Reducing spending is the key to saving

Step 1: Look for easy ways to cut costs

Try to find money wasters that have little or no payoff.

For example, track down — and cancel — unnecessary monthly charges, such as unused gym memberships, cell phone insurance, unused long distance plans and extra TV or movie channels you rarely watch or could do without. Make sure you’re not over-purchasing on Internet bandwidth and cell phone minutes you’re not using. Consider cancelling subscriptions you don’t have time to read and scan the free online versions instead.

Easy changes to your everyday expenses — even small ones that you won’t notice — will add up fast and kick-start your cost-reduction plan.

Step 2: Put your priorities into action

After you’ve made some easy changes for a few months, review your spending patterns within the context of your goals. Use the goals and priorities to guide you towards making choices to further reduce household costs.

Here are some examples of tradeoffs you might consider:

• Could you reduce the number of times you eat out each month, or cut your restaurant bills when you do dine out, in order to after retiring sooner?
• Would switching from an expensive gym membership to a community centre or working out at home help you pull together a condo down payment sooner?
• Can you choose generic products instead of name brands, or regularly shop at discount supermarkets instead of pricier boutique markets, if it means saving more for a vacation?

Step 3: Sock it away

Your efforts will make a difference only if you put aside the money you’ve saved into a vehicle such as a savings account, Tax-Free Savings Account or registered Retirement Savings Plan so it can grow. Figure out how much money you’ve freed up, and transfer it regularly into a savings vehicle, or set up a Pre-authorized Transfer Service so it happens automatically.