indicatorSaving and Investing

How to save by cutting everyday expenses

By ATB Financial 27 July 2020 4 min read

While saving money seems like a big undertaking, cutting small daily expenses can really add up over time. If you are looking to lean-out your daily budget, we’ve created 6 easy tips that can help you save while not sacrificing a lot. We also show you how to turn that $210 into much more.

Here are 6 reasonable changes you can make to save roughly $210 a month

1. Cancel your cable.

With streaming services like Netflix, Crave and Disney + on the scene, more and more Canadians are cancelling their cable services. In response to shifting consumer demands, many telecommunications companies have started offering streaming bundles instead of cable packages.

If you find yourself defaulting to Netflix to avoid the channel switching and advertisements that come with cable, consider cutting the cord to cable TV. It could save you a lot of money and may even reduce the amount of time you spend in front of the television!

Savings: $40 per month

2. Brew your own coffee a few days a week.

This is one you hear all the time, and that's because it can be a big money saver. Coffee makers are pretty cheap these days (like $15-20), and if you like the fancy flavoured coffees, a bit of cream and flavoured syrup doesn't add much to your grocery budget.

It won't taste the same, but if you brew three days a week instead of buying from that swanky coffee shop, the savings make it a tasty alternative.

Savings: $35 per month

3. Move your money into a low-fee/no-fee bank account.

If you live off your debit card and have a lot of transactions every month (like, more than five per week), you could save $10-15 a month by switching bank accounts. Unlimited accounts are a great option for debit-happy folks, and some are free if you maintain a minimum balance.

Savings: $12 per month

4. Cook a big dinner once a week and have the leftovers for lunch (or another dinner).

Often, it doesn't cost that much more to double the servings of a recipe—at the top end, maybe 50 per cent of the total ingredient cost. So, if it costs $10 to make one two-person meal and $15 to make twice as much, that's about $3-4 per meal—a lot less expensive (and more healthy) than eating out for lunch or dinner.

Do this once a week and those savings will pay for a nice meal that you don't have to cook.

Savings: $80 per month

5. Subscribe to a free online coupon site and get a deal on that nice restaurant meal.

Sites like Groupon or Living Social offer special deals in most Alberta areas every day. It's free to subscribe to the emails, and there's no pressure to buy.

Restaurant deals are common, and they often feature 50 per cent off the coupon value (for example, spend $20 to get $40 off). Buy a couple coupons every month and you could save $40 on meals, spa services, fitness classes, and more.

Savings: $40 per month

6. Use a cash-back credit card for your everyday purchases.

Okay, a cash-back card isn't going to really save you money every month, but you will get cash back once a year, and that's essentially the same thing.

If you use a no-fee card with 1 per cent cash back, it's like having 1 per cent off everything you buy with the card. For example, if you spend $500 per month on restaurants and groceries, you can save $5 by using your cash-back card.

(Of course, the cash back is pointless if you don't pay off your card every month—the interest will be more than you'd earn—so make sure you pay off your card.)

Savings: $5 per month

Total savings: $212 per month (give or take)

 

How to grow your savings

Now let’s do some quick math. If you saved roughly $212 a month with these changes, that means you would have saved approximately $2,544 over the course of a year. That’s a lot of money!

If you have short-term savings goals, like saving for a vacation or building your emergency fund, putting your money in a savings account or even a tax-free savings account would be a good option because these accounts allow you to access your money quickly.

On the other hand, if you started saving with a bigger financial goal in mind, like buying a home or retirement, investing can help you get closer to this goal, faster with the help of compounding returns. When it comes to investing, the concept of investing regularly and starting early can have a profound impact on the performance of your investments.

Here’s an example:

Say you start with an initial investment of $100 and continue to invest with monthly contributions.

Monthly contribution $25.00 $100.00
Total contributions over 10 years $3,100.00 $12,100.00
Projected value of investments over 10 years $4,022.00 $15,599.00
Gains $920.00 $3,499.00

1 Projected growth for $100 initial capital and a defined monthly contribution for 10 years, compounded annually at a hypothetical rate of return of 5%, gross of fees. These calculations are for illustration purposes only and not a guarantee of performance.

As you can see, time (and regular contributions!) is your friend when it comes to growing your money. As you begin to save more, consider your short-term savings goals versus your long-term savings goals (such as retirement) and how registered accounts like TFSA's and RRSP's play into your overall savings plan.

By using the 6 savings tips above, you can start saving for short-term goals or your next big purchase without sacrificing your lifestyle.

If you would like to learn more about investing, visit ‘Investing 101’. If you feel ready to start growing your savings, visit atbprosper.com or take the ATB Prosper quiz for investment option recommendations based on your financial goals, timelines and preferred level of risk.

 

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