I challenged readers a while back to take a day off during the week to work on their finances. That means going through recurring bills, such as cable, internet, bank fees, car insurance, and monthly subscriptions to ensure you’re getting the best bang for your buck.
You might also use the time to look for ways to earn more money, exploring opportunities to run a small side-business, switching to a more lucrative rewards credit card, or finding a better return on your savings and investments.
The main reason why I budget and track my expenses is so that I can identify potential areas to save money or simplify my finances. Over the years I’ve tried to come up with budgeting tips and strategies to help manage our household expenses – which can be tough when you’ve got a growing family to take care of!
Here are some of my favourite tips:
Simplify. You can take saving money and optimizing your finances too far where you can’t see the forest for the trees. At a certain point there’s a law of diminishing returns, where the time spent chasing additional savings can’t be justified.
Too many bank accounts, credit cards, investment accounts, and savings hacks can put stress on your time and lead to mistakes. Anyone who’s ever forgotten to pay their credit card bill on time, or had a cheque bounce or their account go into overdraft can attest to this: Sometimes the simple approach, even if it’s not 100 percent optimized, is the best approach.
Insider tip: I used to have a wallet full of rewards cards to try and maximize the cash back from every dollar I spent. I soon realized that, for simplicity’s sake, I was better off using the 1-2 rewards cards that best matched my spending.
Get cash back. Canadians love using their debit cards. Using debit to pay for your purchases sounds innocuous, but can have costly consequences.
Full service chequing accounts that include unlimited debit transactions can cost $15 per month or more. Add a separate account for your spouse and the cost doubles to $30 per month.
Insider Tip: My wife and I switched up our preferred method of payment from debit to a cash back credit card. Instead of paying monthly bank fees, we get cash back on every purchase and earn hundreds of dollars each year.
Maximize every purchase. Pretty much every store offers its own loyalty program or participates in a broader coalition program, but most of us can’t be bothered to carry around a bunch of loyalty cards or store discount cards just to save a few bucks.
However, when you combine a store loyalty program with your rewards credit card, you’re earning twice the rewards or discounts and saving more money.
For example, with a card like the SimplyCash Card from American Express you’ll earn 5% cash back on gas, grocery and restaurant spend for the first six months, and 1.25% on everything else. After six months, you’ll earn 1.25 percent cash back on everything you buy – all with no annual fee.
Insider tip: Gas stations are a great example; let’s say you can fill up at a local station that offers a 7 percent discount on gas purchases. If you subsequently use the SimplyCash Card, which offers 5 percent cash back on gas purchases in the first six months, you can increase your discount to 12 percent off gas!
Spend on things you enjoy. I’m not a big latte fan, but if you enjoy expensive coffee then who am I to criticize? Spend on things that bring you joy (or that save you time) and try to save money in other areas to offset your splurges.
My wife and I like to enjoy a nice bottle of wine (or two) on the weekends, but we’re not that fussed about the type of coffee we drink (we brew it at home). We also save money by planning the majority of our meals in advance and cooking at home, but we’ll splurge on dinner at a nice restaurant or a weekend excursion once in a while.
Insider tip: A great example is to use the cash back that you’ve earned on your everyday spending to treat yourself and splurge on something that you don’t get to do that often.
This post was sponsored by Amex Bank of Canada. The views and opinions expressed in this blog, however, are purely my own.