If you’ve had to modify your daily routine over the last few months, you’ve likely found your spending habits have changed considerably. An Angus-Reid1 poll shows that 38% of Canadians say they are cutting back on spending — that’s a 12% increase since March 16.
If you’ve been fortunate to not have been financially impacted by COVID-19, here are some ways for you to maximize your savings and make the extra money you save go further.
Maximizing your savings
1. Revisit your budget
A great first step is to re-evaluate your budget, as you may find yourself spending more on groceries and utilities, but less on eating out, entertainment, and personal care products. Setting a budget will help you prioritize your spending by separating needs and wants. This allows you to set money aside and reduce stress.
If you need help getting started, try out our budgeting tool.
2. Don’t let your savings sit in a chequing account
If you have extra money sitting in your chequing account, why not put it to work? We offer many savings options, and each of them can help you earn more in interest.
Building a rainy-day fund? Consider our Regular Savings account or a Variable TFSA. Both of these accounts can help maximize your savings, with the ability to withdraw funds whenever you need. Are you planning for a vacation in a few years, or saving for retirement? Consider a Guaranteed Investment Certificate (GIC). With a minimum $500, you can choose from one to five-year terms. No matter which option you choose, your funds are guaranteed 100% by the Deposit Guarantee Corporation of Manitoba.
What to do with your extra savings
1. Build a rainy-day fund
Ideally, you will want to save three to six months’ worth of living expenses. If you don’t have a rainy-day fund, start with a goal of $1,000 — it’s likely any emergency expense will be less than this amount, so you won’t need to use credit. Consider a separate savings account for your fund, and if you ever need to dip into those savings, try to refill your account as soon as possible. You can also automate your savings so you can save regularly without even thinking about it.
2. Pay off costly debt
You’ll be able to set more money aside if you can get rid of as much high-interest debt as you can. Not only will you save money on interest, but you’re also eliminating a monthly bill from your budget. One option to help you pay off debt is to get a personal loan or line of credit, which have lower interest rates than credit cards.
For more information, check out our other resources on when to save and when to pay down debt.
3. Help others
Now that you’ve done some work trimming your budget, you may find you have more disposable income on your hands. If you’re working toward your savings goals and have the wiggle room in your budget, it’s okay to spend a bit to treat you and your family. Why not support local businesses at the same time? These don’t have to be extravagant purchases — it can be as simple as buying something online from a local store.
Or, consider helping others by donating to a non-profit or charity. Get together with your family and come up with a list of causes you want to support. Then, research which groups best fit your criteria.
4. Save for something fun
Getting through challenging times is easier when you have something to look forward to in the future. Exciting future vacation? Home renovation? This is a great time to start a savings account dedicated to a future goal. Make a goal-specific savings account and set up a pre-authorized debit.
5. Get some advice
Unsure where to start? That’s where we come in. Give us a call at 1.800.728.6440 and we’ll help you find the solution that’s right for you.
1Central 1 Marketing & Research, “Covid-19: A Global Response.” April 15, 2020.