15 Money Saving Tips to Increase Your Wealth
Saving a portion of your income every time you get paid is a good money habit everyone should be comfortable with. However, life sometimes gets in the way and before you know it, you’re not saving and you’re drowning in debt. Read on to find out what are top money saving tips are so you can keep your head above water and be prepared for anything. Plus, we’ll give you some pointers on how to save money even if you find yourself in debt.
Why Should I Save When I Earn So Little?
You may think that because you don’t earn a huge salary, there really isn’t much point in saving, right? Wrong! Saving should be a reflex you’re in the habit of, no matter how little you earn. The rule of thumb is to put away at least 10% of your income every time you receive a paycheck.
This is one healthy money habit that prevents you from overspending. And even if you’re only gathering a little bit at a time, you’ll eventually build up a security blanket in case of any emergencies. Having a savings buffer will help prevent you from falling into debt. Even if you’re only saving $20 per week, it’s still way better than not saving anything at all.
Where Do I Start Saving Money?
It may seem like you don’t have a very extravagant lifestyle. But if you write out all of your expenses for once entire month, you’ll see there is plenty you could’ve done without. Review your regular expenses and see what you can reasonably cut out without restricting yourself too much. Or see where you could’ve saved money by either shopping around, taking advantage of sales, or by simply doing it yourself.
Even small increments of money saved can help you build up your financial security over time. You can save everywhere, from your weekly groceries to your fancy morning coffee. Cut down what you really don’t need or at least set a limit for each month.
Money Saving Tips You Need to Know
There are so many ways to save money. On its own, each money saving tip may not seem like it’s make a big difference, but collectively, you can save loads more than you thought by applying these money saving tips to your life starting today!
1. Start the $5 Challenge
What is the $5 challenge? This money saving tip is a great one. It means that whenever you receive a $5 bill as change, you out into straight into a savings jar and never look back. After one year, you can access the funds and either pay off debt, buy something you’ve been wanting, or invest it. The idea is to get consumers to understand that $5 may seem quite insignificant but every dollar saved can add up to big bucks over the course of a year or two. If you’re not convinced, give it a shot for one year.
You may find yourself squirrelling away $500 a year without really changing your spending habits all that much. If you can complete the challenge after one full year without dipping into the jar prematurely, double it up the next year. Start putting $10 bills away and let your money accumulate. You can apply the same principle to loose change. Anytime you receive coins, dump them in the jar along with the $5. You’ll be amazed at how easy it can be to save $1,000.
2. Cut Out the Fancy Coffee
No matter what you earn, nobody needs a $12 coffee every day. Instead of buying that over-the-top cup of Joe, put the money you would’ve spent on it away and either order a simpler coffee or make your own at home before leaving the house. This money saving tip can save you hundreds of dollars per year. You can certainly spoil yourself with a fancy cup of coffee once a month or so. Just try to curb the everyday habit so you can save some money – and the calories!
3. Invest Your Money
If you’re not investing your money, it’s not doing anything for you. Whatever you invest – whether it be in a GIC, RRSP, mutual fund, term investment, or tax-free savings account – can grow exponentially if invested. Leaving your money to sit in your chequing account is like a missed opportunity. Even if you only have a small amount to invest, meet with a financial advisor to see how you can invest that money wisely so you can actually make it grow. If you’re just beginning you career, you have decades for that money to grow into a hefty retirement fund. It may be tempting to spend everything you earn, but investing some of your cash today will give you financial security tomorrow.
4. Invest in Appreciating Assets
You may really want that brand new fancy car, but remember, a car depreciates by the day. A home on the other hand, is an investment that appreciates over time. You’ll get that money back when you eventually sell so it’s worth it. As much as possible, spend your money on things that will bring you some sort of return. Keep the purchase of depreciating assets to a minimum because that’s just money you’ll never see again. Before any purchase you make, ask yourself what the return is for you. Do you need a car? Of course. Does it need to be the most expensive one you can afford today? Absolutely not.
5. Use the 30-Day Rule
If you are looking to buy something non-essential, don’t rush. Apply the 30-day rule. This means you think about the purchase for 30 days. If you still absolutely want it and can afford it, then go for it. But if the urge has died down, let it go. This doesn’t mean you can’t ever make purchases that make you happy. It’s just a way of reminding you that not everything you want will be that important to you forever. It may just be an impulse buy that you’ll regret tomorrow. To avoid buyer’s remorse and overspending, give your purchases some though first – especially if they come with a hefty price tag. In the end, you may find yourself spending way less money as you’ve let the novelty wear off before you saddle yourself with more expenses.
6. Pay Your Debts Off First
If you have any kind of debt, whether it be secured or unsecured, try to pay it down as quickly as possible before spending more. You’re being charged interest on every debt you have. The faster it’s paid off, the less money you’re losing. The goal is to pay off any debts you have before making other non-essential expenses for yourself. Paying off debts should always be your primary financial goal.
7. Make a Financial Plan for Yourself
Making a budget that you can follow regularly is a great way to save money. This tally process allows you to see what’s coming in, what’s going out, and what you’re spending your money on most. You can include a portion to save, as well. Following your budget will keep you from overspending and help you save. If you don’t have a concrete plan, you risk overspending. If you’re not sure how to get started on making a plan, our financial experts can help you.
8. Consolidate Your Debts
If you’re paying off several credit cards at a time, you are going to be paying more than you can afford to pay each month. Then you’ll be forced to rely on using even more credit to purchase the essentials. Instead, see a debt consolidator to lump all of your debts together. This will reduce your payments to one single monthly payment. If you choose BHM Financial, one of our financial experts will help you pay down your debts and create a repayment plan that works for your budget and lifestyle. This will minimize your risk for default and accumulating more interest charges.
9. Pay More than the Minimum Payment
If you can afford to pay above the minimum payment for your mortgage, credit cards or other loans, do so. The minimum payment is the lowest amount you can pay to keep your credit in good standing. But simply paying the minimum will keep you in debt for the maximum amount of time as interest continues to accumulate. Try to pay above the minimum if it is at all possible. In theory, you should be able to pay more than the minimum. If you can’t, it either means you are overspending somewhere else or your debt exceeds what you can afford to pay back.
10. Get a Cashback Credit Card
Avoid credit cards that have an annual fee, unless you can secure a card that offers you cashback at the end of the year. The cashback is only worth it if it pays the fees for you and then come. Cashback cards can give you back some of your own money just for using the card. Of course, this is only a beneficial point if you do not let your balance carry over from month to month. Otherwise, you’ll be losing everything in interest. Instead, don’t put more than you can afford to pay back on your credit card and benefit from the cashback at the end of the year.
11. Shop Sales and Stock Up When You Can
If you happen to see a good price on a non-perishable item you often use, buy a few extra ones so you don’t have to pay full price the next time you need it. If you can do this for a few different items, you’ll find yourself saving on the things you spend most on and never running out of necessities. Assuming, you only shop for what you immediately need, you may get stuck paying higher prices later. If you have children, buy them the next sizes up when there is a sale. They may not need it today but when they do, you’ll have it and you will have paid less for it.
12. Shop Around
Never get too comfortable shopping for everything you need in one place. It may take a little bit more effort, but shop around for the best prices. You can check flyers in the mail, but you can also check online and set up alerts on your phone to find out when your favourite items go on sale. There is no one place that always offers the best prices. It can vary widely from store to store. So keep checking all of your local stores when you grocery shop to ensure you’re always paying the lowest price. The bigger your family is, the more you stand to save on groceries by shopping around. With the price of groceries these days, we could all stand to save a little more in this area.
13. Set Reminders to Pay Your Bills
Try as much as possible to pay all of your bills on or before their due date. Paying your bills late – even a day late – can result in extra fees and instant interest charges. This is really like taking your own money and throwing it straight out the window. Instead, keep all of your bills in check by paying them on time. This will also help keep your credit in good standing. Set up reminders in your phone or calendar to make sure you get the notification with plenty of time to pay the bill.
14. Don’t Take Cash Advances from Your Credit Card
A cash advance isn’t the same as using your credit card. When you use a credit card, you have a grace period to pay back the amount. A cash advance starts accruing interesting from the first day. This money saving tip is an easy one. If you’re strapped for cash, take out a personal loan or meet with a debt consultant at BHM Financial to find out how you can get the cash flow you need without paying unnecessary interest charges. Our consultants can help you manage your finances, repay your debts, and budget yourself accordingly.
15. Always Look Over Your Accounts and Price Plans
Your needs change over time. What was valuable to you a few years ago, may no longer be a necessity to day. To make sure you’re not paying for services you don’t use, review your statements and accounts on a regular basis. Check with your utility providers to see when new prices are introduced so you can be sure you’re paying the lowest rate. When you can, shop around with the competition to negotiate better pricing at least once per year. Never pay bills for years on end without re-evaluating if you are paying the best price. Regularly checking on your accounts can save you hundreds of dollars per year.
How Can I Get Rich in 5 Years?
If you’re looking to not only save, but accumulate wealth, consider different ways to grow your income. This may include looking for a second job or selling off items you no longer need to accumulate more cash. Accumulating wealth is not a simple task. You have to be willing to do what most people aren’t willing to do to be able to live how most people can’t in the future. This means tightening the belt, reducing your spending, earning more, and saving more. This is easier said than done but if you are committed, you can increase your wealth significant even in just five years.
What Happens If I Get Into Debt?
No matter how well you plan financially, you may still end up in debt. One unforeseen major life event like illness, and you may wind up in debt. This is not uncommon in Canada. If you find yourself drowning in debt, don’t wait to get your finances in order. Meet with our financial advisors today to consolidate your debts and pay them down sooner. Our agents can also help you develop a budget to keep you on track once your debt is paid, too.
How Can I Avoid Debt?
Following the above money saving tips can really help you stay out of debt. If you plan ahead and build a contingency fund, you can avoid unnecessary consumer debt in some instances. However, sometimes, getting into debt is unavoidable. In that case, our advisors can help you find the right loan for you to get out of debt faster. It may be a personal loan or a home equity loan, where you borrow against the value of your home to get the cash flow you need to pay your bills.
Each situation is different. That’s why, at BHM, we meet with each of our clients individually and work with them to find the loan and repayment plan that works for their individual needs.
Why BHM Financial?
At BHM Financial, we know debt can happen to anyone. Our goal is to help you get your finances in order, minimize your payments, and make your debt more manageable so you can get out of debt and rebuild your credit. If you want more information, contact us today to see how we can help you overcome your financial problems and learn to save more for your future.