Contributing Writer at Thrive Savings
With rising housing prices and the high cost of living (don’t even get me started on taxes!) combined with the ease of online shopping, a consumer-driven culture, and disproportionately small wage increase in Canada, it’s no wonder 47 per cent of Canadians are living paycheck to paycheck. The savings rate among Canadians is the lowest it’s been in a decade, and this is leaving many financially unprepared for emergencies, rainy day funds, and retirement.
According to a recent poll by CIBC, 85 percent of Canadians say they “need to save more money”, but many of them are all-talk no-game, with 64 percent of them not actually making savings a priority. This new economic reality Canadians face means we need to help them become more financially savvy and develop savings habits that actually work.
In a mission to help Canadians break the paycheck to paycheck cycle and master their money, we interviewed several of Canada’s top personal finance bloggers to learn their favourite simple savings hacks.
GenYMoney blogger, Gym, suggests using multiple savings strategies for one purchase. “I see something in the flyer that’s on sale, then I see if I have a coupon, and then I pay using a points-back credit card (like the PC Financial card or the Aeroplan Infinite Visa), and then use the Checkout 51 app to see if there are more savings to be had,” she says. These micro-savings add up to hundreds or thousands of dollars a year, so it’s definitely worth it to get savvy with money apps and coupons and take advantage of this triple-dip savings strategy.
To cut down on your spending, try shopping bans. “I do an alternate-month shopping ban for myself…if I want something really bad and it’s not ‘my month’ I think about it and see if I still want it the next month”, Gym says. This forces you to slow down and not make impulse purchases and makes you really consider the value of each purchase. Start small and simple. Try not buying anything for one whole day. Then try two days, five days, and even one week. Challenge yourself to see it through and watch your savings grow.
Bridget Casey from Money After Graduation stresses the importance of saving small amounts consistently, for example, $20 every week. If you’re a low-income earner or otherwise unable to save a large amount of money at once, this strategy can be particularly useful for you. “It doesn’t feel painful,” she says, “and it adds up to over $1000 a year and makes a huge difference”. The Thrive Savings app is optimal for helping you do this. Thrive calculates the perfect amount for you to save every week or month based on your spending and earning patterns, and saves automatically for you every week or month towards your goal.
Ever heard of the saying, ‘out of sight out of mind’? Well, when it comes to saving money, Bridget Casey says this can be super helpful. Open a savings account at a different bank than you do your main banking it, and set up pre-authorized monthly contributions into it. Because you don’t visit that bank often, you won’t touch it, and then when you eventually come back to check on it, it’ll be like finding a surprise few thousand dollars in your pocket.
Spending cash instead of using debit or credit will help you save more because you’ll be more aware immediately of how much you’re spending. “Those with debit or credit have a tendency to spend more,” Bridget Casey says. With debit or credit, you don’t feel the pinch right away, but by using cash, you’ll be more careful giving your money away, which will ultimately help you spend less.
For those who work part-time or have a volatile income, try to find the lowest baseline you can live on consistently. “If one month you earn a lot, and one month you don’t, live on the baseline and bank as much of the remainder as you can,” Bridget Casey says. Sticking to this bare-bones budget will help you grow your savings significantly in the long run and help you stay out of debt when you aren’t earning a lot.
Kristy Shen, founder of the Millennial Revolution blog, who managed to save enough to retire in her 30’s, says, “What works well for me is having mini milestones instead of being overwhelmed by all the debt.” She suggests paying off a certain amount every month, and increasing that amount over time as you get more confident, and rewarding yourself as you go. These little rewards, whether it’s a new pair of shoes, a dinner out, or a day trip, will in turn help motivate you to keep saving and paying down your debt.
Another key way to save more money is to pay off the debt with the highest interest rate first, as Kristy Shen highlights. It makes more sense mathematically, and for your own benefit, to pay down the debt with the highest interest rate first and then gradually move on to the debt with lower interest rates. If you do it the other way around, you’ll end up paying more and saving less because you’ll have to pay that much more in interest.
Bank fees and transaction fees add up fast. In order to limit them, Kristy Shen says you should avoid going to ATMs, get a credit card that doesn’t have a high foreign transaction fee if you’re travelling, and investing in low-cost investment funds so you don’t have to pay a high management fee.
Instead of feeling like you need to cut back on everything in your life in order to save money, Kristy Shen suggests, “Prioritize one thing. Pick a category that is important to you, such as cooking instead of going out to eat, so you don’t feel guilty spending in that category, but make everything else as efficient as possible.” Whether it’s something small like breakfast (ex. making breakfast at home instead of buying it), or something bigger like transportation (ex. Selling your car and taking public transit), it will help you save more in the long run.
Enoch Omololu, the founder of the Savvy New Canadians personal finance blog, says it’s important to focus on the small things first, and then build up to the larger things. He advises Canadians to “cut costs on a daily basis before they think about thousand dollar savings”. For example, cut back your online shopping, maximize your credit card rewards, and try to find deals when grocery shopping. Once you’ve started saving on everyday expenses, you can move onto larger things such as increasing your income, whether it’s negotiating a raise or finding a new job.
Take five minutes the night before to prepare your lunch for the next day, so you won’t ‘have no choice’ but to buy lunch when you ‘forget’ to pack one. “I save $1800 every year by packing my lunch,” Enoch says. Who doesn’t want almost $2000 in savings from something so simple and easy?!
In order to increase your savings, leverage your current resources so you can get more out of them. Enoch says some key ways to do this are by renting out parking spots you don’t use to make some extra cash, monetizing your assets (for example, using your car for ridesharing in the evenings) or even starting a side hustle online.
Finally, if you’re tired of having an empty wallet and need a little guidance, savings apps can literally be your knight in shining armour. They take care of the hard work for you, find extra ways to save, and help you reach your savings goals faster. Download the Thrive Savings app for free today from the App Store or Google Play Store and try it out for yourself. It’s simple, easy, stress-free, and you don’t have to alter your lifestyle or spend more to save money like other savings apps insist on.