Close-up Of Person Hand Inserting Coin In Pink Piggybank On Table

Let’s face it — saving money is hard. With all of the endless bills and unplanned expenses, it can become difficult to make a plan to put some money aside for important things, such as a house, a new car, or retirement, without adding even more stress to your life. Follow these simple tips and learn how you can save your money with just a few small changes to your spending habits. 

Make a budget. Creating a budget (and actually sticking to it) will show you exactly how much you’re spending and what you’re taking in each month. Often times, we think that we’re spending much less than we actually are, and at the end of the month it is difficult to determine where that money has gone. The best thing about a making a structured budget is that you can set a goal of how much money you want to put aside, and then tailor your spending to reach this goalno matter what it is.  

Before you make your budget, you need to find out how much you spend on average per month. Make a list of your “Big Expenses” like your rent/mortgage and other monthly bills (cell phone, hydro, insurance, etc.). Next, make a category called “Living Expenses,” and write down the costs of everyday necessities, such as groceries, parking, and gas. Finally, create a category called “Entertainment,” in which you write down how much you spend on things like eating out, shopping, movie nights, Starbucks, trips, etc. It’s important that you don’t do all of this at the end of the month, though, because this is where you will forget things, so make sure that you write everything down as you spend.  

When you look at all of your expenses together in this way, it becomes clearer how things really start to add up as the month progresses. Asses your spending summary above and then begin to create your budget. Your “Big Expenses” will not change much, so subtract this amount from your monthly earnings. Next, subtract the amount you want to put aside and save. The number you have left over is what you can spend on the Living Expenses and Entertainment categoriesThis number is probably much lower than you thought, so it’s time to really look at these expenses and decide what’s most important. Is getting Starbucks every morning more important than buying groceries? Probably not — so it’s time to cut it out of the Entertainment category. If you really want to buy something, wait thirty days. If you still want it, you can incorporate it into the Entertainment section of your budget, but it’s likely that you will have simply forgotten about it. Nothing ruins a budget more than impulse purchases, so this is a good strategy to avoid temptation and pocket that money instead. 

Although it seems like common sense, creating a structured and organized budget is something that a lot of us just simply don’t do, and yet it is the best way to track your spending and know exactly where your money is going.  

Find smart places to put the money you saveAfter you have created your budget and you start saving, it’s important to find a place to put this money so that it can accumulate interest and grow over time. Visit a few banks and ask about their high interest savings accounts. You can also open a Tax-Free Savings Account (TFSA), which allows you to set money aside tax-free, or place these savings into a low-risk mutual fund. You can also set up automatic transfers at the beginning of each month so that the designated amount you want to save goes into your savings account or mutual fund without you having to do anything. This will keep your savings amount constant and ensure that you actually set this money aside.  

Avoid credit cards and start using cash. We’ve all had that scare at the end of the month when the credit card bill comes and it is so much more than we thought. The problem with credit cards is that they’re way too easy to use and they promote that “I’ll just pay for it later” mentality. Avoid this massive bill by only using your credit card for big purchases over $500. For things that fall under the “Living Expenses” category of your budget, use your debit card, and for things that fall under the “Entertainment” category use cash. Once you have your budget, you will know exactly how much you can use for things like eating out or going to the movies, so at the beginning of each month take that amount out in cash. Once it’s gone, it’s gone. Using cash allows you to have a better gauge of the depletion of your money and, when you see it decreasing, you’ll think twice about whether you should eat out or just make dinner at home.  

Making a few simple changes to how you spend money will set you up for success as you make the effort to save long-term. Knowing where your money is going and making a strategic plan are the best ways to keep an eye on your money and make it accumulate overtime, so that you can use it for the things that really matter.