Did you know that the average Canadian saves less than $1,000 per year? If this sounds like you, then you’re in the right place.
Schools don’t teach us much about personal finances, and unless we grew up with financially savvy parents, many of us don’t learn from home either.
It’s challenging to save money with expenses increasing, but not impossible. Below, I’m going to show you the best ways to save money on a tight budget in Canada.
By implementing one or more of these simple tips, you’ll be able to quickly grow your savings and start building a safety net for the future.
How Can I Save Money If My Budget Is Tight?
I get it. Saving money can be hard, especially if you’re already on a tight budget and don’t have extra money sitting around to allocate to your savings account. That being said, it’s still possible.
You just have to find clever ways to “hack” your life and create new saving habits. Here are some quick tips for saving money on a tight budget.
Don’t Overcomplicate Saving
The more complicated you make saving, the less likely you are to do it. If you have to drive to the ATM every week to deposit cash into your savings account, you probably won’t be very consistent about it.
For some, having a simple savings jar on their home desk that they see every day is the best way to start saving on a tight budget.
Find Clever Ways To Save Money
From couponing to side hustles, there are lots of clever ways to save money or make some quick cash that you can put into your savings account. Keep an open mind and always be on the lookout for new opportunities that allow you to save.
Consistency Is More Important Than The Amount
Be realistic. Setting a goal to save $200 per week is great, but this may be too high of an amount to keep up with if you’re already strapped for cash. You might make it one week, but then fail to save the amount the next week, get discouraged, and stop saving altogether.
Starting small and committing to saving $5 or $10 a day will ensure that you stay committed to saving, which makes all the difference. For example, if you can save $5 every day, you’ll have saved $1,825 after one year.
The Best Ways To Save Money On A Tight Budget In Canada
Here are some of the best (and simplest) ways to save money, even if you’re on a tight budget. Remember, saving is a long-term game and every extra dollar you can save will add up at the end of the year.
By creating good saving habits on a tight budget, you’ll be able to save even more once your budget allows.
1. Use Coupon Apps To Save On Groceries
- How Much You Can Save: $50+ per month
Times have changed, and you no longer have to worry about cutting out paper coupons and being “that person” at the grocery store register. Today, you can use simple couponing apps to scan local circulars and save coupons to your phone.
When you get to the register, simply scan the coupons on your phone and save! Most couponing apps require you to accrue a balance (usually around $20) before allowing you to cash out. Some of my favourites include:
- Checkout 51
For a full list, be sure to check out my list of the best coupon apps in Canada.
2. Sign Up For A Free High-Interest Savings Account
- How Much You Can Save: 2.25% monthly interest on your savings
When most people think of a savings account, they think of a traditional bank savings account. The only problem is that many banks only offer 0.01% interest on the money you save.
While a regular savings account can certainly keep your money safe, it doesn’t provide a great incentive to continue saving money.
That’s why I recommend signing up for a high-interest savings account. Neo Financial is one of the latest FinTech startups in Canada and I’ve been recommending their Neo Money high-interest savings account to everybody who wants to start saving.
Neo Money pays customers 2.25% monthly interest on every dollar they have saved in their account, which is over 100 times more than what most traditional banks offer.
This money could help you cover bills or be used to grow your savings account balance even more.
Additionally, Neo Money doesn’t require you to maintain a minimum balance and doesn’t come with any hidden monthly fees, so it’s a great way to start putting your money to work for you.
3. Start A “Swear Jar” For The House
- How Much You Can Save: $20+ per month
Growing up, my mom kept a “swear jar” in the house. Every time that one of us (including her, sometimes) said a bad word, we had to put a dollar in the jar. She didn’t let a single foul word slide!
This not only taught us to watch our language and speak more professionally, but it allowed her to save a jar of money that she would put towards groceries at the end of the month.
Even if you don’t swear often, you can apply this concept to just about any habit that you’re trying to start. Some other good reasons to put a dollar in your jar include:
- Every time you sit down and watch TV
- Every time you forget to take your shoes off in the house
- Every time you miss a workout
- Every time you buy fast food instead of cooking at home
This simple saving tip not only helps you improve your daily habits, but allows you to save cash that you can put into a savings or investment account at the end of each month.
4. Use A Cashback Credit or Debit Card
- How Much You Can Save: 0.5% – 5% cashback on all purchases
Using a cashback credit or debit card is a great way to start saving money on purchases that you make every day.
For example, with KOHO’s prepaid Mastercard, you can get 1% unlimited instant cashback on groceries, billing, and services. You can also earn extra cashback with their affiliated brands.
Since it’s not a credit card, you don’t have to worry about a credit check or your score, and you won’t overspend because you can only use how much you put in. It also works like a high-interest saving account. All the balance sitting in the KOHO account can earn up to 2% saving interest to help you boost your savings.
If you have a decent credit score, you could also apply for a traditional no-fee credit card from a provider like Tangerine that offers up to 2% cashback and helps you build credit at the same time.
If you use your cashback card to pay for at least $1,000 worth of categorized expenses, then you could save up to $20 per month that can be used to cover costs, so that you can allocate cash to your savings.
5. Cut Down On Streaming Services
- How Much You Can Save: $10 – $30 per month
Most people are subscribed to at least one streaming service like Netflix, Prime Video, or Disney+. If you have all three, then you’re likely paying upwards of $50 per month after taxes and fees.
Entertainment is important, and I’m not suggesting that you cut out all streaming. Be honest with yourself, though — you likely only use one of them regularly and use the others a few times a month.
Most streaming services charge customers on a month-to-month basis, which means that you can easily unsubscribe from the ones that you don’t use as often.
Let’s say that you’re watching a show on Netflix, and you see that Disney+ is releasing a new title that you really want to watch.
First, finish the series on Netflix and then unsubscribe from the service. Then, sign up for Disney+ the next month and watch the new title. That way, you’re only paying for one streaming service at a time.
- Read more: The best free streaming apps in Canada.
6. Set Up A Recurring Savings Transfer
- How Much You Can Save: $100+ per month
Sometimes, the easiest way to save is to set up a recurring savings transfer with your existing bank account.
One of the first savings accounts that I created as a teenager would automatically transfer $25 per week from my checking account (where I received my paycheque) into my savings account.
Since my chequing and saving accounts were with the same bank, I didn’t have to pay any transfer fees, and the money was saved without any effort on my part.
Most traditional banks offer this service to their customers. Neo Money (the high-interest savings account I mentioned above), also allows their customers to set up recurring transfers.
7. Take Advantage Of Public Transportation
- How Much You Can Save: $200+ per month
Canada has some of the top-rated public transportation systems in the world. The bus and train systems in Toronto, Vancouver, and Montreal are regularly studied and mimicked by growing cities around the globe.
So, why not take advantage of them?
The amount of money saved with public transportation quickly adds up. For example, when I was driving in Vancouver, I would easily spend up to $100 per week or more in fuel (not counting the cost of wear and tear on my vehicle). By contrast, a 1-Zone Compass Card costs $102.55 per month.
Since I’m not actively driving, I can spend time catching up on the news or emails as I’m riding the bus or train to my destination.
8. Rent Your Vehicle Out On Turo
- How Much You Can Save: $375+ per month
Turo is like AirBnB for cars. It allows anybody to list their vehicle on the platform and rent it out on a daily or weekly basis.
You have full control of the situation and can select specific availability dates, rental prices, and cleaning fees (if they return it in poor condition). Plus, customers are required to purchase temporary insurance through Turo, so there’s no risk involved on your end.
You can turn this into a full-time side hustle or just use it to help you earn a bit of extra cash on days you don’t plan on using your car.
9. Do Your Own Vehicle Maintenance
- How Much You Can Save: $150+ per month
You don’t have to be an expert mechanic to perform your own basic vehicle maintenance. Changing your oil, flushing coolant, and changing bulbs are all simple and easy maintenance items that you can complete with a few simple tools and a YouTube tutorial.
Getting a professional oil change can easily cost up to $150 at a dealership. Conversely, you can change your own oil in less than 30 minutes with $50 worth of fresh oil and a new filter.
10. Start Cooking At Home More Often
- How Much You Can Save: $300+ per month
Eating out is one of the most expensive habits you can develop. Eating a $15 meal for lunch five days a week adds up to $300 every month. By contrast, a simple, healthy, home-cooked meal only requires around $4-5 worth of groceries.
You don’t have to be an expert chef either. A simple sandwich or homemade salad will fill you up and can easily be taken to work with you.
Weekly meal kit subscriptions like Hello Fresh or Chef’s Plate are also an affordable way to cook great-tasting meals at home without having to shop for a long list of groceries.
11. Trade Your Vehicle In For A Hybrid
- How Much You Can Save: $200+ per month
Despite market fluctuations, you can expect fuel costs to keep on rising, as fossil fuel continues to become a limited resource.
Trading your gas-guzzler for an electric vehicle can save you a lot of money in weekly fuel costs. If an electric vehicle doesn’t fit your needs, hybrids are a great second choice and are twice as fuel-efficient as an all-gas vehicle.
Additionally, owning a hybrid or electric vehicle could allow you to take advantage of CRA tax credits, which can further increase your savings.
12. Round Up Your Purchases To Save & Invest
- How Much You Can Save: $100+ per month
One of the easiest ways to save money is to use a round-up app. You can link your credit card or debit card to a service like WealthSimple’s Round-Up Invest app and start saving every time you swipe your card.
Whenever you swipe your card, the amount is rounded up to the closest dollar. For example, if you swipe your card for a $17.23 purchase, it will be rounded up to $18.
The extra change (in this case, $0.77 cents) is then invested directly into your WealthSimple investing account.
This money is not only saved, but is also invested into stocks, ETFs, and cryptocurrency, allowing you to potentially save even more, based on your portfolio’s growth.
It may not sound like a lot, but think about how many times you swipe your card every day. You could easily save and invest $2 to $10 a day without even thinking about it.
13. Earn & Save With A Side Hustle
- How Much You Can Save: $350+ per month
One of the best ways to save extra money is to earn extra money. One of the main things that holds people back from earning extra money, though, is a busy or constantly changing work schedule. This is where the “gig economy” can really help you.
Having a part-time side hustle doing gig work allows you to set your own hours and work as much (or as little) as you want. Some of the best side hustles that you can do in Canada include:
- Uber and UberEats
- Amazon Flex
All of these side hustles typically pay between $20 and $30 per hour after tips, and offer weekly direct deposit.
They also don’t require you to work a specific amount of hours. You could work an extra two or three hours a week, allowing you to save an extra $40 to $60 per week.
14. Eat Before You Leave The House Or Buy Groceries
- How Much You Can Save: $125+ per month
Even if I’m not that hungry, I still try to make a habit of eating a small, filling meal before I leave the house for the day. This helps me stay full for the next few hours so that I don’t have to worry about getting hungry and falling into the trap of buying expensive food while I’m out.
This is especially true when it comes to grocery shopping. Studies have shown that hungry shoppers spend as much as 60% more at the grocery store than those who eat before they shop.
15. Give Yourself Daily “Rewards” For Good Habits
- How Much You Can Save: $100+ per month
One of the best ways to keep up with a good habit is to reward yourself for it. For example, every time I go to the gym, I’ll set aside $5 to go into my investment account or a high-interest savings account. Our human brain is wired to respond positively to rewards and will repeat habits that it feels rewarded for.
Even though you’re technically rewarding yourself, the reward of seeing your savings or investment account grow every day can help you keep up with good habits while encouraging you to save more.
What Is The 50-30-20 Budget Rule?
Accountants often recommend the 50-30-20 budget rule to their clients. It’s a simple strategy for spending and saving your after-tax money:
- 50% spent on needs (fuel, groceries, bills)
- 30% spent on wants (clothing, eating out)
- 20% saved (preferably in a high-interest savings account, or investments)
Although you may not be able to follow this rule perfectly, you should at least try to follow it to the best of your ability.
What could you do if you had an extra $1,825 in your account at the end of the year from saving $5 a day?
Saving money shouldn’t be complicated, even if you’re on a tight budget. The trick is to implement small daily or weekly habits that allow you to consistently save. The more automatic you make saving, the easier it is.
Creating a budget is one of the first steps you should do to get on top of your finances. Check out my list of the best budgeting apps in Canada next so you can create a plan to save and invest even more!