How to Save Money on Everyday Expenses in Canada

When it comes to debt management, the best approach is to try to prevent it in the first place. Finding ways to save money is one way to reduce the need to rely on credit and avoid getting into debt.

The cost of living in Canada is on the rise. While inflation in Canada for July 2023 is lower than it was for July of 2022—3.27% in 2023 vs 7.59% in 2022 (Source: Ycharts)—the cost of living is still on the rise. Finding new ways to reduce your expenses is a key personal finance skill that will help you stay ahead.

Whether you’re trying to deal with shrinkflation (the reduction in product sizes while their price points remain the same), are worried about the rising cost of living, or are in need of ways to free up some money to help pay off your credit card bills, following a few simple money-saving tips can help.

Start by Understanding Your Everyday Living Expenses (Making a Budget)

The first step to saving money is to get a firm idea of what your living expenses are by doing a detailed review of your accounts and credit card statements. How much are you spending each month on shelter, utilities, food, and other necessities? This is where using a budget planner and expense tracking tool can help! 

First, you’ll want to divide your monthly expenses into distinct categories such as:

• Housing. This covers costs like rent, mortgage payments, property taxes, and insurance. For many, this is the largest single living expense category on their budget.
• Food. This is one of the more variable costs since it’s easy to underestimate just how much you spend on eating out or on groceries. Many small purchases can really add up, especially when you consider current grocery prices.
• Transportation. This can include things like car payments and maintenance or transit passes/Uber fare.
• Utilities. This category covers electric, gas, water, and internet/cable bills.
• Debt Repayment. This is a cost category that you should establish to account for the payment of any outstanding debt you may have (like credit card bills).
• Personal/Discretionary. This is a catch-all category for any personal items that you purchase for yourself that aren’t technically necessities. For example, hobby expenses, haircuts, and entertainment costs could all be considered personal or discretionary expenses.
• Savings Contributions. Set aside some of your budget to save money for the future—about 5% of your “take home” earnings is a good place to start. Whether you use the saved money as an emergency fund, invest it into a retirement savings account, or simply put it towards a vacation fund, it’s a good idea to start saving money when you can.
• Medical. While Canada’s healthcare system will cover many expenses for general healthcare, you still need to consider costs like prescriptions, glasses/contacts, dental work, and specialist visits, among other items.

Keeping track of your spending in each of these categories for a few months can help you identify where your money is currently going and which expenses you can cut back on to make room for other expenses.

Useful Apps That Can Help You Save Money

Knowing how to save money fast is a good start, but how will you keep up with your money-saving plans? Thankfully, there are many tools out there to help you keep to your budget. Specifically, budgeting apps can be incredibly useful for keeping up with your savings goals.

Some examples of apps that could help you save some money through better budgeting include:

• Goodbudget. This personal finance app is useful for creating a digital version of the “cash wallet” budget. Set up individual “envelopes” in the app to keep track of what you’re spending on different expense categories and put any extra towards your savings.
• Honeydue. This app is specialized for couples that offers shared viewing of joint bank accounts with in-app chat tools to help you and your significant other better collaborate when it comes to controlling your budget.
• Mint. This is the “#1 most downloaded personal finance app” that offers users the ability to connect all of their bank accounts and track every deposit and withdrawal in one place. It has both free and paid plans (the monthly subscription provides credit monitoring).
• Smart Receipts. This app allows users to scan their receipts using their phones and store them digitally so you can search, print, or share them later. This is a great app for those who need to track their business expenses for tax reasons.

These are just a few examples of budgeting apps that are available to help you keep track of spending. Your bank will also likely have an app with features to help you monitor your spending habits, set aside money for savings, or handle paying your bills online.

Money-Saving Tips for Your Daily Life

Okay, so you have a budget and you even have a budgeting app to help you keep track of your expenses moving forward. Now what? It’s time to break out the money-saving tips that can help you cut back on your daily living expenses so you have more room in the budget to pay off your credit cards or put aside savings.

How to Save Money on Food

Food can be one of the most variable living expenses on your budget. Between eating out, random grocery store shopping sprees for unplanned meals, and the rising cost of various items, it’s easy to spend much more than you planned to on food.

With this in mind, here are a few tips for saving money on food expenses:

• Start Planning Your Meals. Rather than sticking your head in the fridge/freezer/cabinet and seeing what you feel like making for dinner, create a meal plan so that you know exactly what you’re going to cook each day of the week. The benefit of this is that it helps you control your spending on groceries, reduces food waste, and keeps you from giving into temptation and spending money on fast food. Also, if you take the time to create a healthy meal plan, it can help you maintain healthy eating habits and cut out the junk food.
• Create and Stick to a Grocery List. Once you have your meal plan for the week, use that plan to create a shopping list of groceries you need to make those meals. This helps keep you from giving in to the urge to splurge on snacks or food items that you find interesting but aren’t part of your meal plan. It can also help to leave the kids at home when you go shopping (if you can) so they don’t ask for items you don’t need.
• Start Couponing. If you aren’t already, consider going through your mailed offers from local grocery stores and popular savings apps like Flipp, Reebee, or Save.ca. The best-case scenario is finding coupons for food items you already buy frequently. Finding coupons for off-brand versions of the foods you like, store-specific coupons, or for foods you haven’t tried yet and basing your food plan and shopping list around those coupons can also help you save some money on groceries.

How to Save Money on Discretionary/Personal Items

Who doesn’t enjoy buying something fun for themselves? From game consoles to designer clothes, cool gadgets, collectibles, movies/tv shows, streaming services, and more, there are countless items out there to spend money on.

Finding ways to cut spending on personal items and other discretionary spending can go a long way towards helping you avoid building up debts. Here are a few tips to help you get started:

• Curb the Online Shopping. Online shopping addiction can be a real problem for any budget. If you find yourself spending too much money online, it’s important to take a step back, find out what triggers your urge to make online purchases, create a list of must-have vs nice-to-have items, and challenge yourself to spend less online. Waiting 24 hours before clicking 'checkout' can give you some time to reflect on whether this is an item that you really need.
• Consider Replacing Your Costlier Hobbies. Some hobbies can be surprisingly expensive. Take, for example, video games. Many games include things like microtransactions or even full-on gambling that can make a game much more expensive than the price sticker at retail would suggest. Consider finding an activity or hobby that is less costly—like geocaching, learning a language, starting a blog, or visiting free (or at least inexpensive) community activities. 
• Tie Personal Purchases to a Prepaid Credit Card. When making personal purchases, consider putting money on a prepaid debit/credit card and using that instead of your regular bank or credit card. This way, you have a hard ceiling on how much you can spend and won’t accidentally go over-budget. Simply add however much your monthly discretionary spending budget is to the card and use it to make your personal purchases.

How to Save Money on Debt Repayments

Debt can take a surprising amount of money out of your bank account over time. This is especially true of debt with compounded interest (where the interest accrued is added to the money owed and future interest is calculated off of this increased total). So, finding ways to reduce the total amount of money you spend on repaying debt can be important for saving money in the long run.

Some ideas that could help you manage your debt include:

• Paying Off Your Largest, Highest-Interest Debts First. When repaying debts, consider focusing most of your money on the largest debts with the highest interest rates first and only paying the minimums on your smaller debts. This is known as the avalanche method and can save you money in the long run by minimizing the amount of interest you pay on your debts overall.
• Refinancing Debts with a Consolidation Loan. You could roll several higher-interest debts into a loan with a lower interest rate to reduce the amount of money you spend on interest over time. This is a great option for those with a high credit score that makes it easier to qualify for loans with low interest rates.
• Seeking Advice from a Certified Financial Planner or a Credit Counsellor. If you need help managing your debt or finding the best ways to save money under your current circumstances, please seek help from a financial planner or a non-profit credit counsellor. By speaking with someone experienced in personal finance matters, you can get insights that are specific to your financial situation and can help you start saving money sooner rather than later.

Need Help Getting and Staying Out of Debt?

Are you looking for help getting (and staying) out of debt? Credit Canada is here to help! Our credit counsellors have helped thousands of people get out of debt with debt consolidation programs and sound advice that helps them stay out of debt once they’re debt-free.

Reach out to Credit Canada today to get out of debt and get back into your life!