When it comes down to saving money and getting out of debt, your habits matter a lot! “The solution to your money problems isn’t more money,” wealth manager and best-selling author David Bach writes in his 2019 book The Latte Factor. Instead, he says, the answer lies in forming “new habits.” So, while saving may require a few new habits—and breaking some old ones, the changes don’t have to be too radical! In fact, saving is simple when you break it down to its most elemental—even when you’re focused on the long term.
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Want to start saving money but aren’t sure where to start? The sages behind MoneyWizard.ca have 10 straightforward methods that’ll bolster your finances. These super simple strategies will save you a lot of money (sometimes thousands of dollars)—and all our are tried, tested and true.
1. Cut The Cable And Phone Cord!
Who watches cable anymore? Streaming services often only cost between $10–20 per month, whereas your cable bill can amount to $55–60 every 30 days. Get all the entertainment you need with Netflix or Crave—it’s time to move on from traditional television.
The other cord that needs cutting is your landline (if you haven’t done this already). We live in a mobile-phone world—and landlines are well past due. Get rid of this needless expense!
2. Cancel Automatic Subscriptions And Memberships
Automatic subscriptions have their use when you’re interested in those products and services. However, it doesn’t take a wizard to show you that paying for unused subscriptions is simply throwing money away. It’s easy to forget how many we’ve subscribed to, so it’s best to audit all of your automatic payments. Manual payments will help you better track where your money is going.
3. Check Your Insurance Rates
Did you know that with auto insurance, you’re usually allowed to switch providers without penalty? So, it goes without saying that you should periodically shop around for more favourable rates. Of course, potential savings depend on your driving record and the vehicle you’re looking to insure—due diligence is always worth the time when you’re trying to save money.
When it comes to home insurance, however, switching providers isn’t as simple. That said, many providers will consider reducing rates in the event you make improvements. Renovations could pave the way to a discount on your home insurance policy. Upgraded carbon monoxide monitors, fire alarms, and burglar alarms could net your savings, as well as updated electrical and HVAC systems.
4. Use Credit Cards Wisely
Credit cards can be a great asset, but they may tempt you to overspend. After all, we’re conditioned to consume. And credit cards are immediately gratifying—especially when you’re lacking cash. Of course, your credit card should only be used in situations that enhance your credit score—namely, for sizable, essential purchases that you can promptly pay off. Beyond that, hide that card away. Otherwise, you’ll be stuck making minimum payments, and penalized by excessively high-interest rates (generally between 16% and 30%).
5. Negotiate Rates With Your Credit Card Company Or Complete A Balance Transfer
The squeaky wheel gets the grease. More specifically, you won’t get nice things if you don’t ask—and that’s especially true of credit card companies.
As long as you’ve been keeping up with your payments, it’s possible to convince your credit card issuer to decrease your rate. Furthermore, you may transfer your balance to a different card. Call the number on the back of your credit card and explain your request. If the company isn’t receptive, multiple balance transfer cards exist with an introductory 0% APR that’ll save you significant interest, albeit over the short term.
6. Avoid Convenience Foods And Fast Food
David Bach coined and trademarked the phrase “Latte Factor”—those small, day-to-day conveniences that, when eliminated, can actually provide you with a significant, and somewhat surprising, sum of money. For example, takeout costs way more than adequately prepared, nutritious meals. It only takes 60 minutes of weekly food prep to supply you with affordable meals and snacking options for the next 7 days. On average, you’re paying anywhere between $10 to $20 for a takeout meal whereas a home cooked meal costs ~$4.50 per serving. And don’t be afraid to use a crockpot to make hearty meals that save both time and money!
7. Plan Out Your Meals For The Week
Meal planning helps you to save money because you’ll know in advance what’s on the menu. You’ll be able to plan meals around items that you already have at home, which means you won’t overspend on groceries, some of which will end up spoiling—the result of not compiling a grocery list and buying too much. With meal planning, you’ll buy just what you need.
8. Save Money Automatically
Set up automated transfers between your chequing and savings accounts—a feature that’s available at almost every bank. You determine the time, amount, and where the money is to be transferred, deposited, or split. Instead of having to manually take out a portion of your paycheck every two weeks, it’s taken care of automagically whenever you’re paid.
9. Park Your Savings In The Right Place
Your ideal savings tools depend on your goals. Do you need extra cash for the short term? Then opening a savings account or Certificate of Deposit are two viable options. Conversely, long-term savings plans are bolstered by securities, stocks, and mutual funds.
10. Save Inside A Tax-free Savings Account (TFSA)
Opening up a TFSA means your savings won’t be subject to income tax. Keep in mind that there are various factors to consider with your TFSA. Your financial adviser will inform you about these matters if you choose this direction. Let’s explore two other similar savings options:
High Interest Savings Accounts
- The potential interest-earnings in these accounts is exponentially higher than other savings vehicles.
- Calculate whether the interest rate you earn will eclipse how much you end up being taxed.
- These accounts give you the freedom to store your funds for your preferred predetermined length (between 90 days and 10 years).
- The longer the term, the more you can earn from interest.
- Note that you may face a penalty for removing these funds earlier than the fixed term you previously selected.
The tips and tricks above work, but only if you do. Those who start today—right now—are the ones who will see the biggest and fastest return on their efforts. You can do it! Believe in yourself! Make a plan for saving and trust that you’ll have the intestinal fortitude to stick with it!