Set a goal
First, identify what you’re saving for. Whether it’s a trip to Italy you hope to take in a few months, a down payment for your dream house, or the big one—saving for retirement—having a very specific goal will help you stay motivated and on track.The truth is, society has gotten away from the saving habit because we now all have easy access to credit. But saving takes the stress out of wondering if you have enough money or not.
Open an account for your savings
Second, it helps if you open separate savings accounts dedicated to your goals, rather than having one account for all your funds.It helps if you have saving accounts like RRSPs or TFSAs because they’re separate accounts that earmark money for a special goal, whether it’s retirement, an emergency fund, or saving for a home.
Start tracking and trimming
You can’t escape having to run the numbers and tracking your expenses to determine how much you’re truly able to save. Calculate your monthly basic expenses and see if there are ways to trim down bill payments—whether it’s the utilities, heating or cell phone bills. Then, subtract your fixed expenses from your monthly net income and take a look at what’s left over. One tip is to focus in on your discretionary expenses (restaurant meals, coffee, clothes, fitness club, etc.) and see if there are ways you can cut back. For instance, instead of eating out for lunch every day at work at $10 a meal, it may make more sense to bring your lunch from home and enjoy a meal out with friends for $30 on Friday nights.
Have a ‘fun fund’
Cutting back on discretionary expenses is not about total denial. Instead, it’s about making sure you’re getting maximum pleasure from some of the day-to-day expenses you chose to spend your spare change on. For some people, it also helps to set up a ‘fun fund’ so that they always have some fun money set aside for entertainment every month, keeping your savings plan from feeling too restrictive.
Set it, don’t forget it
Once you’ve done this initial planning, the best way to stick to your savings plan is to automate the transfer of funds to your various savings accounts. You can do that by setting up monthly pre-authorized payments to your bank accounts on the first of every month. This way, it’s not a question of finding the willpower to save every month.