Skip the latte. Bring your lunch. We have all heard the examples of how to save money by cutting back on discretionary spending. They're all good ideas, but even with the best of intentions, some people have trouble controlling the impulse purchases.
If it's tough to muster up the self-control not to spend when you have money in your account, trick yourself into thinking you don't have the money to spend.
"If you have trouble saving because you're a chronic spender, make your savings automatic," says Raymond Chun, a senior vice president at TD Canada Trust. "When you transfer small amounts to your savings account regularly, you may not even notice a difference in the money you have to spend day-to-day, but will see a big difference as you watch your savings grow."
Chun offers his advice for how Canadians can "trick themselves" into saving:
• Save it before you see it — A pre-authorized transfer of a portion of your pay cheque into a tax free savings account (TFSA) or to another high interest savings account will help you put money aside before you see it or get a chance to spend it.
• Save every time you spend — Some banks offer programs that allow you to automatically transfer a small pre-set amount into you savings account with each debit purchase or ATM withdrawal. That means every time you buy your groceries or pay for gas, you could be saving without even trying.
• Know what you can spend — You should aim to save at least 10% of your pre-tax income. So once you have automated your savings and covered bills and other financial obligations, you can treat yourself with the knowledge that you are responsibly setting aside money for the future. Watch your account balance carefully, especially in the first few months of the automatic transfers, to make sure you don't spend more than is available
