Taking a hard look at all the streaming subscriptions you’re paying for is a good first step toward reducing your monthly expenses.Giordano Ciampini/The Canadian Press
On Oct. 21, personal economics reporter Erica Alini, consumer affairs reporter Mariya Postelnyak and investment reporter David Berman answered reader questions on how to manage their household finances, cut down on spending and save money.
Readers asked about how to sift through their monthly subscription services, how to prepare for large and unexpected expenses, and the best way to plan and track their finances. Here are some highlights from the Q&A.
How do you recommend budgeting expenses? I currently track every expense in a traditional Excel sheet. Is there a faster method, even if it means tracking fewer details?
Berman: There are plenty of apps that can track expenses. One highly recommended one is called YNAB (which stands for You Need a Budget) – and it claims to save subscribers an average of $6,000 a year. I haven’t used it though, there’s a monthly charge associated, and not all Canadian banks are fully supported.
I find that the DIY approach works fine if you’re willing to accept estimates. Much of my monthly expenditures are recurring – car loan, streaming services, hydro bill, etc. – so they’re not going to vary much from month to month. And the unusual expenses don’t take much effort to track. I might not get things down to the penny, but I usually have a good sense of where my money is going.
Alini: In addition to YNAB, Monarch is another platform that has good ratings, although I also haven’t used it. I echo David – I also have very predictable recurring expenses so I mostly focus on how I’m using my savings. I use the “money buckets method” outlined here.
How can I manage all my subscriptions? I know I don’t need them all but I don’t know where to start.
Postelnyak: The Bobby app is a great starting point because it forces you to take quick inventory of your digital spending. I like that the interface is super simple and “Google Docs-esque,” if you will. You tap the plus sign, add each service and watch the monthly costs add up. While Bobby lets you automatically add all of the big name services, you still have to manually enter your own costs (an enlightening exercise, to say the least).
Beyond taking stock of where you might be bleeding cash on subscriptions, my tried-and-true strategy for cutting costs in this domain is simple if a bit sneaky: always try to cancel.
With very few exceptions, the company will counter with a discount to keep you around. Audible, for example, offered me three months at half the price the last time I tried this move. I’d estimate the strategy saves me at least $50 a year!
Buy now, pay later has gone mainstream. How are Canadians using it?
How can I get the best deal on mobile and internet services? My provider insists that a bundle is the best deal, but I’m skeptical.
Berman: I’d be careful about bundling services, especially when you are not even using some of the elements within the bundle – such as a home phone. You should break out the individual cost of each service, then add them up to see if bundling makes sense. The other problem with bundles is that it can make it far more cumbersome (or impossible) to cancel one service (like the home phone). Don’t get me wrong: Bundles can be great. But yes, be skeptical.
A Toronto woman holds her adopted senior cat. As pet-related health expenses can rack up quickly, Mariya Postelnyak recommends saving up a little every month.Laura Proctor/The Globe and Mail
What’s the best way to save up for emergencies? I’m worried that one health issue with my dog is going to cost us thousands we don’t have.
Postelnyak: Pet parenthood can be one of the hardest things to plan for. A creature whose diet might regularly include baseballs and telephone wires is bound to throw you a few curveballs. I recently spoke to a reader who’s spent $44,000 on their Bernese Mountain Dog. And she’s seven years old!
Pet insurance is one option to consider. A single surgery can run close to $50,000, while a policy can cost roughly $45 a month. But there are caveats. It’s often not worth it for pets over the age of three or those with pre-existing health conditions (check out this piece we published earlier this year).
Outside of insurance, start building a rainy-day fund and add in as little as $10, $20 or $25 a month. Park that cash in a separate high-interest savings account, hide it from your main view in online banking to reduce the itch to move it around and set up an automatic transfer on payday.
Alini: The general rule is to aim to have at least three to six months’ worth of living expenses tucked away for emergencies. If you’re just starting out building a rainy-day fund, one way to do it would be to set yourself a target of three months’ expenses at first and figure out how much that would be. Second step: Figure out how much you can realistically save toward that each month and how long it will take you to get there.
Set yourself a timeline and track your progress each month (you can do that in an spreadsheet or just a piece of paper). An important note: I recommend parking your emergency fund in a high-interest savings account with competitive interest rates. Here’s a good account-comparison tool.
David Berman recommends gauging your child’s interest in different extracurriculars before investing in one long-term.JENNIFER ROBERTS/The Globe and Mail
As a parent and a child of immigrants that struggled to make ends meet, I want to give my kids the opportunity to enroll in extracurriculars. But they add up to hundreds a month. How can I save money while still giving my kids a childhood I never had?
Berman: We went through a similar conundrum when our daughter was young – so many extracurricular options, so much money. And time was a limiting factor as well, of course. Our solution was to wade in slowly to extracurricular activities, mostly to gauge the level of enthusiasm from our daughter. Soccer didn’t work. Swimming was hit-and-miss. But dance was a spectacular success, so we focused on that.
What’s the one thing I can do right now to save money on my monthly expenses?
Berman: How about separating your essential monthly expenses from those that you can live without? So, the essential list might contain things like phone, internet and rent (or mortgage), while the non-essentials might be multiple streaming services or food delivery. When you take a cold, hard look at those non-essentials, you might be pleasantly surprised by what can be cut without much pain. I mentioned this in a recent article about my family’s streaming services: We discovered two subscriptions to the same thing. Cut!
A worker restocks shelves in the bakery and bread aisle at an Atlantic Superstore grocery store in Halifax. Erica Alini says introducing financial concepts to her kid early on helped him learn to comparison shop.Kelly Clark/The Canadian Press
Our biggest household expense is food, and it seems like grocery prices are only going up. How can I lower my food bills?
Berman: Let me add one point that doesn’t relate specifically to groceries. Anything I make at home offers huge savings over what I will pay at a restaurant or coffee shop. I wrote an article recently about my home espresso maker, and how the high upfront cost of the machine looked far more reasonable when I calculated the per-coffee cost over several years. I think it was something like seven cents a cup, if memory serves – and it decreases with every cup! Coffee beans are expensive, of course, and they’re going up. But you have to compare that cost to what a Starbucks brew will set you back. Big savings.
Do you have any tips on teaching your kids about good financial habits? I want to make sure they’re set up when they start thinking about their own money.
Alini: I started giving my kid an allowance as soon as he had basic numeric literacy and found that he quickly developed an appreciation for how much things cost. It was interesting to see constant requests to buy toys stopped almost overnight (which was a huge plus). I also found he quickly started to comparison shop at various stores. And he learned to add taxes to displayed prices. I plan to open a bank account for him in a few years, likely toward the end of junior high. And sometimes in high school, I’ll introduce investing and get him to try his hand at it with various virtual investing tools (no actual money involved). Here are two well-regarded Canadian books about kids and money: one for parents and one for teens and young adults starting to manage their own money.
Berman: I’ve wrestled with this question at home. With so many transactions now online or cashless, my daughter once asked me: What is money? I can’t recall my sputtered response, but it alerted me to the fact that today’s young people have a harder time thinking about finances. What worked: Giving my daughter a consistent allowance that encouraged her to budget and think about things like taxes and sales. I’ve also introduced her to basic investing concepts, like dividends. I think she knows what money is now.