When you’re a young Canadian with student loans, a car loan, and an entry level job, saving money is hard. You’ve got a lot of demands on your money, and it can feel like there isn’t enough to go around. Even if you’re excellent at prioritizing your rent and debt obligations, at the end of the day, there may not be much money left over, and the idea of putting it into savings is not that appealing. Instead, the temptation to treat yourself for a hard week’s work can be strong.
As you move into your thirties and climb your career ladder, money will flow more easily into your pocket. The fact that you’ll earn more as you age is true almost universally, but it’s also true that your financial obligations will increase. Perhaps you’ll upgrade your car (and the payment that comes with it), move into a place of your own or even buy a house. These obligations will put an increased strain on your finances, and again, there might not be enough money left over at the end of the week to put into savings.
The scenario I just described can continue through all life cycles, and it does. Across the country, Canadians only have a savings rate of 5.8%, and this is in part because throughout their lives, saving money was never prioritized, and they never created a lifelong habit of saving money.
But saving money isn’t that difficult. The process of transferring money from your chequing account into your savings account is not taxing or complicated. What’s difficult is prioritizing savings as a goal over other things like shopping and vacations. What’s difficult is carving out space in your budget for savings, even if that means you spend less on other things that are important to you.
Creating this habit of saving is the hardest part about saving money, which is why I always say that saving the first $1,000 is the hardest. Intentionally and deliberating delaying your gratification so that you can put money in a savings account or retirement fund might be one of the most counter-intuitive things a person can do with their money, which is why very few Canadians save enough in their lifetime.
Here are my tips for saving your first $1,000 painlessly, and in a way that will set you up for success in the long term.
Rome wasn’t built in a day, and neither is a savings habit. The one thing I think most Canadians struggle with on a day to day basis is the feeling that there isn’t enough money to meet their everyday needs. Whether this is true or not is another question entirely, but the sentiment, the feeling of not having enough, is surely there.
Because of this, it can be very difficult to set aside money for the future, when you feel like you need it right now. That’s why it’s important that you start slow, with just $20 or $50 per week into savings. By starting slow, you won’t enhance the feeling of not having enough money, because you aren’t cutting your budget by enough to trigger that sense of deprivation.
Set Small Goals
Saving money is gratifying, but in a different way than buying stuff. Saving money isn’t like buying clothes that make you feel attractive, it’s not like buying a car or a home where there is an actual physical object that you can use daily. Saving money is gratifying in the sense that it gives you a deep seated feeling of assurance. Having money in the bank gives you a quiet confidence that you can’t achieve through buying a new car or nicer clothes.
But explaining that feeling to a novice saver is incredibly difficult. It can be hard to compare the gratification you get from buying stuff to the quiet confidence you feel when you have money in the bank.
That’s why $1,000 as your first savings goal is a great place to start. By starting small you’ll be rewarded for reaching your goal quickly, and you’ll get a taste of how that quiet confidence feels. Hitting a savings goal and having that money sit in the bank where it’s got your back in case of emergency is a great feeling. By setting a small savings goal like $1,000, you’ll hit it quickly, and you’ll know the feeling I’m talking about sooner rather than later.
Grow Your Money, Grow Your Confidence
Once you get into the habit of saving a little, it’s time to ramp up your savings and set bigger goals. When you get a raise at work or find savings within your budget, instead of putting all of that extra money towards buying things, try putting it towards savings instead. Banking your raises will help you save money quicker, and as your bank account balance grows you’ll understand that feeling of gratification more and more.
Eventually, the habits you put in place by saving that $1,000 will grow and blossom, and you’ll be a saving powerhouse in no time.