How To Save More Money

Do you find that you’re not saving enough even though you have a plan to limit your spending? Let’s go back to the basics to see how to save more money. These tips should lead you to more savings and money in your pocket.

save money

First, we have this savings formula: Savings = Earnings – Expenses

It tells us that:

  • The more you earn, the bigger your savings can be.
  • The less you spend, the bigger your savings can be.

So, let’s think of ways to increase your earnings and reduce your expenses.

Increase earnings

Increase earnings through passive income

What’s exciting to lots of people is to earn a passive income. You can earn a passive income by investing and renting out real estate properties to collect monthly rent.

However, that comes with managing properties and dealing with tenants. It could turn out to be more work than expected and would defeat the purpose of a passive income, which should require less work than an active income.

Perhaps a simpler way to generate a passive income is through a portfolio of dividend stocks. Less money is required for an initial investment compared to a real estate property.

Let’s say a condominium costs $300,000 and you rent it out for $1,500 per month, that’s a return of 6%, excluding the mortgage interests, maintenance fees, property tax, strata fees, and so on.

Historically, the market has returned 7-10% per year. Theoretically, you can buy quality dividend stocks when they’re on sale. After the commission fee for buying, you can hold and avoid paying any more commission fees that are required for sales.

Then, you can just collect passive income from dividends. It’s common to find 3-4% dividend yields that can grow at least 5% per year and 5% yields that may grow 2% a year.

Eligible Canadian dividends are favourably taxed if received in a non-registered (taxable) account for Canadians, and likewise, qualified U.S. dividends are favorably taxed for Americans. Canadians can receive qualified U.S. dividends in registered retirement savings plans (RRSPs) without the 15% withholding tax.

The business growth, which eventually translates to capital gains, is tax deferred until you sell, at which time, only 50% are taxed at your marginal tax rate (if you’re Canadian).

If Canadians buy and hold in a tax free savings account (TFSA), they don’t have to pay any taxes on dividends and capital gains!

If your goal is to generate a passive income, then, you don’t even need to worry about the sell side. Just focus on buying quality, dividend-paying companies when they’re at reasonable valuations and collect their dividends forever.

Right now, relatively cheap dividend stocks include:

  • AbbVie Inc (NYSE:ABBV) yields 3.7%. At about US$61 per share, it trades at a multiple of 13.5. Earnings per share (EPS) growth of about 10-13% is expected in the medium term.
  • Apple Inc. (NASDAQ:AAPL) yields 2.4%. At under US$94 per share, it trades at a multiple of 10.8. EPS growth of about 10-14% is expected in the medium term.
  • Canadian Western Bank (TSX:CWB) yields 3.3%. At roughly $27.70 per share, it trades at a multiple of 10.5. EPS growth of 7-12% is expected in the medium term.
  • Northview Apartment REIT (TSX:NVU.UN) yields 8.3%. At about $19.70 per unit, it trades at a multiple of 8.4. Funds from operations per share growth of about 2-3% is expected in the medium term.

If you can even amass a portfolio of $25,000 and get a dividend yield of 4% to start, you’ll generate a passive income of $1,000 in your first year. The $1,000 is added to your savings that you can use in any way you like, including paying down debt or reinvesting into high-quality stocks at good valuations.

Increase earnings through another job

To increase your earnings, on top of your day job, you can look for part-time or casual work. It can be challenging to work on top of your day job, but what if you can earn some money through a side job that’s really your hobby?

For example, if you love to ski and are really good at it, why not consider being a part-time skiing instructor during the winter season? If you like soccer, you can consider being a soccer coach.

Any additional income will help increase your savings amount if you maintain the same kind of spending.

Reduce expenses

Reduce everyday expenses

The first thing to do is to separate needs from wants.

We all need food, housing, clothing, and transportation, but within these categories, needs and wants should be easily distinguishable. In so doing, you need to decide whether the wants are important enough for you to lower your savings.


Eating is a need. Going out to eat is a want. Usually, it’s cheaper to cook at home, but of course, there’s more work involved: getting the ingredients, cooking, and washing the dishes.

Drinking coffee may be a need, but by making your own instead of getting one from Starbucks could save you a few hundred bucks every year.


Is it essential to own your home or could it be cheaper to rent? Owning your home could be a want, but having a place to live is a need.

If you live in your own home, the utility bills (gas, phone, internet, other subscription fees), property taxes/strata fees, maintenance fees, mortgage interests etc. are unavoidable.


Wearing something is a need. Buying new clothes for the new season is a want. This really depends on what you do because some careers require you to dress especially well such as in the field of public relations.


Being able to get from point A to point B is a need. Having your own car is a want. Travelling via public transit can save you thousands of dollars on the car itself, as well as its maintenance and insurance fees.

Reduce big item expenses

Vacations are costly no matter how you look at it. You’re paying extra to live somewhere else while you’ve paid to live at your home whether it’s rented or not. However, if you can’t do without vacations, here are some ways you can lower your expenses.

You can reduce the number of vacations within a certain period. For example, if you go on vacation twice a year, consider going once a year.

Instead of flying off to somewhere far, consider camping or visiting the next big city, province, state, or territory.

Can you perhaps live at a friends place while you’re on vacation so that your stay would be cheaper?

Traveling in a small group usually beats traveling by yourself or as a couple in terms of reducing expenses.

Reduce your debt

By reducing your expenses, you can more quickly repay your debt if you have any. Ideally, other than a mortgage for a property, it’s best for most people to not have any personal debt.

I’m not saying you should never use credit cards, but now that we’re on the topic, credit cards should be paid off every month. Why? If you don’t pay them off, you end up paying high interests. Some charge interest rates of over 20%!

If you have lots high-interest debt to pay back, you should see if you can refinance your debt to pay back the high-interest debt immediately with lower-interest debt such as your line of credit.


You can save more by earning more or reducing your spending. First, pay down high-interest debts such as credit cards before other debts.

Second, think of ways to increase your earnings by generating passive income from rental properties or a dividend portfolio.

Third, see if you can find a casual job that’s something you enjoy doing and can earn a bit more money on the side to increase your savings.

No matter which savings tips you decide to use, I hope your increased savings rate can allow you to enjoy more of what you have and what you’re doing.

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Disclosure: At the time of writing, I own NYSE:ABBV, NASDAQ:AAPL, TSX:CWB, and TSX:NVU.UN.

Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.

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