It’s no secret that prices have been on the rise since the pandemic, but more of us than ever are having a hard time making ends meet. According to one recent survey, 34% of Canadians are in “bad” or “terrible” financial shape, up from 27% in April 2020. There are signs of inflation everywhere from the grocery store to the gas pump, which makes it harder than ever to save.
However, saving money in today’s financial climate doesn’t have to feel impossible. At EasternLoans, we recommend using a few tried-and-tested methods to set aside more of your hard-earned cash. Here’s what you should know about how to save money.
Write Down and Prioritize Your Goals
There’s no way to reach your savings goals if they’re too nebulous to pin down. Making a list of your goals is a great first step if you want to better manage your money. Studies also show that keeping written goals where you can see them makes you more likely to achieve them.
It’s a good idea to establish some short- and long-term goals to work toward. You should also make sure they’re SMART goals, which can help ensure they’re attainable and easy to measure.
Here are some common examples of savings goals:
- Pay off a car
- Pay off a debt
- Start an emergency fund
- Plan a wedding
- Fund a home renovation
- Save for retirement
- Save for yourself or a child to go to school
- Pay off a mortgage
Once you have a list of financial goals, rate them in order of preference. Prioritizing your goals helps you understand how much or how often you’ll want to save toward each one.
Establish a Budget
Let’s get something important out of the way: it’s impossible to save efficiently if you have no idea where your money is going. Only around 49% of Canadians report having a budget, even though these tools are essential for saving, managing debts, and much more.
To establish a budget, you’ll need to go through your finances to get a sense of how much income you make each month. This may be easy if it’s written on your paychecks, but it’s more difficult if you have a contract job, freelance gig, or side hustle.
Next, you’ll figure out how much you need to spend for everyday expenses. To do this, you may need to go through past bills and credit card statements.
Last, figure out how much you need to allocate toward different categories of your life, including groceries, rent or mortgage payments, gas, and more.
The amount left over is what you can use at your discretion. If you’re focused on saving, this money should go toward your financial goals rather than other purchases.
One of the biggest advantages of a budget is that it allows you to see where your money is going. From there, you may be able to find big or small ways to cut your expenses. Here are some common things you can do to cut costs in certain areas of your budget:
- Cancel subscriptions or memberships you aren’t using
- Cut your cable package
- Use a list when you’re shopping
- Eat at home instead of going out
- Find ways to make your home more energy-efficient
- Update your cell phone plan
- Take a “staycation”
- Stop smoking
- Look into debt consolidation
- Shop for cheaper insurance
For some people, it helps to annualize your spending. Paying $3.50 for a cup of coffee every workday could cost you around $875 per year! Even small savings can add up, so make sure to go through your past expenses with a fine-tooth comb.
Eliminate Your Debt
Some savings goals, like setting up an emergency fund, can be crucial first steps toward better money management. However, other long-term goals might be better served after you pay off outstanding debts.
If you have a heavy debt burden, the money you spend on interest payments may outweigh the amount of your income you can save each month. Putting money toward your debts, which lowers your monthly interest, is a better way to save money in the long run, even if it might not feel like it at the moment.
Pay Yourself First
One of the best budgeting tips for anyone wanting to save money is to pay yourself first. This personal finance strategy works just as you might expect: before you spend money on discretionary expenses, you set aside money for yourself.
This helps you avoid the temptation of impulsively spending money you could be saving. This often means sending money to a savings or retirement account as soon as you receive it. If you also need to pay down your debt, you may want to put a portion of the money toward this as well.
For the best results, it’s a good idea to schedule automatic transfers to make this process a no-brainer.
Use a High-Rate Savings Account
If you need to put money toward an emergency fund or a savings account, why not make that money work for you? A traditional savings account might keep your money available, but it won’t grow your cash much.
A high-rate savings account, on the other hand, can help you accrue a small amount of money over time. Some of the best interest rates hover at around 4-4.5%, though you may see promotional rates of 5% or more for new account holders.
Get Financial Help From EasternLoans
Saving money can be difficult in any financial climate. Life tends to throw unexpected bills and expenses our way, and it can be hard to keep up without an established emergency fund or savings plan. However, sticking to the tips above can make you more likely to weather small financial storms.
If you do find yourself struggling to make ends meet, even with your savings, remember that EasternLoans is here to help. With a straightforward loan application process and no credit check, you can get the money you need fast. Contact us for more information or apply online.