How to Save Money: 20 Ways to Boost Savings and Cut Costs

Do you want to save more money? You’re not alone. Canadian savings trends have been decreasing since the pandemic, with Canadians only saving 2.9% of their household income as of the first quarter of 2023. That’s down from a record high of 26.5% in the second quarter of 2020.

Having a healthy savings amount is a vital part of any financial plan. When you have robust savings, you can afford surprise expenses, eliminate the need for high-interest debt, and work toward future goals, like a down payment for a house.

But starting your savings journey can be really daunting, especially if you’re living paycheck-to-paycheque. If you’re struggling to save, looking to start saving, want to adopt healthy money habits, or just want to grow your savings even more, here’s how to save money easily and quickly.

Why saving money is important

Saving money is crucial if you want peace of mind in your finances. And while having a nest egg you can rely on will help you financially, there are other benefits. Here are some of the main reasons you should prioritize savings goals.

An emergency fund offers security

Have you ever received a surprise medical expense or pop-up car repair that you didn’t budget for? We’ve all been there. An emergency fund can help you prep for these surprise expenses. The exact amount you should save is up to you — decide what amount will make you feel comfortable. Experts generally recommend between one and six months’ worth of expenses.

An emergency fund is an amount of money you set aside, preferably in high-interest savings accounts, to help you cover unplanned costs. Keeping your emergency savings in a savings account that earns interest can help you earn a little extra on your funds while keeping your money accessible. KOHO, for instance, offers a high-interest savings account that earns up to 5% back on your money while also offering overdraft protection coverage and easy virtual card access.

You can avoid debt

When surprise costs pop up, and you don’t have money for them, it’s easy to turn to high-interest credit cards to cover the expense. The problem? Credit card APRs are historically high right now (above 20% in most cases,) making it expensive to carry a balance from month to month. Unless you can pay off your balance during the billing cycle, you’ll want to avoid turning to credit cards.

If you have extra savings, however, you can dip into those funds rather than relying on credit cards, saving you money in interest charges.

Saving for short-term goals builds discipline

Another benefit of focusing on savings goals is that it builds discipline. When you get into the habit of routinely saving money, you’re more likely to make smart money decisions. You might find you think twice before overspending, and you may become focused on growing your savings a little more each month.

You can get a jump start on retirement

Retirement may be decades away for you, but getting a head start on your goals will pay off down the line. If you have a tax-advantaged workplace retirement account, make sure you’re contributing to it. You can start off with 5% or 10% of your paycheque and work your way up to 20%.

You can also contribute extra cash into different types of savings accounts in Canada to supplement your retirement fund. You might consider a tax-free savings account (TSFA) for retirement, which can help you earn interest and even invest money without worrying about paying taxes on the interest or earnings. Be sure to compare the benefits of a TFSA vs a regular savings account to find the best fit for your money.

You’ll feel less anxiety and worry about money

Another plus of saving additional money? You’ll benefit mentally and emotionally. If money worries stress you out, building money routines and healthy money habits can help offer you peace of mind. This will free you up to concentrate more on the things that are most important to you. Once you know how to save money, it will come more naturally and help you feel more content about your finances.

How to save money

Ready to get started on your money savings journey? Here are the three basic ways to save money that can help boost your savings account balance quickly.

Create a budget

If you want to save extra money, you need to first know what you’re working with. Creating a budget can help. It will help you figure out how much money is coming into your bank account each month and how much is going out. You then look for ways to increase the amount of available funds so you can save more.

You can try a budget template or budgeting methods like the 50/30/20 budgeting rule, which has you dedicate 50% of your income to essential living expenses (like bills), 30% to nonessentials (like eating out), and 20% to savings. Following a set budgeting guide can help you get started and then you can switch up the rules to better fit your lifestyle and financial goals.

Find ways to cut unnecessary expenses

Now that you have your budget, an easy way to save money is to lower how much you’re paying in monthly expenses. It’s a good idea to start with nonessential purchases, like clothes, restaurants and takeout, entertainment, and subscriptions. Decide if there are any areas where you can scale back.

You might even find expenses like subscriptions you didn’t realize you were still paying for, and you can cancel altogether. Maybe there’s a streaming subscription you no longer use or a gym membership that you’re no longer interested in maintaining. Look for any spots where you can start cutting expenses to save extra cash.

Increase your income

If you want to save money fast or have high goals, you might want to find a way to increase your income. First start by researching your job title and salary to see if you’re being underpaid. If so, hunt for jobs that will pay you more or talk to your boss about a raise.

If that’s not an option, you might consider taking on a side hustle to boost your income and help you save money faster. This could include freelance writing, driving for rideshare services, pet sitting, or even cleaning homes for extra money.

Tip: Don’t burn out while working a side hustle. Instead, find an interest or talent you have that can help you earn some extra income without feeling too overwhelming.

20 ways to save money easily

Want to save money even faster or increase your savings potential? Here are 20 ways to save money that will boost your account balance quickly.

1. Open a high-interest savings account

To grow your money even faster, you want to take advantage of today’s high-interest savings rates. The best way to do this is to deposit money into a high-interest savings account. You can find these at most online banks and a few big banks. You might even be interested in a nontraditional savings account option like KOHO’s spending and savings hybrid account. This lets you make purchases directly from your savings account, and KOHO even has savings account options for businesses.

You can earn savings interest rates around 5% or 6% right now. If you’re not already earning interest on your savings, you’re missing out. Look for the best interest rate on your savings to maximize your earnings. Plus, your money will be protected for up to $1,000 thanks to chequing and savings account insurance from the CDIC.

2. Automate savings

If you have to think about saving money, it becomes even harder. Take the guesswork out of things by setting up automatic transfers the second your paycheque hits your account. Most online banks and traditional banks in Canada offer this feature to make saving additional money in your savings accounts a little more effortless.

3. Use round-up features

To make savings even more mindless, you might want to take advantage of additional savings boosters like round-ups. Some banks provide this service, which takes every transaction, rounds it up to the nearest dollar and moves the “spare change” automatically into your savings account. If your bank doesn’t offer this feature, some budgeting tools and savings apps may.

You might also find additional savings boosters at banks. Some accounts use AI technology to analyze your spending and move money that could serve you better in your savings account. Look into any of these mindless savings tips to help you save even more, faster.

4. Reward yourself for health spending choices

If you’re regularly spending too much, you can gamify your financial goals and reward yourself each time you make a smart money choice. For example, if you like to order takeout or delivery often, every day when you cook at home or don’t spend money on food, move the amount you likely would have spent into your savings. You can adjust the amount if you’re worried about moving too much, but the point is to introduce a healthy habit that may become just as exciting as the unhealthy habit.

You might find yourself more motivated to eat at home so you can move more of your money to your savings account and watch your balance grow.

5. Try a savings challenge

Want to save a large amount of money quickly? Or maybe you need help building the savings habit. Either way, a savings challenge can be a fun way to boost your savings while keeping you motivated.

There are many different savings challenges (like saving a dollar a day), but one that could have the most impact is a no-spend challenge. It works by picking a timeframe. Most people opt for a month, but you can ease into it with a weekly challenge. Then the rules are that you won’t spend any money on nonessential purchases. That means no eating out, no shopping for clothes you don’t need, and no other splurges.

While it may seem extreme, a savings challenge can help you learn more about your spending habits so you can help cut spending.

6. Wait before making a purchase

If spending beyond your means is stopping you from saving more money, there’s a simple way to rein this in. Anytime you want to buy something new, sleep on it for a day. If you decide after 24 hours that the purchase is still worthwhile and will add value to your life, make it. If you hesitate or realize you no longer want it, reward yourself by moving the money you would have spent into your savings account.

We often spend our money to satisfy emotions like hunger, stress, or sadness. Giving yourself a buffer before checking out can help you save much more in the long run.

You can extend this timeline, too, by implementing the 30-day savings rule, which has you wait thirty days before making an impulse purchase. The thinking behind this? After a month, you’ll probably be less likely to still want the item, saving you a lot of money throughout the month. And if you do, you’ll know it’s a purchase you’re buying because you actually want it and not just because you feel the urge to spend.

7. Bundle your insurance

If you haven’t checked in on your insurance rates lately, you may be overpaying. While switching providers could help you save money, another way to lower your insurance costs is by bundling plans. If you pay for car insurance and renter’s insurance, for example, combine your plans with the same provider to save a little extra.

8. Don’t skip debt payments

You may be tempted to pay the minimum payments on debt accounts like credit cards to save money faster. But the interest rates for credit cards are much higher than the interest you’ll earn with high yielding savings accounts. And then you may have to empty out your savings to afford your debt payments. It’s a vicious cycle.

Instead, make sure you prioritize your debt repayment and savings goals. It may slow your savings, but accruing less in interest charges will pay off down the road.

9. Take advantage of cash-back offers

If your bank account or credit card offers cash-back on purchases you’re already making, you can earn money back on your spending and move this over to your savings. This hack won’t make you rich overnight but adds up over time.

Just make sure you’re not accruing debt to earn cash back since you won’t earn enough to negate interest charges.

10. Make online shopping harder

Tired of spending money online faster than you make it? Make it harder for you to make transactions online by not saving your credit cards with merchants, social media sites, or your web browser. Not only can this protect your security, but it will also make it harder to overspend.

Why? You’re more likely to second-guess a purchase if you have to spend time typing in your credit card numbers.

11. Grow your credit score

This might not seem like an obvious tip, but boosting your credit score will help you save money big time over the course of your life. A higher credit score means you’ll qualify for better rates on credit cards, loans, and even a mortgage. It’s also possible to lower your car insurance rates if you have a high credit score.

Look for a credit partner that can help you. KOHO is a credit-building tool that helps you safely boost your credit and provides free credit score access.

12. Set savings goals

If you’re wondering how to save even more money, it starts with getting organized. Wanting to save more is an abstract thought, whereas setting a $5,000 goal is more tangible. When your goals are concrete and trackable, it can become easier to work towards them.

List out any of your savings goals, like planning for a dream vacation, home down payment, car payment, or new furniture, and then prioritize them so you can distribute extra savings in your chequing account accordingly.

13. Check in on your cell phone bill

You might be paying more than you think for your cell phone plan. It’s a good idea to check in on your bill, make sure you understand what services you’re being charged for, and then explore plans with other carriers. If you find you’re spending too much money, reach out to your cell phone provider to see if they’ll negotiate with you. If they won’t, it may be time to jump ship.

14. Use virtual cards for trial subscriptions

Have you ever tried out a subscription and then forgot to cancel? Using a virtual card to pay for these services can help. When you pay for a recurring service with a virtual card, you can cancel the virtual card number at any time. When that happens, you’ll stop being charged for the service and can save yourself the trouble of cancelling it. You’ll also, of course, save money from the monthly charges.

15. Plan out big purchases

Is there something big you need for your house like a new TV or a couch? Maybe you know you’ll need a new car in the future. Rather than dipping into your savings or relying on debt, plan out your purchases in advance, so you can set a new savings goal to reach them.

This can help you continue to save money while also getting a big-ticket item you’ve been wanting for a while.

16. Cut back on eating out

It’s expensive to eat out at restaurants often. And while takeout can be a little bit cheaper, delivery services can gouge you in fees. It’s almost always less expensive to eat at home, even if your grocery bill increases.

You don’t have to never go out to eat either. Just take a look at your current habits and adjust them. If you currently eat out five times a week, try scaling back to twice weekly. Small changes like this can have a big impact on your bottom line.

17. Meal prep

If you feel like you have wasted food at the end of the week and you suspect you’re spending more than you need to on groceries, try meal prepping to lower your food costs. When you meal prep, you plan out the food you’ll eat in advance, which has a few benefits.

First, it’s easier to stick to a grocery list when you know exactly what you need. The added bonus is it’s generally healthier and can prevent you from reaching for your phone’s food delivery app if you can’t decide what to make for dinner.

18. Shop second hand

Another easy way to save money on purchases you plan on making is to shop second-hand. Need a new bookshelf? Look on Facebook Marketplace or Kajiji instead of buying a new one that’s likely to cost more. In some cases, you might even find items for free.

Not only will you save money, but you’ll also be making a sustainable choice by giving an old item a new home.

19. Organize a swap with friends

If you always want new clothes but can’t afford to keep up with the habit, save money by organizing a clothing swap with friends. Have your friends bring a few clothing items they no longer want and swap the items so that your closet continues to look fresh. You can also do this for kids’ clothing.

You don’t have to limit swaps to clothing only, though. Consider doing this with books, small appliances, home decor, bedding, furniture, and other items around your home you may be looking to upgrade or change.

20. Share your savings goals

Loud budgeting is a trend that made waves on social media because it focuses on people loudly stating their money goals. If you want to make saving more money a priority, it’s important to let your family and friends know so they can support you.

When you share your savings goals, it can also become easier to say “no” to expensive meals or trips with friends and family because you won’t feel like you’re letting them down. Plus, your friends and family can then help cheer you on by planning low-cost or free events, like picnics, get-togethers at someone’s home, or hikes.