It has been said that a dollar saved is a dollar earned.
When it comes to reaching financial goals, the saving is just as important as the investing. As a self-certified budgeter, I have learned many methods to help you save money while enjoying a good quality of life.
1. Find housing that meets your needs
Whether you are living alone, living with a spouse or living with your family, the most important step in saving money is to ask if you are living in a house that meets your needs. I have friends that work and live in Toronto but spend up to half of their paycheck on housing each month. Being in the city gives them easy access to work and events, but the premium that is paid usually outweighs the benefits derived.
One method to address this is to consider living in a more economical environment. This can be downsizing your house or moving to the suburbs, whereby the city is only a short commute away. It may mean renting a room in a house (for the single people), which comes at a steep discount compared to one-bedroom apartments or condos.
By finding housing that meets my needs, I save around $350 a month.
2. Shop at economical grocery stores
When it comes to shopping for food, a large chunk of my monthly expenses is spent on groceries. To address this cash drain, I do my shopping at economical grocery stores such as T&T and NoFrills, which are both owned by Loblaw.
As a general rule of thumb, I get my meats and produce from T&T and my dairy and toiletries from NoFrills. By doing this, I take advantage of what both stores have to offer. T&T has an incredible fresh meat, seafood, and produce section but overcharges for daily staples such as tissues, eggs, and milk. NoFrills lacks in the produce department but has fairly priced day-to-day items.
By using this method, I save $150 a month on groceries.
3. Invest in dividend-paying stocks
There is no greater feeling than having your money work for you. When it comes to saving, investing in dividend-paying stocks is an important part of the equation. I currently own shares of Teck, which has a meagre but present 0.96% dividend yield. Teck is a Vancouver based metals and mining company.
For those of you wanting a more generous dividend yield, I would suggest looking into buying shares of SIR Royalty. It collects royalties from some of Canada’s most notable restaurant brands, including Jack Astor’s, Scaddabush, and Canyon Creek, just to list a few. Its dividend yield is currently at 11.45%.
With a 11.45% dividend yield, investors that buy $10,000 worth of shares can expect to receive $95 a month in dividend payments, which can be put toward savings.
4. Utilize public transit or walk
If you live in the suburbs, I understand that this can be a challenge. If this is the case, one way to save money is to be thoughtful of when you use the car. If you need to buy clothing and groceries I would suggest finding a plaza with both a grocery store and a clothing store, so you can save on gas by not driving around town. Similarly, if you own two cars, consider getting rid of one. After all, costs can be in excess of $1,000 per car each month.
For those of you in the city, using public transit is a no-brainer. I personally use public transit to get to work and do my shopping.
I save $300 a month in car expenses.
5. Be patient
A sale at a retail store is as inevitable as taxes these days. If you are looking to buy clothing, wait for sale periods such as after seasons, during holidays, and my favourite sale of the year, Black Friday.
I save $50 a month by buying clothing on sale.
6. Create an automatic savings plan in your bank account
50% of my after-tax income goes straight into a savings account. Sometimes, I need to tap into this account to pay my bills, but I try to be as frugal as possible. By having this automatic savings plan, I learn to create a budget with a much smaller amount, which allows me a cushion in case I have unexpected expenses.
I save $100 a month in impulsive spending by having an automatic savings plan.
Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.
Fool contributor Chen Liu owns shares of Teck Resources Limited.