Illustration by Audrey Malo
Take control of your personal finances and be a budgeting guru with these easy attitude adjustments that'll help you spend less, save more and achieve financial freedom
We know what you're thinking: "Supersavers" are about as real as superheroes. With the rising cost of pretty much everything under the sun—childcare, fresh fruit, your smartphone bill (gasp!)—plus the fact that we Canadians owe $1.71 for every $1 of disposable income we make, saving money seems like a pipe dream. News flash: It doesn't have to be. All superspenders really need is a crash course in money management and a little financial know-how from a few of the country's most successful money mavens. We found out how to pinch pennies, stretch dollars and squirrel away funds for that ever-looming rainy day.
"I like $6 lattes."
Supersavers say "We like $6 lattes, too, but that doesn't mean they should be a habit."
Free advice: This is one of those extra costs that'll creep up, leaving you none the wiser until, of course, you do the math. Allow us: Just three tasty beverages a week adds up to more than $900 a year. "If you think in terms of eating loonies instead of consuming drinks, it can help put things in perspective," says Cynthia Kett, a Toronto-based certified professional accountant and certified financial planner. Don't worry—we're not suggesting eliminating your java altogether; likewise for indulgences such as eating out and buying (instead of bagging) lunch. "Dining out is a social activity," says Kett. "Consider which meal rituals give you the most pleasure and keep those, but reduce the number per week. For instance, have a latte on Monday, go for lunch on Wednesday and make dinner reservations for Saturday. You'll have something to look forward to nearly every other day."
"I can't afford to open a TFSA or an RRSP."
Supersavers say "You can't afford not to open one (or both) of these savings vehicles."
Free advice: Good savers adhere to this easy-to-follow rule: Pay yourself first. What does it mean, though? Set up your bank account so that with, say, each paycheque, some money (even just $10) automatically goes into a registered retirement savings plan (RRSP), tax-free savings account (TFSA) or—at the very least—a regular savings account. "The money you don't see in your chequing account likely won't be missed," says Laura Chanin, an investment adviser and certified financial planner in Vancouver and Surrey, B.C.
"I'm an impulse buyer."
Supersavers say "Never open your wallet without asking yourself a few key questions."
Free advice: Chanin says a self-imposed cooling-off period before bigger buys (and even smaller purchases) is a classic move among savers. "If you find something you want, think about it for at least 24 hours," she says. Try some internal dialogue: Do I really need that purse? If yes, ask yourself if you can afford it now. If you need it and can afford it, then see if there's a way to get it for a lower cost. And if you don't need it or can't afford it now but still covet it, make a plan to save for it. Always remember, says Chanin, that "slowing down your spending will give you a greater sense of control, and the pride in that typically lasts longer than the emotional high you get when you hear that satisfying beep indicating your debit or credit card payment has been approved."
"Spending diets never work."
Supersavers say "We almost agree. Spending diets often fail miserably (much like food diets), but they can work in some circumstances."
Free advice: "If someone told me that I couldn't eat dessert for a month, I'd fail. If I'm sticking to eating dessert once or twice a week, though, that's sustainable for me," says Kett. The only times in which these financial diets might work are to meet short-term goals (a vacation in six months, a wedding a year from now, a home purchase in two years). "When the financial pain is limited to a specific time frame, it's more tolerable."
"Following a budget never works."
Supersavers say "If you don't track your money, you'll lose it."
Free advice: Budgeting isn't one of those pointless projects financial experts recommend. "The pure act of being aware of what's going in and out of your bank account each month increases your probability of saving by more than three times," says Lesley-Anne Scorgie, a financial expert, bestselling author and owner of MeVest, a service that offers money coaching and financial planning countrywide. Try a budgeting app like Mint that tracks when and where your money is going. Some apps will also send a notification to your smartphone if you're off budget.
"This is what credit cards are for."
Supersavers say "Credit card interest wreaks havoc on your bank account."
Free advice: Spenders may think they know the consequences of credit card interest, but statistics show they're full of it. Last September, research conducted by credit-report bureau Equifax found that in the second quarter of 2017, the average Canadian carried about $22,595 in debt from credit lines and cards. Kett says it's never a good idea to finance nonessential spending with ongoing credit card debt—interest rates are just too high. Think about it: Say the interest rate on your card is 19.99 percent and you pull out your plastic to drop $1,000 on a week at an all-inclusive. If that's the only purchase on your card and you make the minimum monthly payment (normally, three percent, or $10, whichever is greater), you'll be forking out cash for that vacation for just shy of 11 years, and it will end up costing you almost double, thanks to the $989 in interest you'll be hit with. Bon voyage?