Anyone saving for their child’s education costs or their own retirement typically makes regular contributions to mutual funds in a registered plan. But what if you’re saving for a trip to Europe or a kitchen renovation? Or a larger goal, such as the down payment on a vacation property or the cost of potential longterm care?

One method is to establish a savings fund dedicated to meeting a specific goal. You identify the need or want, choose when you want to reach it and determine its cost – your financial goal. Then you calculate how much to contribute each pay period or month. A Tax-Free Savings Account (TFSA) is an ideal savings vehicle for a dedicated savings fund, although mutual funds in a non-registered account may suit some situations.

Using a dedicated savings fund offers several benefits over haphazard savings. Psychologically, you’ll feel confident that you’re on the path to achieving a financial goal. Financially, you’ll avoid using a credit card or line of credit and paying interest, and you won’t be tempted to tap mutual fund investments from your retirement savings or emergency fund.