According to one recent report, money remains the top stressor for Canadians for the sixth year in a row. In fact, 40% are more worried about money than about their personal health, work, or relationships. Does that sound familiar? If you’re getting low on cash, you know it can affect your mental, emotional, and even physical health. No one wants to tell their friends and loved ones, “I spent all my money, and now I’m unsure what to do.”
Finance-related stress can take a toll on your everyday life, but it’s not impossible to overcome. Today, we’re looking at a few of the most effective ways to cut unnecessary spending and rebuild your savings one step at a time.
1. Learn Your Habits
Before you can begin saving money, you need to understand how you’re spending money. It’s easy to lose track of all your daily expenses, especially ones that seem minuscule at the time (like that $5 coffee).
Start keeping a written record of everything you spend. There are a few different ways you can do this, including:
- Writing it down in a notebook
- Using a money-saving app
- Keeping a note on your phone
- Tracking it in a spreadsheet
No matter which method you use, the goal is to be consistent. Writing everything down gives you a chance to really see where you’re spending, and it might help you think twice the next time you take out your wallet.
2. Make a Budget
Once you take a closer look at your spending habits, the next step is to create a budget. This is simply the process of keeping track of your income and expenses.
There are many different budgeting tips you can follow, but the easiest way to get started is to divide your earnings into three different categories. These include:
- Basic necessities
- Non-essential expenditures
- Savings
As a general rule, 50% of your earnings should go toward your basic necessities, which can include everything from housing and utilities to groceries and clothing. Then, around 30% should be allotted to non-essential luxuries, such as eating out, grabbing coffee, or going to the movies. Finally, aim to reserve at least 20% of each paycheck for savings.
It can be challenging to track your incoming and outgoing money each week, but this step is critical for anyone who seeks to curb unnecessary spending and get their finances back on track.
3. Look at Your Housing
Housing is the largest expense that most people have to budget for each month. If this is the case for you, consider if there are any ways you can adjust your living situation.
For instance, if you purchased a home and you’re finding your mortgage payments to be exorbitant, it might be more cost-effective or you to rent instead. If you already rent, think about adding a roommate to help offset the costs.
This won’t be a realistic step for everyone, but it can help you save a significant amount of money if you find yourself seriously sinking into debt due to your housing.
4. Cut Subscriptions
One of the less-dramatic changes you can make is to take a close look at the different services you’re subscribing to each month. This might include any of the following:
- Television streaming services
- Music streaming services
- Gym memberships
- Magazines and newspapers
- Beauty box (or similar) mailings
Try eliminating these extra expenses for at least two months. If you truly miss the product or service you were receiving, you can consider adding it back once you have a little more spending money.
5. Look Into Debt Consolidation
Experts predict that by 2025, cash will make up only 3% of all point-of-sale transactions in Canada. We’re quickly becoming a cashless economy, which means that more people than ever before are using plastic to pay. As a result, you may have multiple debts cutting into your earnings, such as:
- Student loan debt
- Credit card debt
- Auto loan debt
If you’re currently paying a separate bill for each one per month, it might be advantageous to look into debt consolidation. In short, this is a process that combines all of your debts into one payment, often with better terms and a lower interest rate.
By lowering your monthly debt expenses, this approach can help you pay off your debt more quickly. The only caveat? For this step to work, you have to commit to making your monthly payments on time.
6. Try Lowering Your Insurance
If you don’t take a regular look at your insurance expenses, you could be paying more than you need to for those services. Insurance can comprise a major portion of your spending, and it’s important to make sure you’re getting a good deal.
There are many different plans and policies out there, and you may find that you can save money by switching to a different company. If you’re happy with your current coverage, ask if you can get a discount by bundling your services together. It’s always worth asking!
7. Lower Your Utilities
There are some utilities, such as power and water, that you need to have no matter what. However, there are ways you might be able to lower your utility bill each month. Some ideas include:
- Swapping your incandescent lights for energy-saving LEDs
- Unplug electrical devices when not in use
- Turn off lights and faucets when not in use
- Switch to a programmable thermostat
- Re-caulk around doors and windows to prevent leaks
You might not notice a major difference at first, but these small savings can add up over time!
I Spent All My Money! What’s Next?
Instead of running around lamenting, “I spent all my money!”, why not take a logical approach to getting your finances back on track? These simple steps can help you reduce unnecessary spending so you can avoid spinning into debt.
Now that you know how to spend money wisely, it’s time to put these practices into action. At Eastern Loans, we’re here to help you make your money work for you. If you need quick cash, we offer convenient, easy-to-acquire loans for Canadians.
Apply now to learn more and get started!