I know. Canadian investors reading this article are probably looking at this and shaking their head. They’ve already cut back on their budget. In fact, they’ve made an entirely new budget! They don’t go out for dinner as much, cut back on spending on frivolous items. They aren’t even travelling anywhere cool this year.
Well, you still have ways of saving more. In fact, you could save thousands in 2024. So let’s get into the top three ways to do this, and how to turn those savings into cash.
High interest
Now you might have made a new budget, but have you organized your debt payments in that budget? Credit card debts are at an all-time high across the country, and even across the world. So it doesn’t exactly look as though many Canadians are really saving more. They’re simply putting debt off into the future.
And that means using credit cards and other high-interest loans. To be clear, a high interest loan can be anything above 7% interest. And with credit cards that’s usually closer to 19%! That means you’re going to have to make your future self pay off those debts, and eventually the payment date will come calling.
In fact, that time is now. Which is why the best way to save thousands is to tackle those high interest debts from highest to lowest. Use any and all cash that you have after paying your bills and other essentials to take on these debts. You should be shocked at how quickly you pay them down, to be honest! And once done, you can start on the next step.
Automate payments
I mean everything. Because if there is one thing you don’t want to owe money on, it’s your bills. These can also increase your interest from overdue payments. Yet instead of remembering to pay them, you can simply make them automatic. This can be done through the company itself, or even just your financial institution.
This should also be done for your savings once you’ve paid down your bills. Part of your budget each month should be allocated to a certain percentage, perhaps between 5% and 10%, towards your savings. That would include first an emergency fund, and then your retirement and other long-term goals.
By make it automatic, you then never have to worry about saving again! And instead see your future value grow higher and higher.
Live below your means
If you get a raise or a new job, that can be tempting to start spending more money. Instead, consider that extra cash as a monthly windfall. One that can be used towards all these items, including your investments.
If you don’t have a raise or more income, consider ways that you could live below your means. But be realistic. There is certainly going to be items that take up a lot of your budget that shouldn’t, so dive in and see what can be moved around.
Start investing
Now that you’re saving potentially thousands in income, you can start investing. In this case, I would go simple first and get right to the top. That would be by investing in the largest stock on the TSX by market cap, Royal Bank of Canada (TSX:RY).
RY stock is now back near 52-week highs, with provisions for loan losses allowing it to expand. This was well supported by its wealth and commercial management arm, which expanded from its purchase of HSBC Canada. And with a dividend of 4.14%, it’s certainly a stock that investors can consider for long-term growth and income.
