“The best time to plant a tree was 20 years ago. The second best time is now.” — Proverb
Similar to saving and investing you can always start now today. It’s not easy, but it’s simple. I’m sharing with you real practical everyday tools and tactics on how to save up for what you want in life or a down payment for a home. Why am I sharing this with you? It’s my belief that many households do not talk about money as well as it’s my belief that financial literacy amongst us Canadians is very low. I’ve also grown up in a household that witnessed my parents constantly bicker and struggle about their finances. During my first year in real estate and through many other side table conversations, the most common question being asked is: “Brian, I really want to buy but don’t have enough for a down payment or what have you done in the past to save up for such a large purchase?” I want you to ultimately take control of your financial destiny and being able to enjoy life down the road. Remember it’s not how much you make it’s ultimately how you spend.
You must have heard this before: a rainy day fund, nest egg, savings – they all refer to the same thing – money or monies you set aside for something that will positively impact your life and your family’s. These practical tips didn’t just drop out of the sky, I’ve been practicing this throughout my life when money was tight or when I needed to save up or pay off a loan. Several times from when I was in younger and needed to save, I used these tactics. Whether it was saving to buy my first ride to saving up for a down payment, to paying off student loans or to fund that 3-month backpacking hiatus in Europe – you get the picture. Money can be stressful, I get it. Things you do in your twenties your thirties will thank you – financially.
Before moving onto my five effective tactics, I highly suggest you perform a self-audit on the last three to six months of spend. This could be scary but it will be eye-opening. You can start with your credit card statement. Categorize the types of expenditures and start to see how much after-tax cash you are spending on each bucket. Some examples are: eating out, discretionary spend – buying items, alcohol, gas, and travel. Once you are done this audit, you will be very surprised at where all the money is going. Any surprises? Start having conversations with yourself, your family or your partner and see where more thoughtful spending can be applied to each of the categories. Everything helps.
“A penny saved is a penny earned” – Benjamin Franklin (ironic he on the US $100 dollar bill – it’s all about the benjamins baby!!)
These five tactics will help you start saving for what you want:
- 1. Buy one less coffee or latte a day
- 2. Pack a lunch (eat out less)
- 3. Buy one less clothing item
- 4. Stop buying crap you don’t need (the catch-all)
- 5. Make purchases with cash and avoid the plastic
- 1. Buy one less coffee or latte a day
Five bucks in the morning and another five bucks in the afternoon. These start to add up really quick. When you multiply this by the number of work days – you get the point. I’m not here to make you feel bad, just understand how you spend your hard-earned dollars. Does your company provide free coffee? Can you go for your afternoon walk without visiting the nearest Starbucks?
- 2. Pack a lunch (eat out less, eat out one day a week)
How much does it cost on average to buy lunch these days? $10 bucks? Depending on which city you live and work in most of the times it can be more if you’re sitting down at the restaurant. Add on an appy split two or three ways and a glass of wine or beer – that $10 dollar lunch is starting to look cheap. Company culture, it’s a sales thang, socializing, or just have a love for eating (high five to the foodies out there!!) – I get it. Does it need to be every day? Can it be just Friday’s? That’s for you to decide. Do the math, understand the numbers and see where you can save a bit more. Not only does it make financial sense, think of all the health benefits.
- 3. Buy one less clothing item
Does your commute to and from work require you to pass by a lot of stores and brands you like? Are you one of those types that needs a new spring outfit or a new shirt every quarter because you work hard and deserve it? Who doesn’t like new shirts or new bright shiny kicks? Stressed out at work and need some retail therapy escapism? Just because you can doesn’t mean you have to. What is your monthly spend telling you in this category? Depending on how you budget monthly or quarterly spend, just ask yourself if you need this when you are getting this item rung up at the cash register or about to press click button to confirm your purchase. Ask yourself again if you need this. I’m not asking you to be a saint and not spend or even wear shirts with holes in them – just be more self-aware of what you are buying and where you are allocating your funds.
- 4. Stop buying crap you don’t need (the catch all)
We live in a marketing world. Every company, brand out there is trying to get your attention and your hard earned dollars. Head over to your closet or one of your storage areas. Look around. Have you recently bought something with its tags still intact? Any unboxed or unwrapped items collecting dust? It was on sale and you bought it, now it’s collecting dust on the top shelf. Been there done that – I’m just as guilty as you are. The thrill of getting a deal and taking action to make that purchase. Instant gratification and all those feel-good endorphins. How does it feel now seeing that item that is not so sought after? Before you step foot into a store, get an item rung up and pay for it, do not just think twice, ask yourself what is the purpose of this item and what problem in my life am I trying to solve with it?
- 5. Make purchases with cash and avoid the plastic
Congratulations you just received 25,000 points towards a flight to anywhere in Canada but there’s a catch. If you’re like most people including me, we love our points and incentives received by making purchases with our credit cards. Who doesn’t like free sh*t!!?? Now, is it really free? Or is there a cost behind that perception of free? Ask Visa or Mastercard, they will share this with you – wink wink. Why is this one the last tactic? This one is the most difficult to apply, but it really works. If all of your purchases are made with cash or debit card, you can really see your spending habits. Each and every time you log into that bank account or look at that receipt when you withdraw cash – it’s an easy yet simple reminder of what’s left in your account in real-time. I’ve used this technique a few times in my life and it works. Try it and start seeing your savings increase geometrically.
Now the above suggestions are very micro, but it really all starts with – what do you want (remember everyone is different)? What does your family want? And then you work backwards. These suggestions are super practical and done on a daily, weekly, monthly basis – you will see results and start building towards that down payment or increased savings. These behavioural shifts and applying more thought to each purchase decision if you choose to take this route will have a significant impact on your life over the long run. Time will fly and once you look back you will have ample savings and your down payment. And best of all, it wasn’t magic, it was self-discipline and it started with you.
Have other tips and strategies for people to achieve their financial wellness? I would love to hear them, comment below or send me a DM. Happy saving!
ABOUT THE AUTHOR:
Brian is a Real Estate Consultant and a Chartered Accountant (CPA, CA). He has over a decade of experience delivering on various audits and risk advisory engagements with both public and private organizations. Brian also was a Product Manager at a local software company and ran his own consulting business prior to converting his side hustle and real estate passion of 16 years into work. He has personally lived and breathed how a person buys and sells a home more than the average person does in a lifetime. Brian is born, raised, and schooled in Vancouver. Brian is a resident, owner, and investor. Brian is happily married to his wife Katharine and has a daughter.
Disclaimer: This communication is not intended to be and should not be used as investment advice. If you want advice please seek a licensed professional for investment advice. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official position of Oakwyn Realty Downtown Ltd.
