3 ways to save money in difficult times
When money is already tight, it can be tough to prioritize saving. These tips can help you start saving, stay on track and gain control of your finances.
When unexpected circumstances arise and money is tighter than usual, it can be difficult to set money aside for your long-term savings. Your priority is probably to pay your bills, get your groceries, and stay afloat. We know how tough it can be to save in uncertain times, so we’ve developed some tips to help you boost your emergency fund while sticking to a tight budget.
1. Pay yourself first
“Pay yourself first” is one popular savings technique: it involves setting aside your savings before you do anything else with your money. The idea is that if you’re able to do so, you put some of your money aside for savings before buying groceries, settling debts, and paying bills. This isn’t always possible when you’re on a tight budget, but if you’re able to put aside even a little bit of money, it can make a difference.
The amount you save isn’t as important as regularly contributing to your savings account. After all, if you’re able to put away $50 a week, it can become $2,600 after one year!
To turn saving into a routine, you can set up automatic contributions from your chequing account. This way, you won’t have to think twice about sticking to your plan.
2. Create an emergency fund in a high-interest savings account
An emergency fund is a financial safety net – and it’s always a good idea to have one. What defines an emergency? It can be anything from a sudden plumbing issue to losing your job. Your emergency fund can help cover unexpected costs, and while it can take time to build up, even a small amount is better than nothing.
A high-interest savings account is an excellent place to store your savings for a rainy day, offering higher interest on deposits so your money can earn you money over time. Plus, unlike stocks, money in a high-interest savings account is insured up to $100,000 and kept safe and secure in your account.
3. Budget more, spend less
Budgeting isn’t just about spending less, it’s about knowing how much you’re spending and what you’re spending your money on. Start by carefully going over your monthly expenses – an eye-opening exercise that’s also key to creating a budget that sticks.
One of the most popular ways to save money is the 50/30/20 rule. Here’s how it works:
50% of your money should go towards your personal needs, which include everything from your mortgage or rent to groceries, gas and bills. Once those needs are accounted for, your “wants” follow.
30% of your money is earmarked for fun things like dining out (or doing take-out), shopping for clothes, books, flowers, hobbies – anything that isn’t a need.
The remaining 20% of each paycheque should go to your savings or investments, a task that can be automated along with your bill payments, so it happens at regular intervals.
Bringing it all together
When you start saving money, worry less about the amount you set aside. What’s important is that you’re making regular contributions to slowly and steadily build up your long-term savings.
Saving money can be a challenge during tough financial times. It’s important to set realistic goals and use the right savings account for your financial plan. But when it comes to building long-term wealth and financial stability, the key to success is consistency. Remember, no amount is too small to start saving.
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