We all know there are plenty of ways to save money, but some things are so obvious you can classify them as common sense rather than smart spending. Drinking tap water and avoiding fast food certainly fall into that category.
Other ways to save money just don’t seem worthwhile. Making your own deodorant or toothpaste will only save you a few pennies and isn’t worth the time.
My wife and I went through all the different ways we save money on everything from housing and insurance to investing and shopping. Hopefully you find these more useful than the ubiquitous latte factor.
Here are 35 ways to save money:
1. We took out a variable rate mortgage on our house at prime minus 0.80, which means the interest rate on our mortgage is an ultra-low 2.20%.
2. Before we negotiated our low mortgage rate, we shopped around using a comparison tool like Rate Supermarket to make sure our bank gave us the best rate.
3. We avoided CMHC mortgage insurance fees by saving over 20% for our down payment. This meant waiting to buy our dream home for 18 months while we saved our money, but it was worth it.
4. We turned down the mortgage life insurance product offered by our bank, instead opting for much cheaper term life insurance.
5. We increased our mortgage payments by $800 a month to lower our amortization to less than 15 years. We’ll save thousands in interest by paying off our mortgage early.
6. I reduced my trading costs from $29 to $9.99 by combining accounts with one brokerage to reach the $50,000 minimum assets threshold.
7. I make sure that my trading costs are no more than 1% of the total stock purchase. For example, since a trade costs $9.99, I’ll make sure to buy more than $1,000 worth of stock.
8. I use low cost index funds like TD e-Series instead of high MER equity mutual funds. The MER on TD’s Canadian Index e-Series is 0.33% compared to TD’s Canadian Equity mutual fund at 2.18%.
9. When I worked in the private sector I took advantage of my employer match for RRSP contributions, which worked out to a 50% return.
10. We use a cash back credit card for our everyday spending and recurring bill payments. We earned over $500 by using the MBNA Smart Cash MasterCard last year.
11. We use a no fee chequing account at ING Direct for payroll, debit purchases and online bill payments that can’t be put on a credit card.
12. We keep a minimum balance of $1,500 in our TD chequing account to avoid bank fees.
13. We ditched our landline in 2009 and saved nearly $40 a month.
14. We regularly call our satellite TV and internet provider to ask for discounts. We saved more than $300 on our cable and internet bills with this strategy.
15. I negotiated with my employer to pay for my cell phone bill, saving me $60 to $90 a month.
16. We go to the library every 3-4 weeks to get books and the latest DVD’s and Blue-Ray’s for free.
17. We took the floating rate, rather than the fixed rate option for our natural gas plan – a smart move with natural gas prices at historic lows.
18. We use e-post to manage and track our bills online, which helps us pay our bills on time and avoid late fees.
19. We shop at Costco and buy in bulk for the groceries and other items we use frequently to save on the overall price per unit.
20. We make our own home cleaning products for simple wipe-downs and disinfecting using vinegar, water and rubbing alcohol.
21. We try to cook extra for supper so we have leftovers for the next night, or at least for lunch the next day.
22. The cost of beef and chicken keeps going up. We started eating a meatless dish at least once a week to save money on groceries.
23. I come home for lunch as much as possible and brown bag my lunch when the weather is bad or I have a busy day planned and can’t get away from work.
24. We save money on gas because we bought our house close to where I work. Our fuel expenses are between $100 and $150 a month.
25. We reduce our gas costs even further by redeeming Air Miles for fuel gift cards from Shell.
26. We’ve avoided upgrading our 2nd vehicle, which is a 14 year-old Hyundai Elantra that still gets me to work and back whenever my wife needs our main vehicle.
27. We dropped collision coverage on our 2nd vehicle to save on auto insurance premiums.
28. We increased the deductible on our insurance coverage to lower our premiums.
29. We bundle our home and car insurance to take advantage of the multi-product discount.
30. We save money shopping online using Great Canadian Rebates, where you can earn cash back on your spending.
31. I regularly look for online coupons and promo codes when shopping online. I had to buy a new battery for my Dell laptop and a quick search for Dell promo codes saved me $15.
32. We signed up for free samples from Pampers and Huggies before our daughter was born.
33. We also use Proctor & Gamble’s Brand Saver site to get coupons for diapers and wipes.
34. We try and reduce the clutter on items we don’t need (or use) any more by selling stuff on Kijiji or Facebook.
35. I avoid buying the extended warranty coverage on electronics and other big ticket items. Our credit card automatically doubles the manufacturer’s warranty.
What are some other ways to save money?
While cutting back on expenses and saving more of your paycheck may gradually increase your pool of wealth over time, the best way to significantly improve your financial situation is by starting a business.
Now having a steady job is all fine and good, but one of the biggest problems with having a job and being a salaried employee is the amount of work you put in is not directly proportional to the amount you get paid.
For example, no matter how hard you work and how much money you make for your employer, you always get paid the same amount and there’s very little upside. Even if you were to create an incredible new product that made your company millions, you would never see any of that money in your bank account.
Related: How Did You Choose Your Career?
In contrast, when you start and own your own business, you get to reap all of the rewards of your efforts. If you make a million bucks, you get to keep it. And if you follow Boomer and Echo’s philosophies on sound investing, you’ll achieve financial freedom much faster than with your day job alone.
So what’s the catch? The problem most people face when starting a business is risk. Most start-up ventures require a well thought out business plan and some amount of upfront investment and in order to be successful, you have to carefully plan your business mission and vision so you can stay afloat long enough for your business to show a profit.
A Personal Story
About 5 years ago, my wife became pregnant with our first child and decided that she wanted to quit her job in order to become a stay at home mom. Now quitting her job wasn’t an easy decision to make. After all, she was making a healthy six figure salary at the time working for a Fortune 500 company.
But being there for our child during the early years was very important to my wife and I so we decided that quitting her job was the right thing to do. No matter how you look at it, giving up 100K a year is very hard to do.
But ultimately, we decided to take the plunge and started an online store selling ladies wedding keepsakes and table linens specifically targeting special events.
Now what was nice about our business idea was that my wife could run the business from home, take care of our child full time and hopefully (eventually) replace the lost income from her day job.
But what was absolutely terrifying was the prospect of investing time and money into a business that could potentially make no money at all.
Today I want to talk about how we got over those fears and to provide some words of advice on how to prepare yourself mentally and financially before you start a business.
Don’t Quit Your Job Right Away
First off, if you want to start your own business, don’t quit your day job right away. Some seasoned entrepreneurs will advise you to put yourself in a situation where it’s make it or break it. But not only is putting yourself in a do-or-die situation extremely stressful but you’ll also take on unnecessary financial risk.
Related: The Cost Of Starting A Franchise
Honestly, if you need to put yourself in dire straits in order to get motivated, then you probably shouldn’t be starting a business in the first place.
The ideal situation is to work on your business on the side while still working your full time job. In fact, that is exactly what my wife and I did.
By being a little more efficient at work and devoting extra time on nights and weekends to work on the business instead of watching television, we managed to launch our online store in just a matter of months. Best of all, there was no financial pressure since we still had our day job salaries.
Save 6 Months Of Cash Or More
Ideally, you should keep your day job until your business makes enough money for you to quit. But things don’t always work out that way. In the event that you need to rely on your business for income, you should always plan ahead and have a small nest egg saved so you can keep your business afloat.
Now if you’ve been following Boomer and Echo’s excellent financial advice, chances are you have a good amount of cash stashed away already, but the actual amount you need depends on your risk tolerance. For my wife and I, we had about a years worth of expenses saved before we took the plunge – but keep in mind that we are more paranoid than most people.
Don’t Take On Any New Loans
As cash flow may be tight during the early stages of your business, it’s absolutely essential that you don’t take on any additional new debt or monthly payments. If you think you need to buy a new car, then think again. If you feel the need to buy a house, then give yourself a slap on the cheek.
Related: Best Way To Finance Your Very Small Side Business
The more cash you have and the less monthly liabilities that you have, the more comfortable you’ll feel about your business. Remember, the goal is to create enough runway for your business so that it takes off before you run out of money.
One of the beauties of starting a company is that you can expense many of your purchases as long as they are used for your business. Without getting into too much depth, you can easily deduct a portion of your rent if you set aside some space for your business in your apartment. You can also deduct the mileage on your car whenever you use it for business purposes.
Note: Please check with your accountant before deducting expenses on your tax return.
Ease Yourself Into Spending Less
If you’re going to be making less money in the short term, then you need to spend less as well. Before we started our business, my wife and I used to go out to eat for every meal. In addition, we spent a lot of money on entertainment and other frivolous purchases.
Cutting everything cold turkey can be pretty difficult, so in the months leading up to our business launch, we eased ourselves into it by making small cuts. Instead of eating out every meal, we tried to eat out only once or twice a week. Rather than going out for entertainment, we stayed in or hung out with friends and played board games.
If you try hard, you can easily find some ways to cut back a little bit and live within your means until your business revenue starts rolling in.
Starting a Business: Is It All Worth It?
Our business managed to earn 100K in profit within our first year of operations. And our little online store has been growing in the double and triple digits every single year for the past 4 years. The best part is my wife now works only a few hours a day and gets to spend all her time with the kids.
Did it require some amount of risk in order to start a profitable business? Absolutely! But it should never be do-or-die. If you prepare yourself financially for the risks ahead, you’ll provide your business with the necessary runway to take off.
Oh and if you follow Boomer and Echo’s sound financial advice in conjunction with your business, you’ll achieve financial freedom in no time.
Steve writes for MyWifeQuitHerJob.com where he teaches entrepreneurs how to start an online store.
Russell Brand stands to make an estimated $20 million from Katy Perry’s fortune because under California law, the community property clause splits money and property acquired during the union 50/50 when there isn’t a prenup.
While most of us can only hope to be in that kind of financial situation, a recent survey says that about 20% of those getting married have prenups.
A prenuptual agreement, or prenup, is a contract entered into prior to marriage or civil union, which commonly includes provisions for the division of property in the event of a breakup.
Related: Couples Money – Savers Vs. Spenders
Objections
This is a controversial topic and there are many who oppose prenups. The objections include:
- It’s not romantic.
- Religious reasons – ‘Til death do you part.
- Don’t trust each other.
- Not really optimistic about the marriage
- Not willing to commit and work at the marriage if there is an exit strategy in place.
No one goes into a marriage expecting it to fail, but the fact is that 50% of marriages end in divorce, especially second, third (and more) marriages.
Who would benefit from having a prenup drawn up?
- Someone who is much wealthier than their partner.
- Someone who earns much more (they can limit the amount of alimony payable).
- Someone about to remarry.
- Partner has a high debt load.
- Someone who owns his or her own business.
Here are some prenup examples.
Prenup Example No. 1
Boris and Natasha met while attending university. They get married before graduating. With their financial situation becoming increasingly tight, Natasha postpones her studies and goes to work while Boris finishes his degree.
A couple of children later, Natasha’s education is put on indefinite hold as Boris graduates and becomes established in his career. Boris meets someone more interesting and dumps Natasha. He then argues that he made all the money.
Among other details, a prenup could have established provisions should one partner have to delay their studies so that they could be continued at a later date and ensure the financial burden of raising a family is shared fairly by both partners.
Prenup Example No. 2
Desmond and his friend start a new business. With a lot of time and hard work the business is finally making money and some lucrative contracts are anticipated. Desmond marries Molly who is established in her own career.
After several years, things don’t work out and Molly files for divorce. In the divorce agreement she demands half the business.
Without a prenup Molly could end up with a share of the business or become an unwanted partner.
Prenup Example No. 3
Diane has a well paying job. She is careful with her money and has accumulated a nice nest egg in her investment and retirement accounts and has no debt. With an inheritance from her grandmother she purchased a nice condo and her car is paid off.
Diane met Jack and fell head over heels. Jack is divorced. He has $73,000 in credit card debt and no assets. He lost the equity in his former house in the divorce settlement and pays $2,800 in child support for his pre-school children.
If Diane sells her condo after the marriage, the money becomes community property. If this marriage breaks up, Jack will likely be entitled to half of Diane’s assets and may also be on the hook for part of his debts and child support.
Other clauses
Other non-financial clauses, such as the division of household chores and weekly date nights, can be included in the prenup agreement. However they increase the likelihood of the agreement being invalidated by the courts. They must be fair and equitable in the eyes of the law.
Here are some crazy (but true) clauses:
- The right to perform random drug tests with financial penalties if the results are positive.
- The husband cannot watch more than one football game on Sunday during football season.
- A claim on all frequent flier miles should the spouse be unfaithful.
- The husband cannot go on vacation with his mother-in-law.
In Conclusion
Today couples are getting married at a much later age and they can build up substantial assets while still single.
Related: How Young Adults Can Still Thrive Financially
People going in to a second marriage, especially when there are children, need to protect themselves. A prenuptial agreement protects the assets and income streams that already exist so that they won’t be shared in the event of a separation.
Do you think a prenup is a good idea?