Running a household can be expensive. Big savings on things like mortgage rates and large purchases are worth more dollar wise, but you can also save by cutting back on smaller stuff.
A lot of what we do are just habits. With just a little thought you can easily minimize costs. Here are some real life money saving tips
25 Money Saving Tips
Get energy smart
I was talking to a sales rep in a show home and he told me he has to frequently make the rounds of the model houses to turn the lights back on. So, it seems we have the “turn the lights off when you leave a room” habit down pat.
Here are some other things you can do to reduce your utility bills:
1. Install a programmable thermostat. I used to be the first one up and turned up the thermostat on those chilly winter mornings, but I often forgot to turn it back down again when I left for work. With a programmable thermostat, you can set it to a lower temperature when you’re at work and when you go to bed. They are easy to override if you happen to be home that day.
2. Turn down the temperature on your hot water heater to save money, energy and for safety. BC Hydro recommends a temperature of 55-60 degrees Celsius (130-140 degrees Fahrenheit).
3. If your large appliances are older that 10 years, consider replacing them with higher efficiency Energy Star products.
4. Do an energy audit to clue you into areas with high energy use. Many utility companies offer them for free. In Calgary, the library lets you check out an energy meter that you plug in to see how much energy your appliances use.
5. Turn off the “heat dry” on your dishwasher. Open the door when the cycle is done and let the dishes air dry.
6. Fridges and freezers are two of the most expensive appliances to run. Keep your freezer full and the fridge partially full. Food acts as insulation and lessens the amount of time needed to run to stay cool. Also, don’t store uncovered food in the fridge. Condensation makes it work harder.
7. A lot of heat is sucked out of your home through all the cracks and openings. You can pick up a couple of inexpensive packages of outlet sealers from the hardware store and place them behind all outlets and light switches on exterior walls.
8. Check around your windows and doors for drafts. Install weather stripping to fill them in. Then look at your window coverings. Heavy drapes will block the sun in summer and insulate against the cold in winter. Would an awning on the outside help?
Learn how to do more yourself
Develop your DIY skills so you can keep your home well maintained, without all those pricy service calls. You can also use your new knowledge to ask good questions if you do need to hire a professional.
9. Use a list like this “Home Maintenance Checklist” for your monthly and seasonal maintenance tasks.
10. Make your own eco-friendly cleaners.
Get cheap thrills
Examine your entertainment spending. Saving money doesn’t mean you have to give up fun.
11. The library is not only a great place to borrow books, movies and CD’s, many also offer passes for local attractions.
12. Look online for free events: summer concerts in the park, plays and lectures at the university, high school football or other sports events, and more.
13. Your local community centre may offer free or low-cost outings, exercise classes, children’s activities, and pub nights with card and crib matches.
14. Revive your childhood experiences and break out your board games. This is a great activity for groups of friends and families with children.
15. Go for a scenic walk or bike ride and finish off with a picnic.
Save money on clothes
16. Learn some sewing basics so you can make minor repairs and alterations to your clothing – hem your pants and skirts, sew on a button, sew up a torn seam, put in a new zipper.
17. Launder items promptly to avoid stains setting in. Washing with cold water makes fabrics last longer.
18. Buy good quality basics, then learn to accessorize and co-ordinate your wardrobe for more mix and match options with fewer pieces.
19. Check the back of your closet or drawers. There may be something there you forgot you had.
20. Don’t pay full price for a new outfit. Pay attention to sales cycles. Check the end-of-season clearance racks and buy for next year (although this can be tricky with kids – a growth spurt can skip a size or two).
21. Scour second hand stores. Thrift stores, “vintage” stores, and consignment shops are often treasure troves for the savvy shopper. You will have to do some digging but you can often find designer clothes and accessories at deeply discounted prices. Younger children grow out of their clothing so fast you can easily find clothes at these stores in excellent condition.
22. Check for discounted display items or demo models for sale. This works for cars, appliances, mattresses, and almost any big-ticket item.
23. Shop right after major holidays. Buy candy the day after Halloween or Easter and it’s typically half price or less. If you have the storage space you can save a lot by buying a Halloween costumes or holiday-related decorations right after the holiday, then setting them aside until next year.
24. Before you buy something, type the brand and style into your search engine to compare different retailers’ prices for the same item.
25. Buy some time. Set aside the purchase you are considering for a few hours (or a day or two) before you decide whether to buy it. Often you may decide you can easily live without it.
Your turn: Do you have any good money saving tips?
There are lots of unknowns when it comes to retirement planning. Most of us focus on how much we need to save for retirement without giving much thought as to how much we’re going to spend in retirement.
A $1 million dollar nest egg can provide you with $30,000 to $40,000 to spend each year with reasonable assurance that you won’t run out of money. But if your ideal retirement lifestyle costs $60,000 per year, your million-dollar portfolio won’t be enough to last a lifetime.
Once you determine your magic spending number, the rest of the variables start falling into place. The earlier you can identify the amount of income you need to live the retirement you want, the easier it is to make your retirement plan and adjust course, if necessary.
Let’s say you’ve analyzed your retirement income needs and find, based on your current financial situation, that you won’t be able to fully fund your desired lifestyle. What to do?
Here are five retirement planning options to help you adjust course and reach your retirement goals.
5 Retirement Planning Options
1. Reduce your lifestyle
A $60,000/year retirement might be out of reach based on your current situation, but maybe reducing your goal to $45,000/year can still provide a great lifestyle in retirement.
This lifestyle adjustment could mean travelling less often, making sure you retire debt free, downsizing your home, replacing your vehicle less often, reducing your hobbies, or a combination of all the above.
Don’t forget to include government benefits such as CPP, OAS, and/or GIS when projecting your retirement income. It’s worth sitting down with a retirement planner to figure out the best way to draw down your assets and when it makes sense to apply for CPP and OAS.
2. Work longer
It can be difficult to picture yourself working longer once you’ve got retirement on the brain, but a few extra years on the job can drastically alter your retirement projection.
The longer you work, the more you can save (or add to your pensionable service if you’re so lucky to have a workplace pension). But also the more years you’re working and earning a paycheque the fewer years you have to withdraw from your nest egg.
Are you healthy and willing to grind it out at work for a few more years? If so, you might be able to reach that $60,000/year retirement goal after all.
3. Earn more return from your investments
This is a tricky one because you might take it to mean investing in riskier assets (i.e. an all-equity portfolio), when in fact you can earn higher returns by reducing the overall cost of your portfolio. That’s the first place to start.
Imagine your $300,000 retirement portfolio is invested in a typical set of mutual funds that together comes with a management expense ratio (MER) of 2 percent. The cost is $6,000/year but you don’t see the charge directly – instead it comes off your returns.
Switching to index funds and going the do-it-yourself route might reduce your costs to 0.5 percent, or $1,500 per year. That’s an extra $4,500/year staying in your retirement account instead of going into the hands of your advisor.
There might also be a case for increasing the risk in your portfolio. Say, for example, you tend to hold a lot of cash in your portfolio – you’re not fully invested. Or you hold a bunch of GIC’s and other fixed income products.
Dialling up your investment risk to include a portion of equities could help you achieve an extra 2-3 percent per year. The power of compounding can make a huge difference to your retirement portfolio and holding even a small portion of equities in retirement can help your nest egg last longer.
4. Save more
This one is so obvious it should be first on the list. If you’re not able to fully fund your desired retirement lifestyle based on your current projections then you need to save more.
Hopefully your final working years can give you the opportunity to boost your retirement savings. Big expenses, such as paying down the mortgage and feeding hungry teenagers, are behind you.
But an empty nest and paid-off home might tempt you to increase your lifestyle now rather than doubling-down on your retirement savings to boost your lifestyle later. That’s fine; see options 1-3.
That said, there’s no better time to enhance your nest egg by maxing out your RRSP contributions, including unused contribution room, and doing the same with your TFSA, in the years leading up to your retirement date.
Be mindful here, though, of strategies to reduce your taxes in retirement. It makes little sense to go wild making RRSP contributions in your final working years without considering how withdrawals will impact taxes or OAS clawbacks in retirement.
5. Supplement your retirement income
Much like working longer can increase your nest egg, supplementing your retirement income with a part-time job derived from a passion or hobby can prolong the life of your portfolio.
Imagine earning $10,000/year from driving a shuttle, working at a golf course or winery, writing personal finance articles, doing photography, or working a couple of days a week at Home Depot just to get out of the house.
All of a sudden you don’t need to withdraw $60,000/year from your retirement account. You only need to take out $50,000/year. That not only extends the life of your portfolio, but studies have shown that having meaningful work in retirement can extend your life, too.
Retirement planning is critical and the earlier you start planning the easier it is to make these course adjustments and reach your desired outcome.
Even late starters need not despair. The first two options – tempering lifestyle expectations and working longer – are on the table. Everyone can try to save more and earn more from their investments. And, finally, a little retirement side hustle can give your lifestyle a boost and enhance your overall quality of life.