Saving money is challenging, particularly in times when the cost of living is on the rise. For many, saving money for emergencies or long-term goals feels like an uphill battle. As the cost of essentials continues to climb, more individuals and families find themselves living from paycheck to paycheck - a situation that’s increasingly common across Canada.
A recent poll suggests nearly half of Canadians are managing finances from one paycheck to the next. This makes it difficult to cover expenses, especially when financial emergencies arise, such as car repairs or medical bills. These unexpected costs create significant stress, especially without any savings to fall back on.
Fortunately, there are ways to combat the barriers to saving money, no matter what your budget looks like. WIth careful planning, it’s possible to start saving money. Prioritizing your spending, tracking your expenses, and setting realistic savings goals are all steps in the right direction.
But, if you need an immediate financial cushion, a payday loan is a quick and accessible solution. With a straightforward application process and transparent terms, iCash helps you manage unforeseen expenses efficiently. Apply for instant funding today and take a step towards financial stability.
What are the 7 Barriers to Saving Money?
Before knowing how to save money, you should first identify the 7 barriers to saving money. Knowing what is preventing you from saving money can help you find solutions to overcome these obstacles.
The 7 barriers to saving money include the following:
1. High Cost of Living
It’s no secret that one of the 7 barriers to saving money is the high cost of living in Canada. This issue is particularly noticeable in major cities like Toronto and Vancouver. Expenses related to housing, utilities, transportation, and even the rising costs of groceries often consume a significant portion of your income, leaving little room for savings.
This challenge is compounded by stagnant wages that have not kept pace with the rising prices. As expenses continue to climb, you may find that your income is not increasing at a similar rate, making it more difficult to save.
2. No Defined Budget
No defined budget or not sticking to a budget is another significant barrier to saving money. Without a budget, it’s difficult to track your expenses and identify areas of overspending. Budgets also give you a better idea of how much money you have left to save after paying your necessary expenses.
For example, imagine you have a monthly income of $3,000 and spend $2,000 on rent, groceries, and bills. If you don’t have a budget, you may think that you have $1,000 left to save. However, if you start tracking your expenses, you might realize that you are spending an additional $500 on non-essential items such as eating out. This means you only have $500 left to save each month.
3. Impulse Buying
One of the most common 7 barriers to saving money is impulse buying. This can quickly drain your savings without you even realizing it. The temptation to buy something new or flashy is hard to resist, but impulse purchases often end up being unnecessary and wasteful in the long run.
An example of an impulse purchase could be buying a new phone when your old one is still working perfectly fine, or purchasing an expensive designer item just because it’s on sale. These purchases may bring temporary satisfaction, but they can also lead to buyer’s remorse and financial strain.
4. Student Loan Debts
One of the biggest financial struggles for Canadians is student loan debts. According to a report, the average student loan debt in Canada is $28,000, with factors like gender, age, location, and program of study impacting the amount of debt a borrower takes on.
This significant financial burden can delay many from saving money, as monthly payments towards student loans can take up a large portion of their income. It's also a source of financial stress that can impact many other areas of life. The struggle to manage student loan payments can lead to postponing major life decisions, such as buying a home, starting a family, or saving for retirement.
5. Overuse of Credit Cards
Overuse of credit cards is one of the 7 barriers to saving money. Doing this can quickly lead to extra debt and financial troubles. While credit cards can be a convenient way to make purchases, use them responsibly.
With credit cards, you’ll incur higher interest rates if you don’t pay your balance in full each month. This can add up and make it difficult to get out of debt or save money, especially if you’re living paycheck to paycheck.
6. Lack of Motivation to Save Money
Lack of motivation to save money can be a major barrier to financial stability and achieving your long-term goals. It’s easy to get caught up in the present and prioritize immediate gratification over saving for the future.
However, not having a savings plan in place can leave you financially vulnerable. How will you take care of emergency expenses while also prioritizing saving money for your future? If you’re not motivated, finding ways to kick-start your savings might seem tough.
7. Limited Financial Awareness
Having limited financial awareness can hinder your ability to achieve your savings goals. Without understanding basic financial principles and concepts, it’s challenging to make informed financial decisions.
An example of this is not knowing how fees related to banking services or credit cards work. This can result in paying unnecessary charges and interest. It’s essential to educate yourself on financial matters, including budgeting, saving money, investing, and understanding how banking fees and interest rates work.
How to Save Money: 8 Easy Money Saving Tips
Now that you're aware of the barriers on how to save money, here are 8 easy money saving tips to overcome them. These strategies aim to enhance your financial well-being by encouraging smart budgeting, mindful spending, and proactive income growth. With focus and discipline, you'll be better equipped to tackle financial hurdles and work towards a more secure financial future.
1. Downsize Your Living Space
If you want to know how to save money, you can downsize your living space. This may not be feasible for everyone. But if it’s an option, it can significantly reduce your expenses and make it easier to save money.
Downsizing can also lead to a simpler lifestyle, freeing up time and resources for what truly matters to you. This move can help declutter your life, reducing stress and increasing your overall happiness. Plus, the money saved from lower living expenses can be redirected towards paying off debt or growing your savings, further enhancing your financial security.
2. Multiple Sources of Income
Work towards finding multiple sources of income. This could involve pursuing career advancement opportunities, acquiring new skills that are in demand, or even taking on a part-time job or side hustle. By enhancing your earning potential, you can create a buffer against rising expenses, making it more feasible to allocate funds towards saving money.
3. Create a Budget and Stick to it
Need to know how to save money fast? Create a budget and stick to it. Start by tracking your expenses for a month to get an idea of where your money is going. Then, set a realistic budget that allows you to save while still covering your essential expenses.
There are also many budgeting apps available that can help you track your spending. Or, you can find money saving tips and other easy budgeting tips online, or through financial advisors. The key is to find a method that works best for you.
4. Reevaluate Your Purchases
Always reevaluate your purchases. Ask yourself if you really need it and if it aligns with your budget and financial goals. If it’s not a necessary expense, consider waiting for a few days before making a purchase to see if you still want it. This will give you the time to think about how to save money the right way by avoiding unnecessary purchases.
Additionally, try to limit your exposure to advertisements and sales that may tempt you into impulse buying. Unsubscribe from marketing emails and text messages, and avoid browsing shopping websites or apps when you’re feeling bored or stressed.
5. Prioritize Debt Repayment
Prioritizing debt repayment is essential for financial freedom and the ability to save money. Start by listing all your debts, focusing on paying off those with the highest interest rates first, as they cost you the most over time.
For example, if your student loan debt carries the highest interest rate among your debts, it's wise to focus on paying it off first. This, known as the debt avalanche strategy, is one of the best money saving tips. It emphasizes paying more towards the debt with the highest interest rate while maintaining minimum payments on others.
By doing so, you'll reduce the amount of interest you pay over time, freeing up more money to pay down principal balances faster. From there, you can begin working towards your savings goals.
6. Limit Your Credit Card Usage
Limit your credit card usage and only charge what you know you can afford to pay off at the end of each month. Consider using cash or a debit card for purchases instead to help limit your spending.
If you already have credit card debt, prioritize paying it off by making larger payments and avoiding new charges. It may also be helpful to seek advice from a financial advisor or credit counseling service for additional support on how to save money by limiting credit card usage.
7. Start With Small Savings Goals
Start with small savings goals and celebrate the small wins. Sometimes, just seeing any progress can boost your motivation. Small savings goals are easier to reach and will add up over time. This will lead you closer to your bigger financial goals.
Additionally, celebrating these achievements, no matter how minor they may seem, reinforces the positive behavior of saving money. This approach not only makes the process of saving money more enjoyable but also helps to establish a strong saving habit that can support your financial well-being in the long run.
8. Use Financial Resources to Save Money
Take advantage of financial resources that teach you how to save money. You can find a variety of personal finance tools online, including articles, podcasts, webinars, and money management apps. You could also consider enrolling in a financial literacy course to gain a better understanding of financial concepts and how to apply them in your daily life.
Questions & Answers with Practical Tips for People who Have Trouble Saving Money
How much money should I have saved by 25?
By age 25, a good guideline is to have saved roughly $20,000. This goal varies depending on your income, debts, and lifestyle. Early savings contribute significantly to compound interest benefits over time.
Achieving this savings goal lays a solid foundation for future financial milestones, such as purchasing a home, investing, or preparing for retirement. It also shows disciplined habits so you won’t have trouble saving money early on.
How to start a money saving challenge?
To start a money saving challenge, choose a realistic goal and timeframe. You could save a certain amount daily, weekly, or monthly. Tools like money saving apps or charts can track your progress and keep you motivated.
A great example of starting a money saving challenge is the "52-Week Money Challenge." In this challenge, you save $1 in the first week, $2 in the second week, and so on, until you save $52 in the last week of the year. By the end of the year, you will have saved a total of $1,378.
This method is effective because it gradually increases the saving amount, making it less intimidating and more manageable, especially for those having trouble saving money. Plus, it can be easily tracked with a simple chart or through various apps designed to monitor savings goals.
Why is money and savings important?
Money and savings are crucial for financial security and freedom. Savings provide a safety net for emergencies, allow for future investments, and help achieve personal goals. Effective money management leads to a less stressful and more fulfilling life.
Additional reasons why money and savings are important include:
Savings reduces reliance on debt.
Essential for a comfortable retirement.
Supports major life events.
Reduces stress from unexpected costs.
How can a payday loan help me if I’m having trouble saving money?
A payday loan can help you if you’re having trouble saving money. It provides you with immediate financial relief for unexpected expenses or day-to-day costs. It can also help you avoid late payments or fees associated with missed bill payments.
Having a solid savings account is key to managing any expenses that come your way. However, sometimes you might find yourself in a situation where your savings are not enough to cover an immediate financial need. In such cases, a payday loan can be a useful short-term funding solution to bridge the gap until your next paycheck.
Consider iCash Payday Loans if You’re Having Trouble Saving Money
The above money saving tips provide a starting point for anyone looking to improve their financial situation. However, if you’re still having trouble saving money, consider alternative options - especially when faced with an urgent expense.
One option is a payday loan from iCash, a short-term loan service that helps cover urgent expenses without waiting for your next paycheck. You can get up to $1,500 via e-Transfer within minutes of applying. No matter what your financial situation looks like, there’s a reliable loan option available.
Don’t let a lack of savings get in the way of meeting your immediate financial needs. Get fast payday loans when you apply with iCash online or via the mobile lending app. Cash in your pocket is just a few clicks away.
