31,750.

How to compare mortgages

How to save up for a car

There are a number of ways you can save up for the car you want.

Reroute old payments

If you have debts or bills that you’ve paid off, consider rerouting the funds that were earmarked for them into your savings account. This way, you’ll save money that you might have spent elsewhere.

Trade in or sell

If you already have a car, trading it in or selling it can help you get some extra cash for a new one. However, while trading it in to the dealer can be more convenient, you could get more from a personal sale.

How much do I need to save for a car?

The average cost of buying a car varies from $33,000 to over $39,000, depending on whether you’re buying a used or new vehicle. Buying a SUV, truck or minivan could set you back $38,000 to over $59,500.

If you plan to finance your car, you’ll only need to save for the down payment, which should be 10% to 20% of the purchase price.

Once you own a vehicle, be prepared for ongoing expenses like car insurance (third party liability coverage is required in all provinces and territories), gas, maintenance and licensing and registration renewal fees. Altogether, these could cost hundreds of dollars each month.

Car loans in Canada

How to save money on a wedding

Get one step closer to paying for your big day with these tips for cutting down the cost of a wedding.

  • Pick a less expensive month to get married. January, March, April and November are the cheapest months to get married. June and September tend to be the most popular and are therefore more expensive.
  • Ask for discounts. Your venue or suppliers may allow you to shave savings off your costs depending on your total guests, weekday, start times and more.
  • Use third-party vendors. Look for a venue that allows you to choose your own vendors and staff. This will give you more control over quality and costs.
  • Get creative with food. Hire a talented friend, make some of the food yourself or ask if your favorite restaurant is willing to take a large order.
  • Stay local. Save money on transportation and accommodations by keeping your ceremony and reception in a convenient location.
  • Consider a destination wedding. Destination weddings can be smaller than hometown ceremonies. Some people reduce costs even more by having guests pay their own travel costs.
  • Set up a registry. Your loved ones will want to celebrate by contributing to your new life together. Use your registry to offset the costs of items you know you’ll purchase after the wedding, or look for a cash registry to fund wedding costs directly.

How much does a wedding cost?

According to, the average cost of a wedding in Canada was $21,900 in 2022. In the US, a wedding costs $34,000 on average, while a UK wedding costs around $19,200.

You could end up spending thousands of dollars more on additional costs like bachelor and bachelorette parties, travel to and from your venues, a rehearsal dinner and — of course — the rings.

Additionally, some venues require wedding insurance, which protects you from financial loss due to wedding interferences like bad weather, property damage, injury and problems with venues or vendors. The cost of wedding insurance ranges from $200 to several thousand dollars.

How to save for an engagement ring

  • Start early. The sooner you start saving, the better. Open an account, and deposit funds whenever you can. Use automatic deposits to ensure you make regular contributions.
  • Save in a joint account. For some couples, saving up for the ring isn’t the responsibility of just one partner. See if your partner wants to contribute to an engagement ring, and consider opening joint savings account.
  • Save unexpected cash. If you receive a bonus, pay off a debt or cancel a bill, consider rerouting that money into your savings account.
  • The $5 bill method. Consider paying for everyday expenses in cash, and stash away your $5 bills each time you get one. You’d be surprised at how much you can save this way.

It’s less expensive to save up and pay cash for an engagement ring, but that may not be possible if you have other expenses or debts to deal with. You can usually finance an engagement ring, but it’ll cost more due to interest.

How much does an engagement ring cost?

There’s an old rule of thumb that says you should spend 3 months’ worth of your salary on an engagement ring. In reality, many people spend less. In 2021, was reported that the average cost of wedding ring in Canada was $3,500. In the US, the amount is higher at $5,500.

How to save money for university or college

Besides saving in an RESP and taking advantage of government matching, you can also get funds for school by withdrawing from an RRSP, saving in an in-trust account, using the cash value of a whole life insurance policy, getting financial aid and applying for scholarships, grants and bursaries.

Lifelong Learning Plan (LLP)

Under the LLP, you can take up to a certain amount out of your RRSP yearly to pay for full-time training or education at a designated institution for yourself, your spouse or your common-law partner (not you or your partner’s children). The maximum yearly withdrawal limit is $10,000 up to a total limit of $20,000. After this, you’ll have to wait a while to withdraw again.

In-trust accounts

An in-trust account (also called an informal trust account) is an investment account opened by an adult for a minor. Once the in-trust account is set up, the minor becomes its sole owner. Unlike an RESP funds held in an in-trust account can be used for anything once the minor reaches the age of majority. Plus, there’s no maximum contribution limit. In-trust accounts can be opened at a bank.

Cash value from a whole life insurance policy

Whole or permanent life insurance policies can protect you and your family, but they can also be used to pay for major expenses. Policies are broken down into 2 parts: A death benefit amount and a cash-value portion that’s invested and grows over time. After you’ve built up enough cash value, you can borrow from your policy. You aren’t required to repay the loan, but your death benefit may be reduced if you don’t.

Financial aid

Merit-based and entrance scholarships for students usually range from $1,000-$5,000 per year. Government grants are often $2,000-$8,000 annually. While some awards are one-offs, others require that students maintain a certain academic performance or continually demonstrate financial need in order to keep receiving funding. Speak to a financial aid advisor at your college or university to find out what you’re eligible to receive.

Scholarships, grants and bursaries

Often, students assume they need very high grades or that they have to jump through an insane number of hoops to be awarded a scholarship. In fact, the majority of scholarships are not merit-based and may not take more than a few hours to apply for.

There are several established companies that produce robust online databases tracking scholarships and bursaries available in Canada including,, StudentAwards, and

How much should I save for college or university?

If you’re saving in an RESP, a good rule of thumb is to save about $2,500 a year per student, or a little over $200 a month. This is based on the maximum annual contribution that the government will match by 20% under the Canada Education Savings Grant (CESG).

Here’s a rough estimate of what you can expect to pay for 1 academic year at college and university. These figures are for public institutions. Private schools will cost more.

University (approx.)Community college (approx.)
Tuition & fees$7,500$2,500
Textbooks & supplies$1,200-$1,800$1,200-$1,800
Transportation$1,100 (public transportation) – $7,000 (own your own vehicle)$1,100 (public transportation) – $7,000 (own your own vehicle)
Food & housing$14,000-$18,000$14,000-$18,000

How to get a student loan

Bottom line

Saving for a big purchase can seem intimidating. But you can get closer to your goals by looking realistically at your finances, carefully putting together a budget, cutting back unnecessary expenses, paying down your debt and contributing to a savings account.

Learn more in our detailed guide to savings accounts. If you need a little extra help getting the funds you need, check out our guide on getting a personal loan.

Frequently asked questions

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