Saving and Spending
In this section, you will learn:
Section 1:
How do you save your money?
Discover what kind of saver you are based on your habits.
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Section 2:
How to take control of your money
Six easy steps to help you balance your saving and spending.
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Section 3:
Create a plan and set savings goals
Use the SMART framework to help you set your savings goals.
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Section 4:
Achieving savings goals
Here are some tips to cut down expenses so you can reach your goals.
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Section 5:
Simplify the savings process
These tips will make sticking to your goals easier.
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How do you save your money?
The Confident Saver
- Has a budget that works for them and tracks their spending consistently
- Found tools they like to use to budget and save
- Invests their extra cash so they can meet their financial goals
The Moderate Saver
- Is aware of their spending habits, but doesn't stick a budget regularly
- Has a savings account, but has no specific plan for their savings
- Is interested in learning about investing, but doesn’t know where to start
The Saving Seeker
- Hasn’t made a budget that works for them, so they don’t track their spending
- Doesn’t feel like they have a plan or direction for their money
- Feels intimidated by investing
How to take control of your money: balance spending and saving
It’s never too late to start making some small, intentional changes to help you take control of your finances, like the ones below.
Step 1: Evaluate your money relationship
Take some time to reflect on any emotions that are connected to money. These are different for everyone. You might discover spending habits that are linked to emotional triggers, or you experience anxiety when you try to save for the future. Understanding these behaviours is the first step to building a healthy mindset about your finances.
Talk about money with people who you’re close with and trust. Hearing about others’ relationships with money may help you understand your own.
Step 2: Track your monthly cash flow (income and spending)
Keeping a basic budget can make a huge impact.
Knowing how much and where you spend can help you see opportunities to save, or discover extra money that you can put towards larger financial goals or pay off your debt.
Step 3: Understand your debt
If you have debt, get a clear understanding of what you have, including credit cards, mortgages, loans and more.
Then you have the information you need to choose which repayment strategy is best for you.
Step 4: Know how to save for your short and long term goals
Get the most out of the money you’re saving by putting it in the right place.
If you’re looking to save for retirement, an RRSP is the way to go. A TFSA is an excellent option for a shorter term goal, since you won’t get taxed for withdrawing funds.
Step 5: Pay yourself first—when you can
This means putting money in a savings or investment account regularly, like you’d pay your rent or mortgage.
Automate a withdrawal from your paycheque into your savings account to streamline the process. Even small contributions can make a big difference long-term.
Step 6: Stay organized
Tracking your money with online or mobile banking allows you to stay on top of your finances. Check your accounts regularly to create a routine that works for you.
Create a plan and set savings goals
A key to creating the saving and spending plans you want is setting financial goals that work for you.
The SMART framework can help you set Specific, Measurable, Attainable, Realistic and Timely goals.
Ambiguous goals don’t enable you to make a plan to achieve them. Setting clear goals—and achieving them—comes down to knowing what you want.
For example, if you’re saving for a down payment, have an amount in mind for the house you want. If you want to save a 10% down payment for a $500,000 house, you know you’ll need $50,000.
Track your progress to know exactly what you need to do to make your goal possible.
After some time, ask yourself this question: are you getting closer to your goal? If not, re-evaluating your savings plan is a good place to start.
Strike a balance between challenging yourself while being mindful of what’s possible for you.
Going back to buying a house, choosing one that fits within your budget makes it an attainable goal.
Knowing what resources you have and how much you can give—whether that’s time, money, effort or otherwise—makes for a realistic goal.
Say the house you’re interested in is within your budget, but you’d need to take possession before you had time to sell your current home. That could make purchasing that house an unrealistic goal.
When you know your monthly cash flow, you’ll know how much you can realistically put away each month to reach your financial goals.
Knowing when you want to achieve your goal gives the healthy pressure to work towards it.
If you’re just getting started, set small goals with deadlines to help get in the habit of saving.
Achieving savings goals: tips to cutting expenses
Depending on your saving style, you may need to find ways to reduce spending so you can achieve your savings goals. Here are quick ways to cut down spending and create room in your budget to save:
Ways to save extra money each month.
Simplifying the savings process: pay yourself first
Tips to help you save more, more easily:
Ways to pay yourself first.
Saving isn’t about completely changing your lifestyle. It’s about taking more control over your money so that you can make your goals possible.