Eight Strategies to Make You Richer

02 Feb Eight Strategies to Make You Richer

Canada has a three-tiered pension system that reduces the risk of poverty in old age. Increasingly, however, Canadians are expected to do more for themselves to prepare for their later years. People receiving less than full payment from the Canada Pension Plan fall below the poverty line. One way to have more money is to reduce costs.

Pay down debt
Whether you owe on a mortgage or have other bills, do your best to pay off debt before you retire, so you don’t face mounting interest payments. This may mean working longer than you had anticipated.

Distinguish between wants and needs
You need food; you may want to dine at an expensive restaurant. You need clothing; you may want the latest fashions. Tune in to whether your purchases are fulfilling needs or merely wants.  It’s also possible to reduce costs by focusing on quality rather than quantity, so that what you purchase lasts a long time.

Reduce your wants
Two big costs are housing and car. Move to less expensive housing, or consider home sharing. One couple in very tight circumstances sold a three-story house and moved into a mobile home, where they discovered a neighbourhood of friendly people.

It costs about $10,000 a year to own and operate a car. See if you can get by with public transit and an occasional taxi, for way less money per year.

Other ideas are to eat out less often (make it a special treat), and perhaps host some potluck dinners with friends. Maybe stop hair colouring and expensive hair treatments, and pare down your cell phone plan. Consider buying second-hand goods. If you’ve had work-related costs such as clothing, commuting, and meals, you may actually reduce costs when you retire.

Focus on value-rich priorities
What are the three things you value most in life? Not what your peers value or what you think you should value, but what really matters deeply to you. Family? Health? Volunteering? Hobbies? Spirituality? Spend money only on what you truly value.

Delay gratification
Wait 30 days before you buy something. Use cash, not credit. Shop with a list and otherwise stay out of stores.

Find what’s free
There are a lot of free resources and opportunities around, once you start looking for them. Also keep your eyes peeled for seniors’ discounts (e.g. stores, concerts, recreation activities).

Treat yourself to small luxuries
By all means treat yourself to small luxuries. Just don’t do it every day! Maybe you can start to create your own luxuries, such as buying a coffee-maker so that you no longer buy coffee every day, or buying some luxury at the grocery store instead of a meal at a restaurant.

Budget and Save
When you start tracking where all your money goes, you will more easily spot a variety of ways to budget for things that really matter to you. Aim to put 10% into savings every time you get some income. You may find, too, that reducing the stuff in your life means less obligation, less distraction, and less stress. Enjoy!