Focus on debt repayment
Getting ahead is impossible if you have consumer debt, especially with interest rates rising like they have in 2022. As a general rule, you should always focus on high interest debt first, such as credit card debt and consumer loans. One way to bring your balance down is to take out a line of credit from your financial institution. This will allow you to transfer your credit card debt to your line of credit, which typically has a lower interest rate. Since interest rates have been rising in Canada, the rates offered with lines of credit have also increased. That said, they’ll still be lower than most credit cards.
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Set some realistic savings goals
Generally speaking, you want to set some short- and long-term goals. Depending on where you are starting from, this could be building an emergency fund or investing for the first time. The idea here is that by having financial goals in place, every money decision you make moving forward will make a difference. For example, if you know you want to save a down payment for a home, you may decide to eat out less since every dollar spent is being taken away from your ultimate objective.
Also, make sure you’re using the right accounts for your goals. The Tax-Free Savings Account (TFSA) contribution limit for 2023 is $6,500. Check your contribution room with the Canada Revenue Agency, as you may have more contribution room you haven’t used yet. TFSAs are a great place for both short and long-term investing. If your focus is on retirement planning, use your Registered Retirement Savings Plan (RRSP). For those planning to buy their first home, keep an eye out for the new Tax-Free First Home Savings Account, which should be available in the spring of 2023.
Buy in bulk
Canadian food inflation has been down month-over-month, but it’s still up more than 10% compared to the same time last year. To combat this inflation, consider buying in bulk whenever certain items go on sale. Some of the more expensive items you should target include meat, coffee, pasta, and butter. Pasta alone saw a 44% price increase.
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Use your local library more
Without a doubt, libraries are the single best resource to save money. These days, libraries offer more than just books and free newspapers. You can now get ebooks, DVDs, and even video games, often digitally. In addition, some libraries offer transit cards, and attraction passes for free.
If that wasn’t enough to bring you back, note that many libraries also offer free on-site education programs and activities for kids and adults. It’s worth checking to see what yours offers, as there might be things you would never have expected. For example, the Toronto Public Library has Presto transit cards and attraction tickets that you can borrow for free.
Put a stop to your impulse buying
Whether it be a $5 or $500 purchase, impulse buys can destroy your wallet. If you find yourself pulling out your card far too often, set a purchase limit for yourself that requires you to wait a certain time before you buy something. For example, you could tell yourself that you’ll wait a week before buying any non-essential item that costs $100 or more. If that week passes, and you still want the item, then buy it. That said, there’s a good chance you’ll realize that you don’t actually need the purchase. If a week seems extreme, set a 24- or 48-hour rule instead.
Even though you may have already set a goal to reduce your impulse buys, you may need to take things a step further. It might be a good idea to ban yourself from certain stores or aisles. For example, the record shop, Amazon, or the snacks aisle. Let’s be honest, there are just some things we can’t resist. Once the item is in front of us, we find ways to justify the purchase. If you don’t expose yourself to these situations, you’ll end up spending less.
Don’t be afraid to spend a little
While the focus of this list has been saving money, it makes sense to dedicate some of your funds to hobbies, activities with your family or things that will be meaningful to you. There’s no point in working hard and hoarding all of your money if you can’t enjoy yourself. If you keep your short- and long-term financial goals at the forefront, you can responsibly set money aside to go out with friends, or take a long awaited vacation. With some discipline and planning, you can enjoy your money while also watching it grow.
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