Looking for that one best tip on saving

Saving is a lot like dieting. Or, perhaps like quitting smoking or drinking. It’s something we all know is good for us but is harder to do than giving up the bad thing we love.

With that in mind, Save with SPP took a quick tour of the Interweb to try and suss out what people say is the one best tip on saving. Ideally we will put together a short list of good ideas. Let’s explore.

Let’s start with the Credit Canada blog, which lists a number of savings tips. Among them is the idea of making your savings automatic.

“Different banks may have different tools to help you automate your savings. For example, virtually every bank or credit union will give you the option of automatically transferring some money from your chequing account into a savings account at regular intervals (or to another investment account). Other banking institutions might offer a “rounding” service, where they round up your transactions to the next dollar and put the difference into a savings account,” the article notes.

Members of the Saskatchewan Pension Plan can “automate” their savings in the plan by making pre-authorized contributions from either a bank account or even a credit card (PAC-PCC-application.pdf).

Another tip from Credit Canada is the idea that you should get rid of debt. “Setting aside some extra money each month to put towards paying down debt can be a challenge, but being able to do so can pay off big time. Remember that example from earlier about compound interest? Compound interest is wonderful when you’re saving money and investing in yourself, but it’s not so great when it’s related to unpaid credit cards,” the blog explains.

Not paying off the full balance, the blog notes, is sort of like saving in reverse, as you are charged compounding interest on any unpaid balance. “Paying off debt before it can accrue interest can save you a lot of money,” the blog notes, adding that you  should consider paying off debt before you focus on savings.

The Moneybliss blog provides us with some “insanely easy hacks to save money every day.”

An idea we’ve begun to see more often is to save every $5 bill you touch, the blog begins.

“Every time you get a $5 bill, put it aside in a jar or envelope and let it add up over time. This simple habit can turn small amounts into a bigger fund,” the blog explains.

A second thought from Moneybliss is to “switch to a 100 per cent cash diet to force mindful spending.” This is a somewhat old school approach, but the blog notes that “paying with cash makes you think twice before buying something because you see the money leaving your hands.”

Last word to the folks at National Bank who have put together a list of 40 money-saving tips.

One we took advantage of was moving to accelerated mortgage payments. By increasing your monthly mortgage payment, you can save thousands of dollars in interest, the bank tells us. (For us, we were able to knock a few years off our mortgage by such tactics chipping in a lump sum from a bonus, and voluntarily increasing the payments.)

A final thought is to take advantage of your employer’s pension plan. “These plans are usually worthwhile because your employer contributes to them too. A group registered retirement savings plan (RRSP) in which your employer makes additional contributions is another great option,” the article notes.

Uncle Joe told us to bank 10 per cent of any money we get and live off the rest. This is a simple and effective plan. If 10 per cent is too high, start with one or two per cent and then ramp up.

Ramping up is also a good approach for your retirement savings. SPP is an open, voluntary defined contribution pension plan that’s open to any Canadian with unlocked RRSP room. It’s ideal for those of us who don’t have a workplace pension, or are self-employed.

You can contribute any amount to SPP each year up to your RRSP limit. You can also transfer in any amount from other RRSPs you have. SPP invests those contributions in our professionally managed, low-cost, diversified pooled fund. Years from now when it’s time to retire, SPP members can choose such options as a monthly lifetime annuity payment or the more flexible Variable Benefit.

Check out SPP today!

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By Sheryl Smolkin

Over the last few weeks, the Globe & Mail has featured an interesting series on debt, and how it is affecting both individuals and the economy. If you haven’t been following it, take a look at some of the stories below:

A taste for risk: Looking into Canada’s household debt

In deep: The high risks of Canada’s growing addiction to debt

Are you drowning in debt? See how you compare to other Canadians

Laurie Campbell: Credit Canada CEO shatters debt myths

I particularly like Rob Carrick’s article There’s no such thing as good debt. Mortgages, investment loans and student loans have traditionally been characterized as “good” debt. Carrick agrees borrowing for each of these purposes can be a rational thing to do and you may end up wealthier as a result. But he concludes there are too many pitfalls today for any one of them to qualify as a no-brainer financial decision.

Big Cajun Man (Alan Whitton) on the Canadian Personal Finance lists several articles about the evils of debt among his personal favourites. In 2008, he wrote Debt is like Fat. He says that just like his weight gain occurred a little at a time over 14 years, if you are not careful, debt build up can occur slowly without your noticing it.

If you are facing a mountain of debt and don’t know where to start, take a look at How I Paid Off $30,000 of Debt in Two Years, The Blog Post I’ve Been Waiting to Write  and What a Year of Being Debt-Free Has Taught Me  by Cait Flanders, who blogs at Blonde on a Budget.

In 2013, Krystal Yee at Give me back my five bucks wrote  How do you fight debt fatigue?. Debt fatigue is a mental state that can happen when you’ve been in debt for so long that you think you’ll never dig yourself out of the hole you’ve created for yourself. She quotes financial expert Gail Vaz-Oxlade who often tells people on her television shows to try and make a plan to get out of debt in 36 months or less – because anything more than three years, and you’ll likely suffer from some form of debt fatigue.

And finally, in a guest post on the Canadian Finance blog, Jim Yih from Retire Happy wrote that Debt Can Be A Problem For The Baby Boomers’ Retirement Plans. He says baby boomers who are getting ready for retirement need to get serious about planning for the best years of their lives.  Part of getting serious is addressing debt head on and taking the necessary steps to develop good habits around debt. His five tips on how boomers can deal with the debt epidemic are: stop overspending; increase your income; get support; focus on you before your kids; and, take one step at a time.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.