Saving money can be such a daunting task and many people look for the little ways they can adjust their lifestyle to save a few bucks here and there. That’s a good start for sure, but if you really want to make a big difference in your saving strategy, you need to look for the bigger saving opportunities.
Focusing on the bigger opportunities leads to a larger savings account by the end of the year. Don’t drop the smaller saving habits though, bundle those in with your larger savings plan and you’ll watch your money grow every month. How exciting!
Impulsive Spending is the #1 culprit in my personal life. It’s not so bad when I go to the grocery shop because I have a meal plan and list that I stick to, but if I take the kids out to the farmers market to play or we stop in at the mall play area to hide from the cold, I’ll wander off to my favorite shops and get a new top with some matching heels, plus 3 new sweaters for each kid…
Yep. Impulse shopping is a culprit in my life for sure.
Creating Your Budget
Before you can really create a budget, you have to know how much money comes in and how much money goes out every single month.
Once you know what your money is up to every month, focus on creating a budget you can stick to! We use the envelope system in our home, but we adjusted it so it works with our digital payment systems with our banking applications. You have to figure out what works best for your family.
Here is a breakdown for creating a budgeting system that works for you.
Figure out your net income
Identify the amount of money you have coming in from paychecks, subsidy, child support and any other incoming cash you may have.
Make sure you calculate the NET value of your money, the amount you receive after all the tax deductions happen, so you are just calculating your take-home pay. This is a little more tough to do if you have a freelancing position or work part-time, but there are some other tips available for managing an irregular income.
If you need extra income, consider a side hustle to make a little bit extra every month.
Track your spending habits
If you really want to know where your money is going, you need to start tracking every cent you spend.
I use a free app - Mint - and it categorizes all my spending for me. So if I spend $600 on groceries instead of my usual $500, my app will alert me of this change. It also puts all my spending into categories so it is really easy to tell which areas are not flexible to change such as rent/mortgage and car payments and which areas I could possibly adjust such as coffee runs and extra clothing purchases.
It also alerts me if I have an upcoming bill, so if I forget about it, I’ll still pay it before it’s due.
The best thing about this app is, I can create a budget right within the app itself.
I’m raving about this app and I wouldn’t even get a commission if you decided to try it out. That’s how you know it’s legitimately amazing.
The next thing you’ll want to do is create some goals for yourself and your family. Where do you see your financial heading in the short term and the long term? If you rent, when would you like to buy? If you owe on your car, would you like to pay it off sooner than later?
Whatever your goals look like, write them out. Make them reasonable but don’t be afraid to think big. Don’t forget to think far enough ahead into your children's futures as well. Savings for their educations is slow going but is worth it in the end.
Create Your Plan
You’ve set your goals, congrats! Now you need to create a plan of action so you can reach the goals you have.
With your new knowledge of your monthly expenses, map out your spending for the next few months. Use your spending habits to guide you.
Adjusting Your Habits
If you’re looking at your goals and plans and shaking your head thinking this is impossible, just know that it is not impossible and with a few small adjustments to your daily habits, anything can happen. This is where the small savings here and there can really make an impact on your bottom line.
Reviewing Your Budget
Don’t set it and forget it, your budget is a fluid document that adjusts with your lifestyle. Check in and make sure you’re still on track and make adjustments to your daily habits as needed.
Frugal Living Tips
Avoiding impulse spending is one of the biggest tips I have for living a frugal lifestyle, but we’ve already covered how much of an impulse shopper I am so let’s just move right along with these other fantastic frugal living tips.
- Sticking To Your Grocery List
- Using Cash Instead of Plastic (pretty easy to spend $10, 000 if it’s available to you, instead, spend that $40 in your pocket on things you really need)
- Stockpile Your Groceries During Sales Events
- Price Match
- Take A Lunch To Work
- Buy A Quality Used Car Rather Than New
- Pay Off Credit Cards (Interest Rates Can Really Hurt)
- Save Your Loose Change
- Wait To Purchase Something, Really Think If You Need It Or Not Before You Buy
- Use Coupons (But Use Them Wisely On Things You Need, Don’t Buy Something Because it’s On Sale)
Saving For Retirement
When you’re living paycheck to paycheck, saving for retirement can seem overwhelming. I mean, you’re barely covering your day to day expenses and now you have to save money for retirement? Hopefully, some of the tips I mentioned above were helpful, but if you really want to make sure you are well taken care of when you can no longer work, you can follow these steps.
Start Saving For Retirement Early
A good time to start saving for retirement is 20 or younger, however, that is just not the reality with all the financial obligations student life kicks our way. You can, however, start saving money at 25 and still have sizable retirement savings if done correctly.
If you start saving at 25 years old, and you put in $100 a month ($25 a week) into your retirement fund and your rate of return is sitting at 6%, you’ll have $190, 000 in your account by the time you hit 65.
If $100 a month seems steep for you right now, try to put away as much as you can. Anything is better than nothing. Even if you are adding $50 a month, it helps. Check out this handy RRSP calculator to help you out with planning your RRSP savings.
If you set up automatic deposits into your RRSP account, you don’t have to worry about forgetting to add to it every month. This is a great way to ensure you don’t spend the money that is dedicated to your future.
Saving money doesn’t have to be a horrible annoying task, in fact, you should enjoy calculating your cash and finding out how you can live smarter now and later.
Track your spending, create some goals and a plan to make those goals into a reality. Once you have a good grasp on your financial situation, go ahead and start thinking about retirement. You wouldn’t want to keep working after the age of 65 because you didn’t plan when you were younger.
Have you started saving for retirement? Are there any tips you have to share with me, I would love to hear them!