How I Saved $20,000 in One Year While Living in Toronto
It became apparent to me that I had a gift with saving money after traveling to South America and Southeast Asia for 6 months without having to go into any kind of debt. I’ve always been good with putting money into a savings account, but I never realized how diligent and strict I could be. In the year leading up to my travels, I had a goal and a plan in place. And I stuck with that plan which allowed me to save $20,000 in one year while living in Toronto.
After talking to friends and family about my ability to save this amount of money, I realized that there was a lack of education surrounding the world of money and how to properly budget/save for short and/or long term goals. So in January 2017, I created a blog called The Budget Babes where I teach 18-40 year olds the basics of personal finance, and how to manage your own personal finances through budgeting. Think of me as a personal trainer for your bank account.
So — want to know how I saved all of that money?
I’ll break it down for you.
Step 1: Get a Job. In 2015, I spent the first quarter of the year working as a server, and the remainder of the year working in freelance – mostly in the live event industry. I hustled hard, worked long hours, and made decent money. I took home $50,000 after taxes.
Step 2: Budget. This is the most important thing that you’ll need in order to start saving. Take your income, and then organize your fixed, variable, and irregular expenses. Are you spending more than you’re making? I used an app called Visual Budget to track where every dollar was coming from and going to. I advise everyone to track their spending for at least one month to get a sense of where your money is going.
Step 3: Look at the Alternatives. When you have an idea of your financial goals, it’s important to start thinking about alternate ways to achieve a similar lifestyle. Do you go out for lunch every day? Daily Starbucks drinker?
Let’s do some math: $4 Coffee x 5 Days/Week x 52 Weeks/Year = $1040/year. That’s a full month’s rent for some people — and you’re spending this on coffee!
How about this?
Find a French press, make whatever coffee you want during the week, and treat yourself to that Starbucks once a week. The money you’ll save on those daily $4 coffees can go right into your savings account.
Step 4: Open a no-fee high-interest saving account.
Once your daily spending is under control, start putting that extra money into a no-fee high-interest savings account. I’ve been banking with PC Financial for 13 years because they have a no-fee chequing account and a high-interest savings account. Most of my friends are paying anywhere between $10-$15/month ($120-$180/year) for their bank accounts. Watch your savings grow faster by making the switch.
Step 5: Find a credit card with no annual fee that has a cash/points incentive.
I swear that I am not affiliated with PC Financial but I do love banking with them. I use their World Elite PC MasterCard, which gives me reward incentives towards PC products. We all love free groceries, don’t we? And when saving, every little bit helps! Keep in mind that I won’t buy something if I don’t have the money sitting in my bank account. I purchase everything on my credit card for the points, but I also pay off my balance in full every month. Some of the highest interest loan rates in Canada live in credit card land, so try to stay far away from credit card debt it if you can.
Step 6: Learn the basics of investing and pay yourself first.
Since the age of 18, I’ve made it a personal goal to max out my TFSA and RRSP every year. What can I say? I’m an investing nerd! Seeing my money grow tax-free has made me recognize the importance of investing. I want my money to work for me, as opposed to me working for it. I now have very little cash sitting in my day-to-day bank account, and invest most of my income in dividend paying blue chip stocks and index funds because it provides me with a bigger return.
The most important thing that I’ve learned from experience is to have a plan and create a budget (which is why I created The Budget Babes). This will ensure that you’re staying on track and aren’t spending more than you’re making. It’s all about making saving a priority, and having fun after you’ve stored some money aside. You can do it! But it does take a plan, some guidance, and the right mentality.
Do you have any questions about budgeting? Ask them in the comment section!
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