Saving can be easier when you have to stay home. But as the outside world opens up again for Canadians, how do you keep up with those good saving habits you gained during the pandemic? Or, if you haven't been able to save as much as you would have liked, how do you get back on track financially?
Here's four steps for how you can set yourself up for saving success.
Step 1: Set up the fundamentals to save money
Pay off credit card and other debt
Your first priority (yes, even before saving for that trip to Hawaii or upgrading your house) should be to clear any debt – especially anything with higher interest rates such as credit card debt. If possible, consolidate all your debts where you can take advantage of low interest rates.
Set clear financial goals
Determine or reassess your long-term and short-term savings goals and set concrete dollar amounts to work toward.
First, build or top up an emergency fund that will carry you through six to 12 months. Next, cover your other necessary bases such as retirement savings, and, if you have kids, for post-secondary education with investment options like an RESP. Then, think about your other goals; maybe you want to save money for an epic vacation, a down payment for a house, a new car, or a wedding.
Create (or revise) your budget
The first step to building a household budget is knowing how much cash flow you have to play around with. Once you have a clear understanding of your annual income, you can start designating spending and saving categories. If you are an eligible Scotiabank customer, you can create personalized budgets by using Scotia Smart Money by Advice+.* This tool, which lives on your Scotia mobile app under the “My Advice+” tab, lets you set up how much you want to spend each month on different categories, like groceries and entertainment. Scotia Smart Money also shows your cashflow so you can better understand all the money that is coming in and out of your accounts each month.
Watch the video: How to budget
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You can try the 50/20/30 rule: 50 percent to your needs (housing, grocery bills, utilities, transportation, etc.) 20 percent toward your savings accounts and 30 percent toward all the fun and variable costs such as restaurants, shopping and entertainment. If 20 percent of savings is too steep for you now, aim for at least 10 percent.
Choose the right bank accounts and investments to save money
An advisor can help you navigate the benefits of different bank accounts based on your long-term and short-term personal finance goals. Accounts like those in Scotiabank Ultimate and Preferred Packages, can offer you great features as you bundle your products, like fee waivers, unlimited debit transactions and Interac e-Transfer† transactions.1 Make the most of your chequing account by finding one with the right perks for your needs.
Your advisor may recommend a Tax Free Savings Account (TFSA), an RRSP, or a savings account with a high interest rate depending on your unique situation. They can also present you with various options for investing.
Set up automatic transfers
Save money without even thinking about it. Easily set up an amount of money to be transferred into your savings accounts at a designated reoccurring time (every two weeks when you get paid, for example) and watch your savings grow.
Record all your spending
Carefully tracking your expenses helps with budgeting and gives insight into your spending habits. After three to six months of tracking, you'll understand where your money is going and can avoid any unnecessary spending.
Use Scotia Smart Money on your mobile app which not only track and report on your spending habits, but also help you to plan and set up your budget. For example, if you plan to spend $500 on groceries per month, it will track your grocery spend day by day, and alert you in the app if you are likely to go over.
Step 2: Explore these saving tips
Reduce as many expenses as possible
Look at where your money is going every month and trim unnecessary expenses where possible. Try to renegotiate your cell phone bill or cancel unnecessary streaming or monthly subscription services that you may not be using as often as you thought. Every little bit helps. Scotia Smart Money by Advice+ can help you with this: in addition to seeing your cashflow and monthly transactions, you’ll receive insights and recommendations that help keep you on track.
What kind of insights will you get? You will find out things like updates on your recent/upcoming activity in your accounts, recommendations on what products might be a good fit for you and a better understanding of what your financial patterns are.
Avoid impulse spending
Before hitting the “buy now” button, take 30 days to think about big purchases and 24 hours for smaller purchases. Give yourself time to mull over whether or not you actually need the thing.
You could also remove your credit card from the autofill on your device or on any websites. The act of having to go get your card could be enough to deter you.
Lower your grocery store bill
Groceries can take up a significant portion of your budget. Cut costs by taking advantage of deals in flyers. Shop at a grocery store that does price matching, buy in bulk when your favourite non-perishables are on sale, and make a weekly meal plan to avoid waste and impulse spending.
Look out for freebies
Join your local library, find free concerts, visit street festivals, watch out for free entrance days at museums and zoos, and check out your local community calendar.
DIY as much as possible
It's been a year of do-it-yourself manicures, facials and hair care, so consider continuing the at-home trend. What can you do yourself that you also enjoy? Think about things like fixing your own clothes, doing your own landscaping and growing your vegetables and herbs. There's a long list of DIY possibilities that can save you a lot of money in the long run.
Make your meals at home to save money
Skip the daily coffee shop run and continue to make your coffee at home. If you normally grab a muffin or breakfast sandwich, make them ahead so that you can grab and go. Pre-make your lunches and stock up on frozen meals (lasagnas, pies, and curries for example) so you're not tempted to order takeout when you're not feeling up to making dinner.
Step 3: Capitalize on all opportunities
Use rewards and cash back programs
Choose a credit card that offers points and cash back on your purchases so you earn by buying the things you normally would. Try to always pay the full balance every single month so you don't pay any interest.
Make some extra money
A great way to save money is to bulk up your household income. Sell anything that you no longer use online. Love animals? Try pet sitting through an app like Rover. Like to cross-stitch? Sell your creations online. Get creative with your money-making hacks.
Save supplemental income
Any extra money you make or lump sums of cash outside of your regular income (think bonuses, tax refunds, or even contest winnings) should go toward debt payment, your emergency fund, or your savings goals. Resist the urge to treat yourself in the moment.
Take full advantage of your employer's perks
If your work offers a matching program with their retirement savings plan, contribute as much as you can. Also, ensure you're making the most out of your health and wellness benefits. Even frugal folks deserve a fancy massage now and then.
Step 4: Get some help from an advisor
Scotia advisors can work with you to create a personalized plan that works for your needs.