Five small changes to grow your savings today
Canadians are pretty accomplished spenders. Last year, we increased our consumer debt by 4.3%, and on average, each of us owes $29,312 — not including our mortgages.
When it comes to saving, however, we’re not quite so successful. Only a quarter of Canadians have an emergency savings fund. However, it isn’t that difficult to turn this picture on its head, reduce your debts and build your savings, as explained by ACU Branch Manager, Lise Tarasenco.
According to Lise, moving away from being a big spender requires just a few small changes. Here are her tips to change your habits and unleash your inner saver.
Tip #1: Find a goal
When it comes to saving, you have to have a goal,” says Lise. “We all need to save for something, so take time to think about what your savings goal will be.”
“It could be for a down payment, to pay off debt, buy a car, or go towards your retirement. Having a goal is essential, but make sure it’s realistic.”
Tip #2: Examine your spending, create a budget
Working out what you spend money on is the first step in financing that goal. “Write down how much you spend in a month and list it in categories,” Lise recommends.
Divide expenses into essentials and non-essentials and compare it with your income to see how much of your salary is left over for savings.
We should save at least 10 per cent of our income. Before you spend anything at all, pay that money into your savings account. Think of it as a salary to your future self.”
Tip #3: Create some savings “wiggle room”
Many people don’t save because they feel they don’t make enough money. Everything they earn gets spent one way or another.
This is where your budget comes in. By breaking down your outgoing cash flow, you can look at ways to reduce your expenses.
Cutting back on non-essential expenses is the easiest way to uncover savings money. For example, taking a coffee with you to work instead of buying one every day can save you at least $500 a year. Taking leftovers for lunch will save you even more.
You can also reduce essential spending. “If you own your home, you could take in a lodger,” says Lise. “If you’re renting, get a roommate.”
Similarly, consider getting rid of cable bills and your landline, or shop around for cheaper cell phone plans, Internet and other service providers. “Every $10 you shave off expenses is $120 a year in your savings account,” Lise explains.
Tip #4: Turn your journey from the red to the black
Owing more money that you have in savings and income is never a good feeling, and doesn’t allow you to take advantage of more opportunities in life. One of Lise’s customers had accumulated so much debt that she couldn’t afford to go back to school.
“We put together a budget so that she knew exactly how much cash she had to last the whole week,” says Lise.
Her customer also got a roommate to reduce living costs and managed to save enough to pay off all of her debt and go back to school.
Tip #5: Get help from the pros
It may be intimidating if you’ve never had an advisor look at your finances, but the potential reward is well worth stepping out of your comfort zone. And you will feel a sense of relief once you have a better grasp of your savings and financial situation.
Talk to a professional advisor at your financial institution,” says Lise. “They can help you reduce debt, manage your spending and build your savings.”
Lise and her team build individual financial plans for their customers and continually monitor their progress. “Having an annual financial review should be like seeing your doctor for an annual medical.”
Your next step should be to get professional advice to develop a customized savings plan.
“It’s our job to help improve your finances,” says Lise. “We have a lot of experience in encouraging people to make the small changes that grow big savings.”
Call or email us today to set up an appointment with your advisor and start growing your savings.
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