Ways to maintain healthy spending habits

Many Canadians are saving more and spending less, at least in the short term, as a result of the economic crisis. According to a recent Gallup poll, 53 percent are spending less than they used to. By turning this healthy new behaviour into a long-term habit, you can make saving a way of life even after the economy recovers. This article provides tips that can help.

Recognize the control you have over saving and spending

Both you and your family will be motivated to continue saving when you see that you really do have control over your expenses. Recognizing the extent of your financial control will allow you to make decisions that can help improve your financial situation both now and in the future. For example, you might decide to reduce credit card spending in your family. This is something over which you all have control. When you see that you're making progress toward paying down your debt, acknowledge and celebrate your successes together. Agree on something fun you can look forward to once the debts are paid off, such as saving for a family vacation.

Make saving a habit

Adopting a money-saving lifestyle means developing money-saving habits, not just temporary behaviour choices. There are some steps you can take to make it easier to make smart spending decisions now and into the future:

  • Set limits

Saving money isn't about giving up all the things you enjoy. It's about enjoying them in moderation. For example, if you spend a lot of money on books, movies, or CDs, you might limit yourself to buying just one a month and then borrow the rest from friends or from the library.

  • Develop a budget management system that works for you

For expenses that easily get out of hand, such as dining out, groceries, and entertainment, consider using cash envelopes to literally set aside the money you've budgeted for those expenses each week or month.

  • Establish some money-saving rules

For example, turn off the lights when leaving a room; make shopping lists and stick to them; and instead of discarding unwanted items, sell or donate them for a little extra cash or a tax write-off. Also, set aside a certain percentage of your income for paying off debts and reaching your financial goals.

  • Look for better deals on the things you buy or use every day

For example, try generic (or store-brand) products, food, and drugs instead of brand names. And review competing offers from other vendors when service contracts come up for renewal, especially on things like your cell phone or cable service. (Just remember: Whenever you're evaluating a deal for ongoing services, beware of limited-time promotional prices. Make sure the long-term charges will be less than what you are currently paying.)

  • Make your credit cards less accessible

Cut them up, store them in your safe-deposit box, or ask a trusted family member to hold them for you.

  • Organize coupons for easy use

Clipped coupons don't save you money unless you actually use them. Make it easy to remember and use them by keeping restaurant coupons with takeout menus and by storing grocery store coupons near your grocery list or weekly menu plans.

  • Learn how to maintain and repair your home, car, and clothing

Fixing things yourself costs less than replacing them or paying someone else to do the work. Ask a friend or neighbour to help if you aren't sure how to fix something, and then pay attention so that you can learn to make similar repairs in the future.

  • Think "free"

Some of the best things in life really are free. Volunteer for a cause that you're passionate about. Visit the library, explore a park, go camping in your backyard, or take a walk on the beach. You can spend quality time with your friends and family in these ways, too, without paying lots of money to go out to eat or to the movies or shopping.

Make one-time changes for ongoing savings

Many one-time changes can save you money month after month:

  • Get rid of services you don't need

Are you renting any modems or cable boxes you use only rarely? Do you pay for a land line when you use only your cell? Review your service contracts and stop paying for anything you don't use.

  • Bundle your services

Many companies offer bundled Internet, phone, and cable or satellite services for cheaper than you would pay for them individually. Again, beware of limited-time promotional prices – make sure the long-term charges will continue to save you money.

  • Make your home more efficient

Have an energy audit done on your home. The Federal government's ecoENERGY Retrofit program provides home and property owners with grants up to $5,000 per unit to offset the cost of making energy efficiency improvements. For more information, go to http://www.ecoaction.gc.ca/ECOENERGY-ECOENERGIE/index-eng.cfm. Ontario and B.C. also offer provincial grants.

  • Set up online bill payments

You'll save on postage and avoid late fees. Monitor your bank statement and bills for errors on automatic payments and remember to record the payments in your check register and budget.

  • Take advantage of employer-sponsored saving opportunities

Many organizations allow you to contribute to RRSPs or purchase Canada Savings Bonds through payroll deductions.

  • Open a tax-free savings account

This allows any resident of Canada over the age of 18 to put up to $5,000 a year into a tax-free savings account. Contributions and monies earned through investments of those contributions can be withdrawn at any time completely tax free and with no withholding tax.

Re-evaluate your spending choices regularly

While you may want to stick with a spending plan that currently allows you to save, remember to review your plan regularly and make adjustments to reflect your family's changing needs. Here are some tips to help:

  • Prioritize what's important

Talk with your family about what's important and make sure your spending and saving habits reflect the things you value most. Your family may be willing to take a shorter vacation to maintain its tradition of going to a professional sporting event together. They may be willing to skip the appetizers and share entrees to allow the family to dine out more often.

  • Continue to differentiate between your needs and wants

Something you needed before may be a luxury you can cut back on now. For example, a lawn mowing service may have once felt like a necessity, but not now that money is tight.

  • Re-evaluate your options

For example, is your childcare provider still the most cost-effective solution for your family's needs? Or is there a cheaper option such as paying for partial-week child care and accepting your relative's offer to care for your child two days a week?

Enjoy the benefits of saving more and spending less

The benefits of saving more and spending less are many:

  • Having control over your finances

For many, it's a relief to rein in the spending and return to basics. It feels good to have control over such an important part of your life.

  • Appreciating occasional luxuries and treats

Luxuries and treats often lose their appeal, as they become everyday items. Cutting back allows us to experience them as the special treats they were designed to be. A luxury doesn't have to be expensive – it can be as simple as a matinee movie or an ice cream cone.

  • Spending time with family

Studies show that Canadians value family more than anything else does, and spending time together as a family can be inexpensive – and priceless.

  • Being prepared financially for an emergency

High unemployment rates have resulted in many people understanding the importance of building an emergency savings. Learn from the experience and protect your financial well-being by building up your emergency fund to equal three to six months of living expenses. Having cash reserves, can provide you with peace of mind and help reduce financial stress.

  • Appreciating what you have

Since the economic downturn, many people are more grateful than ever for what they have – and are less concerned with what they don't have.


Keeping up your saving habits even after the financial picture improves will allow you to make the most of your money in the years to come. You'll look back and be grateful you adopted saving as a way of life.


Written with the help of Melanie Hardie, M.A., A.F.C., L.A.D.C. Ms. Hardie is a financial consultant at Ceridian.

© 2009 Ceridian Corporation. All rights reserved.