SMALL CHANGES, BIG SAVINGS

There are so many things in our lives these days that are overwhelming, especially so since the pandemic. Saving money and achieving your dreams of a secure financial state for your family doesn’t have to be one of them. Here are nine simple, small changes that mean significant savings.

 

DEBT

When it comes to debt, it can feel like you are stuck between a rock and a hard place. The more you put on your debt, the less liquid you have to pay for life, and so you depend on credit. There are three small changes you can make where your debt is concerned that will make a substantial positive impact.

  • Renegotiate interest rates. First and foremost, make a list of all your debtors. Contact each company and renegotiate your terms to lower interest rates.
  • Consolidate debt. Where possible, consolidate your debt. Shop around for the best offers, and then approach your personal financial institution to see if they will match it for you. Either way, a low-interest offer for consolidation from any credible institute will help you gain traction on paying off your debt
  • Magic method. The magical method of financial advisors and debt-free families worldwide when it comes to eliminating debt is the following.
    • List your debt in order of interest rate, highest to lowest.
    • Calculate the maximum amount you can pay towards your debt per month.
    • Pay the minimum amount due on your debts while throwing the bulk of the allotted money onto the highest interest account.
    • Continue doing so each month until that high-interest account is paid off.
    • Select the next highest interest rate and repeat the process, continuing until you have paid off your debts in full.

 

With your debt lowered or eliminated in full, you will be able to use your income better to save for an emergency fund, retirement and whatever else you please.

 

HABITS

We all have small habits that, when combined, create a snowball effect to the detriment of our hard-earned money. Thankfully a few simple adjustments can turn things around and leave you with a little extra cash to invest into whichever savings you choose.

  • Comfort spends. A rich latté from your neighbourhood café, a bottle of your favourite wine, your go-to take-out after a long day; sometimes we spend more than we should when we need a little comfort. There is nothing wrong with that. In fact, these little moments of happiness are what make life enjoyable. Sometimes our comfort spends become a habit rather than an occasional source of comfort. How can you cut back without losing the little things that make you happy? See it as a challenge.
    • Make a list of your favourite comfort spends. Account for what they are, how much they cost and how often you buy them.
    • Plan to cut one out of your routine each week. (Go for more if you are game.)
    • After a month, look back and decide which you missed and which you surprisingly did just fine without.
    • Cut out the habits that you didn’t miss.
    • Cut back on the frequency of the comfort spends you just can’t live without. For example, rather than grab a latté every morning, opt for making your own at home most days. Your Friday morning ritual will be that much more enjoyable after a long week.
    • If you can swing it, take the money you save cutting out, or back on, your habitual spending and use it for your savings.
  • Subscriptions. Subscriptions are another expense that might be worthwhile on an individual level but simultaneously clutter your finances. Review your credit cards and app subscriptions, creating a list of all auto-renewals. Consider alternating your streaming apps, finishing one game before buying another, etc. What about physical box subscriptions? Once again, they might very well be a fantastic deal on their own, but do you really need a whole new wardrobe every month or more products than can be consumed in one month, and so on. If you can clear up some of these subscriptions, that money can go towards your savings every month instead.
  • Shopping habits. Take a minute and review the way you shop. Have you become a little too comfortable shopping online in the past year? While online shopping has its perks, it’s also every company’s dream and your wallet’s nightmare. Our credit cards are locked and loaded, ready for purchases at the click of a button. Delete your payment information from your computer and avoid online browsing unless you really need to buy something. One win for online shopping when it comes to staying on task – groceries! Try ordering your groceries online. Not only will you save yourself the hassle and time, but you won’t end up with additional items in your cart that weren’t on your list.

 

SAVINGS

When it comes to the actual savings, there are once again simple changes you can make for significant results.

  • Prioritize savings. It’s essential to prioritize the ways in which you save. Here is the foolproof order.
      • Emergency fund. An emergency fund is crucial for financial stability, even though it should typically equal 3-6 months’ worth of income. The wisdom behind an emergency fund is that it prevents you from going further into debt when the unexpected happens. A home repair, car repair, job loss and so on can set families years back into debt. If you have the funds set aside, you avoid having to use credit. You can also try a simple online loan to get you through a rough patch without damaging your credit score.
      • Saving for your retirement is the next big step in financial wellness. RRSP options help secure your future, but they also provide incentives. For example, your employer and the government may assist you in your savings. If you want to buy a home, you can borrow a portion of your retirement savings to use as the down payment. Your retirement savings is money well spent.
      • Your choice. What comes next is totally up to you. Vacation, home renovations, a new car; once the priorities are in place, set up a savings account for pleasure on the side. HerMoney.com has a fun idea of linking your savings goals with Pinterest! Get creative; the options are endless.
  • Where you save. Shop around for your savings accounts. Different banks offer different incentives. You can also consider using a TFSA (Tax-Free Savings Account), taking advantage of the tax break and increased interest rate. Ask your financial institution for other options you can take advantage of, finding ways to see your money grow.
  • How you save. How you save is up to you. Keep a realistic mindset if you want to succeed. Remember slow, and steady runs the race, doing the best you can with what you have. If larger goals are overwhelming, break them into portions. Aim to reach ¼ of the goal amount per year, rather than all of it. As you succeed, you will feel encouraged and motivated to continue. Like they say, “Every penny saved is a penny earned!”.

 

With a few minor adjustments, you can realign yourself on the road to saving. Financial security is always an option.

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