7 Saving Tips: #1 GET STARTED

Saving money is hard in today's world where living costs are high and pay lags behind. This is very prevalent today, and people need to save money more than ever so that tomorrow can be better. Saving is looked at as hard, but let's face it... numbers do not lie. To save and to state the obvious, there needs to be more money coming in than going out. This is easier said than done - that is why I am here! To provide tips and tricks I use on a daily basis to make my dismal $30,000 CAD/year get me through school, save, and even invest large sums of money.

My personal story is that I am a mature student. A mature student is defined as someone who is older than the usual age at which people attend certain levels of school. I am a mature student in university (I'm 25 going into a 4rth year undergrad)!

How to Save Money with Little Income

I personally have little income because I am in school with full-time studies majoring in Kinesiology in a Bachelor of Science (wow...). I make around $30,000 CAD annually only working 4.5 months a year as a carpenter. I only work those 4.5 months because I need to maintain high grades so that I can be a competitive applicant for medical school! So, time is of the essence for me and I need quick and easy ways to save money. The key that no one likes to hear is it all boils down to budgeting! Budgeting is the vital key to financial

tranquillity (lol - if there is such a thing).

Doing a Lot - with a Little

I like to think I do a lot with a little, and I believe I can help you do the same. I have investments in the tens of thousands, and it's relatively easy for me to pay for my schooling and all associated living expenses with the small amount I earn. The significant help I receive is that my living cost for rent is very low as I live with a parent close to the university I attend for full disclosure. To pay current rents around the university I attend, I would need to make an extra $6,000 CAD/year to maintain the current lifestyle.

Rule: 50/30/20

The 50/30/20 rule is where 50% of your income goes towards necessities. These are expenses that you need to live, such as living costs associated with food, shelter, and any other living expenses you may have.

The 30% is set aside for fun activities and non-essential things. These can include vacations (in my opinion, this is a necessity), snacks, or even random coffee purchases.

The remaining 20% is what is recommended for saving. This is the amount that you should save on a yearly basis.

Personally, I am more of a 50% saving, 30% living, and 20% fun kind of guy. So this is only a recommendation to quantify where you should put your money. I am only this way through school; I do not intend to keep up the aggressive saving style I have when I am out of school.

TIPS

Tip #1: Getting Started: Calculate Income and Expanses

The number one problem people face with anything is getting started. This is a hard task to do because intrinsically we all have to give up something we want to do, to do the thing we should do. I can tell you though, it gets easier. Once you start saving and accumulate more and more money successfully, you gain a desire to continue on the current trajectory. You will find satisfaction in saving and accumulation of funds.

To get started, you need to calculate all expenses and income per month. Include everything! Phone, utility, rent, mortgage, subscriptions, gym membership, and any other bills you may have. Set this as the minimum you need to have in your account or on hand from month to month.

Set up these two numbers (income and expenses) in an Excel sheet or wherever you can see them to remind you that these are your parameters in which you must live to have any chance at financial tranquillity.

Tip #2: Trim the Fat: What is Necessary to Spend Your Hard Earned Money On?

No, I don't mean go to the gym and run your hips off... I mean look at your expenses and decide what is crucial for you to have. Be honest and serious with yourself because this is probably the most important tip: live within your means even if those means are dismal. Your means won't be dismal if you have a couple of years of heavy savings and you can afford to spend more money because now you have thousands in the bank making you more money! So please, people, be honest and ask yourself... Do I absolutely need this purchase? Will I be on the streets if I do not buy this or subscribe to this service? BE HONEST and don't cheat yourself.

Tip #3: Budget: Utilize Daily Income and Expenses Tracking On Smart Device

How your expenses compare to your income when you're honest with yourself determines how much you can, and should save on a regular basis. The 50/30/20 rule is a good parameter to follow.

I think budgeting is the most underrated utilization on smartphones today. That is a bold claim with zero data to back it up, but I know my peers do not update an Excel spreadsheet on their phone every day of projected income and expenses... Using your smartphone hooked up with the cloud unlocks a super fast and easy way to keep track of your hard-earned money! It allows you to see the big and small picture everyday.

I update my income and expenses on a regular day-to-day basis to keep track of every dollar. This may sound a little nuts... and let's face it, I may be a little overboard with it. But the fact of the matter is it works well, and I notice very quickly when I've spent money on something I don't need. 

This method in use, is very beneficial to see how you progress day-to-day, week to week, and month to month. You are kept accountable for what you're spending on and how much you're making. "But JH… why not just look at my bank account?" You could do that, but it's hard to see the full picture from a snippet of your spending. When you're actively engaged in assessing your income and expenses everyday, you get a sense of how your money moves, where it goes, and how to improve your monetary discipline.  

Tip #4: Your Plan: Can't Hit a Target When You're Not Aiming

Have a plan for the numbers you generate for expenses and income. I think it is always beneficial to reach for the stars, have big plans, and chip away at progressing towards them day by day. Eventually, all the baby steps taken - add up to miles covered. The key, again, though, is to start. The plan should include what your goals are, where you want to be in X amount of time, and how you want your account to look.

My plan ever since I was little was to be a millionaire by the time I was 18… Was this realized in any capacity? No. But I am in a better financial position than people I know making way more with lots more time than I do, due to their habits. Saving and accumulating money is all about your habits and your plan, which brings us to the next tip…

Tip #5: Habits: Know Your Spending Habits and Question Your Spending 

Know and follow your spending habits. Cut down on unnecessary spending and focus on the big picture! Your goals and plans will not be realized with all the added up baby steps in the opposite direction (baby steps add up to miles - which direction will your baby steps add up in?). I cannot stress this enough, saving is all about discipline and you need to be honest with yourself to cultivate the best financial version of yourself.  

Tip #6: Building the Nest Egg: Your New Zero

Build a nest egg; this is an amount of money that you do not touch and that you SAFELY invest. This money can be looked at as your chance at freedom. I think this is a powerful way of looking at it, and this will be your set zero amount. Anything below this amount puts you in the negative, anything above is positive. It is key to also think of this amount as dynamic in the positive direction, meaning, this amount should grow year after year, setting a new zero value! This is a very powerful technique that I and many others use to save tens of thousands of hard-earned dollars. 

Tip #7: Cut Down: Live Inside your Means

I know this seems intuitive, but sometimes we all need someone to just reinforce the obvious... Cut down on unnecessary spending. This includes regularly eating out, expensive clothing when you're not wealthy, brand name items of any sort, and general useless spending.

How do I get started? where do I put my money?  

When you get started, you need to start putting your money somewhere. Here in Canada, we have something called a Tax-Free Savings Account (TFSA). This account is available to individuals after the age of 18 years old, starting from the year 2009, and you're are allotted $7,000 CAD/year tax-free. Yes, tax-free! So, say you're 25 and you want to start saving, you can put up to $49,000 CAD in that account tax-free. From a TFSA you can then use it for direct investing, mutual funds and many other investments.

There are many other places you can put your money, but I am not qualified to address issues of specific investment. What I can advocate for, though, is maybe putting your nest egg into a TFSA and then investing in a Guaranteed Investment Certificate (GIC) for guaranteed principal and interest amounts. This is what I personally did and from that alone I will receive and estimated $4,000 - $7,500 CAD over the course of 2 years.

Conclusion on my Tips and Tricks for Saving 

I am not selling anything. I have nothing to gain from sharing how I am paying for school, making little money, saving, and investing other than your readership. These are tips and tricks that I use on a regular basis and they bring me closer to my goals as to what I see as successful. Through the journey, the goals have become less superficial pertaining to money but towards purpose. That is why I want to be a physician and help people obtain their potential as I am trying to strive for mine. All in all, share your thoughts and don't hesitate to email me. I am a regular guy that loves people and I want to share others' success so that we can all go through the journey together and reach all our potentials.