So since I think that more young people need to talk about money and finances…& I know everyone complains about housing prices, especially here in Vancouver, or one thing or the other about finances but being a Millennial myself, I wanted to turn that around and teach you 10 little ways you can save more money by managing your finances smarter! Let’s get one thing straight, saving money does mean making certain sacrifices so if you’re not willing to do that, you won’t save any. Simple as that. Sacrifices yes, but that does not necessarily mean a total 180 is needed. It’s all about finding little ways you can tweak your life so a) you don’t feel like an antisocial hermit (a richer antisocial hermit 😉 but still that’s no fun) and b) the changes are actual lifestyle changes you can keep going for the long run and apply it to various aspects of your life as your circumstances change, you make more or less money, hopefully the former! You can use these money saving tips if you’re saving for a car, house, retirement, purse, dog, shoes etc. The list really goes on. Once you have the principles down, you’re well on your way. So let’s get started shall we?
ps. I am not a financial adviser, rich person, day trader or very good at math actually but I did watch A LOT of t.v. shows about budgeting (shout out to Gail Vaz Oxlade), have picked up a lot from my financial advisers at a young age and my mom, of course!
- Pay yourself first – You are your most prized creditor. Remember that! What exactly does this mean? Well, if you’re not in debt, but find yourself not saving much month after month, I’d suggest picking a set number to save and then removing that from your paycheck before you pay bills or spend money on wants over needs. This number would be different for everyone but it needs to be something you can realistically sustain paycheck after paycheck. That doesn’t mean you can’t adjust as you see what works for you but an example could be say “I will put away $100 per paycheck into a separate bank account”. Depending on your goals, this could be a retirement savings account, a house fund, mutual funds etc. It’s super important to move the funds into a separate account rather than just mentally doing this exercise so that when you find something you want, you can look at your account and say no, I’m not touching that money (obviously unless I you absolutely NEED something) until I reach my goal.
- Repaying debt needs to be a priority – This is specifically for high interest debt like credit cards, lines of credit & student loans where rates can be 20+%. Sure that huge student loan you have may look daunting and that you will never get it down but consistent payments overtime will pay off. Stop waiting for when you get that inheritance, trust fund, rich sugar daddy (kidding) or get a raise at work. It’s super important to make paying debt off a priority now. You can use the same method as no. 1 above. Instead of putting that money in a separate account, commit to paying $XXX each paycheck until that debt gets smaller and smaller. Compound interest is NOT your friend. Another way to do it would be let’s say you want to pay off your debt at most in 5 years. Take what you owe, divide it by the number of payments you will make in 5 years, this will give you an average of what you need to put away per paycheck to get that debt paid down. This method only works if your interest rate is 0% like for some cars. If it’s compounding interest, this will give you a benchmark but you will need to take into account the interest that will accumulate over the time you take to pay your debt.
- Get a part-time job or side hustle – I know this sounds like an obvious to actually make more money but let’s say you want to get married in the next few years or go on a large vacation . Well, instead of just your salary providing the funding and you cutting down on your expenses, it is possible to get another source of income to help you pay for your upcoming expenditure! This works great for big ticket items like vacations, cars or a wedding. You may still have to dip into your savings or take a loan out but at least you will have a cushion because you anticipated the added expense!
- Cut down on your morning coffee/tea – I worked at Starbucks for two years and I can’t tell you how many regular customers we had in the morning with many of them spending upwards of $5 a day or sometimes even twice a day. On average, there are 261 working days in a year (Mon-Fri, excluding bank holidays) so 261 x $5 = $1,305. That number IS INSANE to me. Do I want to spend over $1000 on my morning coffee? HELL NO. So if your office coffee sucks…which btw they usually do (having worked at numerous offices), buy yourself a french press or instant coffee and make that cup of joe yourself! I’ve started doing this years ago and it’s made a huge difference. I will sometimes splurge on Fridays but I don’t really need an almond milk americano misto every day now do I? Start with baby steps if you’re super happy with your morning drink, change those taste buds, find an alternative. Plus buying less coffees will cut down on the number of cups, that are not actually recyclable due to their inner lining, and straws in the landfills (assuming you don’t bring your mug).
- Cut down on work lunches – Going for lunch with coworkers is fun, it’s exciting and it’s social but do you need to go all 5 days of the week? Maybe making some extra food at dinner or meal prepping on the weekend would help you have a meal or two for lunch so you can save your money. Not to mention, take out usually has bigger portions than what a serving size should be so not only will you save money, you can also make smarter choices for your health! I won’t do the math here for you but you can imagine if $5 coffee a work day cost $1,305 a year, lunches are typically anywhere from $10-20.
- Max out your Tax Free Savings Account (TFSA) – This tip is for eligible Canadians only, the government gives you a savings vehicle that you can invest in and all interest earned on this investment is not taxable so in my opinion, this should be the first thing you max out as you earn more money because there is huge growth here, depending on how you invest! The basics are that for each year since 2009, you are allowed to contribute a maximum amount of money that the government has set (which changes so you need to be aware of what your room is). If you have previous room that is unused, you can use it in any year but you can’t go over the total room anyone gets – which as of tax year 2018 is $57,500.00. Also it gets tricky when you withdraw money because you can’t put it back until the following tax year but there is no penalty to withdraw money, which is cool because you can use it when you want but not like a savings account that you continuously move the money around. It’s kind of complicated until you get it and it’s not so for more information, you can see the Government of Canada’s website by clicking here.
- Create a budget – I feel like this should be higher up the list but I am not the best at following this tip myself. You can create an old school budget on pen and paper or use an app like “Mint”. It allows you to track your expenses, categorize them and even gives you cool graphs to show you historical spending habits and where your money actually went! I found it too tiresome to constantly categorize certain things as one thing, then another a different time because it saves your preference however I could go to the grocery store for gas or groceries so switching it was annoying but it does auto categorize a lot depending on the merchant, which is helpful. I liked this app because I’m not one to use cash often so it kept track of all my bank accounts and credit cards in one spot. They also send you emails that say “unusual spending for x” which a) can make you feel bad for what you shouldn’t have bought but it also is a good way to be alerted to a transaction, which you may not have noticed before.
- Cash or Credit? – I personally am a fan of credit cards because a) points for travel, groceries, gas etc. and b) it keeps track of all your cents like $0.35 from your grocery purchase or $0.19 from your make up purchase all add up whereas when I have cash, I’m more likely to blow it because it’s the whole oh it’s just a $10, mentality until you spend $100 and woops! Do make sure to pay credit card bills on time to avoid negatively impacting your credit score. However, those who spend outside of their means or need to physically see how much they can spend, I’d suggest you take out money after you get your paycheck and after you have paid yourself like no. 1 above! Then you can set aside funds for various things like groceries, rent, gas etc. and not run the risk of spending more than you have! Debit cards work the same in that you can’t see what you’re spending but you can’t spend more than you have, which is better than nothing!
- Emergency Fund – Sh*t happens. Life happens. & you really need to be ready for it. There are so many unfortunate cases of people having an unexpected expense (like getting sick, pipe burst, car issues, dog issues or being fired from their job etc.) and then they end up going into debt. It helps if you have family or a partner that can pick up the slack temporarily but being prepared is always important. Save for an emergency fund first with tip no. 1. You should have about 3-6 months of living expenses saved. I know young people thing they are invincible and that nothing like that could ever happen to them but it could, or it could happen to your partner and if you didn’t plan for an unexpected issue, it could really rack up your debt unexpectedly.
- Get a line of credit – I’m a total activist for not going into debt if at all possible but sometimes you need to if something unexpected comes up like no. 9 and you weren’t ready or you have a big purchase because most people don’t have $30K lying around for a new car or whatever. Depending on your credit score, line of credits are generally WAY lower in interest than the average credit card. Honestly, I think credit card interest rates are just morally illegal and there needs to be the education that it’s not free money and how compound interest and making minimum payments gets you no where to paying off that debt. You can also transfer balances from credit cards to lines of credit and pay them off faster that way too!
I hope you found this informative friends. A little different than my food topic but important in my opinion nonetheless. As always, please feel free to reach out to me on socials @balancingandie if you want to see more content like this!