How to Save Money: A Practical Guide for Canadian Households

Whether you’re trying to build an emergency fund, save money for your dream vacation, down payment, or simply get a better handle on where your money’s going, you’re not alone. With the rising cost of living, most Canadian households are looking for practical ways to save money without significantly impacting their daily lifestyle.

The good news? With smart financial strategies and consistent habits, you can make saving money more manageable and rewarding. This guide walks you through how to save money by looking at your monthly expenses, setting clear budget goals and creating a personalized budget that works for you.

Step 1: Assess Your Current Cash Flow

Before you can start saving money, you need to know exactly where the money you make is going. That means that on top of your bills, you’ll need to track your spending habits. Your daily caffeine runs to your favourite coffee shop or late-night impulse purchases all add up.

Try This

Make a goal of tracking every dollar you spend for the next 30 days. To narrow down where you’re spending the most money, separate your expenses into two categories: wants vs. needs.

You can track your monthly expenses using free budgeting apps like YNAB (You Need a Budget), or even use an Excel spreadsheet. Some mobile banking apps also offer money tracking tools that will help you visualize where your money is going.

One thing to mention is that you shouldn’t restrict your spending during this time. The goal is to track your actual habits to identify any opportunities where you can redirect your spending to your savings goals. You’d be surprised at how many people discover they’re spending too much money on food delivery and streaming services. Awareness is key.

Step 2: Set Specific, Time-Bound Savings Goals

Saving money without clear financial goals can cause you to lose motivation quickly. This is where SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound) goals come into play. Here are some common savings goals you may want to consider:

Emergency Fund

Aim to save 3 to 6 months’ worth of living expenses to ensure you’re covered in the event you lose your job, come down with an illness, or have unexpected expenses arise.

Short-Term Goals

Short-term money-saving efforts can be allocated toward things like a vacation, new furniture, spending while you’re away on holiday, or a new vehicle.

Long-Term Goals

Long-term financial goals include things like a down payment on a home, your child’s future post-secondary education, and your retirement.

Example SMART Goal

“I want to save $6,000 for a new car within 12 months by putting away $500 a month.”

Remember, having a clear target and timeline will give you purpose and help keep you motivated. Write your goals down and revisit them regularly.

3. Build a Realistic Zero-Based Budget

A zero-based budget means that every dollar you earn each month is assigned to different bills or savings. By the end of the month, you’ll have no extra money left over.

To do this, start by using the 50/30/20 budget rule as a guide:

• 50%: Needs (car insurance, cell phone plan, car maintenance, grocery shopping, utility bills, rent, etc.)
• 30%: Wants (dining out, streaming services, entertainment, hobbies, etc.)
• 20%: Savings and any debt repayments.

From there, you can adjust your savings plan based on your priorities and lifestyle, depending on your disposable income levels.

3. Quick Wins on Fixed Expenses

Fixed expenses, like your mortgage, insurance, and internet, can use a large chunk of your budget. But these costs aren’t always set in stone.

Quick Wins

• Shop around: When it’s time to renew your home and car insurance, consider shopping around or even switching providers. You may be able to find a better deal elsewhere that could save you $500 a year on premiums.
  Refinance high-interest debt: Debt with high interest rates, such as credit cards, can seriously impact how you save money. Consider refinancing your debt with a low-rate line of credit or a balance transfer offer.
• Call your providers: Call your phone, internet, and TV providers to negotiate new terms. If you’ve been with the same company for years, you may qualify for loyalty discounts.

Bonus Tip: Use any money you saved from renegotiating your fixed expenses and allocate it toward your savings accounts so you can save money faster.

4. Trim Variable Costs Without Hurting Your Lifestyle

Saving money doesn’t mean you have to cut out everything you love from your life. You just need to be intentional with your spending.

Changes that Make a Difference

Meal-prep and plan for the week instead of getting takeout on nights you’re too tired to cook.
Buy pantry staples in bulk to have on hand at all times.
Audit your subscription list. Think about what you use regularly, where you can downgrade, and whether you’re open to cancelling anything.

5. Boost Income Streams to Accelerate Savings Goals

Cutting costs is great, but increasing your monthly income can make an even bigger impact when it comes to saving money fast. Here are some tips to help get you started:

Ideas to Earn More

• Become a freelancer or consultant in your area of expertise.
• Join the gig economy (tutoring, pet sitting, ride-share, etc.).
• Sell unused items like old sports equipment on Facebook Marketplace, Craigslist, or Kijiji.
• Rent out a spare room or parking spot in your building.
• Open a tax-free savings account or a high-interest savings account to earn interest on the money you deposit.
• Invest in mutual funds and dividends.

All the extra money you earn interest on is a chance to grow your savings even more.

6. Automate Your Savings Accounts & Track Progress

Setting up automatic contributions to your dedicated bank account is an easy and powerful tool to help you save money.

Set it and forget it:

• Set up automatic transfers the day after your biweekly paycheque from your chequing account to your savings account.
• Label each of your savings accounts by your financial goals, such as emergency fund, vacation, or new car, so you stay motivated.

Track your progress with a savings goal app or use Embark’s RESP Calculator to visualize your success in real-time!

7. Family-Friendly Saving Strategies

Saving money doesn’t have to be an individual saving venture; you can also get your entire household involved. If you have kids and teens, teaching them how to save money and build responsible financial habits is essential for their future.

Things to Try

• Hold a monthly meeting to go over your spending limits and set new goals.
• Give kids allowances when they do chores or reach a learning goal. Encourage them to put a portion of their allowance in a piggy bank or bank account for later.
• If you find that you’re under budget for the month, use the leftover money to do something fun with your family.

Ultimately, by involving everyone in your family in a way that makes sense to your household, you can make it a team effort and grow closer with your loved ones.

8. Maintain Momentum: Habit-Forming Tools

Saving money takes time, which is why staying on track requires the right tools and some accountability.

Tools that Work

• Do a 3-day no-spend challenge: Skip non-essential spending for a month and see what you learn about your habits. Instead, look for free activities in your area.
• Savings chart: Print a money tracker and colour in each milestone you hit. This is a great option for children and visual learners.
• Accountability partners: Check in monthly with a friend or family member who may also be saving money or working toward a financial goal.

Don’t forget to celebrate little milestones. Positive reinforcement can help you lock in good habits for life.

The Bottom Line

Saving money doesn’t mean you have to sacrifice everything you enjoy in life. It’s about making intentional choices with the money you earn and cutting out extra dollars that may be preventing you from creating a safety net for your future.

By taking small, consistent steps, such as tracking your spending, setting up automatic transfers, setting SMART goals or generating more income, you can take control of your finances. Even if you can only save $10 a month to begin with, the key is to keep going.

Need help getting started? Check out Embark’s suite of savings tools and resources to help you make your next move.