I was an expert on how to save money on a low income. For the last six months of my maternity leave, I was on parental/ maternity leave and receiving $987 every two weeks, or a grand total of $1974 after taxes per month.
Although it was not much, I was still very grateful for it as it allowed me to stay at home with my baby up until he was one year old. I was also grateful for the Canada Child Benefit, and I noted down the Child Tax Benefit Payment Dates (aka payday). I did have cash savings to prepare me for my maternity leave so that I could still contribute to my retirement, TFSA, and investment accounts. Here’s how I budgeted and was able to save money on a low income when I was on maternity leave.
I will admit, my budget was pretty tight (my mortgage payment and maintenance expenses were over half of my monthly income, for example…) and I wasn’t able to save as much as I would have liked (or am usually accustomed to).
I certainly didn’t about saving money on a Louis Vuitton, that’s for sure.
I move a fixed percentage of my income into our joint accounts to pay for joint expenses such as groceries, hydro and utilities. However, I was still able to move some money on most of the low-income months into my high-interest savings account (with the end goal of moving it into my retirement accounts) and I didn’t have to dip into my savings.
I didn’t end up buying back my pension as it wasn’t worth it.
Table of Contents
To Budget or not to Budget
Although I’m not a firm believer in budgets (just like dieting, I don’t believe budgeting works for me), I do think that budgeting for yearly expenses is a good way to understand what your cash flow situation is like. I do an annual budget to estimate how much I have to pay for certain things and see where I can cut back, but I don’t make myself feel bad if I go over the budget in individual categories on a monthly basis.
As long as the whole month is okay, I don’t sweat it. I really do pay myself first.
It usually shocks me when I find out I am spending $400-$500 a year on hair cutting and highlights. Or $1113 just on gifts over the year (yeah, quite the shocking number, right?). So with these yearly numbers, I usually just try and cut down instead of being fixated on a certain number per month.
Which brings me to the next point of learning how to save money for a low income, tracking your expenses.
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Track your Expenses
One of the key ways to become more aware of your spending habits and where you put your money is by tracking your expenses. To this day (for the past 10+ years), I write down what I spend in my day planner (yes, I am old school, I still have a day planner and don’t use Google Calendar or an app for my planner).
If I spend $3 on a coffee, I write it down. If I treat myself to a soft-serve vanilla cone that only cost $1.49, I write it down. Then every week I add up the numbers.
This really helps me understand where my money goes. After tracking the expenses, I add it up on a yearly basis to form the annual budget.
Writing things down manually might not work for you though, so there are some other options available:
- YNAB You Need A Budget– I hear great things about this, and used to have this years ago but I didn’t like manually tracking on the computer.
- Mint– One of my favourites and I use this regularly. It is free. I link up my credit cards to Mint but don’t use my banking accounts (I am worried about safety for banking accounts, but this is likely an unfounded worry of mine). Besides, I don’t need it to track my net worth, I just like having my purchases tracked. I mainly buy everything with credit cards, even a $3.24 coffee sometimes (yes I am that person).
- Personal Capital– For US residents, many PF bloggers rave about this. Or Wealthica in Canada, here’s my raving review of Wealthica.
Pay Yourself First
One of the major ways to save money and avoid pay cheque to pay cheque living is to pay yourself first. When I got my $987 deposited into my bank account, I would subtract my mortgage payment and maintenance fee payment (if it was close to the first of the month) and see what was left.
Then I would subtract the minimum amount required to avoid the bank fee ($3000 is the minimum balance to keep before getting charged a bank fee) and see what was left. Then I would move money into savings if it wasn’t time to pay the credit card bill. If it was time to pay the credit card bill, I would use the money in excess of the $3000 minimum balance to pay the bill.
I have multiple savings accounts to move money to so that I don’t see the money. If I see the money sitting smugly in my chequing account, I usually feel falsely rich and then end up wanting to spend that money. If I move that money so I don’t see it regularly I adopt a less rich mindset and don’t end up spending as much. Also, these online high-interest savings accounts are hard to get money out of (can’t just take it out from an ATM), which helps trick your brain and yourself.
I try to trick my brain into saving money this way.
There are some bank account promotions that offer a big bonus such as $350 cash or a new iPad for signing up for a new chequing account.
Here are some online high-interest savings accounts to get you started- you can move your money in here from your usual banking chequing accounts:
With the Tangerine Savings Account, you get:
- 3.25% rate for the first 5 months
- After you sign up for a savings account, you will get an “Orange Key” which is a referral number that you can use to refer your family and friends. If they open up an account and deposit $250, you will get $50 and they will also get $50 (a win-win situation!).
- There are no minimum balances for the savings account
With the EQ Bank Savings Plus Account, you get 2.00% interest*:
- FREE INTERAC e-TRANSFERS® (email money transfer)
- Unlimited electronic fund transfers, so you can funnel your money online however which way you want without having to worry about getting dinged.
- There is also no minimum balance
- EQ Bank has mobile cheque deposit (take a picture of your cheque to deposit it)
To sign up for 2.00% interest* with EQ Bank, click here!
The Wealthsimple Cash Account gives you 0.90 % interest. This is great to have if you want to have cash in your investment portfolio to be invested since they are also a robo-advisor. In addition, Wealthsimple recently announced they are providing Wealthsimple Trade, a zero dollar commission trading platform in Canada, though only for non-registered accounts. If you haven’t heard of Wealthsimple, it is a company making huge strides that was founded by a millennial named Michael Katchen. He was only 29 years old and raised $37 million in funding from Power Financial Corporation for Wealthsimple!
Adopt Lifestyle Deflation
Have you heard of lifestyle inflation? Lifestyle inflation is where you add things that you do regularly to your lifestyle and then your lifestyle ends up costing more. For example, things such as pedicures, manicures, haircuts, eyelash extensions, cable, gym memberships, and yoga memberships.
One way of being able to save money on a low income is to deflate your lifestyle or lifestyle deflation.
Cutting these things that are not necessary or reducing the frequency of them will really save you money (it might not seem like a lot, but it really adds up).
I haven’t had cable in over 5 years and don’t miss a thing! Last I checked, cable costs over $100 a month, or $1200 a year.
Use Netflix Instead
I don’t usually watch Netflix very much but given that it is under $11 a month, it’s still nice to have the option to watch a movie or a great series such as The Letdown or a show like Ali Wong’s Hard Knock Wife (the best mom jokes.. EVER) when I was feeling emotional about the sacrifices of new motherhood. If I watched this earlier during my maternity leave, I would have cried a lot less!!
Borrow Books from the Library
I’ll admit, I was a bit of a library snob (as in, I thought buying books was cooler) but my husband converted me. I haven’t bought a book in years since using the library! I have been able to find all my personal finance books that I want to read at the library. If something isn’t available, you can even request it at your local library (depending on your library of course).
Cut Memberships that You Don’t Use
For example cut your gym memberships (especially if you haven’t gone in the past 3 months), yoga memberships, hot yoga memberships, and spin class memberships. Running or working out at home was better for me especially since the only time to work out in the first few months postpartum was during baby’s (30 minute) nap time.
Cutting memberships that you don’t use adds up to over $600 in a year savings at least (if you have a conservative number of $50 a monthly membership) for each membership! Save money on a low income win!
Cut Out or Decrease the Frequency of Coffees or Desserts or Treats
If your daily latte means a lot to you and you really enjoy it and it adds value to your life, then by all means, stick with it.
You do you.
But if it doesn’t, and you don’t see the added value, or you’re having trouble justifying the annual $972.40 price tag (let’s say a conservative $3.75 five times a week), then you might want to decrease the coffee frequency or switch to an alternative. Like brewing coffee at home with a Bodum French press or an Aeropress.
I still had some treats but I didn’t have it as frequently. Some days I needed the sugar hit and the caffeine hit. Since I didn’t have it as often, I enjoyed the experience of coffee or dessert or the ice cream treat even more.
It also helps if you manage to get free Starbucks in Canada too.
Here are some other household budgeting tips from Porch.com.
Add In Some Side Income Through a Side Hustle
It is an understatement that adding in some extra money on top of your income is very helpful for the budget!
I was able to add in some side income through this blog and also through some extra contract work that allowed me to do a little work from home while my baby was sleeping. Both of these combined provided some extra money during these six months of lean times. It wasn’t that much but it’s certainly nothing to sneeze at!
Use a Cash Back Credit Card (Responsibly!)
My cash back credit card gave me 2% cash back for a zero annual fee. In 2018, I was able to redeem $200 in statement credits and in 2017, I was able to redeem over $600 in statement credits. That’s $800 in FREE money!
Sure, it would have been nice to have the points to be used for travel hacking instead, but getting cash back is like a little safety moat that I can use when I know that my credit card bill is going to be high and I may not have enough funds in my chequing account to pay the bill. Unfortunately, this great no annual fee card will be charging an annual fee very shortly and therefore I am switching to another cash back card that does not charge an annual fee.
I will have to warn you that if you can’t pay off your balance on the credit card, stay away!! But if credit cards can be used responsibly, they can be a great tool to help you budget and save money when you are on a low income.
Related: 10% Cash Back Credit Cards in Canada
Another way for some easy money is through the lazy couponing savings way:
SUBMIT YOUR GROCERY RECEIPTS TO CHECKOUT 51
Another way to save money on a low income in Canada is to submit receipts. This takes very little effort because it involves downloading an app, and checking out what’s available AFTER I make my purchases.
Usually, the coupons available in Checkout 51 doesn’t sway me to buy a certain product (with exception fo diapers for which I try to stock up). I don’t look at Checkout 51 before I go grocery shopping. I just do it after I grocery shop so that I don’t get influenced by their product coupons.
A lot of the coupons are for non-produce goods, but for certain things like diapers, it really saves money because I can stack my coupons (e.g. $2.00 print out coupon, and then another $3.00 from Checkout 51 for a total of $5 off the economy box of diapers).
Best of all, the app is free! It’s one of my favourite personal finance apps in Canada.
Read my Checkout 51 Review for more information about how they make money and how you can make easy money too.
I’ve downloaded it and have had it for just over a year and my payout (by cheque, mailed to my home) has been $46.85. The cheque comes very promptly, within a week or two. I’d say it’s pretty passive. In fact, I actually like going through my grocery receipts to check out if there’s anything I can claim with Checkout 51. I know $46.85 is nothing to write home about but it’s still better than $0!!
In the past few months, Checkout 51 even started paying you $0.30 or so for watching advertisements. I don’t mind clicking on those for a quick $0.30 and to be honest I don’t watch it, I just rest my phone somewhere and go do something else.
If it can get you to the payout threshold of $20.00, why not?
Go On a Shopping Ban and Boycott the Malls
I don’t know about you, but I don’t have much willpower. That’s why I avoid the malls. I don’t go shopping in the malls unless I have to. This has really helped me with my alternate month shopping ban which I imposed on myself last year.
This is how my self-imposed alternate shopping ban worked.
For example, January I could treat myself and buy clothes and in February if I saw something I liked I would have to wait until March to see if I still liked it. I would wait and think to see if something was really necessary or would add a lot of value to my life before I made the purchase. It stopped me from impulse buying.
I didn’t do my self-imposed shopping ban this year but I still think very carefully before I open up my purse strings.
Because of this self-imposed shopping ban, now when I go into malls, I actually feel overwhelmed by all the stimulation and decor!
Get Rid of Stuff and Make Money
Get rid of 365 things in One Year
Last year, I got rid of 365 things in one year. You can read about the lessons I learned from that experience right here. 365 things sounds like it lot, but it really wasn’t. It felt very good to purge. I don’t miss most of the things that I got rid of.
They weren’t adding value to my life. During my decluttering experience, I learned that I had a lot of clothes that I didn’t realize I had because they were all rolled up at the back of my closet! It’s like finding free money in your pants pocket! This also helped curb the desire to shop.
Get Rid of Stuff you Have in your Home to Make Money
You can call this a side hustle, but there’s nothing like extra cash from stuff you don’t want anymore to make your day! I have made thousands getting rid of stuff around my home that I don’t need.
I had an Ikea patio table that was just sitting on my patio that I didn’t need (and haven’t used since a year ago since we rarely have people over anymore) and decided to sell it. The price of the patio table when I purchased it 5 years ago was around $250 and I sold it for $200 cash within days. Not bad at all, $10 of cost per use each year! Here are some websites and apps that I found useful to help get rid of stuff and make money doing so.
I was trying to stay off Facebook but I caved and created an account to sell on Facebook Marketplace.
Meal Plan and Freeze Your Food
This is huge. With a baby, I was so tired and sleep deprived that making food for myself while my husband was at work felt like the biggest task of the day. Sometimes cooking for the family feels like the biggest chore but the family has got to eat!
I try my best to meal plan for the week and also batch cook and make more portions for lunch the next day, or to freeze and eat later. I would buy these freezer bags from Dollarama and put meatloaf in it, meatballs, pulled pork, cauliflower fried rice, and a lot of other foods so that I can defrost it for use later on.
Buying an instant pot before the baby came also really really helped. I would make hard boiled eggs, stews, pulled pork, short ribs, pasta, pho.. basically everything.
I use the instant pot almost every day, and sometimes multiple times a day. It helped cut the cost of buying take-out or delivery or going out to eat.
Here are 4 recipes to make for pho, fries, ice cream, and sushi that I made regularly (and are super easy) in order to curb my cravings.
There we have it, hopefully, these tips are helpful for you and will help you save money on a low income.
When you go back to work from parental leave, you can look at my musings of an overwhelmed working mom.
When you continue to save money and invest it, you will start to generate passive income and low income will be a thing of the past. You’ll even have more money to invest into your child’s RESP. It will be replaced with financial independence money and passive income and freedom to do whatever you want with your time!
One of my favourite ways to save money is to treat myself with birthday freebies for my birthday.
You may also be interested in:
- How to Save Money Fast in Canada
- Is a Costco membership worth the money?
- How to gift a share of stock
- Free birthday stuff Canada
How about you?
What are your favourite ways to save money on a low income?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.