Do you hate saving money? If you answered yes, you’re not alone. Canadians love to spend, with a shocking 47% of us spending to the brink of financial ruin.
People can get stuck in the mindset that saving money limits your freedom and fun. But I’ve found this is the opposite.
Saving money has provided me with the freedom to work and travel anywhere, and take chances with my career.
If done right, saving money is not about being cheap or missing out on life experiences. Here are my top tips on how to save money in Canada.
Get Into a Saving Mindset
You’ll have to get into the right mindset to succeed at saving. Here are some mental tricks that I’ve found helps me out with this:
- Ask yourself this one question before buying something expensive: Will this purchase improve my life in the long-term? This tip alone has helped me drastically cut down unnecessary spending. Often in the past, I was buying things that didn’t make me happy and was keeping from meeting my financial goals. It made me sit down and come up with a list of things I wanted to spend on that made me feel fulfilled, such as travel, relationships, health, career advancement, and hobbies.
- $100 rule: If I’m spending more than $100 on something, I will do proper online research on the product. I make sure it’s not an impulse buy that I will not regret later.
- Think about spending your money as time: Calculate your real per hour earnings. For example, you make $30 an hour, but after tax, it’s likely closer to $22/hour. You might think twice about impulse buying a $100 online item if you realize it will take over four hours of grinding away at work to afford it.
- Knowing that money saved today will multiply with time: $100 saved then invested today at a 7% rate of return per year will be worth almost double that amount in ten years. It will make you more likely to save if you think about this.
- Track your spending: Countless research has shown that if you track your expenses, you will become a better saver. I like to use an excel spreadsheet at Squawkfox, or you can also use a mobile app like Mint.
How Much Should You Save? (Goal Setting)
Goal setting is crucial to saving. If you don’t have savings goals to aim for, you’ll rarely hit it. Here are some possible goals you can set for saving:
- Pay off high-interest debts: This should be your saving priority number one if you have any credit card debt.
- Emergency fund: If 2020 has taught us anything, having an emergency stash is of utmost importance. Aim for at least three months.
- Use a rule of thumb: The 50/30/20 rule is popular, where you spend 50% on needs, 30% on wants, and save 20% of your income.
- Percentage of income: Set savings goals as a certain percentage of your income, starting at 10% and increase that amount as you earn more money.
- For a large purchase: You can set a savings goal for a large purchase like a down payment on a house, wedding, or vacation.
- Saving for retirement age goal: For the long-term planners out there, you can work out a retirement age goal, and see how much you’ll have to save each year to hit this goal. The 4% withdrawal rule is an excellent goal to aim for.
61 Ways on How to Save Money in Canada
Tax Deductions in Canada to Save Money
Here are some lesser-known tax deductions that Canadians can make to save some money. If you qualify, make sure you get these in when filing your taxes!
1. Child Care Expense: As a parent, you can deduct up to $8,000 a year for a child aged seven or younger. For a child between seven and sixteen, you can deduct $5,000/year. Claim expenses like caretaker, nanny, daycare, nursery, boarding school, and more.
2. Spousal RRSP Contributions: If you find yourself in a higher tax bracket than your spouse, consider contributing to a spousal RRSP. Your contributions won’t affect the available contribution room your spouse or common-law partner has.
3. Medical Expenses: Claim uncovered medical expenses on your tax returns to lighten up your tax bill. Claim expenses like insulin, hearing aids, prosthetics, insulin pens, eyeglasses, contact lenses, vitamins, and more.
4. Split Your CPP Pension: A CPP pension split only makes sense when you are 60 or older, and the income and tax bracket of one spouse is higher than the other. You can split your CPP pension by up to 50% with your spouse. The max split amount depends on how long you’ve lived together.
5. Transfer Tax Credits To Your Spouse: Certain federal tax credits can be transferred between spouses. It depends on if the one spouse has excess tax credits available, they can transfer the credits to their partner. Some examples of transferable tax credits include education, tuition, pension amount, disability amount, age amount, and caregiver amount.
6. Home Office Tax Credit: For self-employed individuals, home office expenses can be a big tax deduction at the end of the year. Claim the portion of your home used for your home office or business for expenses such as rent, utilities, property taxes, and more.
7. Employ In-House: Hiring your child and spouse can lower your overall tax obligation, as you can write off the salary of your employees. Be warned that this deduction is something that the CRA monitors closely, so it must be a real position that adds value to the company.
8. Incorporate: Once your business income grows beyond a certain point, it makes sense to get incorporated. You can defer your taxes at the lower business tax rate and pay yourself as needed with dividends. Do careful calculations; however; If the cost of incorporating your small business outweighs the tax break you will get, it doesn’t make financial sense to do so.
Where Should You Invest Your Saved Money?
Ok, so you’ve saved some money. Now what? It is essential to save money, but you have to know how to put your money to work. Here are a few of my favourite ways:
9. High-Interest Savings Account (online): When in doubt or for any short-term savings, save your money with an online high-interest savings account. HISAs provides the ultimate flexibility, and online banks can provide much higher interest rates than your average bank. I use EQ Bank to hold my emergency funds and short-term purchases (Current interest rate is 1.50%)
10. Online brokers (DIY Investing): For the cheapest way to invest in ETFs and stocks, look at putting that hard-earned money to work with an online broker. Note that you will have to do your research and won’t get any advice with this approach. I use Questrade to make all my ETF trades since the purchases are free.
11. Robo-advisors: If you want to invest in ETFs but also need some advice and help in coming up with your asset allocation, turn to robo-advisors, a technology solution to your investing needs. Wealthsimple and Questwealth are my top two picks for the best robo-advisors in Canada.
12. Real estate: Canadians love real estate, so consider putting your money into a property. Don’t just limit yourself to Canada, though; in today’s connected world, you can invest in many places around the world. Read more about the best Canadian real estate investment options here.
Save on the “Big 3” Expenses
The three biggest expenses you can have are on your housing, transportation, and food:
13. Negotiate when re-signing a lease: If you have a good relationship with your landlord, try to ask for a discount the next time your lease is up for renewal.
14. Take your time and shop around: Make a list of at least four or five different units to take a look at, and spend some time inside each of them.
15. Get a roommate: Your rental costs will decrease by a lot if you have a roommate to split all the expenses with.
16. Live further from the city core: downtown rent is usually much more expensive than suburbs, so consider moving outside of the city core.
17. Watch out for hidden costs: See what utilities are covered and if there are any move-in fees for booking an elevator if it’s an apartment.
18. Look for a new place in the wintertime: People hate moving in the cold winter, so demand will be a lot lower. It’s easy to find great bargains during this time.
19. Sublet your place: Going away for more than a week? Consider subletting your place while you’re gone to cover some of your costs.
20. Negotiate better mortgage rates: Look beyond big bank mortgage rates, which are usually high. Contact multiple mortgage brokers and get the best prices. They have access to hundreds of lenders, much more than your average banker. They also work on commission, so they are motivated to get you the best deal.
21. Put down 20% to save CMHC insurance: If you put down over a 20% down payment, you won’t have to pay CMHC insurance.
22. Learn to use Airbnb: Turn your home into an income generator when you’re gone on vacation or even on short weekend trips.
23. Home renovations – Be weary of home renovations, they can end up costing way more than budgeted. Renovations usually don’t increase the value of your house by what you paid for it, so it’s not a great investment most of the time.
24. Start a business: You can write off a portion of your property tax, insurance, and utilities if you have a home office that you use to generate income.
25. Save on utilities: Go green by buying energy-efficient appliances. Rework your insulation, clean your filters, and change your light bulbs to more efficient ones.
Save on Transportation
26. Negotiate insurance – Contact multiple brokers and shop around online for the best rates, if you live in a privatized insurance province. There’s a big difference in price with each company, so shop around.
27. Become a One-Vehicle Family: If you have two vehicles in your household, switching to one can be a fantastic way to save money. You can alternate on a daily or weekly basis on who takes the car to work. The other person can use public transport or carpool on their off day.
28. Buy used, and look for good deals: The average new car loses 20-25% of its value in the first year alone. Look at buying 2-5 years old, which I think is the sweet spot for used vehicles.
29. Avoid buying premium fuel cars: Premium fuel is super pricey now! If your car needs premium fuel, your costs will be much higher to operate the vehicle.
30. Beware of upsells: Be wary of when you are going to talk to the “finance manager” at a car dealership. They will try to upsell you on overpriced warranties and add-ons that are mostly unnecessary.
31. Calculate your cost per kilometre of driving your vehicle: For example, in BC if you own a used SUV, it would cost around 63 cents per kilometre driven, with fuel, maintenance, and insurance costs factored in. If you’re making a 30 kilometre round trip for a total of 60 kilometres, that trip is actually costing you around $37.80. You can check your vehicle cost per kilometre using this estimator tool.
32. Get active: If it’s not too cold out, consider getting active by walking, biking, skateboarding, or running. Not only is it free, but you’ll get in shape and see more of the city
33. Ease up on your lead foot: Avoid fast starts off red lights and excessive speeding to minimize your fuel usage. It could cut your fuel costs by up to 30%.
34. Buy smaller: Smaller cars usually means it will cost less, consume less gas, and are less expensive to maintain. Plus, it’s easier to park!
35. Public transportation: Get to know the various forms of public transportation in your city. During rush hour in several cities, it can be even faster than taking a car.
36. Don’t buy a vehicle at all: In today’s busy world, many people are choosing not to have a car at all. You can use rideshares like Uber and Car2go as a substitute for owning a vehicle without missing a beat.
37. Electric for the win: Not only is it a cheap way to get around, but it’s super fun to try on a nice day. Electric scooters, longboards, and unicycles have been growing in popularity around the nation.
38. Learn to maintain your car by yourself: Be able to do minor routine work like oil and filter changes, and you can save on regular maintenance costs.
39. Meal prep – Prep meals for a few days at a time, or even longer if you decide to freeze them. This will make it super convenient to grab food and go. You will save money and probably eat way healthier also!
40. Use Costco or a similar bulk grocery store: Costco is hands down the cheapest way to get ingredients for food. If you hate cooking, there are many fantastic pre-made meals you can buy at Costco for very cheap.
41. Figure out your per meal costs: Making your own food using ingredients from a grocery store or Costco should cost about $2-5 a meal on average. At a restaurant, with taxes and tip for lunch or dinner is at least $18-20 these days. Fast food is around $7-12 a meal now. Cut your food costs by making your own meals.
42. Replace the social aspect of eating at a restaurant: Eating out is great because of the socializing you do with loved ones. You can host barbecues or pot lucks at your place instead of going out to eat, save on money costs, and still socialize.
43. Have fun cooking: Look up new fun recipes to make, take a cooking class, cook with a partner or host cook-offs with friends.
44. Invest in good Tupperware: If you’re going to be preparing more food for takeaway lunches and fast breakfasts, have proper containers ready for you to use.
45. Go to expensive restaurants for special occasions only: Going to a restaurant loses its appeal if you’re doing it every day. Try saving the expensive restaurants for special times.
Frugal Living Saving Tips
Here are some overall lifestyle tips that can help you to save money.
41. Clothing: Canadians spend somewhere between 2.5% and 4% of their income on clothing on average. Learn to mend and sew so that your old clothes will serve you longer. Buy rugged clothing items, or buy second-hand and hit garage sales and thrift stores. Trade your expensive clothes at consignment stores. Buy when clothes are on sale and out of season
42. Accessories: Buy a few suitable quality accessories that last longer. Buying simple jewelry items and sturdy handbags that can go with most of your outfits and stand the test of time. If you wear a watch, invest in a rugged one that can weather the times with you.
43. Fitness: The cheapest gyms can cost you about $10 a month and about $40-$50 at the time of initiation. High-end gyms can be anywhere from $50 a month to hundreds. Better yet, set up a home gym from used items on Craigslist or Kijiji for a few hundred dollars.
44. Cut the Cord: You can save $25 to $70 a month easily by getting rid of cable. Netflix and Youtube are all I watch now, so it’s only $10 a month I spend on media.
45. Bank fees: Choosing a no-fee online bank such as Tangerine could save you hundreds of dollars every year in fees, all while giving you the same features a bank would.
46. Credit card choice: If you’re a travel lover like me, you’ll want to choose an excellent travel credit card that will give you access to lounges and travel points. There are also many no-fee credit cards and cash back credit cards for those who don’t specifically like to travel.
Save Money on Groceries in Canada
An average Canadian family spends around $12,667 a year on groceries. Let’s see some ways to reduce that amount:
47. Collect/Request Coupons: Subscribe for the online newsletter of the grocers/marts you frequently visit. Most grocery stores now accept mobile coupons. You can also find coupons and promo codes on some websites if you prefer to shop online.
48. Price Matching: It’s easy to save about 10% of your grocery expenses by price-matching and looking for retail stores that are selling the same items at a lesser price. Find a flyer of the competitor’s prices. There are also apps that offers price comparisons for different retailers in your area.
49. Grocery List: A study revealed just how much you could overspend if you don’t prepare a grocery list: up to 23%. If you know what you need to buy, you won’t be tempted to browse and to impulse spend.
50. Leave Kids At Home: Anyone with kids will tell you that it’s tough bringing them to the grocery store. Studies have shown that you can spend anywhere from 10% to 40% extra if your kids tag along since they can have a hard time exercising self-control.
51. Hunt Down the Cheapest Grocery Store: Discounted or cheaper grocery stores can help you cut your bill by about 10% on every grocery trip as compared to the more luxury brands.
52. Shop on A Full Stomach: Have you ever heard the phrase your eyes are bigger than your stomach? Well, that applies to when you’re grocery shopping also. You are much less likely to impulse buy junk food if you shop on a full stomach.
53. Avoid Pre-Packaged Food: While pre-packaged food may be a more convenient option, if you instead buy raw or unprocessed food items, you can save up to 25% to 40% of the cost. So if you spend $4,000 a year on pre-packaged groceries, you could save about $1,000 to $1,600.
54. Choose Generic Brands: You will be able to find a lot of local and generic brands that are just as good in quality as the named brands, such as Kirkland at Costco or President’s Choice at Superstore. They will be much cheaper than the heavily marketed name brands.
55. Add more (Seasonal) Fruits and Vegetables in Your Diet: Seasonal fruits and vegetables are often quite cheap, so look up recipes that have it as the main ingredient.
56. Stock Up On Sales: Stock up some of the most needed items at a lower price, and save on later grocery runs as well. Frozen and canned food items will last the longest.
57. Avoid Impulse Purchases: US citizens cough up about $5,400 in impulse purchases in a year. Assuming that Canada’s situation is relatively similar and about 20% of these purchases happen when you are out grocery shopping, you can save about $1,000 by not giving in to your shopaholic impulses.
58. Go Green: Most places charge for plastic bags now. Save money by bringing your own grocery bags, and save the environment also!
59. Buy in Bulk: Buying in bulk can help you save a lot of money in the long run. For one, it will cut down on the number of grocery runs, saving you precious time and fuel. Secondly, buying in bulk is usually more cost-effective per unit of what you’re buying. My personal favourite for bulk buys is Costco.
60. Avoid Soft Drinks: Over half of Canadians spend anywhere between $1 and $15 a month on soft drinks. Ideally, you can cut that out entirely and increase your water intake.
61. Earn Cash and Scan Groceries: Cashback apps offer a great way to earn back money while buying stuff that you need anyway. You are effectively getting a discount on your grocery item when you get the cashback.
Best Budget Apps in Canada
Technology has made it easier than ever to budget in Canada. Check out my top picks for budget apps:
|App Name||Award||Cost||Link to App|
|Koho||Best Budget App for a Reloadable Visa Card||Free||Link|
|Mint||Best Free comprehensive Budgeting app||Free||Android | iOS|
|You Need A Budget||Best Paid comprehensive budgeting app||Free for 34 days | US $11.99 per month, US $84 per year||Android | iOS|
|Mylo||Best Saving and Investing budgeting app||The app is Free | $3 Flat investment fee||Android | iOS|
|iXpenseIt||Best iOS-only budgeting app||US $4.99 (In-app purchases and subscriptions cost extra)||iOS|
|Splitwise||Best group budgeting and expense tracking apps||Free | US $0.99 per month or US $11 per year for Android Users | onetime $1.99 for Apple Users||Android | iOS|
Cheapest Places To Live in Canada to Save Money
Tired of paying insanely high rents in cities like Vancouver or Toronto? Consider moving to a cheaper city to save money. Here are the cheapest cities to live in Canada:
|City||Avg Monthly Cost of Single Person (No Rent)||Avg Monthly Cost of 1-Bedroom Apartment in City Center|
|Surrey, British Colombia||$1,151||$1,490|
|Halifax, Nova Scotia||$1,191||$1,412|
|Kelowna, British Colombia||$1,100||$1,357|
|Niagara Falls, Ontario||$1,216||$1,058|
|Nanaimo, British Colombia||$1,141||$1,125|
|Red Deer, Alberta||$1,208||$943|
|Prince George, British Colombia||$1,141||$971|
|Saint John, New Brunswick||$1,177||$931|
|Quebec City, Quebec||$1,022||$775|
Whew, that was quite the how to save money in Canada list! If you made it this far, I hope you learned a few new neat tricks to save money.
Start by getting into a savers mindset, and the sky’s the limit! Saving money is one of the best habits I’ve formed, and it’s had such a positive impact on my life. I hope it can do the same for you too.