Saving money isn’t always easy, but even if you think that you can’t save a penny, you probably can. All you have to do is limit your spending, record your earnings and employ some simple tactics to keep your money working for you and growing as much as possible.
In this article, I’m sharing 7 of my favourite money-saving tips for travel. Not all of them are hacks and secrets, but if you use as many of them as you can, you’re sure to save more money than you thought possible. Here it goes!
Note: This article is based on wages equal to or less than the averages in many western countries. I am aware that salaries differ greatly in different countries and in no way assume that everyone is able to save this amount of money in one year.
1. Write Down Your Budget
The first thing everyone should do when they’re trying to save money is write down your inflow and outflow of cash in a given month. Write how much you earn at the top, and then subtract your bills, insurance, rent, mortgage, gas etc.
Note: This may sound like a basic idea, and it is, but it’s extremely useful when trying to save money and if you combine it with the next 6 tips in this article, it will help you to save over $15,000 in just one year.
After calculating your expenses, give yourself about $100 / month for entertainment and $100 / month for miscellaneous spending. The latter is an important one because there are always things popping up that you didn’t plan for. A safety stash will ensure that you can pay for these mishaps without dipping into your savings.
If you write down your wage and subtract all of your expenses and you start to go into the negative, or there’s nothing left to save, you really need to start to adjust your spending habits to better suit your salary, or better yet, try to find a second job.
If you have the best cable package, get rid of a few channels to reduce the monthly cost. Stop leaving the air conditioning running all day to relieve some of your electricity bill, and make sure to turn off your lights when not in use. Car pool when you can, and party less, etc.
If you’re living way beyond your means, it will be very difficult for you to save money.
2. Automatic Transfer
After you’ve written down your budget, call your bank, or go to the bank, or (if you’re banking online), go online and set-up an automatic withdrawal. This will magically transfer your money from your regular account into a special, travel savings account.
If after subtracting all of your expenses, entertainment and miscellaneous spending, you still have $790 / month left over, have $395 (bi-weekly) automatically withdrawn from your checking account and transferred into a savings account. Have the withdrawal set to come out one day after your pay cheque is typically deposited in your account.
Note: By automatically saving money the day after payday, you’ll never really feel as though the money is there and you’ll have an easier time saving it. I don’t recommend transferring it on the day of your payday because if your pay cheque is delayed and you go into overdraft by accident, you’ll have to pay overdraft fees.
3. Use A Money App
We use the Trail Wallet App to budget our life while travelling, but it could easily be used while saving money at home as well. With this app, you can manually enter in every cent you spend throughout the month and add them into different categories.
At the end of a couple of months, have a look at your pie chart in the app and decide if there’s anywhere that you could spend less money. For us, it was wine! For you, it could be grocery bills or dinners out.
The app is perfect for anyone who is trying to watch their pennies and keep track of their spending.
4. Put Your Spending On Credit Cards
In previous articles, I’ve always said that you should take out cash and then spend it out of your wallet so that you can better keep track of your purchases. This is a very good method for people who don’t have any discipline, but if you do this, you’ll be missing out on a ton of credit card rewards points (click here for good cards to use in Canada).
If you spend an average of $2,000 / month on your credit card, then by the end of the year, you’ll have spent $24,000. For Canadians, if you put all of these purchases on your TD First Class Infinite Card and then redeem your points through Expedia for TD, you’ll earn $1,080 in free travel (4.5%) after just one year!
Add that to the automatic savings of $300 / year (from tip 2 in this article) and you’re at $4,680 after a year. That’s enough to buy a nice used car or better yet, head out on a 2 week trip with your spouse.
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5. Save Your Pennies
Literally put your change into a big jar every time you come home. Don’t worry, even if you put as much as you can on your credit cards, you’ll still have to use cash from time to time, and in these circumstances, you’ll have change.
Save that change every single time! Put it in a big jar and take it out at the end of the year. If you don’t believe that this can work, I have met a man who is proof. My good friend from England saved his change while working in the UK and after 12 months he had enough coin to pay for a 3 month trip through Central Asia. Save your pennies! It works.
6. Lock In Your Savings
Not everyone is looking to save their money for a big trip at the end of the year. Some people want to save a lot of money for a rainy day, or they only travel once every few years. If you’re building a nest egg and you know that you won’t need the money for a long time, consider locking it into a high-interest GIC or investment savings fund.
Currently you can get around 2.5% on a 5 year GIC in Canada. If you invest $5,000 into this type of GIC and lock it in for 5 years, you’ll earn around $650 extra when you redeem it after the 5 year term has expired.
Note: The above numbers were calculated using an online investment calculator. If you deposit all of your savings into a 2.5% GIC each year ($4,680 / year according to this article), the interest will compound and be exponentially greater.
7. Don’t Go Out!
Probably the best money-saving tactic and the one that people hate the most. Not going out doesn’t mean that you can’t have fun with your friends. It just means that you have parties at your house, or out camping, or anywhere other than the bars & restaurants around town.
Think about it. A beer at a restaurant or bar is around $6.50. On top of this, most North Americans tip around 20%. According to Quara.com, beers at bars, clubs and restaurants in North America often cost the customer around $8 each!
How much do you drink on an average night out? 6, 7, 8 beers? Let’s say you have a calm night and only drink 4 beers at $8 each. That’s $32 in beer. Do this on Saturday and Sunday and you’ve spent $64 over the weekend. Drink those same beers at home and they’ll only cost you around $15. That’s a savings of $49.
Do this all year and by the end of the year you’ve saved $2,548! That’s just on beer! Do the same with cocktails and wine, where the mark-up is even higher in bars and restaurants, and you can save a ton of money. We’re talking thousands.
On top of that, you’ll save around $30 / weekend on taxis.
We haven’t even got into food yet. A typical half rack of ribs in a restaurant costs around $40 in Canada ($48 including tip). This dinner for two would cost $96 in a restaurant.
You can buy a full rack at the grocery store for $10 on sale, some potatoes for $1 and some veggies for $3. Add this all together and you could easily feed two people for $14. That’s a savings of $82!
Do you eat out twice / week? If you cook at home instead of eating out, you’d potentially save around $8,528 / year. Only eat out once / week? $4,264 in savings. Just once a month? $964.
Bottom line… if you want to save money, don’t go out so much. Just look at all of the money that you’ve saved in a year!
Perhaps you don’t make as much, save as much, spend as much on credit cards, drink as much or eat out as much as the examples in this article. But if you do, the total savings that we covered here is well over $15,000 / year. That’s a lot of money!
Even if you can’t scrape that much from your current earnings and budget, you can be certain that by using these 7 tactics, you can save a lot of money in just one year.
Give it a try!