Save & Invest
How to Save Money Fast: 5 Quick Savings TipsJuly 09, 2019
Saving eludes many of us until well into adulthood, and the longer we postpone it, the more resistant we are to start. The idea of saving might seem like a sad joke for some people, but with a few simple steps, personal finance is a skill anyone can get master. You just need to know where to begin…
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Saving is like a muscle, the more you exercise it, the stronger you get at it. And like any exercise or activity, it can be broken down into a step-by-step guide for beginners. We break it down into five simple steps. And, we throw in a few extra tools and tricks for good measure.
5 steps you can take to start saving more money:
1. Set a goal
What are your dreams? Visualize them and make them your financial goals. Let these goals motivate you. Change is challenging, but our brains will tackle it head-on when there’s a light at the end of the tunnel. Write your goals down and put them somewhere you’ll see them every day. At first, you’ll need to remind yourself why you’re saving, but after a few weeks, it’ll become second nature.
The trick is to start small. Choose one goal and focus on small amounts. With simple decisions and a little willpower, you’ll quickly develop new behaviours that become good habits. And once you taste the success of reaching a small goal quickly, you’ll be ready to set your sights on larger goals!
Some worthy saving goals may include:
- An emergency fund. Perhaps, like most of us, you’ll only feel secure once you have an adequate one or at least a rainy day lump sum when you need it.
- A down payment for a house. The motivation to get on the property ladder is all some people need.
- Reduce debt. Larger or more frequent payments is a great use for your newfound savings. It can also help raise your credit score and help you save on interest charges.
- Vacation or special occasion. Maybe you haven’t taken a proper vacation in years? Maybe you just got engaged and have a wedding to pay for?
- Education. Maybe you want to go back to college or you have a teenager who will be going into university soon?
- Retirement. Saving for retirement is a highly advisable long-term savings plan. You might even be planning to retire early!
2. Review your spending habits
An easy way to start saving money fast is to understand your spending habits intimately. You may surprise yourself with how frivolously you’ve been throwing cash around. Review your bank statements. Find patterns in your expenses. You’ll find that small expenses—two dollars here, five dollars there—have been burning a big hole in your pocket.
When our spending goes unchecked, we often reach into our pocket without even thinking about it. Those rectangular pieces of plastic in your wallet can be a little too convenient, especially with today’s tap machine technology! Once you’ve reviewed and become familiar with your spending habits, you need to devise a strategy to break them.
For some, credit card purchases are a serious weakness. Research shows that credit card purchases don’t register as “spending” in our brains because there’s no visible cash exchange. Impulse spending is another trap we need to be aware of, but we can minimize it by knowing our triggers and steering clear of them. For example, you should try to:
- avoid the shops where you tend to make your biggest impulse purchases.
- stay away from 1-click shopping websites.
- keep less money in your chequing account.
- leave your credit cards at home when you go to the mall.
- pay in cash- it’s more painful than paying with a card.
One or two little changes may be all you need to save a small fortune!
While you’re looking at your bank statements, you may also be surprised at how many auto-debits you are signed up for. Are there any subscriptions or memberships you no longer need or rarely use? Figure out which subscriptions bring the most value to your life and cut out all the rest.
3. Build a budget and stick to It
Once you’ve identified how much money is coming in and where it’s all going, you can start to build a budget.
We strongly recommend that you spend time and put some thought into this as you create a practical budget that you’ll stick to. It’s all about keeping the essentials (needs) and extracting the extravagances (wants), but remember, it’s okay to reward yourself every now again.
When drafting your budget, it might be a good time to set some rules for yourself to achieve your saving goals faster. Some good rules might include:
- Committing to discount shopping. Buy in bulk, download cashback and discount apps (see below), use coupons, shop on discount days, and visit consignment shops.
- Cutting back on dining out. Prepare your own meals and get used to packed lunches. Remember, a $6 daily sandwich can add up to over $1500 a year, and that’s not even counting weekends!
- Planning a cheat day. Don’t waste money on junk food or things that are bad for you, but if you really enjoy it, schedule one day out of the week when you’re allowed to treat yourself.
If you’re unsure about how to allocate your money, the 50/20/30 rule is a reliable guidepost. This guideline divides your net income into three categories: essentials (home, car, utilities, food), financial goals (savings & paying off debt), and personal expenses (luxury items and personal indulgences).
There are also a few thoughtfully designed apps that can help you create a budget to fit your lifestyle.
4. Pick the right savings account
You work hard for your money, so it’s important to put it somewhere it will work hard for you.
Generally speaking, there are two types of savings accounts.
The first gives you easier access to your money albeit at a lower interest rate to other types of savings accounts.
The second type of account will boost your savings with a higher interest rate, and it will make it harder to touch those savings when you feel a regrettable splurge coming on.
Financial institutions offer varying rates, so make sure to shop around for the best rates and service fees.
There are several ‘savings’ tools that are similar to savings accounts:
- An RRSP or Retirement Savings Plan is ideal if your goal is to save for retirement. Check if your employer offers RRSP matching benefits.
- A TFSA, is a Tax-Free Saving Account up to a limit of $6,000 per year. A TFSA can be used for any saving goal and is a welcome alternative to a standard investment account which is subject to taxation.
- An RESP is a Registered Education Savings Plan that allows you to save for your child’s post-secondary education. The government may even contribute a grant to supplement this fund. That’s right, the government pays you to save!
Other options include term deposits, mutual funds, and more. Each account comes with varying conditions of use, and each comes with its own criteria and tax implications for withdrawal.
It’s important to reiterate this point: save your money somewhere it will grow. Don’t underestimate the value of compound interest—you’ll be earning interest on your interest before you know it!
Image: Interest earned on a 1-time lump sum of $1,000 over a 10-year period.
Compound interest can also be your worst enemy, like with quick cash loans, for example.
5. Automate your savings
It’s not hard to set up automatic withdrawals from your checking account into your savings account. This way, you won’t forget or accidentally spend the money you were supposed to save. You’ll barely even have to think about it! Choose an achievable weekly, biweekly, or monthly transfer amount that you’re comfortable with. Then, simply set it and forget it!
Now that you’re part of the saver’s club, here are a few other tips, tricks, and tools to keep you on the straight and narrow.
Join a community of savers
Saving is more fun when you don’t feel like you’re doing it alone. Dive into the world of living frugally by following how the pros on YouTube do it. Checking into your favourite channels (or podcasts) from time to time is great for helping you keep your eye on the prize and really cement good habits.
You’ll pick up excellent tips to help you tighten your belt even more, and you can network with other savers and learn from each other.
Some YouTube saving gurus are top-rated with hundreds of thousands of subscribers, while others are smaller but equally valuable. Here are just a few to get you started:
- Jordan Page – Fun, Cheap or Free
- Jeff Rose – Good Financial Cents
- Sarah Wilson – Budget Girl
- Nicole – Frugal, Chic Life
Download money-saving apps
There are so many great apps to help you budget, invest, save money, and get cash back! We’ve already covered our favourite budgeting apps, so here is a list of some of our other favourites and must-haves:
- Mylo is a savings app that rounds up your purchases and invests your spare change.
- Ebates offers great cash back deals, coupons, and discount codes.
- Checkout 51 delivers cash back on grocery shopping.
- SwagBucks gives you cash back for purchases with various retailers.
- WagJag & Groupon offer excellent discounted deals on events, experiences, travel, goods, and meals.
- GasBuddy is essential for drivers. This app helps you find the cheapest gas wherever you are.
Spring Financial provides simple saving tips and practical advice for Canadians facing all types of credit situations. We offer quick-and-easy installment loans (and other credit-building solutions) to help you pay your bills, consolidate your debt, and get that home renovation or new car you’ve been dreaming of.
Connect with us today to see how we can help you take that first step to a better financial future.