Is Your Money Making Money? How to Revamp Your Savings Strategy

If your extra money is sitting in a chequing account, it’s not doing much for you.

A smart savings strategy starts with one simple question: When will you need the money?

Your timeline — whether it’s a few months or a few years — should determine where you keep your cash. The right account can help you earn interest, preserve flexibility or lock in stronger returns — depending on your goal.

Here’s how to match common savings goals with the right strategy.

Start with your goal — then choose the right account

Whether you're saving for a short-term expense or a major milestone, your timeline should guide your choice.

Goal #1: Holiday and annual spending

If you’re setting aside money each month for holiday gifts, travel or other predictable year-end costs, flexibility matters most. You’ll want easy access to the funds without sacrificing growth.

Best fit? A HISA with a competitive promotional rate and no transfer fees.

A high-interest savings account (HISA) offers competitive interest rates while allowing you to deposit and withdraw money as needed. Some banks provide temporary promotional rates for new customers, which can offer a short-term boost.

Just pay attention to transfer fees. While many institutions allow free internal transfers, some charge small fees for moving money to another bank. If you plan to dip into the account several times, those fees could offset some of your interest earnings.

Goal #2: Emergency fund growth

An emergency fund is your financial safety net. Ideally, it should cover at least three to six months of essential expenses — and remain easily accessible.

Best fit? A TFSA, a short-term GIC — or a combination of both.

A tax-free savings account (TFSA) lets your savings grow without being taxed on interest earned. Eligible deposits are protected by CDIC insurance up to $100,000 per insured category, making it a secure place to hold emergency funds.

A guaranteed investment certificate (GIC) is also eligible for CDIC insurance up to $100,000 per insured category, and you can hold them in a TFSA. They may offer higher rates than a standard savings account, but they often require locking your money in for a fixed term. If accessibility is important, focus on redeemable or cashable GICs.

Once your core emergency fund is fully funded, you might consider a split strategy. Some savers keep the first several months of expenses in a HISA or TFSA for immediate access, while placing excess funds into lower-risk fixed-income investments to potentially earn slightly higher returns.

The difference in yield may not be dramatic, but over time the compounding effect can add up — especially if you rarely need to access the funds.

Goal #3: Planned purchases (like a car)

If you’re saving for something specific — such as replacing your vehicle — and you have a general timeline in mind, you may be able to earn more by locking in your rate.

Best fit? A short-term GIC that aligns with your timeline.

GICs often offer higher rates than standard savings accounts, particularly for longer terms. The tradeoff is reduced flexibility, since your money may be inaccessible until maturity.

When considering options, compare rates across different term lengths and choose one that matches your expected purchase date. Be aware that many short-term GICs renew automatically unless you provide instructions otherwise — and the renewal rate may differ from the original one.

Minimum deposit requirements vary by institution, and can range from $100 to $5,000. So confirm you meet the threshold before committing.

Goal #4: Home down payment savings

If you’re actively house hunting but unsure exactly when you’ll buy, flexibility becomes critical. You can’t afford to have your down payment locked away.

Best fit? A HISA held within a First Home Savings Account (FHSA).

An FHSA allows you to contribute up to $8,000 per year to a lifetime maximum of $40,000. Contributions may be tax-deductible, and investment growth is tax-free when used for a qualifying home purchase.

Because your timeline may be uncertain, many planners recommend keeping FHSA funds in a high-interest savings account rather than a non-redeemable GIC because HISAs offer more flexibility.

“The rates are also typically close to GIC rates,” says Morgan Adams, a certified financial planner with Tier One Planning in Guelph, Ontario. “A redeemable GIC could also work but you sacrifice the interest rate for it. I always prefer flexibility in these scenarios over rate.”

The bottom line

Idle cash loses potential every day it sits in a chequing account.

The key isn’t chasing the highest rate available — it’s choosing the right tool for the job. Match your savings vehicle to your timeline, balance flexibility with return and revisit your strategy as your goals evolve.

When your money is aligned with a clear purpose, it has a much better chance of working for you.