We are now day twenty something (I think) into this quarantine that has pulled the rug up from under a lot of people’s feet. I don’t think anyone could have anticipated the seriousness of this and just how much it would shift our daily routines. However, abstaining from public gatherings, entertainment and other activities hasn’t been all that bad. One positive that comes to mind from being indoors is that [hopefully] you’re able to save money in some way whether that is by canceling subscriptions or saving on regular expenses (e.g., commuting, parking, takeout food etc).
With the busyness of life on pause, now is the best time to understand your relationship with money, define clear goals, and become more intentional with your spending habits. I interviewed my friend and finance enthusiast, Allison, who was so kind to share how she manages, budgets and saves money in order to acheive her goals.
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What is the importance and value behind saving money?
Two words — Financial Freedom! Saving money definitely requires planning, discipline and self-control. It’s valuable because it gives us an opportunity to work towards building our own savings, investments, and cash on hand to afford the quality of life we want for ourselves and our families.
Do you have a process when it comes to saving money? What does it look like?
I keep it pretty simple. Just calculate my income for the month, deduct expenses that I deem essential, and try my best to save whatever is left over. Basically I live below my means. It becomes addicting to reach these little milestones I set for myself. I think the process is pretty easy but the hardest part is to start. Once you get going it becomes routine and it’s just like, the time is gonna pass anyway so might as well slay these financial goals!
What are additional habits someone should have that will help them save?
- Being intentional with spending! Be careful with sales which often encourage you to buy things you don’t need at prices you can’t resist.
- Being OK with missing out and saying “no” to people and some outings
- Daily affirmations and visualization is also very powerful for attracting money (and anything really). One of my favourite affirmations was said by T. Harv Eker and it goes: “I release my non-supportive money experiences from the past and create a new and wealthy future“. I love this one because it acknowledges that the money management we have learned is not set in stone and can be improved at any time.
What are some challenges I may face while I’m saving?
A challenge you may face is that no matter how much you work, scrimp, save, and budget you can’t seem to actually save a large amount of money. This boils down to really being honest with yourself about two things: Either you need to increase your income (i.e. work on getting a higher paying job and/or develop multiple streams of income such as earned income, capital gains income, profit income – just to name a few). The second solution is to lower your expenses. A quick example is evaluating certain luxuries and whether you’re willing to sacrifice them in order to get closer to your financial goals.
What are some tips to keep motivated while saving?
- Create a Vision Board with financial goals you would like to achieve and look at it often
- Avoid shopping when you’re feeling emotional, tired, stressed, or hungry
- Read personal finance blogs and books
- Sit down with a notebook or start a spreadsheet on your computer, whatever you’re most comfortable with, and write down your goals divided into increments of 1 month, 3 month, 6 months, 1 year. Or whatever timeline works for you. This allows you to make plans in easy chunks so you’re not overwhelmed by the big goals.
Can you share a money budgeting success story?
When I started my Undergraduate Studies that’s when I began to develop the mindset and habits that I have today. The same do-able things I’ve outlined in this very blog post helped me to graduate University debt-free. That’s right, I graduated from a four-year degree program with zero student loans. To do it, I had multiple streams of income (worked in retail part-time and did random jobs on campus), applied to any scholarship I qualified for, lived below my means, and took advantage of student discounts. While others were partying and shopping I was saving and studying to get my grades up in order to qualify for scholarships. Don’t get me wrong, I had an amazing school life, partied and shopped too, but I was responsible about it and made sure it fit in the budget that I set myself each month. If it didn’t fit then I would just sacrifice it for that month and do it later!
What’s the best advice to give someone that has no savings?
Start by setting a schedule to save little, but often. Many banks have an option to automatically transfer a pre-set amount from your chequing account into your savings account automatically (i.e. I have mine set up to transfer $100 into a TFSA, every pay day. I also have it set to save $5 every time I use my debit card). This ensures it’s put away before I even have a chance to look at it. These small amounts add up to BIG savings over time! For example, saving $20/day in miscellaneous spending adds up to $7,300 per year. It’s just about deciding what is necessary and being honest with yourself about what you can truly cut back on. This method can be used to accumulate enough money to invest, or pay down debt.
As for debt, it’s important to prioritize what you pay off. Start with credit card debt because it typically has the highest interest rate. Second, pay off car loans because cars depreciate so there’s no sense of paying more interest on it as it decreases in value. Third student loans because they may impact long-term goals such as the home you’re able to afford. And finally mortgage debt is last, as this is typically the largest debt and a home is a solid asset to own. The main idea when it comes to debt is to identify which loan carries the highest interest rate and pay that first!
Can you suggest any apps that will help keep me accountable to my savings?
Borrowell to find out your credit score, Mint for budgeting. TD Myspend analyzes your spending and tells you when you’re on track compared to the previous month. If you’re competitive with improving yourself (like me lol) then it becomes fun to try and out-do your previous month.
Hope this helped! Thank you 🙂
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How have you been using this time to make sure your money is organized? Let me know below!
