One of the biggest misconceptions about creating budgets or saving for major purchases is that you must completely change your lifestyle to get what you want. However, this is not entirely true. Building your long and short-term savings, can help protect you from unexpected problems and help you achieve your financial goals.
Our Team has broken down some steps you can take to save money, without making any major lifestyle changes!
Shift your money mindset
Everyone has different mindsets about money. From our spending habits to the way we save, it is important to think about your attitude towards personal finances, before you begin making changes to your habits.
Key questions to ask yourself:
Once you reflect on your current financial situation, you can begin taking steps towards future goals. Personal reflection is extremely important, as it will help you see what you are doing well and what you can improve upon. It is also important to remind yourself that anything is possible if you make a plan and set concrete goals for yourself to achieve.
Personal finance is 80% behaviour and 20% tactics….
So how do you start on your personal journey?
Now that you’ve figured out your personal financial goals, you can begin working towards them. We’ve broken down a few tactics that will help you get in the correct mindset to achieve your financial goals.
Saving money doesn’t have to be hard. We recommend three different saving techniques you can implement into your life, that will help you save BIG without even noticing.
Save the 10s
Each time you get paid, you can ‘save the 10’s’ from your paycheque. This means if you get paid $856 each pay period, you’ll put $56 into your savings account. Applying this method to your life can help you save, without taking a chunk out of your paycheck!
Using the above amount as an example, if you get paid $856 every two weeks and save $56 each time you get paid, in a year you will have saved $1,344!
50-30-20
This is probably one of the most popular ways to budget your money. The 50-30-20 technique tells us that we should use 50% of our paycheque on needs, 30% on wants and 20% on savings. While this is a more structured way to manage your money, it is still a great way to help you save.
So, if you make $856 every two weeks, you will have to save $171.20 on each paycheque. In a year, you will have saved $4108.8.
Save your change
Similar to the 10s method, saving the cents from every purchase you make can help you save quickly and easily. Apps like Mint, offer programs that round up every purchase you make to the nearest dollar and put these funds into a savings account. Some banks even offer programs that transfer a set amount of money into a savings account every time you make a transaction.
Using techniques like this will help you save without thinking about it!
Tips for everyday life
Eating out
Another common misconception about budgeting is that you must cut all non-essential spending out of your life. However, this is not a healthy outlook to have. As we mentioned earlier, achieving financial goals is 80% mindset, so being too strict with yourself can cause more harm than good.
However, small changes can make a big difference. For example, if you eat out once a week and always get the main course, a drink and dessert, try cutting back slightly. The next time your order a meal in, only order a main course. While this may seem like a small purchase, these are often the costs that add up the quickest.
Groceries
Grocery shopping is often one of the biggest parts of our budget, aside from rent or mortgage payments. When buying groceries, you can easily save money by couponing, looking for in-store sales, signing up for store rewards cards or buying cheaper options of essential products.
You can also try buying non-perishable or freezer food in bulk. While bulk foods may have a slightly higher price tag, they often last much longer than buying smaller serving sizes. This will help you save more money in the long run.
Invest in yourself
Your life should be your biggest investment. When buying tangible items for yourself, like clothing, shoes or personal care products, it’s a good idea to look for items that will last longer. While these items may be slightly more expensive, buying one high-quality item is more cost-effective than having to repurchase multiple cheaper versions.
If you look at every purchase in your life as an investment into either yourself or your future, your mindset about money will change. Although you may have to make some sacrifices, like opting out of your favourite dessert or waiting for a pair of shoes to go on sale before you buy them, your future self will thank you for it.
How does saving affect my credit?
Saving is a major part of becoming financially free. You can not have good credit if you do not know how to save and spend your money. Saving also allows you to have extra support for emergency situations or put you on track to grow your wealth.
Applying these tips to credit card spending can also help you avoid going over your limit and develop your relationship with your personal finances.
While these tips won’t make you a millionaire overnight, they will help you to understand your financial situation and put you on track towards achieving your long and short-term financial goals.
Disclaimer: The content provided on the Plastk Financial Inc. Blog is information to help Canadians become financially literate and learn about credit. Plastk is not responsible for building or ruining an individual's credit score or credit rating. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment, credit inquiries, and all other decisions should be made, as appropriate, only with guidance from a qualified professional.