Saving money used to be fun. You had a piggy bank (or in my case, a doggy bank) and all your change and maybe even some paper money went into it. You loved to shake it and hear the money jingle and dream about what you could buy with your savings. But that’s all changed. Nowadays, we’re lucky if we have any money left over after paying all our monthly bills. So to help, here are a few insider tips on how to save more money in your life and bring back the art of saving money.
Canadian Saving Rates
Compared to the rest of the world, Canadians ranked in the bottom half out of 29 countries when it came to saving money. In fact, Canadians are expected to save just 3.09% of their disposable income in 2019, while Americans are expected to save 6.67% – more than double! (The Swiss are the best at saving money, saving about 17.64% of their disposable income.) And we're not doing so hot when it comes to debt either. By the end of 2018, Canadians' household debt-to-income ratio was hovering around 178% whereas US household debt as a percentage of disposable income currently sits at less than 110%. We need to turn this around – Canadians used to be known as savers. So what can we do to increase our savings?
Automate Your Savings
Make arrangements with your bank or credit union to transfer a set amount of money every time you get paid, or every month from your everyday account to your savings account. You then won’t have to think about it and you'll get accustomed to having less money to spend. Remember that old saying, out of sight, out of mind? Well, use it here because your money will grow as it compounds over time. Some employers will let you divide your pay between two accounts so it's all done for you as soon as you're paid.
Round Up Your Debit Purchases
Check if your bank or credit union offers debit purchases round up, where your debit purchases are rounded up to the nearest dollar and the surplus gets transferred to your savings. If they do, sign up for it. Then, when you make a $1.75 purchase, you'll be charged $2.00 and $0.25 gets transferred to your savings account. Your bank or credit union may offer different rounding up techniques, so be sure to ask. Over months and years, these small saving amounts really do add up, and you won't even feel it.
Bring Back the Piggy Bank
A big jar will do just as well. Put the piggy bank or jar on your dresser and every night put your leftover change in it. If you can afford to do so, don’t spend any of this change and let it build up. When I mentioned this at a recent workshop, a participant said how a friend had been laid off and was worried about getting by until she received her first EI cheque. Then she remembered her money jar that was in the closet and when she counted the money, she had over $400 saved up. That certainly lessened her stress.
Set Financial Goals
You find out you will need $3,600 two years from now to take a college course to complete your mandatory skills upgrade at work. You break out in a cold sweat as that is a huge amount of money to you at this point in time. But what do you think about $150? By putting away $150 a month for 24 months, you will have the needed $3,600 when it's time to take the course. Preplanning and knowing how to set up financial goals could save your job by helping you get the training you need to keep it.
Save on Money Gobblers
You have been tracking your monthly spending using Credit Canada’s Monthly Expense Tracker and you discover there are certain areas that are wants versus needs. But hey, the coffee is only $4.00 a day. However, if you were to put $4.00 a day into your savings account, in a year you could save $1,460 plus the accumulated interest! That could cover a one week vacation at an all-inclusive resort. And the best part? You don’t have to go into debt to take this vacation. Curb your habits and bank the savings!
Teach Your Kids about Money
A few years ago, I had a client that used the jar method for budgeting out the family’s expenses. Her 4 year-old daughter asked if she could have a jar for herself and she decorated it with her favourite stickers. Whenever she received money, she put it in her jar. After a birthday party, she was excited to deposit what she thought was a red $5 bill into in her money jar. When she excitedly showed her Mum, turns out it was a $50 bill which she had received as a gift. I suggested to my client that she use this as a learning tool and take the next step of having her daughter open a bank account with that “red” $5 bill. My client was thrilled that her daughter was establishing saving skills at a young age.
Contact Credit Canada if You Want to Save But Don’t Know How to Get Started
Saving, like any new skill, must be learned and practiced. You can use our Budget Calculator to see where you may be able to cut back and save. Or for one-on-one help getting back on track with your spending and saving, book a free appointment with one of our certified Credit Counsellors. It's as easy as dialing 1.800.267.2272. What's the reward? Financial confidence and seeing money in your savings account.