Maximizing financial resources to make ends meet, save money, and live better is a big priority for most of us. However, that’s easy to say but sometimes harder to do for many Canadians. To help jump-start your savings we have looked carefully at how to save money. Perhaps more importantly, how to save money fast.
There are many big and small ways to save money and keep more of your hard-earned cash. And it is possible that you can save more than you think.
How to budget and save money fast
Financial planning starts with a wide-angle view of your current spending. Begin by tallying your fixed costs each month – payments that cannot be avoided without penalty. That includes mortgage and rent, car payments, life insurance, and utilities. Also factor in the minimum payments you must make on outstanding credit.
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Include money you control
Next, assess where your discretionary spending has been going. Credit card and bank statements can help you figure that out. Create a list of ‘buckets’ for typical spending on groceries, drug store, gas or transit spending, entertainment, smoking/vaping, wine or other alcohol, clothing, hobbies, and others.
What’s the bottom line?
Add your fixed and discretionary totals and compare that sum to your monthly household income after taxes. That is the aha moment when you will clearly see whether you have extra money monthly to save, are just breaking even, or if you’re falling behind.
The quickest way to save money
The fastest way to save money is to spend less which, although it sounds over-simplified, is very true. Buying items because there’s a deep discount sale is still spending. If you have a finite amount of money to work with each month, spending less will enable saving. Let’s look at some creative ways to do that.
Review/reduce expenses where you can
We all get used to paying recurring bills without questioning them but there are savings to be found in monthly commitments — even in those fixed costs.
Ensure best rates for home insurance & car insurance
Not all insurance rates are created equally and shopping around for the best deals in car and home insurance can save you money. Look for special rates for seniors if you have a long history of safe driving. Check on ways to minimize home insurance coverage while still protecting your most important asset and save your money.
Renegotiate mortgage savings
Mortgage rates are low, creating a great opportunity for those with existing mortgages to comparison shop.
If the gap between what you are paying and today’s rates is significant, it may make sense to re-mortgage. By keeping the same amortization period – for example, 25 years – but at a lower lending rate, your monthly payments will be reduced.
To assess if re-mortgaging makes sense for you, compare the penalty for breaking your existing mortgage. This penalty is usually a minimum of 3 months’ interest. That can easily be paid back over the term of a new mortgage (variable or fixed-rate 2-year, 3-year, or 5-year mortgages).
Mortgage brokers can help assess the opportunity for a better rate, taking the complexity out of re-mortgaging.
Car Expense Savings
Car payments, especially for new vehicles, can take a big bite out of the monthly budget. Opting for a used vehicle or selling an expensive car and ‘downsizing’ to something more affordable can make a big difference. Driving a less expensive vehicle can also dramatically reduce insurance rates and keep more money in your savings account.
Comparison shop for life insurance
Life insurance varies between providers so shop around. As well, there’s a big difference between premiums charged for whole life – which has a savings component – and term insurance. Get what you need without overpaying.
Save on cell phone and internet spending
Now’s the time to get on the phone and ask your provider to do better on their rates. Especially if you have a family with multiple cell phone users, it’s possible you could get a bundled rate to save money. Does everyone need an expensive data plan or could that be canceled?
Are you also paying for multiple entertainment channels and big cable TV bundles? It pays to have a hard look at what value you’re getting for your money. Drop any entertainment feeds that you aren’t using regularly and save more money.
Reduce your utility bills
We often feel at the mercy of our gas and hydro providers with no recourse to save, but in fact, you can control your use of services and timing to save money. Using electrical appliances like washers, dryers, and dishwashers in off-peak hours can save on bills. Turning the thermostat down a couple of degrees in winter or a few higher in summer makes a difference and the same with turning the temperature down slightly on your hot water heater. Have an old freezer clunking away in the garage? It’s time to disconnect old energy-consuming appliances for big savings.
How to save money on groceries
We tend to think of food shopping as a fixed cost because we need to eat to live. But it’s also a discretionary cost because we decide what to buy and how much is appropriate to spend. In that middle ground between need and want, there is an opportunity for savings.
We’re told never to shop for food when we’re hungry. That’s a great way to avoid impulse buys. Using coupons, on-line discounts, and comparison pricing can net savings if you do some prep before going to the store. Most grocery stores will price match and sometimes do rain checks for out-of-stock items. Also, making a list before you go to the store and sticking to it can avoid random purchases.
Buying in bulk and selecting no-name products can save money; shopping for in-season fruit and vegetables also keeps the cost down. Go to farmer’s stands if you can in the summer for produce where good food is plentiful and often less expensive.
Eat and drink less away from home
The Coronavirus experience has resulted in many new cooks in the kitchen! Cooking at home became part of the new norm with noticeable savings on restaurant meals and takeout. Plan ahead for how much money is available to treat yourself to meals not prepared at home and stick to the plan so you can save money.
Pack a lunch for work or school
As workplaces and schools become fully occupied again it’s important to consider the cost of buying lunch every day. When cooking at home, recipes can be doubled so there are tasty leftovers to pack for lunch. Casseroles, soups, stews, and salads make great double-duty choices. Whether you’re trying to save money as a teenager, a parent, or someone saving for retirement, packing a lunch can make a significant difference in spending over time.
Be a minimalist – consume/buy less
The easiest way to save money is to stop spending it, reducing the volume of goods and services used in your household. It’s good for the environment to use what you have instead of buying new, and it’s good for your budget. That can include repairing rather than replacing appliances, driving the same car longer instead of buying new, and even smaller steps like reducing the use of day-to-day convenience including bottled water, paper towels, and single-serve coffee pods.
Shop your closet
With people going out and about after Coronavirus restrictions, the urge to shop is powerful. To save money, first, have a good look in your own closets to see what gems might be hiding. Pull out your out-of-season clothes to create space to view in-season items.
Weed and feed by making a pile of things that no longer fit or are no longer in style. Then reassess the pieces you have and see if there are new combinations of pants, tops, jackets, etc. that can help refresh your look. Add back into the mix any out-of-season clothes that can be used year-round like cardigans and jackets.
If any items you are discarding are in good condition, freshly cleaned, and still the style you can sell them on buy-sell sites or at consignment stores. Accessories like stylish handbags, shoes, and jewelry are also marketable. For the men, there may be suits or other business attire that you no longer need in a society that is now more open to work-from-home.
If you have friends who are doing the same clothing refresh you could arrange an on-line swap event, posting items and letting the nearly-new buying begin!
Cut on-line spending
With in-boxes bombarded with tempting offers from on-line shopping sites, it’s easy to lose sight of goals. Make sure you’re making good, non-emotional decisions by delaying purchases by at least a day to consider if they are satisfying a real need or just a temporary want. Try to avoid those weak moments when life seems dull and that new handbag or golf club looks like a day-brightener.
Consider unsubscribing to sites for your favourite things to reduce spending. And if you have reward points from credit cards, travel programs, or drug stores, try satisfying shopping cravings by spending points instead of cash or credit.
How to save money on low-income fast
The most challenging situation is for people who have low incomes with less flexibility to save. But there are ways to save money even on a tight budget. Buy groceries on a need versus want basis. Hand clothing down from one child to another as they grow. Cook at home and limit entertainment spend. Watch indulgences on smoking/vaping/drinking. Ensure that fixed costs are as low as possible. These strategies can reduce expenses and save you money.
How to save money from your salary quickly
If you can allocate even a small amount of money from your paycheque monthly for savings, have your employer or your bank automatically withhold that in a savings account. Chances are you won’t miss those funds and it will quickly build into savings you can rely on. Be sure to take advantage of any employer matching programs for RRSPs or other investments which will quickly boost what you are saving.
Automate savings with online bank transfers
If your budget has savings room, automate those savings so funds go directly to your TFSA, RRSP, high-interest savings accounts, or GICs automatically before you can access them for spending. What goes out of the account automatically is typically not missed and will ensure you are saving money.
How to save $1,000 a year
Adopting the philosophy of assessing need versus want and getting creative on saving can absolutely net $1,000 a year in savings. That money can then be set aside as an emergency fund for unforeseen home or car expenses for example.
If you reduce monthly spending by:
- Groceries minus $35
- Entertainment minus $25
- Home and car insurance minus $25
you will have saved just over $1,000 by the end of a year. You can decide what bucket of spending to reduce to achieve monthly savings and reach your goal.
How to stop living paycheque to paycheque
These are challenging times and it may not always be possible to increase your income. However, there are several options to consider including:
- Finding a second job that you can do without interfering with your main employment
- Negotiating a raise in your current position based on performance
- Ensuring teenage children are learning life skills by working part-time and contributing to their future education
- Going down to one shared car in two-vehicle households if feasible
- Saving any rebates from income tax or other windfalls rather than spending.
Creative ways to save money
Along the same lines, you can generate more income by leveraging your own creativity.
Hobbies that can be turned into viable businesses are worth pursuing. Garage sale junkies can turn trinkets into treasures, perhaps refinishing furniture or polishing old jewelry for resale.
De-cluttering at home can also help find things to sell. Online buy and sell groups make great platforms for local selling and bartering.
It’s also a great time to get creative with DIY projects you’ve been putting off around home. Instead of ‘hiring it done’, you can save money by doing anything from gardening and landscaping to an interior décor refresh.
No-fee banking: Pay yourself, not the bank. Be sure to sign up only for no-fee credit cards – ones that don’t have an annual recurring fee. And take a close look at what your bank is charging you for services monthly. If you are being charged, find a no-fee bank account provider. Seniors should ensure that the bank is aware of their age because banks often rebate service and account fees for those 65+.
Cash is king: Using cash instead of credit makes spending more ‘real’ and can result in lowered splurging over time. And if you have credit card debt, be sure to pay down the card with the highest interest fees first. Gradually you’ll be paying off principle and reducing debt instead of paying interest-only.
Save on hobbies: Another area to look for savings is hobbies. While gym and golf memberships may seem like a necessity, other lifestyle habits like jogging or hiking can provide fitness for free.
Create your budget and stick to it
Now that you’ve lowered your fixed and discretionary spending, you can finish the budget process. Update your budget with your lowered costs and set your limits for each ‘bucket’ in the expenses you control. Create a bucket for savings and you can see how much you save each month. Soon you’ll have that emergency fund everyone talks about but never seems to have!