“The most important thing is to develop the habit of saving,” says Ayana Forward, a fee-only Certified Financial Planner (CFP) in Ottawa. So what are some easy ways to start saving without sacrificing too much from day to day?
1. Set mini goals as part of your long-term plan
“Saving money really comes down to self-discipline and goal setting,” says Brent Vandekerckhove, a financial advisor with RGF Integrated Wealth Management in Vancouver, B.C. To start, decide what you’re saving for and calculate how much money you need to meet your goal. Whether it’s saving for a car, a house, retirement or anything in between, your goal should be specific and measurable, as this will help you stay on track, says Vandekerckhove.
Having a concrete goal will give direction to your long-term plan. And sharing your goal with others around you can help keep you disciplined and accountable, he says. Even when working towards a long-term plan, it’s a good idea to set smaller, short-term goals, Vandekerckhove says. Reaching little milestones along the way will keep you from feeling overwhelmed and show you that you’re on the right track.
2. Decide how much you should put away each month
Although you may read that you should save 10% to 20% of your monthly income, this isn’t set in stone. The ideal amount of money you put away ultimately comes down to your goals and how much of your income is left after meeting monthly expenses.
The other thing to consider is how much time you have to save. For example, if you’re saving for retirement, consider your current age and how long you intend to work, among other factors. If you have a short-term goal, like purchasing a home within the next five years, you may have to save a larger amount each month than you would if you were saving for a long-term goal.
3. Track your spending and savings
A key part of saving is tracking your money. This will help you develop conscious spending habits. According to Forward, everyone should do spending audits regularly to figure out where their money is going.
Start by reviewing your bank and credit card statements and making a list of every item you’ve spent money on in the last month. Look for unnecessary expenses that can easily be eliminated. This will help determine if you need to curb your spending and where to start.
“Think about what you want to prioritize. It’s going to be different for everybody,” advises Forward. “Make sure that those things come to the forefront, and anything that was in that spending audit that is unimportant, try to avoid or eliminate it.”
