Saving money is tough, but crucial to anyone's financial stability or future. Whether you are saving up for a down payment on a house, your Child's college fund or your retirement you must learn how to create a savings strategy and develop proper savings habits for both short and long term goals. Here are some tips or ideas to help you get started.
Audit Yourself, Review Expenses and Cut Spending.
The first step is to understand where your money is going and how much money you actually make. Take a look at your past months (or even years) spending and sort them into essential and non-essential spending. There are lots of apps that can connect to your banking accounts and credit cards to help with this like Quickbooks or even your personal bank might have their own technology or app that calculates your spending into one spot. Create a budget for each type of spending and make sure you follow it. Review your monthly subscriptions like Netflix or your daily coffee routine (There are cheaper ways to get coffee in the morning then that $6 latte). Where can you save money? Is using Skip the Dishes to spend $300/month on Mad Mango's Laksa soup essential? Probably not. Don't cut out important items like organic foods, but consider things like eating out less instead.
- If you're having difficulty keeping to your budget, try putting your budgeted amount of money into different bank accounts or even take it out as cash and put it in envelopes for each type of spending (make sure to store this safely). Then once you run out of cash in your envelope, you're budget is done and you're not allowed to add more money. Consider adding any surplus directly into your savings if you come in under budget.
- Reevaluate your cable subscription and make sure you only pay for what you use, same goes with your phone bills, call them and ask for a lower bill and even call competitors to see what they can offer you. Cancel subscriptions you don’t use (not an excuse to cancel that gym membership).
- Pay more attention to utility bills, consider washing with cold water soaps, turn the lights out when you're not in the room. Consider having an energy audit done on your home, it will save you money in the long run.
- Set up automatic deposits through your bank or even your employer. This way whenever you deposit a cheque into the bank, it will automatically take a portion and put it into your savings. Even better if you are using your Tax-Free Savings Account.
- Start small. It may be easier to develop a good saving habit first by setting short term small deposit goals and then reevaluating your saving potential as you go. Try with $20 a week instead of $500 per month. Once you develop a good habit and can see how you're spending less effects your lifestyle, you can steadily increase your deposit amount.
- Round to the nearest dollar. If you haven't heard of this one yet, it's pretty cool. What started with an app, is now provided by most banking institutions. Whenever you make a purchase with your debit card, let's say buying a Starbucks coffee for $3.55, your bank will automatically round that purchase up to $4.00 and put the extra $0.45 into your savings account! This adds up into a nice stream of savings over the month.
- Save Windfalls. A lot of the times you hear someone come into a bit of money through their tax return, a work bonus or inheritance and then they go out and buy something new and shiny! Why not consider saving it instead? Or at least part of it.
- Put a limit on how many unessential items you can purchase over the month or within the week. You can even make a game out of it and see for how many days you can go without making a non-essential purchase! Try opening up a bit of competition with your partner or friends.
- Pay off credit card debts every month. Credit cards are the true killer of savings with monthly interest on most cards close to 20%. If you are collecting points or cashback but always have a balance on your account, you are losing much more money then you are receiving back. If you know you are going to carry a balance, consider ditching the points and go down to a lower interest card like 11% or 12%.
- Use your banks atm. There are usually upwards of $5 surcharges when using an ATM at a bar or event, make sure to plan ahead of time if you think you'll be needing cash, this is also a great way to set a budget before you go out.
- Set autopayments on bills. To avoid late charges or the stress of remembering to pay all your bills on time, you can easily set up most of your bills on auto payments through your bank or even your bank's mobile app.
- The gift of savings. Birthdays and Christmas tend to sneak up on us and require lots of spending in a short amount of time. Consider purchasing gifts throughout the year, especially during big sales in advance of the holiday. Even better, set up smaller gift amount limits within your family and with friends, it will save everyone some money and you can focus on what really matters during the holiday season.
- Pack a lunch. Eating out gets expensive even just for your work meals, packing a lunch from home usually costs less than half of what you would spend out. Not to mention it is probably healthier and you can avoid those large lunchtime lines.