Editor’s Note: This article was originally written by FT back in 2017. Due to its popularity, we have asked FT to update it for 2021 with more relevant advice. As always, we encourage you to comment below and tell us how you save money in your day to day life.
Out of all the strategies that I have used to build wealth over the years, I would say that saving (and investing those savings) contributed the most in my million dollar journey.
While there are a lot of savings tips and tricks out there, you’ll get the most bang for your buck if you focus first on your largest budget items. For most households, the top 3 expenses include: housing, groceries/food, and vehicles.
Here are some of the savings strategies that include savings tips for the top 3 expenses, along with other savings tips that I’ve used along the way.
Included below are 25 ways that I save money:
1. Bank your Raises – One of the pound for pound most effective ways to save money is to live simply for as long as possible. When my income increases, I aim to keep lifestyle inflation at bay. Basically, I bank my raises.
For us, we started off buying a 2-apt house to live in one unit and renting out the other. We decided to build a slightly larger place when we were expecting our first child (in 2008), and even though our financial situation has significantly improved since then, we still live in the same house.
2. Reduce your MER – If you have mutual funds, did you know that reducing your MER by 1.5% could result in a 50% larger portfolio after 30 years? I keep our ETF/mutual fund management expense ratios (MER) as low as possible by using indexed ETFs/mutual funds. And that’s assuming that your mutual funds can keep up with indexed ETFs! Check out some all-in-one index ETFs here.
3. Shop for the Best Rates – When making a big purchase that requires a loan, like a mortgage or a car loan, I negotiate and shop around for the best rate. When your mortgage term is up, take some time to shop around instead of just renewing with your current provider. This will save you thousands in the long run.
4. Buying a Home – In addition to shopping for the best mortgage rates, and buying a home that’s affordable, saving for a large down payment can significantly reduce CMHC fees. You can also read Kyle’s article where he discusses if it’s worth it to buy a house in Canada or not.
5. Reduce your financial fees – I arrange my banking so that I don’t pay any fees and use a discount brokerage that minimizes my trading expenses. The current highest rated discount brokerage with Million Dollar Journey is Qtrade – check out our review here.
6. Buy Gently Used (especially cars) – Buying gently used big ticket items can offer a lot of savings. This works especially well with highly depreciating assets like cars! From my research, for cars, the sweet spot is 3-4 years where they can depreciate as much as 50% (depending on the make/model). We did this with our last vehicle purchase (way back in 2016) where we purchased a $46,000 3-year old large Japanese SUV for $25,000.
7. Maximize those Loyalty Programs – Use points or a cash back based credit card that gives me the best return for my spending. Over the last few years, I’ve been maximizing the PC points system that can be the best points system in Canada if you use it right.
8. Reduce Temptation – When buying consumer items, I try to separate my “needs” and my “wants”. Before you put the item in the shopping cart that’s not not on the list, ask yourself, “Do I need this?”
9. Get Cashback When Shopping Online – When I find something that I “need”, I do comparison shopping or wait until it goes on sale. If I find the item online, I check Rakuten or Great Canadian Rebates or for additional cashback opportunities.
10. Entertainment – We use streaming services to watch movies at home instead of going to the movie theatre every weekend (pre-covid). However, since we enjoy the theatre, we still visit the movies on occasion. Here is how to maximize Scene points. To please our reading habit, we use the library as much as possible.
11. Drive Efficiently – When purchasing vehicles, I tend to think about function over form. Fuel efficient SUV’s work for our family. Even if a car is fuel efficient, we drive with gas efficiency in mind.
12. Save Energy at Home – We save energy around the house with CFL’s, programmable thermostats and proper insulation. A few years ago, we took it to the next level by installing a mini-split heat pump and it has made a dramatic difference to our overall energy usage.
13. Do Housework in Batches – We do laundry once / week (we may do more now because of the kids, but try to be as efficient as possible) and we wait until the dishwasher is full before turning it on.
14. Save at the Office – While a number of employees go out to lunch, I try to brown bag my lunch as much as possible. This can save up to $300/month (assuming $15/lunch). To make brown bagging easier, I prepare my lunches in bulk and store them in individual glass containers.
15. Cook at Home – I will admit that we really enjoy trying new food establishments, especially places that specialize in a particular dish (ramen anyone?). Having said that, we prefer to cook at home for a couple of reasons. First, it’s likely healthier and second, you can save a lot vs eating at a restaurant. So we tend to cook at home as much as possible.
16. Save on Coffee/Tea – I really enjoy my morning coffee and while it would be easy to pick up a coffee at Starbucks or McDonalds, I make my own coffee because first, it tastes better, and second it saves me a bit of time and money. A $3 daily coffee would cost me about $90/month, while making it at home works out to be less than $1/day (even with my latest pour over coffee obsession).
17. Reduce your Sins – The government takes full advantage of cigarettes, alcohol, cannabis by taxing them through the roof (sin taxes). For me, as more of a healthy lifestyle choice, we avoid sin taxes as much as possible. That’s not to say that I don’t have a social drink or two when with friends.
18. Save Money on TV/Internet/Telephone – We tend to keep it simple and have basic cable instead of the fancy cable packages. We also look for bundle deals in cable/internet/telephone with the same provider to take advantage of the discounts available.
19. Buy term insurance and invest the rest – The Wealthy Barber put it best, buy term and invest the rest. For most of you, term insurance makes more sense than universal life or whole life insurance. The premiums are much lower and with the goal of financial independence for a lot of you, have the goal of being “self-insured” before the term expires.
20. Save More on Insurance – When you need new insurance, shop around for the best deals on insurance products. In addition, look at increasing your deductible on insurance products to reduce the premiums.
21. Save Money on Travel – With all the comparison travel websites/apps out there now, getting the best deal now takes less time than ever. To save money on car rentals, I watch the fluctuating prices on Expedia and when a low price shows up, I bid slightly lower on Priceline. Another way to save is by getting a travel credit card or an Aeroplan card.
22. Buy Quality – For large purchases, buy with quality in mind in the expectation that it will last a long time. Stick with the brand names that have a reputation for reliability, longevity, and reasonable repair costs – but wait until they go on sale! We have found that the extra premium on these products often pays for itself over the long term.
23. Make Saving Automatic – I make my deposits into my high interest rate savings account and RRSP automatically on a bi-weekly basis. Basically when I get my paycheck.
24. Track your Spending – I track my spending/budget with Excel or other finance apps. As mentioned above, knowing your largest expenses and attacking those first is the most efficient way to increase your cashflow.\
25. Sign up to personal finance newsletters and forums – One of the best ways to pick up new ideas is by engaging with the community. I can’t begin to tell you how many little tricks I learnt from my readers over the years! Hopefully this update will spur more comments from people sharing their saving secrets with us. You also can subscribe to the Million Dollar Journey newsletter and get our 2 free eBooks here.
What are some ways that you save money? Do you follow the frugal living lifestyle?
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