Whether you're looking to pay off debt or save for your kids’ university tuition, there’s one habit that will help you realize your goals: budgeting. Yet despite its significance, many people grapple with managing money — not least because of mounting interest rates and soaring prices. So to help, we’re sharing six tried-and-true tactics that financially successful people use to save in today’s climate.
One of the most powerful budgeting habits you can adopt is to only buy what you can afford. But how can you determine if you have the money? At the start of each month, take stock of your expenses with a simple budgeting spreadsheet — or use a budgeting app or calculator. This should outline your sources of income (such as your salary and any side gigs), along with your monthly expenses divided into categories like transportation, food, housing, bills and personal items. Then, follow the 50/30/20 rule.
Have you been dreaming of a new set of golf clubs or winter jacket? Before you open your wallet, think about how the purchase will impact your savings and whether it will truly add value in your life. A good rule of thumb: always wait a week before making a big-ticket purchase. If you’ve forgotten about it during that time, you probably didn’t need it to begin with.
Another idea? Set aside time at the end of the year to list your more expensive purchases, along with one adjective describing how it made you feel. This will help you assess whether it’s worth the price moving forward.
Odds are, you’d probably be surprised by how much you’re overpaying each month. One of the biggest culprits is subscriptions. Financially savvy people regularly review everything from streaming services to magazine subscriptions to see if they’re paying for ones they don’t use and if there are opportunities to lower costs. It’s also a good practice to call your phone and internet providers a couple of times each year to see if they have any promotions that can save you extra cash.
Moreover, think about your daily routines and whether there’s something you can cut back on. That might be making coffee at home or walking to work instead of driving. Finally, be sure to pay off your credit card bills each month, so you aren’t having to pay more with high interest payments.
Sure, it’s convenient — but eating out and food delivery can add up significantly. That’s why financially successful people carve out time each week to plan out their meals and create a grocery list that they stick to (and that falls within their budget).
This helps prevent impulse decisions at the store and overspending on groceries that end up getting tossed. It’s also healthier and you may even surprise yourself with your culinary chops. Other ways you can save on food expenses are to buy bulk, use sales flyers and purchase generic products over brand names.
When planning your grocery shopping, leverage technology to save money.
Another solid budgeting habit is to transfer money to a savings account on your payday. Even better: set up automatic deposits through your financial institution. This allows you to save a portion of your hard-earned cash, without having to think about it. Small deposits over time can make a massive difference in helping you save.
TIP: Use online banking to set up automatic deposits into your savings. A good rule of thumb is to allocate 20% of your income to savings.
How you feel can have a drastic impact on your spending habits. From treating yourself when you had a bad day to celebrating a big win. All these small purchases pile up and even your routine shopping trips can become impulsive. To break the cycle of emotional spending, try texting yourself an emoji of how you feel each time you make a purchase. Include a small ‘self care’ budget to cover off any of these extra purchases and stick with it. Overtime you will become more aware of your spending habits and they will become less routine.
By following these six core habits of financially successful people, you’ll be well on your way to hitting your goals. And remember: budgeting doesn’t have to feel restrictive. If you’ve reached a major financial milestone in your journey, take the time to reward yourself.
Save smarter for your child’s education. BC residents can take advantage of three government grants related to RESPs.
Use these tools and resources to help you stay on your savings path and maintain your budget:
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