A common new year’s resolution is to save money but it’s easier said than done, especially if you want to sock away enough for a down payment on a new home. (That’s no small chunk of change!) Here are 10 tips to help get you to your goal.
1. Many people wait until the end of the month to see how much money they have leftover before putting any aside for savings. Instead, set up an automatic savings plan. This may mean contacting whomever deals with payroll at your place of work to have a certain percentage or dollar amount of your regular pay directed into a savings account. Not only does this make the process automatic but it makes it ‘invisible,’ too. Money moves from your paycheque to your dedicated account without you seeing it happen. This will remove both the temptation and ability to spend it.
2. Start living as if you are already paying that new mortgage. This means putting the difference between your rent and assumed future mortgage payment into your savings account or another investment vehicle where you can earn a little interest on it. This habit will get you used to the idea of paying a bigger mortgage and as a bonus, you’ll also be setting aside money to put toward a down payment on your new home.
3. Renegotiate your rent if your lease is up for a renewal or it’s currently month-to-month. Alternatively, look for a new place to live. Toronto’s once soaring rental market has done a 180-degree turn, with the number of condominium apartments listed for rent at one point during Q3 2020 up by 114% year-over-year. (Figures for Q4 2020 are still pending.) Many investor-owners have taken their units out of the short-term rental market, due to stricter regulations and the COVID-19-related tourism downturn, and made them available in the traditional rental marketplace. The result has been greater choice and more negotiating power for renters. The average rent for a one-bedroom condo apartment in Toronto was down by 12.2% in Q3 2020 to $2,023, compared to $2,303 in Q3 2019. Two-bedroom rents fell 10.2% over the same time period to $2,746, from $3,057.
4. Bank periodic windfalls. These can include income tax refunds, monetary gifts, bonuses or large commission cheques, and the sale of personal belongings or assets. If renting, you could also set aside the difference between what you currently pay and how much it would have increased this year, if the Ontario government hadn’t introduced a rent freeze for 2021. The maximum allowable increase by landlords was supposed to have been 1.5%. If your monthly rent is $2,000, this would amount to a savings of $30 per month.
5. Reduce your expenses by 10% across the board. If your grocery budget is $400 a month, for example, reduce it by $40 for a total budget of $360. That’s not a huge difference but the money will add up when you apply this to all your expenses.
6. Don’t throw away unwanted items; rather, sell them to bank extra money, so long as they’re still in good condition. In many instances, someone else can use what you don’t need. Some of the best and easiest things to resell are electronics, video games and consoles, books, brand name clothes, furniture, home decor, sporting equipment and kids’ toys.
7. Shop at the right time of year to get the best price for a particular product. It’s often when inventory is being cleared out for new models. For instance, think air conditioners in winter, linens in January and February, patio furniture in late summer and large appliances in early fall. Try not to buy anything unless it’s on sale and if it is, only purchase when you really need it.
8. Close closet and bathroom doors, so you’re not needlessly heating and cooling relatively unused space. This will help bring down energy costs. For further savings, turn off lights when you leave a room, unplug unused electronics, lower your thermostat — doing so by just 2 degrees will save 5% on your heating bill — take shorter showers (water is expensive), skip the heat-dry setting for the dishwasher, use the cold cycle when washing laundry and add a towel to your dryer load to significantly reduce drying times.
9. Rethink your cable. Cut back on premium television channels or opt for one of the many alternative, cheaper online streaming services instead, such as Netflix or Amazon Prime Video, which you can access via your laptop, tablet or other connected devices. Also, cancel your telephone landline if you’ve got a good cell plan.
10. Buy generic. There are great savings to be had with ‘no name’ or store brands in every supermarket, and they are often as good as their pricier brand name counterparts.