It’s January, the time of the year when many people are making resolutions and dreading their credit card bills. If you’re looking for some ways to cut back your spending, we have some suggestions.
We’re not about to claim that you’re going to be able to buy a home in Vancouver by giving up avocado toast. But small adjustments add up and will help you boost your savings or pay down debt faster.
Here are a few ways to free up more cash.
WATCH: These apps will help you boost your savings — and you might not even notice.
Cut down on lattes — potential savings of $56 a month
Yes, you’ve heard this one before. And yes, there are many who’ve taken issue with the notion, popularized by American money guru David Bach, that people can retire with $1 million in the bank by simply foregoing their daily caffeine-infused little luxuries.
Still, despite the critiques and proliferation of costly at-home brewing methods, the fact remains that you can save a decent amount every month by trading a store-bought latte for a regular, homemade cup of Joe every morning.
Here’s the back-of-the-envelope math. Let’s say a latte costs $4, or $20 a week if you buy one every weekday morning.
By comparison, a 300g bag of roasted coffee costs $5.19 on average, according to Statistics Canada. Depending on how strong you like your coffee, that will get you between 10 and 20 cups. And that might be enough coffee for a week if you run on two cups a day.
Even if you round up $5.19 to $6 to account for sales taxes, you’d be spending $14 a week and $56 a month less on coffee.
WATCH: Here’s what it costs to feed a family of four in Canada
Meal planning — $48 a month
Quoting a study from the University of Pennsylvania, the Credit Counselling Society says people who plan out their meals and don’t sway from their grocery list tend to spend up to 23 per cent less than those who wander into the supermarket without a firm shopping roadmap.
Still, make sure to change your meal plans or your might overspend on out-of-season produce.
For a sample Canadian family of four, that would work out to a potential monthly savings of around $191. Divide that by four and you get $48 less a month in groceries for a single shopper.
WATCH: Here’s how to eat on a $65-a-week budget if you live alone
Potluck brunches and dinners — $50 a month
Even if you carry a brown bag to work every day, there are dinners and brunches with family and friends. That can be a big budget drain. It’s also the single expense people are most likely to regret, according to behavioural economist Dan Ariely.
Canadian households spend $2,272 per year dining out, according to StatsCan. Considering the average household size in this country is around 2.5 people, that works out to $908 a year and $75 a month per head.
Of course, foregoing your social life so you can eat every single meal at home would be tough. On the other hand, hosting can be pretty expensive.
That’s why potlucks can be a good compromise. Now, let’s say you spend $25 on things like waffles and fresh fruit for a family brunch with the in-laws or a party-sized batch of your signature chili. You’re still walking away with $50 more in your pocket.
WATCH: You’re going to pay more for your groceries in 2019
Get a cheaper cellphone plan — $50 a month
It’s well known that Canada’s cellphone plans are horrifically expensive — at least if you need data in addition to calling and texting. The last time Global News took a look, a two-year plan with unlimited Canada-wide talking and texting, and 1GB of data per month (plus a 1GB-bonus) with any of the three big carriers cost around $100 a month.
Switch to a discount carrier, and you might be able to lower that bill to around $50 a month.
(Disclaimer: One of the options we reviewed is Freedom Mobile, owned by Shaw Communications. The Shaw family controls both Shaw Communications and Corus Entertainment, the parent company of Global News.)
WATCH: The best, cheapest cellphone plans in Canada in 2018
Switch to a robo advisor — $62 a month for $50,000 worth of investments
Hunting for a better deal could save you even more when it comes to managing your money.
Let’s say you have $50,000 in retirement savings that you’re investing with a mutual fund company. And let’s say you’re paying a two per cent annual fee for the service. That’s $1,000 a year in fees.
With a robo advisor, you’d be paying an annual fee of around 0.5 per cent, which works out to just $250 a year. That’s a saving of $750 a year or $62 per month.
WATCH: Investing with a robo advisor explained
Accelerate your mortgage payments — $74 a month for a $320K mortgage
Switching to accelerated bi-weekly mortgage payments is another way to save a bundle, especially as interest rates continue to climb. The idea is simple: The faster you pay off your mortgage, the less you’re going to pay in interest.
Even a small boost to your monthly mortgage payments can make a big difference. For example, say you bought a $400,000 home with 20 per cent down at a 3.54 per cent fixed rate with five-year term mortgage. If you opt for the classic monthly payment, you’re looking at $1,604 a month, according to the mortgage calculator provided by financial products comparisons site RateHub.ca.
If you opted to pay your mortgage every two weeks, your payment would be $802. That’s exactly half the monthly payment, but you’d be making 26 — not 24 — payments per year (there are 52 weeks in a year). This allows you to pay down your mortgage faster and save on interest.
Over the first five years, this works out to savings of less than $1,000. But over the life of the loan, those interest-cost savings would grow to a grand total of $22,231, or nearly $890 a year for a 25-year amortization period. And that’s $74 less a month, when you spread the savings evenly over the entire period.
Any one of these suggestions might help you save $50 or more a month. And even if you splurge on the occasional cappuccino or dinner out, sticking to two or more of these strategies most of the time could make a significant difference to your bottom line.