I know it’s tough to save money. It’s even more difficult to up the ante and save more year-after-year. But saving is necessary to meet both our short-and-long term financial goals. Without any savings, and living paycheque-to-paycheque every month, you’ll either work until you die or else retire in extreme poverty.

Related: Retirement planning for late starters

So what will it take for you to save more this year? Some people start off small, saving two or three percent of their salary, and that’s fine – every little bit counts. But many of us short-change our retirement by not finding ways to increase that amount every year. Here are four easy ways to save more in 2015:

Take up a challenge

All the rage in 2014 – the 52-week money saving challenge was pinned, posted, and shared across social networks and blogs to help inspire people to save. Ordinary Canadians, who’d typically only post about their vacation and dining experiences, were taking up the challenge and talking about money. Fantastic!

52 week money saving challenge

The 52-week money saving challenge is simple: Save $1 in week one, $2 in week two, $3 in week three, and so on until you have about $1,400 saved by the end of the year. Or, increase the degree of difficulty and try to put away $10 in week one, $20 in week two, $30 in week three, and so on until you’ve saved nearly $14,000.

The best variation I’ve found is the reverse challenge where savers put aside $52 in week one, $51 in week two, $50 in week three, and so on. The reverse order works well because the bulk of the saving happens at the start of the year while you’re still motivated.

Let’s be honest – who’s going to remain excited after saving a measly $10 in January? But with the reverse challenge, come December, when money is tighter, the amount you need to save goes down as your spending is likely to increase. You’ll also get compound interest working for you earlier, and the habit of saving more early on just might stick with you for the entire year.

Find your match

Many employers offer a contribution-matching savings program. But according to industry experts, Canadians are leaving as much as $3-billion on the table by not taking advantage of these programs. Employers are only paying out between 40-50 percent of available matching funds.

Related: Why putting off retirement savings can cost you

Some employers will kick in 50 cents for every dollar you contribute, while others will match you dollar-for-dollar. One could argue that skipping out on an employer-matching program is a worse financial move than carrying a credit card balance for a year. That’s because you’d give up a guaranteed return of between 50-to-100 percent in order to pay down credit card debt at 19 percent.

I get it, most of these plans are voluntary and that portion of your salary feels better in your bank account than in some group plan that you can’t touch until retirement. But if your employer offers you free money, free money that doubles your retirement contribution, you take it!

The same goes for government matching programs like the Canada Education Savings Grant, which provides grants to RESP contributors – 20 percent on every dollar of the first $2,500 you save inside an RESP each year. That’s up to $500 in free money for your child’s education.

Bank your raise

One sure-fire way to boost your savings from one year to the next is to bank your raises. Okay, salary increases are few and far between in this economic climate. I know – last summer I got my first raise in nearly five years. But if you are managing to get an annual increase, even if it’s just cost of living, here’s an example of how to make it work for you:

Most retirement calculators assume that you save a fixed amount every year and that number doesn’t grow with inflation.

John is 25 and earns $50,000 per year. He can afford to save $250 per month ($3,000 per year) toward his retirement.

The conventional “pay-yourself-first” approach doesn’t assume any increase in that amount over time, and so after 40 years of saving $3,000 per year John will have $480,000 saved for retirement. Not bad.

Related: A simple way to boost your retirement savings

But how much would John have if he simply increased his savings rate along with his two percent annual raise? It doesn’t sound like much, but it would mean an additional $145,000 at retirement – or $625,000.

Build on what’s already working

Most of us have already have some sort of automated savings plan in place, whether it’s a percentage of income that gets funnelled into our RRSP or TFSA, or monthly contributions to our child’s RESP. Even your mortgage payment is a forced automated savings plan.

Build on the good things that you already have in place. Increase your monthly mortgage payments by $50 or $100. You’ll easily take a few years off the life of your mortgage – especially if you make a habit of increasing your payments annually.

Related: How to pay off your mortgage faster

Keep bumping up the contributions to your RRSP, TFSA, and RESP until you start maxing out the annual limits. Once you get there – see if you can catch up on unused contribution room to further bolster your savings.

Final thoughts

There’s always room to improve our finances each year, but often we get complacent with our savings plans and fall victim to financial inertia.

Find a way to grow your savings every year, whether through a fun challenge, by taking advantage of employer and government matching programs, banking your raise, or by simply building on what’s already working for you.

What will it take for you to save more this year?

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11 Comments

  1. Mclain on January 5, 2015 at 9:57 am

    Mid last year I started to save all my $5 bills. Since I use cash most of the time, that little bit of cash saved really starts to add up. I put the $5 in an envelope and evey quarter I deposit the money in my brokerage account.

    • Echo on January 5, 2015 at 2:06 pm

      That’s great, Mclain! I bet you can save quite a bit of money that way – adds up faster than a loonie or toonie jar.

  2. Barry @ Moneywehave on January 5, 2015 at 10:38 am

    I’m actually finding it more difficult to save these days. I’m at a point now where my budgets are pretty exact so there’s limited flex. Mind you I’m also maxed out on my company stock and pension plan.

    Sure I could cut back on travel but that’s not something I want to do right now.

    I’ve always banked my cost of living raise but in the last year I’ve noticed that the cost of living actually has gone up. Grocery costs are definitely up but at least gas prices are down.

    • Echo on January 5, 2015 at 2:12 pm

      Hi Barry, I’m the same way – my budget includes specific savings and so every penny is basically accounted for. Whatever I’m saving on gas today I’ll just keep on hand for when it inevitably goes back over $1 this summer.

  3. Happy New Year Rob!
    I agree automate and try to save at least half your pay rise.

    • Echo on January 5, 2015 at 2:13 pm

      Happy new year, Kathy! Saving at least half your pay raise is a great idea.

  4. KC on January 5, 2015 at 12:24 pm

    Basically, keep doing what I was doing last year. Any extra income not part of salary automatically goes towards debt. As soon as my debt is fully paid off in June (I cannot wait!), it will automatically be earmarked for savings.

    I don’t automate my savings but rather I do it manually with my appointment reminders on my calendar and of course, update my budget on the spot. It seems to help me to stick to my financial goals because I’m physically “paying myself first”. Odd, I know but it works!

    • Echo on January 5, 2015 at 2:16 pm

      Hi KC, great news that your debt will be paid off this year – congrats! It’s good that you’ve already earmarked your debt payment toward savings because many people treat the freed up money as a windfall and spend it.

      The only automated savings I have is the kids’ RESP. The rest gets allocated in my budget spreadsheet and with reminders as well 🙂

  5. Tawcan on January 5, 2015 at 1:22 pm

    We’ve been putting money aside automatically every pay cheque and it’s doing wonder to our net worth. For this year we’ll be putting most things on auto pilot but will be looking ways to improve our savings rate of course.

  6. Mr. Captain Cash on January 5, 2015 at 1:54 pm

    Thanks for sharing I like your variation of saving the most when your motivation for the savings challenge is the highest. Makes sense to that if you save $50 the previous week mentally you will know that you can save $49 the following week.

    Another savings challenge that has been started with a great online community building and even weekly podcasts to keep you motivated throughout 2015. Is the Moneysteppers 2015 savings challenge. It involves determining a savings rate and a desired net worth increase throughout 2015. I am in the challenge and did a write up on the challenge if anyone is interested in checking out the challenge.

    Hopefully I will see you there Robb for some added competition. Might be that added push for you to hit the million dollar net worth before 41!

  7. Mrs. Frugalwoods on January 6, 2015 at 8:39 pm

    I agree with you on saving to employer-matching retirement accounts–it’s crucial! You’ve just gotta do it (if at all possible 🙂 ). My husband and I each contribute the federal max to our 401Ks and we’re happy the max was increased to $18K for 2015. Savings here we come!

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