How to Cut Your Expenses by up to $5,000 a Year

Craig Sebastiano
by Craig Sebastiano August 22, 2017 / No Comments

Are you spending more than you make? Do you find yourself living paycheque to paycheque? Maybe it’s time to look at how much you spend and see where you can slash your expenses.

It’s a good idea to have a budget and keep track of where you spend your money every month. Here are a few tips that can help you reduce your spending and leave you with more money in your pocket.

Get rid of your landline

If you happen to be one of those people that still has a landline, it’s time to move into the 21st century. Many cell phone providers now offer unlimited local or nationwide calling. You can also make free long-distance calls using FaceTime or Skype. Bell charges $41.44 a month for its basic home phone plan, which includes only includes unlimited local calling. Over 12 months, that adds up to nearly $500.

Cut the cord

Who needs cable when most networks make their content available for free online or through an app? You can also get an antenna if you want live TV. Rogers charges $24.99 for its starter package (35+ channels), $49.99 for its select package (100+ channels), $74.99 for its premier package (130+ channels), and $99.99 for its premier package (170+ channels). Surprisingly, the most expensive package doesn’t even come with The Movie Network or HBO Canada. Based on these prices, cutting the cord will save you anywhere from about $300 to $1,200 every year.

Switch Internet providers

It’s difficult to live without access to the Internet, especially if you want to keep Netflix. Unlimited monthly usage can cost a fortune, especially if you choose one of the larger providers. For instance, Bell charges $89.95 a month, Rogers charges $99.99 a month, and Shaw charges $105 a month. While all three offer discounts for new customers, there are smaller providers that offer better deals. For instance, TekSavvy charges $59.95 a month for unlimited usage with a download speed of 75 Mbps. However, there’s a fee for the modem and an installation charge. But in Ontario, both Virgin and Fido offer a free modem and no fee for installation. The cost for unlimited monthly usage is between $50 and $65 for either provider, depending on the download speed. The potential savings can be up to $40 to $55 a month or as much as $480 to $660 a year.

Skip the movie theatre

Do you hate paying for overpriced snacks and drinks, and having to sit next to strangers when you go the theatre? A night at the movies for two—including the price of food and beverages—can cost between $40 and $50. If you go once a month, that’s easily $480 to $600 a year. Instead, you can get Netflix or Amazon’s Prime Video and watch in the comfort of your own home. A standard Netflix account costs $10.99 a month while Prime Video is $79 a year. You can easily save about $350 to $470 annually.

Pay off credit card debt

Credit cards can be both good and bad. They’re good if you earn rewards and pay off your balance in full every month. But they’re bad if you carry a balance and pay a ridiculous amount of interest. According to TransUnion, the average credit card balance per borrower in Canada was $3,904 in the first quarter of 2017. If the rate on your card is 19.9% and you only pay $117 a month for a year, you’ll still be charged $714 in interest. Instead, dip into your savings and pay that debt off to avoid paying interest. Or if that’s not an option, consider getting a balance transfer credit card and pay off the entire balance before you have to start paying interest.

Get a no-fee chequing account

The cost of a chequing account can vary, depending on the type of account features you choose. While you can avoid those costs by keeping a minimum balance, you probably aren’t earning any interest on that money. Some banks will charge you as much as $30 a month—that’s $360 a year. Do yourself a favour and get a no-fee chequing account. It’ll probably have many of the same features you want without the monthly fee.

Eat out less

The average Canadian household spent about $2,500 on restaurant meals in 2015, according to Statistics Canada. You can save a lot by cooking for yourself or bringing lunch to work. You can also use the Flipp app to see what’s on sale and shop around for the best deal on groceries. If the average household is able to reduce the amount spent on eating out by half, that’s a savings of $1,250 a year.

Take public transit to work

The cost of driving to work can add up, especially if you work in downtown Toronto. If you live 20 km away from work and pay $20 a day for parking, your monthly commute will cost $532 a month, according to the Toronto Transit Commission’s commuter cost calculator. But if you park in a public transit lot every day and get a monthly pass, you can save about $278 a month or $3,336 a year.

The bottom line

Although everyone’s situation is different, some of the tips above can help you save a small fortune every year. You can also bundle your TV, phone, and Internet with the same provider or threaten to cancel in order to save money.

Once you take advantage of some of the ways to cut your expenses, you can stash the money in a savings account or a high-interest savings account in the short term. However, if you want to get a better return on your money over the long run, you’ll be better off investing in a mixture of index funds or exchange-traded funds.

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Flickr: KMR Photography