Chances are this year looks a little different than what you planned. Along with your newfound passion for gardening, baking and enjoying the simpler things in life, there’s something else you can take from these unique times: a chance to set a budget or savings goal.
Think about it. Expensive vacations abroad have been called off. You’re turning down more and more dinner invites. You’re not commuting as much and having to pay for high gas or parking prices. And you haven’t splurged on any new looks because you’ve been spending more time than usual time in sweatpants. Not going out means you’re spending less money. And, from stripping down your life to essentials-only, you’ve even started budgeting for what you need.
Whether you’re saving to cover the cost of big vacation, a new car or an emergency fund, put your new budgeting and savings habits to the test. Start and hit a savings goal. We’ve gathered some helpful tips to get you there.
Define your reasons for saving
Understand your “why” for saving and make sure you have a specific goal in mind. Vague reasons won’t give you the motivation you need when the temptation to spend comes knocking. It could be that epic European vacation you’ve been talking about for years, or that nicer car you want but can’t afford right now. Maybe you want to plan for an emergency fund to cover six months of living expenses. Whatever your reason, make it concrete, do some research and cost it out. When you have that number of what you need – set it and make it your savings goal.
Do the math
As they say: If you fail to plan, you are planning to fail. Just setting aside a few dollars for your goal at the end of the month might not be enough. It’s important to have a defined amount that is going directly towards your goal each month. An easy way to figure out that amount is to work backwards. If you know you want to save $5,000 for that euro-trip, $15,000 for a better car or $20,000 for an emergency fund, you’ll need to know how much you need to save and how long it will take to get there. So, calculate it!
You can also utilize tools like a mortgage calculator, RESP calculator or TFSA calculator to help you develop and fine tune your savings plan. There’s lots of other calculators out there too. Alternatively, if you can determine the amount you can save each month like $500 per month for a vacation, $2,500 per month for a car, or $1,000 per month for an emergency fund, then you can calculate the date that you will hit your goal. Put that money away each month, and in 6 months, one year or two years from now you’ll have it.
Create a budget
Develop a budget that works for you. Some people thrive on the kind of budgets that lay out how much you can spend on each item, down to the last penny. Others do better with more flexible budgets. Budgets aren’t a one size fits all approach. Do a little research to find one that fits you and your spending style. At the end of the day, all you’re looking for is a framework that makes you aware of what you’re spending on, what you need to cut down, and what you need to put away. It’s a way to help you see your spending habits, so you focus on spending only what you had planned for.
Audit your spending
Do a meticulous comb through of your spending. Look at your Mastercard® credit card and MemberCard debit card statements. You’ll be surprised what you find. That streaming service that you haven’t watched in months, the magazine subscription that auto-renews, concert tickets you haven't got refunded, and yes - that cell phone bill which always seems to be going up. When you add it all up, you’ll be surprised at the total. If you were able to cut down or even eliminate these expenses, you could pocket that money and put it towards your savings goal.
Set it and forget it
Move your savings from optional to actioned. The best way you can overcome the challenge of saving is to pay yourself first. Once you know how much you can comfortably commit to each month, set up an automated transfer that automatically transfers funds to your savings account on a schedule. If that money is whisked away into your RRSP or Simply Free Account® before you even know it’s there, you’ll eliminate any temptation to dip into it. Your credit union won’t make the pre-authorized transfer if there isn’t enough money in your account to cover it. Talk to us about setting-up an automated transfer.
Make small impactful wins
There are a ton of great ways to save. Many of them can be as easy as switching a product or adding a service. This might seem counter-intuitive but choosing the right credit card can help you be a better saver. Consider no fee or low fee credit cards designed to save you money, or even give you cash back.
Take advantage of programs that help you save like BIGChange®. Every time you use your MemberCard debit card to make a purchase, BIGChange rounds it up to the nearest dollar and transfers those extra coins to an account you can use to help you grow your savings.
If you find it hard to save because you always spend what’s in your savings account, get your funds locked up for a certain period of time with a 1-year or 2-year term deposit. Some term deposits are cashable at any time, so you can access them if you absolutely need to. But, if you want to really lock your money away tightly, select a non-redeemable option which gets you a higher interest rate and a reason not to access it before the maturity date.
Lastly, find ways to make extra money. Look for incentive programs like Referral Perks®, where you can earn $100 just by referring friends to apply for a Simply Free Account®.
Don’t go it alone
Your journey to saving success doesn’t need to be a solo effort. Consider recruiting an accountability partner like a friend, spouse or even parent who knows about your goal. A little encouragement goes a long way. We’re here to help too. Our expert financial advisors can answer any questions to help you make the smartest possible choices for your financial future.
That’s what we’re here for. We can answer your questions about saving or budgeting. Whether it’s an inquiry about how to set up an automated transfer, switch credit cards or register for a savings plan — contact us.
Increase your knowledge
We like to ensure that you have the tools and resources you need to budget and save. Here are some other helpful articles to lean on for insight: