Five simple moves that can kick your savings into high gear
Is your goal to start saving more money this year? Are you urgently trying to clear up a credit card balance? Have you joined a savings challenge? Are you behind on retirement savings? Whether you need the money asap or if this is part of a lasting effort, here are five simple ways to kick your savings into high gear starting today.
Review your spending line by line with the goal of cutting back
For this exercise, you’ll grab your credit card statements and bank account transactions from the past three months. Review each item, line by line, asking yourself these questions: Do I need this? How is this helping me? Could I do without it? Is it making me happy (or not)? Could I use this money for something more important? Is it possible to get a better deal?
Your aim is to try to find between five and 10 costs that you could immediately reduce or completely eliminate. Common areas for trimming back are subscriptions, home and auto insurance, bank fees, internet, cable and phone services, money spent on kids activities, clothing, dining out, ordering in and online shopping.
Take action. Cancel the unnecessary spending or switch to something lower-cost, including a discount grocery store. Last year a student in my community was able to shave $350 per month off her spending — permanently — by performing this exercise.
Once you’ve implemented the changes, update your budget template, and repeat this exercise monthly. You’ll be surprised what else you find to cut once you’re in savings mode — I always find new opportunities to save.
As you go line by line you may also reflect and see income opportunities. If you have the ability to take on extra shifts at work, change jobs, get a raise or do some side-hustle jobs to make a little extra money, now is the time to take action on those ideas.
Do a no-buy challenge (all the TikTokkers are doing it)
This is a bandwagon worth jumping on. You turn the taps off of your spending typically for a minimum of five days, but many of my community members do a 30-day challenge. Every time I do the no-buy challenge, I learn something new about myself, I save hundreds of dollars (if not thousands), and I’m reminded of how much I do have and feel a lot more grateful for it. The steps are simple:
Step 1: Pick a day to start and a reasonable duration (the longer you push this out, the less likely you are to do it, so don’t delay). Try it for at least five days.
Step 2: Each morning, transfer a meaningful amount of money into your savings account, such as $20.
Step 3: Don’t buy anything non-essential (you still have to pay your electricity bill!), which means you’re making coffee and lunch at home and skipping any online shopping.
Step 4: Get to know your vices a lot better, and replace them with something healthy. Maybe it’s takeout or gambling? It could be booze, dating apps or paraphernalia for your garden. Your no-buy challenge is going to bring you face-to-face with real spending temptations, old habits, mental patterns, your ambition and confidence. Once you know your triggers, you can make a plan. As an example, ensuring you have groceries on hand so you don’t order in. When temptation arises, insert a healthy, free substitute like a walk, a trip to the library or meeting up with a friend at the park.
Increase your automated savings contributions
Have you set up regular monthly, biweekly or weekly transfers into your high-interest savings account? If you have, bump up the amounts by a few extra dollars. If you’ve never done this, set it up. You’ll want to create a regular automatic contribution into your savings at a pace that works for you.
Wondering how you’ll afford this? I think about a daily latte — sadly now costing $7 to $10. By skipping the latte purchase and putting that money into your savings, over a year, you’ll have banked an extra $2,555. Could you nudge this amount up just a dollar or two more, say to $10 per day, which is $3,650 annually?
Bump up your retirement savings programs at work
If your employer has a retirement savings plan, participate in it. Typically there are some matching benefits, albeit modest at most employers, but it’s still free money. If there is a way to bump up your contributions, taken automatically off your pay cheque before you have the chance to spend it, to maximize the matching benefits of your plan, do so. Say you’ve already maxed those out, you can still save for retirement through an RRSP and TFSA. The RRSP deadline to have your contributions count toward the 2024 tax year is March 3, 2025. Check the CRA My Account portal to see what your allowable contribution limits are for both accounts to ensure you don’t go over the limit. Retirement might seem like a ways away, but the sooner you start saving, the more time you give your money to grow.
Hold off on larger purchases until you’ve hit your goal
Having a specific savings goal in mind can offer the right amount of motivation to hold off on unnecessary purchases. Once you reach your goal, you can “reward” yourself with something meaningful that doesn’t blow your savings. As an example, if your goal is to save $1,000 toward an emergency fund and clear your $2,500 credit card bill from the holidays, once you’ve accomplished both, perhaps you treat yourself to a nice meal out with your honey, but keep it to $100 or less. Then, set your next savings goal.
Other ideas to quickly save money is to go through anything that wasn’t used or consumed during the holidays and return it, or sell something that you don’t want or need. For example, if you were given a new tablet, put the old one up for sale on Facebook Marketplace or Kijiji and get some cash for it. Cash in all of your points for cash back on your purchases (then bank the difference into your savings). If you don’t have this, then use other loyalty rewards to pay for your regular expenses like groceries.
This article was originally published in The Star. Lesley-Anne Scorgie is a Toronto-based personal finance columnist and a freelance contributing columnist for the Star.
