7 ways to save more and pay down your debt
1. SET GOALS: This is a no-brainer. Whether its saving up for your dream vacation, a rainy day, your future children’s education, or retirement, it’s good to keep track of them to stay motivated.
2. BUDGET, BUDGET, BUDGET: The easiest way to save money consistently is to spend less than you earn. Tracking your spending on an app can help you visualize much better. Once you know how much you’re spending monthly, you can decide on what expenses to cut out so you can meet your savings goal.
3. PAY OFF DEBTS ABOVE EVERYTHING: Paying off that credit card, mortgage, or student loan is the best tax-planning you can do. That’s because there’s no taxes on increasing your home’s equity, nor are there taxes on paying off debts.
4. AUTOMATE: The best practice is to set up an automatic transfer of funds, from your paycheque to a savings account (high-interest, TFSA, or RRSP), regardless of the amount (whether it’s $50 or 50%). It is good practice for disciplining yourself to always save/invest first, then spend after.
5. INVEST MORE, PAY LESS [TAX]: Slash your taxes by making sure you use TFSAs and RRSPs properly. In general, if you fall under the lowest income tax bracket, ONLY put your money on TFSA’s and high-interest savings accounts, as you don’t get a tax break from putting any money onto your RRSPs, nor would you want to get taxed on taking money out in case of emergency. If you fall under a higher income tax bracket, it is best to put enough money into your RRSP until you’ve fallen under the lowest income tax bracket you can fall into. The rest should be put into TFSAs and high-interest savings accounts. Note that the contribution limit for RRSPs in 2019 was 18% of income, or $26,500. For TFSAs, it’s $6,000 (but with extra room depending on your age).
6. INVEST ON YOURSELF: Setting aside a little bit on self-improvement (say a gym, a sports league, or a social club) goes a long way to helping you save your money. Think about it: any time you’re engaging on something you’re interested or passionate in reduces the likeliness of binge-eating, or going to “retail therapy” (the misleading term of shopping to improve well-being).
7. CHOOSE THE BEST DEBT PAYMENT STRATEGY FOR YOU: If you’re the type that can feel overwhelmed by multiple debts, then it’s best to implement the “Debt Snowball” strategy, where the remainder of funds (after paying all minimums on monthly debt charges) goes towards the lowest debt. This can help ease your budget planning and your mind. If you want to pay the least amount of interest, then it’s best to implement the “Stacking Method” strategy, where the remainder of funds goes towards the debt with the highest interest.