Where Does Your Money Go?

Budgeting is perhaps the best way to save and spend more wisely. To monitor your spending habits better, keep a record of the money you spend during a one-month period. Then answer the questions below:

  1. Chat patterns can you see in your spending habits?>
  2. How do you decide what to purchase?
  3. What factors influence your purchasing decisions?
  4. Read and go through Consolidated Credit’s Budgeting Made Easy workbook.

How Canadians Spend Their Money

The next time you’re tempted to buy something, stop and think about the following:

  • Do I really need this item?
  • Is it worth all the time I spent making the money to pay for it?
  • Can I use my money in a better way right now?
  • Do I really need to buy the priciest item or will a lower-cost item serve me just as well?
  • Can I really afford this right now?
  • Will the item be on sale soon? Should I wait?
  • Do I really need a name brand item, or will a store brand serve my purposes and save me money?
  • What do consumer magazines say about the item I’m considering?
  • Do I know anyone who already owns this item? Do they think it was worthwhile to buy or do they regret their purchase?
  • Is there a warranty and/or service contract on the item?

Tips for Spending Smarter

  • Pay yourself first. Set up a separate account for savings, and immediately transfer a portion of your salary to the account each pay period. Consider this account to be off-limits, except in the case of an emergency.
  • Apply any extra income toward paying off debts.
  • Try to save on insurance. Review your policies to avoid duplicate coverage. Consider raising your deductibles; talk to your insurance agent about other ways to save.
  • Start saving $1 per day. Save your pocket change too. You’ll be surprised how quickly it adds up.
  • Don’t buy on impulse. Purchase only the items you originally planned to get. Limit the amount of cash you carry as well as the number of credit cards.
  • Wait for sales, and comparison shop. You can save 50% or more by doing so.
  • Make two shopping trips before you buy. On your first trip, compare prices. Then, after you have made a thoughtful decision as to an item’s price and value, go back to the store a second time and make your purchase.
  • Use coupons and rebates as much as possible.
  • Shop at consignment shops, and consider rebuilt and pre-owned items.
  • Save money by doing things yourself. Cut your own lawn, for example, or wash your own windows.
  • Conduct family meetings each week to discuss ways that you as a family can save money and get out of debt.

Ways to Save Money

Transportation/Airline Fares

You can reduce the price of a roundtrip ticket by as much as two-thirds if your trip includes a Saturday night stay-over and you purchase your ticket in advance. Always ask your travel or reservation agent if you’re getting the lowest fare. Watch for price wars, sales, and special offers (such as “Friends Fly Free”), and be prepared to act quickly.

Car Rentals

Car rental rates vary greatly; shop around for the best basic rates and special offers. Check with your insurance agent and credit card company to see what type of coverage you have. That way, you can avoid paying for duplicate insurance coverage.

New Cars

You can save thousands of dollars by choosing a model that has a low purchase price, low financing, and reasonable insurance rates. Purchasing a car that has good gas mileage and low maintenance and repair costs can save you a great deal of money in the future. You can find new car guides that offer great advice in your local library. Comparison shopping for an automobile can save you hundreds of dollars. Call at least five dealers for price quotes, and let each know that you are calling others.

Used Cars

Before buying a used car, compare the asking price with the blue book price. You can access blue book prices online. Have a trusted mechanic check the car, particularly if the car is being sold without a warranty. Consider buying a used car from a person you know and trust; he or she might be more inclined to charge a lower price and/or point out any problems with the car.

Leasing A Car

Leasing a car isn’t right for everybody. Here are some guidelines to use when you’re considering leasing:

Don’t be tempted to lease a car just because the payments are lower than on a conventional auto loan. Lease payments are arrived at by using a complicated formula involving the purchase price, your down payment or trade-in, monthly payments, and term. Other charges, such as fees for excess mileage, excess wear and tear, and the purchase option price at the end of the lease factor in as well.

Try to keep your term fewer than four years. At the end of your lease, you will need to either:

  • Return the vehicle to the lessor.
  • Trade your leased vehicle for a new one. If you have equity in the car, it shouldn’t cost anything to trade it in. (This will typically not be the case until you are at or near the end of your lease.)
  • Purchase the vehicle from the lessor for the residual value stated in your lease agreement, plus any additional fees you owe.

Auto Loans

If you have money in the bank that’s earning a low interest rate, consider making a large down payment or even paying for your car in cash. This could save you hundreds in finance charges.
Shop around for a low-interest loan. Contact several banks, your credit union, and the auto manufacturer’s own finance company.

Car Repairs

Every year, Canadians spend billions of dollars on unnecessary or improperly done car repairs. Make sure you use a skilled, honest mechanic. Look for a mechanic who is certified, well established, and has done good work for someone you know, and make sure you get a written estimate before work is done.


Auto Insurance

Your provincial insurance department has publications showing typical insurance rates charged by different companies. Call four of the lowest priced, licensed Insurers, and compare their prices for similar coverage.

Ask your agent or insurance company about raising your deductibles on collision and coverage to at least $500, or, if you have an older car, consider dropping this coverage altogether.
Tip: You can also save money by obtaining auto insurance and home insurance from the same company; many companies give discounts. Ask your agent or insurance company if any other discounts are available.

Homeowners Insurance

By purchasing homeowners insurance from a low-price, licensed, and insured company, you can save $100 or more each year. Ask your state insurance department for publications showing typical prices charged by different licensed companies. Then, call the lowest-priced companies and ask for a quote. Make sure you buy enough insurance to replace your house and its contents. Ask your agent or the insurance company if you qualify for any discounts; newer homes and homes with security systems, for example, qualify for discounts.

Major Appliances

Purchase reliable appliances from reputable manufacturers. To learn more, consult Consumer Reports Magazine or its web site www.consumerreports.org for information about particular brands, their reliability, and energy usage.

After you have chosen a particular brand, locate several stores that carry it (either look in the phone book or consult the manufacturer’s website for dealers). Call 3 to 4 dealers to get price quotes on the model you want. Try to negotiate the best price! Also, inquire about delivery charges.



To save on your electric bill, purchase the most energy-efficient appliances you can afford. The energy efficiency of major appliances is found on the Energy Guide Labels affixed to each one; these labels are required by federal law. To cut electric bills, remember to turn off lights and ceiling fans when you leave the room, and run dishwashers and washing machines only when full.

Heat & Air Conditioning

A home energy audit can show you ways to save money on home heating and air conditioning. Your electric or gas company should do an energy audit for little or no money. Setting back thermometers is also a great way to cut your heating and air conditioning bills.



You can save over $100 yearly in fees by opening a checking account with a minimum balance requirement that you can meet. Banks frequently will drop or lower fees if your paycheck is directly deposited by your employer. Direct deposit offers other advantages as well; it’s easy, secure, convenient, and gives you immediate access to your money.

Savings and Investments

Before opening a savings or investment account, ask if the account is insured by the government. Many investments, such as annuities and stocks, are not insured. Certificates of deposit (CDs) and treasury bills or notes often earn the highest return with little or no risk, although you will lose access to the money for a period of time. Once you decide on a particular type of investment, compare rates offered by different institutions. These rates can differ and, over time, can considerably affect your return.

Food Expenses

Don’t forget your cappuccino factor. This refers to how much a person might spend on a fancy coffee each day. In your life, there are probably such small but regular purchases that add up to big money leaking from your household budget.

For example, a Canadian family of four spends more than $3,000 a year eating out, according to government statistics. Is it really worth cutting back on this expense? Would it really make a difference? In the cappuccino example, a $3.50 cappuccino every morning for a year adds up to nearly $1,300. Spending money on beverages, take-out food, and restaurants has evolved. It wasn’t long ago that there wasn’t an espresso/cappuccino shop on every corner. We all made coffee at home, and it was fine, and it cost pennies.

Ways to Save Money

Here is a list of ideas to help you save money. Keep in mind that not every idea will work for every person. See if you can fit a few of these ideas into your life. Add your own ideas to the list.

  1. Pay yourself first: Autopay from your paycheck into savings account every month. Whether you save 10%, of your paycheck or $10, the result is that you are developing a savings habit. Make sure you save money in an account that is “easy to put into” and “difficult to take money out of” if your goal is to use your savings for your home buying or financial life goals.
  2. Collect your spare change in a jar.
  3. Freeze credit cards literally!
  4. Explore phone cards or cell phone plans for long distance.
  5. Review insurance coverage/deductibles if you raise your deductibles your premiums will go down. Evaluate whether you are adequately insured and explore options.
  6. Review your W-4 exemptions.
  7. Use consignment shops or shop at garage sales.
  8. Save on utilities by conserving energy and water.
  9. Barter trade.
  10. Budget for occasional bills such as car insurance, vacations, and holiday gift giving.
  11. Note which habits cost you money and re-evaluate their importance.
  12. Plan and limit your ATM withdrawals.
  13. Eliminate non-sufficient fund charges by using a budget and know which checks pay which bills so you never have to pay a late fee.
  14. Establish a gift-giving agreement with friends and family during the holidays.
  15. Circulate kids toys.
  16. Call your credit card company and request a lower rate.
  17. Use the library instead of bookstores.
  18. Use a list when grocery shopping.
  19. Have separate checking and savings accounts.
  20. Treat yourself to small rewards.
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