Saving money can really benefit you a lot from your present to your future. Today’s savings can act like a big brother in your future bad times and can save you. If you are getting difficulties in How to save money in Canada. Don’t worry you will get to know about 12 incredible ways to save money in this post.
It’s true that life in Canada is expensive, but there are so many ways to cut down on these costs, and often you just need some advice or a nudge in the right direction. In a new place, and especially a new country, it takes time to understand and find your way around. It becomes really difficult sometime to manage the salary for some other expenses.
But before moving towards tips to save money, you need to understand the philosophy behind saving money and why you need to save money. Let’s get straight towards that……….
1. Why Should You Save Money?
But Why should I be saving money you might think? Well, there are actually two types of saving money that people usually do.
One, they’re saving money as in spending less money than you would have otherwise. Just because you’re smart about your choices your decisions and your resources.
Another type is saving money as putting money aside for the future in order to build a safety cushion or retire early or just build your financial well. These are most probably the two reasons why you need to save money.
2. General Philosophy Behind Saving Money
First and foremost if you are not doing that already start budgeting. Budgeting is generally a plan of how you want to spend your money for the month ahead. The simplest exercise which is recommended is to look at what you’ve spent in the last week or if you can in the last month and try to recollect every single thing you’ve spent money on.
Going back in time rebuilding a list of the things you’ve spent your money on is a powerful exercise to help you reflect on your spending habits.
You should start focusing on your own plan and start budgeting. There are multiple methods of how you can do that but, for starters, it is recommended you try the 50-30-20 rule. This rule was popularized by the U.S. bankruptcy expert Elizabeth Warren.
This rule says that about 50 percent of your money spent should go on your needs the things that you have to pay for no matter what like housing, groceries, utilities, or transportation. Your thirty percent should go on your wants the nice to haves the things you’d want to spoil yourself with every now and then like a nice shoe, dinners out, or hockey tickets. The remaining 20 should go into savings and debt repayment the foundation for your safe and stable future meaning a down payment for a house college savings retirement funds and so on.
With this model, you’re making sure you’re distributing your expenses across three main aspects of your life. The biggest chunk of your money goes into your basic needs because according to the pyramid Maslow, it’s important to have that solid foundation otherwise it’s impossible to think about anything else that goes on top. And then you have thirty percent for your nice two halves and twenty percent for not-so-fun things.
3. How to Save Money in Canada: 12 Money Saving Tips
It’s pretty widely agreed that life in Canada can be quite expensive. This depends on where you are moving from, but most immigrants find daily expenses such as rent, groceries, car insurance, eating out, and childcare to be higher than what they are used to.
In order to save money fast you need to follow some of the tips. These tips can save you a good amount of money.
No matter where you are in Canada or anywhere else in the world these are 11 things that you can start doing as soon as you can in order to start building a prosperous and stable future.
3.1 Find a Cheaper House!
Your biggest expense as a newcomer to Canada will be your accommodation, so the top tip number one is not to take the first rental place you find.
The rental market is pretty out of control across most of Canada, especially in the big cities, and you will no doubt be shocked at how expensive it is to rent even the most basic of rooms.
But, the advice would be to shop around. Use the internet, and compare sites like Airbnb, independent rental agencies, and Facebook marketplace. There can be a huge range of options, from renting a shared room in a house or basement flat to condos, up to detached houses.
A lot of large houses in Canada have finished basement suites with separate entrances, and renting them out is very popular as a way of helping to pay a mortgage. So, it’s definitely worth looking into if you are a family with children and want a place of your own.
And be aware that the going rate will vary enormously depending not just on the size, but also on the state of the house, the location, proximity to conveniences or a main road, whether or not it’s furnished, and sometimes even the direction it faces.
There are always cheaper options available, and when you first arrive it’s perhaps wise to not be too fussy. Consider sharing a basement flat or an apartment with others for a few months. This will drastically lower your rent as well as your bills and will give you time to explore other options.
If you want to own the house then try to consider a cheaper option as it will deduct the price as well as the property taxes and several other taxes on the house.
3.2 Buy Second Hand!
Tip number two is a huge money saver and it is to buy things secondhand.
The used market in Canada is absolutely superb for anything you could ever need – whether it’s clothes, furniture, electronics, kids’ toys, outdoor tools, sports equipment, you name it.
Second-hand stores, or thrift stores as they are called here, are absolutely everywhere. And unlike in some countries where they are just a jumble of miscellaneous items, the thrift stores here are well organized and have everything you could possibly need at a fraction of the price it would be new.
The other place to check out is the Facebook marketplace, which is a treasure trove of second-hand items that people are wanting to pass on. You can specify what you are looking for, and narrow your search down to your local area. Plus, picking things up from private sellers means you avoid paying the dreaded provincial tax!
Just some of the things that you can pick up second-hand can be furniture, kitchen utensils, a saw and a hatchet, winter jackets and boots, a bike rack, and ice skates!
3.3 Don’t Buy a Car!
Tip number three is, if you can, try to avoid buying a car!
Depending on where you are moving from, the cost of buying a car in Canada may seem good value, or very expensive. But regardless of this, there’s no denying that the ongoing costs of running a car are expensive here in Canada.
Car insurance can easily set you back anything from $1000 to $2000 per year, and you will probably find that just everyday driving, such as to and from work, food shopping, and the occasional trip at the weekend will mean you are filling up your car once a week, which may cost you an extra $300-400 per month.
Most people in Canada would tell you they couldn’t live without a car, and while most of them are probably right, there are ways around having a car, depending on your lifestyle. Public transport in Canada is not what it could be, but there are still plenty of buses in the towns and cities.
So, if you can use these to get around, plus a bike in the non-snowy months, and occasionally rent a car for weekend trips, you will literally save yourself thousands of dollars.
3.4 Shop Around the Shops!
Tip number four is to shop around several different grocery stores when you first arrive and find the one which has the cheapest produce for your eating and lifestyle habits.
Don’t just shop at your closest convenience store, which could easily end up costing you hundreds of dollars a month extra. Grocery stores here vary considerably, it took us several months to find the ones which suited us! And be aware that no one store is a one-stop shop.
You may find that fruit and veg are cheaper in one place, meat in another, and toiletries in another so, look out for the best deal. Each store also has its own value range, so if you’re not fussed about brand names, buying the budget options for a lot of your groceries can make life a whole lot cheaper.
3.5 Only Buy What You Need
Tip number five is a good tip for all shopping trips, and it’s to make a list of exactly what you need, and only buy what’s on your list.
It is all too easy to be tempted by items you don’t need, especially when you are in a new place and don’t know your way around the supermarket. Having the discipline to buy only what is on your list could save you hundreds of dollars a week!
Also, sign up for loyalty cards in all the stores you shop in, these generally earn you points every time you shop there, and will give you a variety of rewards as well as money off your purchases.
3.6 Take Picnics Lunch
Tip number six is to take picnic lunches, and make your own coffee at home!
The number of cars lined up at the drive-through each morning to buy their coffee on the way to work is incredible! If you buy a coffee and a pastry every morning on the way to work and buy your lunch every day, you could easily be spending upwards of $400 a month at least.
All of these things can save you a few hundred dollars if you prepared your lunch the night before, and either drank a coffee at home or took one with you.
3.7 Banking Basics
Tip number seven is to shop around for your bank account and credit card.
Different banks offer different incentives for opening an account with them, and a lot of credit cards will give rewards such as air miles, money off groceries, movie tickets, and cheaper fuel.
So, you can decide which one suits you. But one thing that you need to take care of is that credit card debt can sometimes become too difficult to pay. So, try to avoid too much use of credit cards.
3.8 Electricity Hacks
Tip number eight is to consider the time of day you are using your electricity and hot water.
Peak hours are early morning and early evening when people are getting ready for work and coming home from work, and using electricity during these hours can greatly increase your utility bill.
So, think about how you could cut down on your usage during those times, such as always turning lights off, and using the dishwasher and washing machine during the off-peak hours.
3.9 Buy in Bulk
Tip number nine is to get yourself a Costco membership as soon as you can, which means having the ability to buy in bulk!
Costco is a wholesaler, which means that it’s basically a huge store where pretty much everything comes in packs of 10! You need a membership card to shop there, and you need to be a permanent resident of Canada to get a card.
But once you have one it’s a great way to save money. You can buy non-perishable foods as well as a huge amount of household items, in vast quantities at a fraction of the cost in the regular supermarkets, and whilst it may seem a lot to be spending in one go, you need to view it as an investment because it will last so much longer and save so much in the long term.
Tip number ten is to consider the monthly subscriptions you are paying into. Cancel unused subscriptions that you are not using at all.
Buying monthly subscriptions is part of daily life these days, but there are so many choices that more often than not you will forget what you’ve paid for, and will likely not be using a lot of them.
Sit down and have a look at your bank statement, write down everything you’re paying for each month and consider whether you’re actually using them. For example, if you already have a cable TV subscription, do you need to be paying for both Netflix and Amazon Prime?
3.11 Use Student Discounts
The number one tip by which a student can save money is Student Discounts.
There are very less people who know that you can save money with this method. You will require a student email id which every college and university provides. Email id and proof that states that you are a student in Canada like a letter of acceptance or enrolment certificate can allow you to use the student discount.
Almost every retail store in Canada will provide you with a student discount. Apple products, Amazon Prime, Netflix, and many more things are on the list which give student discounts. You can get student discounts on clothing brands like Nike, H&M, and Levis’s, you name it. You can also get a discount on Air Canada Flights as someone who wants to go to their hometown can save money on flight tickets.
The discount is usually around 10-15%. One thing to note is that always ask the store if they will give student discounts or not, because some stores may not give discounts.
3.12 Reduce Your Reoccurring Expenses
This is really important and a lot of people don’t talk about this thing.
Let’s understand it with the help of an example.
For Example, the rent let’s take it to be $400 which is a reoccurring expense that needs to be paid every month. If I am living in sharing and one of my friends is paying $500 for the same room and he is also living in sharing.
Now if you would have lived on $500 rent for about ten months, it’s gonna be more expensive than the $400 rent for ten months. So, always try to reduce the reoccurring expenses and try to find cheaper accommodation and it can also be the case with phone bills. Try to go for cheaper options.
4. Saving Money
Now let’s move on to saving money the first thing you need to do when you’re saving money is open a savings account.
You need to make sure that you are putting your save money in some saving account or some emergency fund. There are different types of savings accounts and it’s recommended you open several of them. Some of the accounts that you can open are mentioned below:-
4.1 High-Interest Savings Account
You should go for a High-Interest Savings Account TFSA and RRSP. The first thing you should start with is a high-interest savings accounts. When you put money into this account the bank pays you interest on simply keeping your money in the bank for a long time. When looking for such an account it recommends avoiding the big banks. They have a very low-interest rate on your savings which will make your savings grow way slower than inflation.
4.2 Neo Savings accounts
You can go for a new savings account, neo savings does everything an everyday bank account does. But it earns one of the highest interest rates on your savings in Canada 1.3 percent that’s 130 times more than any traditional bank or financial institution can offer. It can act as an investment account for you.
There are no minimum balances or monthly fees simply pay bills and make e-transfers deposits and withdrawals all from one convenient place. It will get you one step closer to reaching your savings goals and building your wealth in Canada.
4.3 Tax-Free Savings Accounts
Once you have your high-interest saving account set up next we highly recommend you set up your TFSA, tax-free savings account, and RRSP registered retirement savings plan. Both of them will come in handy when you start saving more money or when you decide to invest in the stock market.
These accounts will allow you to save on tax for instance depositing a portion of your income into an RRSP account will allow you to reduce your taxable income by the amount you deposit on your RRSP in the given year.
You can set up recurring automatic deposits from your bank account to your savings account because it makes it so much easier. And there are different types of auto deposits like this for instance you can set up a weekly deposit or a monthly deposit or you can opt into a roundup service that some financial products offer.
Such a service connects your credit card and tracks the amounts you spend from each purchase rounds it up to the full dollar and automatically moves the rounded-up amount into your savings account.
It doesn’t seem like a lot but believe me cent by cent dollar by dollar it all adds up to a nice sum being added to your savings by the end of the year. You can withdraw money from your RRSP account when it’s the right time to live a peaceful retirement life.
These were some of the ways through which you can save some amount of money for yourself. You can follow these tips to save money for your future, and try to avoid high-interest debt or avoid paying interest as it can destroy your savings.