For those who find saving money a challenge, the “spend a little, save a little” principle may be a lifesaver for you. There’s no denying the advantages of taking the time to save money, but too often it is overlooked. Studies estimate that a fourth of Canadians are living paycheque to paycheque with no contingency in place for an emergency. And more than half of Canadians have less than $10,000.00 set aside for emergencies. Too often, because there is no savings, credit cards become the safety net, which results in people ending up in debt with very little way back out.
It’s far too easy to run a little short before pay day and dip into an easily accessible account to float you through. Even if you tell yourself you’re going to pay it back (and maybe you do), then the next pay cycle you’re that much short again, and more than likely to dip into savings yet again, until you decide you can’t pay it back and then you’re just out and back to square one.
If this sounds like you, the key is to open a savings account that you just forget about. And really, the only way you can have a hope of forgetting about it is to not have to regularly send to it. So how can you save money and forget about it all at the same time?
Most financial institutions now have programs in place, which you can set up on your debit card, and for every debit transaction a set amount of money is sent to your savings account. This can be set as a percentage (so the more you spend, the more you save) or a flat rate per transaction. Because it’s automatic, it’s not something you have to think about, and for many people this alone allows them to be more successful with saving their money.
Obviously there is still a bit of self-control required, because you will be able to see this bank account if you log in online to look at statements… but holding yourself to a completely “hands off” policy when it comes to this savings account may help ensure that when you really need it, a safety net will be there.
Has anyone tried the “spend a little, save a little” concept already? What has been your experience with it?