Struggling to save money? You're not alone. Over a third of Canadians are making some type of money-related resolution for the new year.
But if you go into 2021 with no real strategies on how to save money, don't expect this year to look different. You want to set goals around financial planning and build new money habits to help you succeed.
This isn't to say that it's easy to start a new habit and succeed right away. It can be tough to say no when tempted by your favourite indulgences, like online shopping, takeout, or daily lattes. And you can enjoy these things as a part of your big picture plans to save money. You just have to plan for it!
With all that in mind, here are a few tips to help you grow your save money this year. You'll be surprised how these small tweaks can have a big impact as you save towards your goals!
1. Separate Your Savings
This is an important tip for all, but particularly for people who find themselves to be impulsive with their money.
Your savings need a dedicated home - they shouldn't be sharing space with your daily spending money. If you can access your savings with the tap of a card, you'll be more likely to spend it mindlessly.
Open up a second bank account to hold your extra savings in. There are plenty of low-to-no fee online savings accounts that'll offer you a secure place to store your cash. You can potentially even earn some interest while you're at it!
Alternatively, you can start an account with QUBER. QUBER is a Canadian mobile app that offers its users access to the QUBER Vault. This is a secure account where they can store their extra savings for free. Plus, you can earn a cash incentive worth 2% of the total you save when you successfully complete any QUBER Saving Challenge.
That's equivalent to (or better than) the interest you'd earn saving that money in most standard savings accounts today!
2. Save Money Right After You Get Paid
If you're waiting until the end of your pay period to save whatever's left in your bank account, you're probably not saving much.
Start saving some of your income right after you get paid and have covered your essential expenses. That way, you can choose an appropriate portion of your income to save while still leaving yourself enough to cover the costs of the rest of your pay period. This gives you a clear idea of what you can afford at your current income level without relying on credit.
3. Automate Your Saving
This goes hand and hand with the tip above. Automating your savings is a great way to make it easier to save money right after you get paid! With most online banks, you can set up automatic withdrawals into separate accounts. Out of sight, out of mind.
Determine a set minimum amount to save each pay period and, if possible, set an automatic withdrawal. You can aim to save a dollar amount or percentage amount from each paycheck. In general, you should aim to save more than less, but it's always better to save even a little. It's better than nothing!
If you can make that saving process automatic, you'll be more likely to stick to that amount instead of if you give yourself the flexibility to save according to how you feel each payday. Automating your saving routine will make it easy not to forget about putting money aside. It's all done for you!
This is another area where QUBER can easily help you make changes to your existing routine. With QUBER, you can choose exactly how you'd like to save. You can round up to the nearest dollar on coffees, tax yourself a percentage on groceries, or saving a set amount bi-weekly. Once you set your Saving Rules, QUBER handles the saving for you.
4. Save Money by Planning Ahead
Take the time to build a budget! Your budget is essentially a plan that outlines where every dollar you make will go.
By budgeting your monthly income, you'll save more on your daily routine. For example, meal planning can help you cut on food expenses. You can purchase exactly what you need and make use of what you already have at home. You'll also be less tempted to get takeout on a whim with planned meals.
Do your best to plan ahead wherever possible. You can get things at the tap of your screen, sure, but the cost of instant availability is high. On a regular basis, the impulse buys can eat into your savings, and set you way off your financial goals.
5. Keep Yourself Motivated
Having a clearly defined goal to work towards when you save money is essential for staying on track. These goals can be something big like a vacation or a kitchen renovation or something small like a spa night in. Use your desire to reach your goal to your advantage - you'll learn to think twice before making impulsive purchases if it takes away from your goals.
Need to keep yourself reminded of your goals? Leave reminders places you'll see them often, such as your agenda, a magnet on the fridge, or a note on your computer desktop. Some people even make a vision board with all their goals on it.
On the other hand, you can keep a list of reminders of impulse purchases you've made that you regret and see how it slowed your progress to your goals.
These techniques aim to achieve the same result - a reminder of the goals you want to hit long term and different ways to visualize them. Soon, you'll find your goal is more top-of-mind. Thinking twice before making any decisions that might set you off track will become second nature.
6. Have an Emergency Fund
In order to ensure the long-term stability of your savings, you'll need to have a dedicated emergency fund. This way, unexpected expenses aren't constantly eating into the savings you work so hard to put aside.
An emergency fund is a pool of money put aside to cover a sudden financial shock. This could be unplanned car repair, an unexpected medical bill or a sudden loss of income (ultimately, anything that results in a significant, unplanned expense for you). An emergency fund is not meant to cover planned expenses like groceries, rent, or clothing. It's also distinctly different from general savings meant for your financial goals.
It's important to have an emergency fund to ensure that you always have some liquid cash put aside in the event you really need it. The problem here is that you just can't predict when that'll be.
If you don't separate some of your money off into its own emergency fund, it's too easy to accidentally spend it. You could end up taking on high-interest debt to cover your expenses if a financial emergency arises. To prevent this, your emergency fund should ideally have its own dedicated account. This is similar to how your savings need to be separate from your spending money.
Determining how much you need to save in an emergency fund is personal. The amount depends on your individual financial responsibilities or lifestyle. In general, it's recommended by the Government of Canada that you save somewhere between 3-6 months of your expenses.
Keep in mind that this is a recommendation. It's important to take a hard look at what an emergency fund would look like for your needs personally. The number can be completely different from person to person.
It's also worth noting that an emergency fund doesn't happen overnight. Reaching this level of savings is a medium-term financial goal for most people. That means you won't be able to achieve it in under two years. Save money to put towards the smaller targets, like $1,000, for your emergency fund and grow from there. This will help your goals feel more achievable - you'll start picking up momentum as you hit those small milestones along the way!
7. Save Your Extra Income
Finally, try your best to save any extra income you earn instead of spending it. Extra income can be anything you earn separately from your primary source of income. This can come from a variety of sources, such as selling old belongings, picking up odd jobs, or your annual tax return.
When you receive extra money in these types of situations, it can be tempting to treat yourself. However, do your best to avoid that temptation and put your extra earnings towards your savings. Every dollar you save helps get you to your goals faster!
And just think how rewarding it will feel to see your savings jump faster than you had planned.
Final Thoughts on Maximizing Savings in 2021
These tips are a great starting point if you're looking for new ways to maximize your savings. Take what works for you and run with it straight to the bank!
Make sure to keep in mind that savings are a long term game - these habits require constant work! Cut yourself some slack in the beginning if you slip up; everybody makes mistakes, and savings will only become easier as you get more used to it. Regularly saving money will afford you so many things in life and there's no time like a fresh year to get started.