I wish I could tell you that I had always been great with money.
That I started selling lemonade at the tender age of 6, worked part-time throughout high school to save up for college, sought out high-paying summer internships during my undergraduate years, and invested every penny I had in high-quality dividend stocks when they were only half of today’s prices.
But none of that happened.
The reality is, I wasn’t the type of girl people point at and say, “now that girl, she will become rich one day”.
I held a few short-term jobs as a late teen (strawberry picker, telemarketer, administrative assistant), found a serious job 4 months before graduation (phew, what a relief that was), but I never showed much interest or gumption for setting up lemonade stands at my parents’ yard sales.
I didn’t take money all that seriously until I was well into my 20s.
Perhaps more importantly, I just didn’t know any better.
Looking back, I don’t regret that I had a late start in wealth accumulation.
But knowing what I know now, if I were to go back in time, I might have made a couple of different choices to strengthen my finances for the future me.
Now I want to share the money hacks I wish I was aware of early on in my life.
1. Take advantage of your employee benefits
I work for myself, so I have zero employee benefits to speak of.
But for those of you lucky folks who work for companies that provide comprehensive employee benefits package, don’t let it go to waste.
Employee benefits are considered part of your compensation package, so if you’re not taking advantage of them, you’re essentially leaving free money on the table.
Some of the most common benefits include defined contribution plans, student loan debt reimbursement, dental benefits, group RRSPs, paid maternity or paternity leave, free classes, healthcare insurance, and catered lunches.
Not taking advantage of employer matching is literally leaving free money on the table.
In my eyes, any benefit trumps no benefits.
If I were to ever go back to working a permanent job, I’d make sure that there’d be some sort of employer matching program (which is in my opinion, one of the best employee benefits for twentysomethings and thirtysomethings).
Let’s say a hypothetical employer contributes 50 cents to every dollar you invest in retirement savings, up to a maximum of 6% of your annual income. Assuming that you make $65,000 a year, and contribute $7,800 yourself, your employer will throw in another $3,900 (6% of $65,000, and half of $7,800) just for kicks. Hooray for free money!
Even “minor” perks like catered lunches and dental benefits can save you thousands of dollars each year, which is nothing to sneer at.
Not sure what your benefits are? It might be as easy as emailing your HR department, or consulting your employee handbook.
Bonus tip: if your employer lets you cash out unused vacation days, you have incentive to take fewer or shorter vacations, and use that cash to beef up your emergency fund or retirement accounts.
2. Shop at consignment stores
Keeping up with fashion trends and buying quality garments can be expensive.
But for people holding professional (especially client-facing) jobs, there is usually no getting around it.
So how do you keep your wardrobe updated inexpensively?
Say hello to consignment shops!
If you love upscale fashion but don’t have the budget for it, shopping at consignment stores is a good compromise.
Consignment shops sell unused or lightly-worn brand-name pieces on behalf of individual sellers, usually for a fraction of the original price, making it possible for savvy savers to snatch up great bargains.
3. Take advantage of bundle offers
Companies (most notably in banking, insurance, software, car industries) like to offer package deals to get more business from you.
The most common bundle offers include:
- Internet + TV + home phones
- Car insurance + home insurance
- Chequing account + credit card + savings account
With bundle pricing, customers get a package of products or services for a lower price than they would if they bought all of them separately.
That’s good news for people who plan on getting all the products or services anyway: they might as well get a bundle offer and save some money in the process.
Just be aware that not all bundle offers are equally appealing, so make sure to shop around to find the best deal.
4. Read personal finance books and blogs
As a personal finance blogger who always has a personal finance book on her “currently reading” bookshelf, I can’t stress enough the importance of reading.
I would go as far as saying that over 50% of what I currently know about managing my money comes from reading personal finance books and blogs, and it is great fun.
Bonus tip: jot down notes as you read or use a note-taking program like Evernote so you won’t forget the details of any actionable tips you read.
5. Travel in the off season
For the most part, the travel industry makes the bulk of their annual revenue during the prime weeks of travel and jack up their prices accordingly.
So if you want to cut down your vacation costs, try booking your vacations during shoulder or off-peak seasons and avoid traveling during Christmas, March and summer breaks.
Flight tickets and hotel rooms will be cheaper thanks to the heavily slashed prices airlines and hotels offer in order to draw more people in during the off season.
And you’ll avoid tourist crowds too! Win-win-win!
6. Pay cash for everyday purchases
When we pay cash for a purchase, we become conscious of the fact that we are parting ways with our hard earned dollars, in a way that we don’t always feel when we charge things to credit cards and debit cards.
The physical act of taking bills out of our wallets makes spending seem more “real”.
With that in mind, it’s not crazy to assume that we could naturally curb our spending impulses by only using cash for non-bill purchases.
Here’s how I would approach it:
First, create a realistic budget that allows you to save your target amount.
Based on that, decide how much you need for everyday purchases per week (think groceries, gas, eating out, snacks, coffee runs, etc), and withdraw that amount at the start of each week and only spend cash.
With this method, you’ll more easily stick to your budget because you’ll know when you’re about to run out of cash, and the “discomfort” (for the lack of a better word) of saying goodbye to your cash provides an added incentive to avoid spontaneous purchases.
Your spending problem could go away as soon as you get rid of your credit cards and always pay in cash.
Bonus tip: make it tough to take out your credit and debit cards by putting them in a hard-to-access compartment of your purse or leave them at home, so that it takes efforts to reach for them. Think of it as a fail-safe measure for when you’re tempted to bust your budget because something you love goes on sale.
7. Automate small weekly transfers
The most effective ways to save money are sometimes the easiest ones, and this tip I’m about to offer perfectly falls into that category.
Imagine getting $20 taken out of your bank account every single week. How would that impact your lifestyle?
Chances are, you probably wouldn’t even notice it gone.
But this easy-to-overlook $20 could help you save a ton over time.
Simply set up a weekly automatic transfer of $20 from your chequing account to your retirement account, invest it in broad-market index funds or ETFs (note: use a brokerage that allows you to trade them for free like Questrade), sit back and watch your money grow.
Assuming a very conservatively estimated return of 4% per year, your $20 per week will turn into $11,774.09 in total after 10 years, and $55,001.12 after 30 years.
Those numbers just turned my eyes into dollar signs.
8. Unsubscribe from e-commerce newsletters
When I see an email from Crate & Barrel, ASOS and Umbra, I open.
Even though I am permanently doing the “No Frivolous Spending” challenge, my curiosity gets the best of me. And of course, I was tempted to buy something more than a handful of times because of those emails.
We’re mere mortals who appreciate quality things, especially when discounts are involved. That’s why email marketers craft these beautiful emails designed to get people to click through to their websites and fill our shopping carts with things we might or might not need.
The only way to combat this is to unsubscribe from all marketing emails, preventing these emails from ever reaching you in the first place.
No email, no temptation. Problem solved.
Near the bottom of every marketing email, there should be an “unsubscribe” (or “update your subscription”) button. Companies are required by law to put it there.
No clue which companies you’ve subscribed to? No problem.
If I were to describe my debt pay-off strategy in one word, it would be “Unsubscribe”.
From now on, every time you receive a new e-commerce newsletter in your inbox, open it, quickly scroll down to the bottom, hit that unsubscribe button and high-five yourself.
Bonus tip: some e-commerce sites give you the option to store your credit cards to make one-click purchases possible. This is a great feature if you’re a shopaholic, not so great if you’re trying to cut unnecessary expenses. So the best course of action is to delete your stored credit cards from shopping sites, so you would have to manually enter your payment details every time you check out. It would make buying enough of a hassle that you might second-guess your decision to purchase.
9. Apply the 30 days rule
This next money saving tip might seem tedious and requires a bit of discipline, but it really works.
Whenever you’re about to make a large purchase that you didn’t budget for, put the idea on what’s called a “30-day list”, and wait 30 days before buying it.
Your “30-day list” could look something like this:
After 30 days go by, if you still want to buy the item, go for it if your budget allows.
But I bet that, most of the time, your strong urge to buy will dissipate by then, and you’ll re-evaluate the potential purchase with a more objective pair of eyes.
10. Don’t underestimate the power of money meetings for couples
You already know that open communications is critical to maintaining a great relationship, and that couples in serious relationships should be on the same page when it comes to personal finance.
If you haven’t already, get financially naked with your partner by hosting regular money meetings.
Very few people like the word “meeting” but money meetings don’t have to be boring or a waste of time.
Very few people like the word “meeting” but money meetings between a couple is oftentimes necessary but don’t have to be boring or a waste of time.
Here are some suggestions for what you could discuss, in sequential steps:
- Share your assets and debts, if there are any.
- Figure out what each of you typically earns, spends and saves in a month.
- Determine short-term (this year), medium-term (5-years) and long-term (10-20 years) financial goals that both of you can wholeheartedly agree on.
- Come to terms on spending expectations. Are there any joint expenses? What is the maximum each can spend without telling the other person?
- Create a comprehensive plan to achieve your financial goals. This plan should, at the bare minimum, include a budget, ways to boost income, and investing strategies. Don’t worry if it’s not perfect, you could refine it later.
From there on out, money meetings will largely become a series of check-ins to make sure that joint expenses are getting paid, debt is not getting out of hand, and you’re both making progress towards your financial goals.
11. Declutter your home and sell unwanted items
Minimalism is all the rage these days. The minimalist lifestyle gives you clarity of mind by simplifying your life, which is rewarding in and of itself.
What’s more: embracing minimalism comes with a side of financial benefits.
When you declutter your home, you could make an extra buck by selling your castoffs on eBay, Craigslist or through consignment shops.
Once that’s done, you won’t want to buy things that clutter your minimalist space. As a result, the desire to own fewer material possessions translates to more savings for you.
Talk about killing two birds with one stone!
12. Enjoy free entertainment from libraries
When I was researching the neighbourhood before buying our house, I was delighted to see that the house is a short 10-minute walk away from the local library.
I have a soft spot for Gone Girl-esque thrillers, but buying copies of every book I want to read seems wasteful. Borrowing from the library, on the other hand, is super convenient and pleasant, and I can find just about anything in the library that I can find in a bookstore.
Also, libraries provide so much more than just books these days.
Here’s everything I can borrow from my local library:
- Books (including audio books)
- Games (even recently released console games)
These are solid entertainment options that cost absolutely nothing.
No more spending money on magazines that end up in the recycle bin.
No more spending money on music and movies that you only enjoy once or twice.
If you don’t like anything you’ve borrowed, simply return it. No harm done.
You’ll save oodles of money this way.
13. Pay insurance premiums once a year
If you have a life or auto insurance and you’re making monthly payments, stop! Chances are, you can save a decent chunk of money by making one big lump sum payment every year (make sure to double check with your insurance provider that this is the case for them).
I’m currently saving roughly $250 per year on my life insurance, and 5% on auto insurance by making lump sum payments instead of monthly payments.
Because you need to have the payment available (a fairly big amount) before it is due, you’d want to plan ahead. So consider setting up a separate savings account that you can make automatic contributions to each month to save up.
14. Optimize your RRSP & TFSA investments
If buying dividend stocks is in your wheelhouse, this last tip is for you: hold your US dividend stocks in your RRSP account, not your TFSA.
Due to tax treaties between Canada and United States, dividends on US stocks held in an RRSP are tax-free because RRSP is set up exclusively for the purpose of providing retirement income in the eyes of the IRS. Such is not the case for TFSA.
If your US dividend stocks are held within a TFSA, the dividend gains are subject to withholding tax (30% by default, 15% if you file the W-8BEN form with your broker).
Bonus tip: if you’re a passive ETF investor, make sure to check that your American ETFs are held within your RRSP (I’m assuming that they pay out dividends), for reasons stated above.
I haven’t always been great with money, but I am growing more financially confident each day by reading, learning and applying what I’ve learned.
You can do the same.
There is no need to hold on to past mistakes.
The most important thing is that we are moving forward towards our goals.
I sincerely hope that you have learned something new from this article, and that you’re eager to try it out.
Do you have a money hack that has changed your life for the better?
The best time to start investing is yesterday. The second best time is now.
Whether you want to build your own investment portfolio, get matched with an ETF portfolio that caters to your goals and risk tolerance, Questrade makes sure you walk away with more of your profits by keeping its fees low.
In case you were looking for a joke, I found this comedy gem via Google:
What does a zombie vegetarian eat? “Graaaaaaaains!”